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2016 Supreme(Ori) 314
IN THE HIGH COURT OF ORISSA : CUTTACK
VINEET SARAN AND B.R.SARANGI, JJ.
Pradyumna Kumar Sahoo and others - Petitioners
versus
Asst. General Manager-cum-Authorized Officer, Stressed Assets Management Branch (SAMB) & others - Opp. Parties
W.P.(C) No. 28345 of 2013
Decided On : 11-07-2016
For the Appellant :M/s. R.K. Rout, P.K. Mishra and K. Rout, Advocates
For Opp. Parties:M/s. D.P. Sarangi & S. Sarangi, Advocates (for o.p. nos.1 & 2) M/s. S.K. Sahoo, M.R. Mohapatra, B.B. Biswal & A.K. Sahoo (for o.p. no.3).
Availability of an alternative remedy under the SARFAESI Act renders a writ application not maintainable under Articles 226 and 227.
Headnote:
SARFAESI Act - Auction Sale - Section 13(2), 13(3)(A), 13(4) - Swastik Agency v. State Bank of India, Main Branch, BBSR, 2009 (I) CLR 629, United Bank of India v. Satyawati Tondon, AIR 2010 SC 3413, Mathew Varghese v. M. Amritha Kumar, AIR 2015 SC 50
Fact of the Case:
The petitioner firm availed a loan from a bank, mortgaging their property. Due to non-payment of dues, the bank initiated proceedings under the SARFAESI Act and conducted an auction sale of the mortgaged property. The petitioners challenged the auction sale, alleging non-compliance with SARFAESI Act provisions.
Finding of the Court:
The court found that the auction sale was conducted in compliance with SARFAESI Act provisions. The petitioners' contention of non-compliance was not supported by their pleadings and an alternative remedy was available under the SARFAESI Act.
Issues: Non-compliance with SARFAESI Act provisions in the auction sale, maintainability of the writ application when an alternative remedy is available under the SARFAESI Act.
Ratio Decidendi: The court held that the petitioners' contention of non-compliance with SARFAESI Act provisions was not supported by their pleadings and an alternative remedy was available under the SARFAESI Act, making the writ application not maintainable.
Final Decision: The writ petition was dismissed.
JUDGMENT :
Dr. B.R. SARANGI, J.
“Maa Santoshi Distributors”, petitioner no.3, which is a proprietorship firm represented through its proprietor Prasanna Kumar Sahoo, the loanee, and petitioners no.1 and 2, who are guarantors of petitioner no.3, have filed this writ application seeking following reliefs:
“It is therefore prayed that this Hon’ble Court may graciously be pleased to admit the writ petition, issue Rule NISI directing the Opp. Parties to show cause as to why the auction sale dated 06.06.2013 shall not be quashed and the properties shall not be sold to the purchaser arranged by the petitioners. If the Opp. Parties fail to show cause or show insufficient cause, the Rule NISI may be made absolute.”
2. The factual matrix of the case, in a short compass, is that petitioner no.3 applied for a loan from the opposite party bank. Considering its financial credibility, Working Capital Term Loan (WCTL) up to Rs.70,00,000/-and Term Loan limit up to Rs.75,00,000/-was sanctioned in the year 2002 by the opposite party bank. In order to secure the said loan, the petitioners mortgaged the property situated at Mouza-Cuttack Town, Unit-28 paisa, Khata no.60, Plot No.318 measuring Ac.0.072 dec. and plot no.231 measuring Ac.0.070 dec. recorded in the name of petitioner no.2. On 18.10.2008, due to short circuit, the business establishment of petitioner no.3 caught fire and burnt into ashes. As petitioner no.3 sustained loss, there was gross irregularity in payment of bank dues, for which its bank account was declared NPA. Pursuant to the insurance claim laid by petitioner no.3, due to loss sustained on account of fire, an amount of Rs.27.00 lakhs was sanctioned, which was adjusted against the loan account on 24.07.2009. Due to non-payment of dues, on 30.07.2010, the opposite party bank issued notice under Section 13 (2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “SARFAESI Act”) for recovery of Rs.1,24,00,000/-. The petitioners filed objection under section 13(3)(A) of SARFAESI Act. Notice under section 13(4) of SARFAESI Act dated 02.11.2010 was issued. Challenging the same, the petitioners approached this Court by filing W.P.(C) No.19834 of 2010 and by order dated 19.11.2010, while issuing notice to the opposite parties therein, this Court directed that symbolic possession of the secured assets may be taken, but the petitioners shall not be evicted from the said property till the next date, subject to deposit of Rs.20,00,000/-with the opposite party bank by 30.11.2010, failing which it would be open to the bank to proceed in accordance with law. Finally, the writ application was disposed of by order dated 13.12.2012 directing the petitioners to deposit a further amount of Rs.20,00,000/-with the bank within a period of ten weeks from that date and the opposite party bank was directed to hold the auction sale, but not to confirm the sale in favour of the successful bidder. It was further directed that if the petitioners would deposit the said amount and make a fresh proposal for settlement of the outstanding dues, the bank would take into consideration the amount of Rs.20,00,000/-already deposited and Rs.20,00,000/-as directed by the said order and till the bank took a final decision, the petitioners would not be evicted from the property in question. At the same time, this Court made it clear that in the event the petitioners failed to deposit the amount as directed within the time stipulated, the bank would proceed with the matter in accordance with law.
The petitioners having failed to comply with the order dated 13.12.2012, the bank was constrained to proceed with the matter in terms of the order dated 13.12.2012 passed by this Court. The E-auction to the property was held on 06.06.2013 and the same was sold to the highest bidder, namely, opposite party no.3 for Rs.43,00,000/-. The auction purchaser opposite party no.3 having deposited the said amount, the sale was
