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2017 Supreme(P&H) 452
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
AJAY KUMAR MITTAL & RAMENDRA JAIN, JJ.
Dayanand Medical College and Hospital Managing Society, Ludhiana - Petitioner
Versus
Debts Recovery Appellate Tribunal and others - Respondents
Civil Writ Petition No. 10405 of 2016
Decided On : 20-04-2017
For the Petitioner:Mr. Pankaj Gupta, Advocate.
For the Respondents:Mr. Harsh Garg, Advocate, Mr. Aalok Jagga, Advocate.
The central legal point established in the judgment is the court's duty to protect the indefeasible rights of a lawful owner and ensure equitable treatment in recovery proceedings.
Headnote:
SARFAESI Act - Recovery of Dues - 13(2), 13(3A), 14 - The court discussed the provisions of the SARFAESI Act, particularly sections 13(2), 13(3A), and 14, which deal with the declaration of non-performing assets, objections to such declarations, and the procedure for taking possession of mortgaged properties. The interpretation of these provisions influenced the court's decision regarding the recovery proceedings and the rights of the parties involved.
Fact of the Case:
The petitioner sought to quash orders related to the recovery of dues by the bank from respondent no.4, including the e-auction of mortgaged properties and subsequent legal proceedings. The petitioner participated in the auction process and deposited a significant amount but was later asked to return the sale certificate by the bank.
Finding of the Court:
The court found that the actions of the bank and the orders passed by the tribunals were in favor of respondent no.5, the guarantor, who had deposited the entire outstanding amount. The court directed the bank to refund the entire amount deposited by the petitioner with interest, emphasizing the protection of the lawful owner's rights.
Issues: The main issue revolved around the legality of the orders passed by the tribunals and the actions of the bank, particularly regarding the auction process and the rights of the parties involved.
Ratio Decidendi: The court's decision was based on the equitable rights of the lawful owner, respondent no.5, who had fulfilled the outstanding amount, and the obligation of the court to protect such rights. The court emphasized the importance of safeguarding the lawful owner's rights and directed the bank to refund the entire amount deposited by the petitioner.
Final Decision: The writ petition was dismissed, and the bank was directed to refund the entire amount of Rs. 6.58 crores deposited by the petitioner with interest within two months from the date of the court's order.
RAMENDRA JAIN, J.
1. By way of the instant writ petition, the petitioner has prayed for issuance of a writ in the nature of certiorari quashing the order dated June 12, 2015 (Annexure P-6) passed by the learned Debts Recovery Tribunal-II, Chandigarth, orders dated November 06, 2015 (Annexure P-17) and February 11, 2016 (Annexure P-24) passed by the learned Debts Recovery Appellate Tribunal, Delhi and the letter dated March 17, 2016 (Anneuxre P-28) issued by the State Bank of India.
2. Put pithily, respondent no.4, namely, M/s P.I. Jewellers, a private limited company, initially availed cash credit limit of Rs. 03 crores from the State Bank of India, Ludhiana, which was enhanced from time to time and finally enhanced to Rs. 16 crores on 2.12.2012. Respondent no. 4, to secure the cash credit limit, mortgaged one commercial building in the name of its Director Mr. Aman Dhir and another residential house owned by Surinder Mohan Dhir (respondent no.5). However, when respondent no.4 could not adhere to the financial discipline of the bank, its loan account was declared as Non Performing Asset (“NPA”) on 30.6.2013. Finally, to recover its dues, the bank initiated recovery proceedings against respondent no.4 and issued notice dated 20.5.2014 (Annexure P-1) under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “SARFAESI Act”) to recover the entire dues along with future interest and expenses against which respondent no.4 filed objections under section 13(3A) of the Act, which were rejected by the bank vide letter dated 27.8.2014. Thereafter, the bank took symbolic possession of both the mortgaged properties on 29.10.2014 and put the same to sale by e-auction fixing the reserve price of residential property at Rs. 6.57 crores (the subject matter of the writ petition). The last date for submission of the bid by the prospective bidders along with their earnest money with deposit of 10% of the reserve price was 8.6.2015. Thereafter, e-auction was conducted on 12.6.2015 under due intimation to the Directors of respondent no.4 and the guarantor, namely, Surinder Mohan Dhir (respondent no.5). In the meantime, the bank approached the District Magistrate, Ludhiana, by way of an application under section 14 of the “SARFAESI Act”, to take physical possession of the mortgaged properties which was allowed vide order dated 20.5.2015. On 8.6.2015, the petitioner submitted its bid to the bank to participate in the e-auction process for the purchase of residential property along with earnest money deposit of Rs. 66 lakh. On coming to know that the bank has received bid of the petitioner for the purchase of residential property, respondent no.5 (guarantor) filed Securitisation Application (SA) No. 324 of 2015 before the Learned Debts Recovery Tribunal-II, Chandigarh (for short “the DRT”) without impleading the petitioner as a party-respondent. During the course of hearing of the aforesaid Securitisation Application of respondent no.5, the learned DRT noticed regarding the receipt of bid of the petitioner for a sum of Rs. 6.58 crores against the residential property mortgaged by respondent no.5, who through his counsel offered to deposit a sum of Rs. 6.60 lakhs, i.e., Rs. 2 lakhs more than the bid of the petitioner. Considering this fact, the learned DRT allowed the aforesaid SA of respondent no.5 on 12.6.2015 directing him to deposit a sum of Rs. 67 lakh on or before 15.6. 2015, Rs. 99 lakh on or before 27.6.2015, Rs. 1.65 crores on or before 13.7.2015, Rs. 30 lakh by 24.9.2015 and the balance amount in installments or lumpsum along with simple interest @ 10% latest by March 15,2016 with the rider that in case of default in any of the due agreed payment by respondent no.5, the bank will be at liberty to proceed in accordance with law and respondent no.5 shall have no objection thereafter and in case the entire amount of Rs. 6.60 crores is cleared, the title deed
