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2020 Supreme(Telangana) 67
IN THE HIGH COURT OF JUDICDATURE FOR THE STATE OF TELANGANA AT HYDERABAD
M.S. Ramachandra Rao, K.Lakshman, JJ.
M/s Aruna Web Offset Printers and another - Petitioners
Vs.
Andhra Bank, A Govt of Undertaking, Himayat Nagar Branch and another - Respondents
W.P.No.16870 of 2019
Decided On : 21-04-2020
For the Petitioners: Sri. G.K. Deshpande
For the Respondent:M.V. Kini Co Advocates Solicitors, Sri. Ravinder Vudiga, Sri. Balshetty Sanjay Kumar
Point of Law
Rule 9(2), the sale confirmation letter ought to be issued to the auction purchaser on the day of the sale itself unless the amount offered by way of sale price is less than the reserve price. On no other count can issuance of sale confirmation letter be delayed by the secured creditor to the auction purchaser.
Headnote:
Constitution of India, Art. 226 – Recovery of Loan – Auction – Tribunal held the Act by the 1st respondent-Bank to them, that they had not replied to the same, that the 1st respondent- Bank was constrained to issue possession notice under Section 13(4) of the Act, and since no repayment was forthcoming, the 1st respondent Bank issued notice under Rule 8(6) and proceeded with the auction of the secured assets – Further held petitioners cannot question the previous measures of the 1st respondent Bank and cannot contend that there is a continuous cause of action; and that each measure has to be challenged within the limitation period – Held, since the challenge to the e-auction notice was already held to be not barred by limitation, by applying the above principle, to challenge the series of steps from the date of issue of Section 13(4) of the Act up to the date of the auction notice i.e , notice dt.05.05.2018 under Rule 8(6) of the Rules published on 10.05.2018, and also the proposed action of the 1st respondent-Bank in contemplating to take physical possession of the secured asset through Advocate- Commissioner appointed in Crl.M.P.No.328 of 2018 by the Chief Metropolitan Magistrate, Hyderabad and the notice dt.10.08.2018 issued by the Advocate-Commissioner – plea in the SA about the invalidity of the notice dt.5.5.2018 issued under Rule 8 (6) is not barred by limitation and the Tribunal erred in taking the said view – 1st respondent could not have conducted sale of the entire secured asset for dues which are fraction of it’s value – Petition allowed (Paras 72,73)
Facts of the Case:
petitioners approached the 1st respondent Bank for OCC credit facility of Rs.10.00 lakhs and Term Loan -contention of the petitioners that the notice dt.21.02.2018 issued under Rule 8(6) of the Rules mentions that the 1st respondent had taken possession of the secured asset on 15.11.2017, but the petitioners were not served with any possession notice dt.15.11.2017 as is alleged by 1st respondent and such notice was never affixed or published as mandated in the Act and Rules; that even notice dt.21.02.2018 issued under Rule 8(6) of the Rules was defective for want of proper service, affixture and publication in the news papers as mandated under law
Finding of the Court:
since the challenge to the e-auction notice was already held to be not barred by limitation, by applying the above principle, to challenge the series of steps from the date of issue of Section 13(4) of the Act up to the date of the auction notice i.e , notice dt.05.05.2018 under Rule 8(6) of the Rules published on 10.05.2018, and also the proposed action of the 1st respondent-Bank in contemplating to take physical possession of the secured asset through Advocate- Commissioner appointed in Crl.M.P.No.328 of 2018 by the Chief Metropolitan Magistrate, Hyderabad and the notice dt.10.08.2018 issued by the Advocate-Commissioner – plea in the SA about the invalidity of the notice dt.5.5.2018 issued under Rule 8 (6) is not barred by limitation and the Tribunal erred in taking the said view – 1st respondent could not have conducted sale of the entire secured asset for dues which are fraction of it’s value
Result: Petition allowed
ORDER :
M.S. Ramachandra Rao, J.
1. Heard learned counsel for petitioners, Sri M.V. Kini, learned counsel for 1st respondent, Sri V.Ravinder, learned counsel for 2nd respondent and Sri B.Sanjay Kumar, learned counsel for respondent Nos.3 to 5.
2. The 1st respondent is a partnership firm carrying on business of Web Offset printer since 1991 and 2nd petitioner is it’s Managing Director.
3. The petitioners approached the 1st respondent Bank for OCC credit facility of Rs.10.00 lakhs and Term Loan of Rs.23.00 lakhs for purchase of machinery of Rs.47.00 lakhs, in which petitioners’ contribution was Rs.24.00 lakhs.
4. According to the petitioners, 1st respondent did not release the Term Loan in time making the business situation of the petitioners unviable disabling the petitioners from participating in the tenders invited by the Government for printing text books. The loan account of 1st petitioner therefore became NPA on 31.05.2017.
5. Thereafter the 1st respondent Bank issued demand notice under Section 13(2) of the SARFAESI Act, 2002 (for short ‘the Act’) on 03.06.2017 stating that petitioners have to pay Rs.25,55,410.96 ps towards OCC Loan Account as well as Term Loan Account.
6. Petitioners contends that thereafter petitioners paid Rs.8.00 lakhs on 27.12.2017 and the entire OCC Loan liability of Rs.7,43,766.96 Ps as mentioned in the notice issued under Section 13(2) of the Act was cleared by the 1st petitioner.
7. Later, on 21.02.2018, the 1st respondent Bank issued notice under Rule 8(6) of the SARFAESI Rules informing about proposed sale (30 days notice) of the secured asset i.e a house bearing No.SRT 59(1-7- 38/6) admeasuring 150 sq. yds consisting Ground + 1st Floor RCC structure situated at Industrial Colony, Mushirabad, Hyderabad mortgaged by the petitioners, fixing the reserve price at Rs.58,86,000/- and asking the petitioners to pay the said amount before the date of publication of notice for public auction.
8. Petitioners then issued a reply on 05.03.2018 stating that they have paid Rs.18.25 lakhs as dues (including Rs.8.00 lakhs paid on 27.12.2017) by 21.02.2018 and this was not reflected in the notice issued under Section 13(2) of the Act by 1st respondent.
9. On 27.03.2018, petitioners sent another letter to the 1st respondent enclosing a post dated cheque bearing No.000307 dt.10.04.2018 drawn on Andhra Bank and requested the 1st respondent Bank to stop the process of sale.
10. This was ignored by the 1st respondent Bank and on 10.05.2018. the 1st respondent published notice under Rule 8(6) of the Rules in Andhra Jyothi news paper to sell the above property for dues of Rs.10,73,373/- as on 30.04.2018. Later e-auction notice was also issued for recovery of Rs.10,76,373/-, due allegedly as on 30.04.2018.
11. On 14.06.2018, petitioners approached the 1st respondent and deposited a further sum of Rs.2.00 lakhs.
12. According to the petitioners, they approached the 1st respondent Bank on 15.06.2018 about the result of the auction, but the 1st respondent Bank did not furnish any information and the petitioners proceeded on the impression that the auction which was to take place on 14.06.2018 was not conducted.
13. On 10.08.2018, the Officials of the 1st respondent visited the secured property of the petitioners along with an Advocate- Commissioner appointed in Crl.M.P.No.328 of 2018 by the Chief Metropolitan Magistrate, Hyderabad and gave 15 days notice to the occupants of the said premises to vacate it.
SA 182 of 2018 filed by the petitioners
14. On 04.09.2018, the petitioners filed S.A.No.182 of 2018 before the Debts Recovery Tribunal-1, Hyderabad (for short ‘the Tribunal’) seeking relief’s of setting aside of (i) the proceedings initiated by the 1st respondent pursuant to the sale notice dt.05.05.2018 published on 10.05.2018 in Andhra Jyothi news paper, (ii) e-auction notice dt.13.05.2018 published in the same news paper on 13.05.2018 fixing the date of auction as 14.06.2018 and (iii) to declare that the action of the 1st respondent i
