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High Court of Judicature at Madras
N. PAUL VASANTHAKUMAR & P.R. SHIVAKUMAR, JJ.
M/s. Simon's Foot Wear Pvt. Ltd. rep. by its Managing Director Arul Neri Selvan Chennai & Another
Versus
Indian Bank rep. by its Asst. General Manager & Authorised Officer Chennai & Others
W.P. Nos. 33782 & 33783 of 2013 & M.P. Nos. 1 to 4 of 2014
Decided on: 11-11-2014
Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 13(2) - Limitation Act - Section 5 – Condo nation of delay – Quash of order - Debts Recovery - As loan amount was not repaid in accordance with terms of conditions on which agreed facilities were extended first petitioners loan Account was classified as Non-Performing Asset and first respondent bank issued a notice under Section 13(2) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 claiming a sum towards amount due on loan account - First petitioner issued a reply objecting to invocation of proceedings under SARFAESI Act - However overruling objections first respondent bank issued a possession notice under Section 13(4) of Act in respect of properties given as security for creation of mortgage by deposit of title deeds after serving a demand notice under Section 13(2) of SARFAESI Act and after rejecting objections raised by petitioners in reply notice - First respondent bank took possession of secured assets under Section 13(4) of SARFAESI Act – Held, Premise that a sale certificate came to be issued in her favor as nominee of auction purchaser - Said sale certificate came to be issued in favor of pursuant to order made - As against said order an appeal came to be filed before Debts Recovery Appellate Tribunal - By said appeal was allowed and order of Debts Recovery made was set aside and said application was remanded back to Debts Recovery for fresh disposal - In view of said order of Debts Recovery Appellate Tribunal sale certificate issued in favor of stood nullified and it is also admitted by writ petitioners that said sale certificate was subsequently cancelled and such cancellation was not challenged by said - After remand final order came to be passed pursuant to which a fresh sale certificate came to be issued in favor of auction purchaser namely second respondent herein - Under such circumstances writ petitioners seem to have chosen to protract case by filing petitions to impaled said and State Industries Promotion Corporation Limited - State Industries Promotion Corporation Ltd. is sought to be imp leaded on premise that land belongs to SIPCOT and superstructure and leasehold right by virtue of a long lease alone belonged to writ petitioner and so that order will be binding on SIPCOT - It is not in dispute that whatever right writ petitioners did have in property alone was subject matter of sale - Prayer for imp leading SIPCOT also deserves rejection - Hence are liable to be dismissed as vexatious - After order of Debts Recovery Tribunal impugned came to be passed writ petitioners have chosen to approach this court only as an abuse of process of court in hope that a re-auction may fetch more amount than amount for which property was sold - Having acquiesced-in in sale of first item for a sum and got back title deeds relating to other properties petitioners shall be stopped from challenging sale in favor of second respondent and contending that sale certificate issued in his favor is null and void - Foregoing discussions will make it clear that even on merits writ petitioners have not made out a case for condo nation of delay in preferring appeal before Debts Recovery Appellate Tribunal and that order of Debts Recovery Appellate Tribunal dismissing application filed under Section 5 of Limitation Act seeking condo nation of delay in preferring appeal under Section 18 of SARFAESI Act can be sustained even on merits - Court are of considered view that there is no merit in either writ petitions and both writ petitions deserve to be dismissed - Writ petitions are dismissed
P.R. Shivakumar, J.
1. W.P.No.33782/2013 has been filed for the issue of a Writ of Certiorari calling for the records relating to the orders dated 23.01.2012, 07.02.2012, 23.02.2012, 14.03.2012 and 24.06.2013 made in S.A.No.9/2012 by the Debts Recovery Tribunal -II, Chennai and quash the same. W.P.No.33783/2013 has been filed for the issue of a Writ of Certiorarified Mandamus calling for the records of the Debts Recovery Appellate Tribunal, Chennai from the 4th respondent relating to its order dated 27.09.2013 made in I.A.No.803/2013 in AIR No.608/2013 (S.A.No.9/2012) to quash the same and to direct the 4th respondent appellate tribunal to entertain petitioner's application for condonation of delay in filing the appeal, to condone the delay and to entertain the appeal and to dispose of the same on merits in accordance with law.
2. The facts leading to the filing of these writ petitions are as follows:
i) The second petitioner Arul Neri Selvan is the Managing Director of the first petitioner company. The first petitioner company was extended financial assistance by the first respondent bank (Indian Bank) with the following limits:
a) Cash Credit Limit : Rs.20.00 Lakhs
b) Medium Term Loan-I : Rs.47.50 Lakhs
c) Medium Term Loan-II : Rs.43.00 Lakhs
As the loan amount was not repaid in accordance with the terms of the conditions on which the agreed facilities were extended, the first petitioner's loan Account was classified as Non-Performing Asset (NPA) on 31.03.2011 and the first respondent bank issued a notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short SARFAESI Act) on 07.05.2011 claiming a sum of Rs.1,02,91,515/- towards the amount due on the loan account as on 01.12.2010. The first petitioner issued a reply dated 20.07.2001 objecting to the invocation of the proceedings under the SARFAESI Act. However, overruling the objections, the first respondent bank issued a possession notice under Section 13(4) of the Act on 18.08.2011 in respect of the properties given as security for the creation of mortgage by deposit of title deeds, after serving a demand notice under Section 13(2) of the SARFAESI Act and after rejecting the objections raised by the petitioners in the reply notice dated 20.07.2011. The first respondent bank took possession of the secured assets under Section 13(4) of the SARFAESI Act.
ii) Thereafter Sale Notice dated 09.09.2011 came to be issued. The said sale notice was challenged before the third respondent Tribunal in S.A.No.122/2011 in which a prayer for interim stay had also been made in S.A.No.112/2011. Ultimately the stay application came to be dismissed by the third respondent Tribunal on 05.12.2011. Thereafter a fresh auction sale notice dated 17.12.2011 came to be issued fixing the upset price in respect of item of the properties mentioned in the schedule to the sale notice as Rs.1,10,00,000/-for the auction proposed to be held on 21.01.2012. The said sale notice was challenged under Section 17 of the SARFAESI Act in S.A.No.9/2012 and the third respondent Tribunal dismissed the said application S.A.No.9/2012 by order dated 20.01.2012 making an observation that the petitioners had represented that they had identified intending purchasers who were willing to pay a sale consideration which would be more than the upset price fixed and directing the first respondent bank to receive sealed tenders from the intending purchasers and produce the same before the third respondent Tribunal on 23.01.2012 without opening. The Debts Recovery Tribunal also permitted the petitioner to bring intending purchasers to the Tribunal before 4.00 p.m. on the said date. As many as 27 bids were received by the first respondent bank for all the three items of the properties and the same were placed before the third respondent Tribunal. The third respondent Tribunal conducted the auction at 4.30 p.m. on the said date and the second respondent in
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