Recovery of Loan--Fake auction--Secured assets auctioned at throwaway price--No credible explanation furnished by the Bank--Declared to be illegal and void.

SATISH KUMAR MITTAL, J.

1. The petitioner, who is a poor mason and had taken a small house loan of Rs. 4,80,000/- from the respondent Bank, has filed this writ petition challenging the action of the respondent-bank whereby the house for which the aforesaid loan was taken, has been sold in a fake auction in illegal, arbitrary and fraudulent manner by invoking the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the Act). The instant case is an example of unreasonableness and high handedness where the bank authorities have misused the provisions of the Act by selling the house of a poor borrower at a throw-away price in collusion among themselves.

2. In the present case, in April, 2003, the petitioner along with his wife had taken a loan of Rs. 4,80,000/- for the purchase of a double storey constructed house situated at Dashmesh Nagar, Patiala. The said house was constructed in an area of 133.3 sq. yards with a covered area of 1251 sq. ft. They had purchased that house for a consideration of Rs. 6,00,000/- vide registered sale deed dated 12-6-2003 from one Smt. Saroj Bala. They had paid an amount of Rs. 1,20,000/- from their personal savings and the remaining amount of Rs. 4,80,000/- was borrowed by them from the respondent bank. The borrowed amount was directly paid by the bank to the vendor. As per the agreement, the said loan was to be re-paid in equated monthly installments of Rs. 5000/- each within a period of 180 months.

3. At the time of granting the loan, the respondent-bank got valued the house in question from its approved valuer, who vide his valuation report dated 9-6-2003 assessed the value of the said house at Rs. 6,14,294/-. Thereafter the aforesaid amount of loan was sanctioned.

4. It is the case of the petitioner that initially he had paid the instalments regularly for some period, but subsequently Shri Parkash Singh, Manager of the bank (respondent No. 2 herein), who was willing to purchase the house in question and was giving allurement to the petitioner to sell the house to him, advised the petitioner that he could deposit the installments quarterly or half-yearly. It is further the case of the petitioner that under that bona fide advise, he deposited the amount of Rs. 10,000/-, Rs. 8,000/-, some time Rs. 6,000/- and at one time Rs. 50,000/-. It is also the case of the petitioner that up to January, 2006, he had paid an amount of Rs.1,50,000/- towards the said loan. In spite of that, respondent No. 2 declared the petitioner was a defaulter at the back of the petitioner without serving any notice on him. It is further the case of the petitioner that in April, 2007, he came to know that respondent No. 2 hatched a conspiracy to grab his house by invoking the provisions of the Act. It is also the case of the petitioner that on 27-4-2007 he came to know that his house was sold in a public auction for a meagre amount of Rs. 4,75,000/- to one Ashok Kumar (respondent No. 6 herein). It is further the case of the petitioner that before initiating the proceedings under the Act, no demand notice was ever served upon the petitioner nor any notice for taking possession of the house in question was served on him nor affixed on his house as per the requirements of sub-rule (1) of Rule 8 of the Act. It is also alleged that the house of the petitioner was auctioned in an illegal and fraudulent manner by obtaining a wrong valuation report and the alleged sale was a benami transaction. Actually, respondent No. 2 has purchased the house in question as benami in the name of Ashok Kumar (respondent No. 6 herein). In these circumstances, the petitioner has approached this Court by filing the instant petition.

5. Upon notice, the respondent bank in its written statement has admitted that a loan of Rs. 4,80,000/- was advanced to the petitioner and his wife for the purchase of a built up house on 12-6-2003 and to secure the said lo