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2020 Supreme(Mad) 1836
IN THE HIGH COURT OF JUDICATURE AT MADRAS
M.M. SUNDRESH, R. HEMALATHA, JJ.
M.R. Vasumathi & Another – Appellants
Versus
The Authorized Officer, Indian Bank, Chennai & Others – Respondents
WP. Nos. 29641 of 2019 and 27770 of 2019 & WMP. Nos. 27305 of 2019, 7915 & 7919 of 2020
Decided on : 21-09-2020
For the Appellant :S. Sethuraman, A.S. Narasimhan, Advocate.
For the Respondents:L. Prabhakar, Kubeeran for M/s. Rank Associates, Advocates.
Loans granted by banks and financial institutions retain the character of public money and cannot be blocked by frivolous litigations by the defaulters.
Headnote:
SARFAESI Act - Recovery of Loan - Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 - Section 13(2), Rule 6(2), Rule 8(6) - Limitation Act - Section 5 - Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Section 31A
Fact of the Case:
The petitioners, children of a deceased guarantor, challenged the e-auction conducted by the bank for the property mortgaged by their father. They contended that the securitisation proceedings were barred by limitation and that the enforcement of the security, eight years after their father's death, was impermissible in law.
Finding of the Court:
The court found that the bank had diligently pursued the recovery of the loan amount and that the auction purchaser had the right to the property. The court dismissed the writ petitions, stating that the loans granted by banks and financial institutions retain the character of public money and cannot be blocked by frivolous litigations by the defaulters.
Issues: Validity of e-auction, applicability of limitation period, permissibility of enforcing security after the guarantor's death, compliance with procedural requirements under the SARFAESI Act and RDDBFI Act.
Ratio Decidendi: The court held that the bank had acted diligently in pursuing the recovery of the loan amount and that the auction purchaser had the right to the property. The court emphasized that loans granted by banks and financial institutions retain the character of public money and cannot be blocked by frivolous litigations by the defaulters.
Final Decision: The writ petitions were dismissed, and the connected Miscellaneous Petitions were closed. No costs were awarded.
JUDGMENT :
R. Hemalatha, J.
(Prayer: Writ Petition filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorari calling for the records pertaining to order dated 16.12.2016 in RA(SA) 91 of 2014 and consequential order dated 16.12.2016 in MA(SA) 107 of 2011 on the file of Debt Recovery Appellate Tribunal, Chennai and quash the same as illegal.
Writ Petition filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorari, calling for the records of the respondents 1 and 2 relating to the statutory notice issued under Central Act 54 of 2005 dated 08.09.2009 auction notice dated 03.02.2010 and the auction held on 11.03.2010 in respect of the Secured Assets offered by the guarantor and quash the same.)
1. The first respondent in W.P.No.29641 of 2019 and the second respondent in WP.No.27770 of 2019 all one and the same, that is the Authorized Officer, Indian Bank. The petitioner in W.P.No.29641 of 2019 is the daughter of the deceased G.Ramanujam and the petitioner in W.P.No.27770 of 2019 is the son of the deceased G.Ramanujam. One Mr.Murugesan who is the sole proprietor of M/s.Shiv Shankar Agencies in West Mambalam, Chennai, had availed a loan in the year 1984 from the respondent Indian Bank. The loan went bad and a money suit in OS.No.4067 of 1996 was filed in the City Civil Court, Chennai by Indian Bank against the said Murugesan and late G.Ramanujam, father of both the petitioners. Late G.Ramanujam had offered his property as collateral security for the loan. The two petitioners are brother and sister. The suit was decreed ex-parte. A preliminary decree was passed for Rs.1,87,004.23/- together with interest at the rate of 18% per annum. The correspondence between the bank and Late G.Ramanujam prior to his death on 26.09.2001 and with his legal heirs after his death show that there were attempts for out of court one time settlement till 2003. On 08.09.2009, notice under Section 13(2) of Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI Act), 2002 was issued to Mr.Murugesan and the legal heirs of Late G.Ramanujam. Subsequently, on 21.12.2009, symbolic possession of the property mortgaged to the bank and owned by late G.Ramanujam was taken on 03.02.2010 and a notice of intended sale was also issued under Rule 6(2) and 8(6) of SARFAESI Rules. In the e-auction sale on 11.03.2010, one R.Kumar, the second and third respondent in WP.Nos.29641 and 27770 of 2019 successfully bid the property for Rs.2,11,00,500/-. The two sons of late G.Ramanujam approached Debts Recovery Tribunal II, Chennai in SA.No.28 of 2010 under Section 17 of SARFAESI Act, on 22.02.2010 praying for setting aside the sale notice. The Debts Recovery Tribunal II, Chennai, dismissed the said Appeal and the connected Miscellaneous Petitions Nos.6504 of 2010, 6505 of 2010 and 6506 of 2010 and also concluded that since Section 5 of the Limitation Act is not applicable to the filing of the Original Application under Section 17(1) of the SARFAESI Act, the delay of 155 days in filing the SA could not be condoned.
2. Aggrieved over this order dated 30.12.2020 passed by Debts Recovery Tribunal II, Chennai, Debt Recovery Appellate Tribunal was approached by both the brothers in RA(SA) 91 of 2014 which was also dismissed. Furthermore, MA(SA) 107 of 2011 also was dismissed by Debt Recovery Appellate Tribunal which was filed against the order in MA.SR.No.6505 of 2010 in SA.SR.No.6473 of 2010 by which the Debt Recovery Tribunal had declined to condone the delay of 155 days in filing SARFAESI Application stating that Act 5 of the Limitation Act does not apply to the Act.
3. Hence, the present writ petitions challenging the orders dated 16.12.2016 in RA(SA) 19 of 2014 and MA(SA) 107 of 2011 on the file of the Debt Recovery Appellate Tribunal, Chennai. The W.P.No.29641 of 2019 is filed by one of the two daughters of the deceased Ramanujam and W.P.No.27770 of 2019 by one of the two
