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IN THE HIGH COURT OF JUDICATURE AT MADRAS
S. MANIKUMAR, V. BHAVANI SUBBAROYAN, JJ.
P. Magudeeswaran - Petitioner
Vs.
The Authorised Officer Lakshmi Vilas Bank, Coimbatore - Respondent
Writ Petition No. 8020 of 2017
Decided On : 17-08-2017
SARFAESI Act, 2002, - Section 13 (2) of- Loan – Repayment of - Mortgage, by depositing title deeds - Declaring the loan account as Non-Performing Asset, respondent Bank, has issued a notice – Held, Dealing with the discretionary power of the licensing authority, the Court of Appeal held that the law recognised certain principles on which discretion must be exercised but within the four comers of those principles. The discretion is not absolute one. The exercise of such a discretion must be a real exercise of the discretion. If in any statute conferring the jurisdiction, there are to be found, expressly or by implication, matters to which the authorities exercising the discretion ought to have regard, then, in exercising the discretion, they must have regard to those matters. Conversely, if the nature of the subject- matter and the general interpretation of the Act make it clear that certain matters would not be germane to the matter in question, they must disregard those matters. Expressions have been used in cases where the powers of local authorities came to be considered relating to the sort of thing that may give rise to interference by the court. Bad faith, dishonesty - those, of course, stand by themselves, unreasonableness, attention given to extraneous circumstances, disregard of public policy, and things like that have all been referred to as being matters which are relevant for consideration. The discretion must be exercised reasonably. A person entrusted with a discretion must direct himself properly in law. He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to the matter that he has to consider. If he does not obey those rules, he may truly be said to be acting unreasonably - auction conducted, on 7/12/2016, is in violation of the statutory provisions, stated supra, and that the same would not confer any right on the Bank, directing the writ petitioner, to vacate and handover possession, within seven days. Auction is set aside.- Writ petition is allowed
S. Manikumar, J.
M/s. Sri Venkateswar Motors, engaged in Automobile business, in selling two wheelers and an authorised dealer for TVS Motor Company Ltd., has approached Lakshmi Vilas Bank, Coimbatore Main Branch, Coimbatore, and availed the following credit facilities,
| Open Cash Credit as Working Capital | Rs.250 lakhs |
| Term loan | Rs.28.17 lakhs |
| Open Cash Credit | Rs.20 lakhs |
| Term loan | Rs.5.62 lakhs |
| Open Cash Credit | Rs.20 lakhs |
2. For the purpose of availing loan, immovable properties have been offered as security, by creating equitable mortgage, by depositing title deeds, with the respondent Bank. Sri Venkateswar Motors, could not repay the amount, in time. Declaring the loan account as Non-Performing Asset, respondent Bank, has issued a notice, dated 20/5/2016, under Section 13 (2) of the SARFAESI Act, 2002, demanding a sum of Rs.3,21,96,388/-. The petitioner has approached the Bank, seeking time to repay. According to the petitioner, instead of considering the representation, Bank has issued a possession notice, dated 30/7/2016, under Section 13 (4) of SARFAESI Act, 2002 and took symbolic possession of eight different immovable properties mortgaged and offered as security.
3. Pursuant to the possession notice, dated 30/7/2016, once again, the petitioner, vide letter, dated 29/8/2016, approached the Bank, seeking three months time, to review the loan account, by sale of some of the properties, offered as security, and in the said letter, dated 29/8/2016, the borrower has specifically mentioned that the Bank need not proceed against the commercial property, situated on the main road where the petitioner is running the business. It is the case of the petitioner that Bank did not consider the said request, but issued a sale notice, dated 1/9/2016, fixing the auction, on 14/10/2016.
4. According to the petitioner, the extent of the commercial property, situated at the prime location of Coimbatore City, brought for auction, measures a total extent of 3,020 sq.feet of land, building, to an extent of 1700 sq.feet, constructed therein, with ground and first floor. In the sale notice, Bank has referred to an extent of 3020 sq.feet, but, according to the petitioner, the extent of construction therein, is about 7,980 sq.feet, which has been suppressed, in all the notices, issued by the Bank.
5. Writ petitioner has further submitted that sale, as scheduled, on 14/10/2016, did not take place and therefore, another sale notice, dated 4/11/2016, was issued by the Authorised Officer of Lakshmi Vilas Bank, fixing the auction, on 6/12/2016, at 11.30 a.m. Publication in Tamil and English newspapers, viz., Dinamani and The New Indian Express, respectively, have been effected, on 3/11/2016.
6. Writ petitioner has further contended that the actual value of the property is more than Rs.4.5 crores, whereas, the upset price fixed by the Bank, at Rs.2,21,50,000/-, is low. The petitioner, received a letter, dated 30/12/2016, stating that the commercial property, situate at Vadapalli main road, has been purchased by Lakshmi Vilas Bank, for a sum of Rs.2,21,60,000/-, pursuant to the e-auction notice, dated 1/11/2016. The Bank has directed the petitioner to vacate the premises, within seven days, from the date of the receipt of the letter, dated 30/12/2016. According to the petitioner, upset price was fixed at Rs.2,21,50,000/- and that the property has been purchased, on 7/12/2016, for Rs.2,21,60,000/-, just by adding Rs.10,000/- over and above, the upset price.
7. Contending inter alia that the writ petitioner was not informed of the sale re-fixed to some other date, i.e., on 7/12/2016 and that the auction price of Rs.2,21,60,000/-, was just an addition of Rs.10,000/-, over and above the upset price, market value of the scheduled property, situated at Vadavalli main road, fixed by the Bank, was prejudicial to the int
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