Point of law: once a machine is fixed, embedded or assimilated in a permanent structure, the movable character of the machine becomes extinct. The same cannot thereafter be treated as movables

ORDER :

Kunuru Lakshman, J.

1. This Writ Petition is filed to declare the auction dated 27.12.2019 in respect of the petitioners' properties by respondent No. 1 bank in collusion with respondent No. 3 under sale notice dated 21.11.2019 as illegal, arbitrary and for consequential direction to respondent No. 1 to consider One Time Settlement (OTS) proposal submitted by the petitioners and not to take any coercive steps against the properties including removing the plant and machinery from the leased premises.

2. Heard Mr. Amancharla V. Gopala Rao, learned counsel for the petitioners, Mr. S. Sainathan, learned counsel for respondent No. 1 - Bank, and Mr. Satish Kumar Varma, learned counsel for respondent No. 2

3. It is the contention of the petitioners that they are the guarantors to the loan obtained by respondent No. 3. The petitioners being absolute owners of the properties have offered the same as collateral security to respondent No. 1 bank for the loan obtained by respondent No. 3. Since respondent No. 3 failed to repay the loan amount, respondent No. 1 bank has initiated the measures under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (for short 'SARFAESI Act, 2002).

4. Respondent No. 3 has surrendered the lease prematurely to respondent No. 2 in the month of November, 2019 without consent and permission of the petitioners. Thus, the same would amounts to violation of terms of Contract and Novation of Contract. The said fact was informed to the Chief Manager of respondent No. 1 bank by petitioner No. 1 vide their letter dated 06.03.2018. Even, the petitioners came forward to pay an amount of Rs. 90,00,000/- (Rupees ninety lakhs only) to settle the loan account. But, the Chief Manager of respondent No. 1 bank refused to accept the said offer. Respondent No. 1 has issued a final notice dated 12.02.2018 calling upon respondent No. 3 to pay an amount of Rs. 18,16,907/-.

5. It is further contention of the petitioners that the Chief Manager of respondent No. 1 bank has colluded with respondent No. 3, principal borrower, and took consent letter dated 20.04.2018, wherein respondent No. 3 has authorized the bank to sell away the plant and machinery for Rs. 50.00 lakhs as well as schedule properties to close the loan account. Thus, respondent No. 1 in collusion with respondent Nos. 2 and 3 is trying to knock away the properties belong to the petitioners at a throw away price.

6. On the request of respondent No. 1 bank, the petitioners, vide their letter dated 27.08.2018, enhanced the amount to Rs. 110.00 lakhs from Rs. 90.00 lakhs to close the loan account. But, during pendency of the said proposal, respondent No. 1 tried to dispossess the petitioners. Therefore, the petitioners filed an application under Section - 17 of the SARFAESI Act, 2002 before the Debts Recovery Tribunal (DRT), Hyderabad, seeking various reliefs viz., to declare that the action of respondent bank in dispossessing the petitioners herein from the schedule property as illegal; to declare the notice dated 10.10.2018 issued under Section 13(4) of the SARFAESI Act, 2002 as illegal; and to restore the possession of the petitioners herein on the secured asset etc. The DRT granted interim order on the condition of the petitioners herein depositing 25% of the demanded amount. Feeling aggrieved by the said interim order, the petitioners filed W.P. No. 42257 of 2018. Thereafter, since S.A. No. 228 of 2018 was dismissed for non-prosecution, this Court dismissed the W.P. No. 42257 of 2018. Subsequently, the petitioners have filed I.A. to restore S.A. No. 228 of 2018 along with delay petition and the same are pending for consideration.

7. During pendency of the said interlocutory applications, respondent No. 1 bank has issued an auction notice dated 21.11.2019 to conduct auction on 27.12.2019 and accordingly, respondent No. 1 bank has conducted the auction on 27.12.2019, which is in utter violation of the procedure laid u