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IN THE HIGH COURT FOR THE STATE OF TELANGANA, HYDERABAD
UJJAL BHUYAN, A.VENKATESHWARA REDDY, JJ.
YKM Entertainment & Hotels Private Limited And six others. - Petitioners
VERSUS
State Bank of India, Rep. by its Deputy General Manager And another. - Respondents
W.P.No.32216 2021
Decided On : 17-01-2022
Constitution of India, 1950 - Article 226 - Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 13 (2), 17 - Security Interest (Enforcement) Rules, 2002 - Rule 8(1) - Companies Act, 1956 - Petitioner entered into a term loan agreement with a consortium of banks, lead bank being then State Bank of Hyderabad - As per term loan agreement, consortium of banks had sanctioned and disbursed loan of Rs.136 crores to petitioner - According to petitioners there was considerable delay in sanctioning loan and its disbursement; in fact there was total delay of about 21 months.
Findings of the Court :
Judicial pronouncements of Supreme Court and having regard to fact that there is not only clear suppression of material facts by petitioners but also there is non-disclosure of relevant facts in a candid manner, we are not inclined to entertain writ petition - We have decided deliberately not to adjudicate merits of petitioners’ claim since petitioners have filed securitization application before Tribunal bearing SR which will be decided by Tribunal on its own merits and in accordance with law - However, in view of fact that petitioners have not approached Court with clean hands, petitioners are not entitled to any relief, including interim relief in this writ proceeding.
Result : Writ petition stand dismissed
ORDER:
Ujjal Bhuyan, J.
Seven petitioners have joined together and have instituted the present common proceeding under Article 226 of the Constitution of India assailing the legality and validity of the measures taken by the respondents under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (briefly, ‘the SARFAESI Act’ hereinafter) including issuance of e-auction sale notice dated 27.10.2021 fixing auction sale of the schedule property on 08.12.2021.
2. We have heard Mr.Mamidi Avinash Reddy, learned counsel for the petitioners and Mr.A.Krishnam Raju, learned counsel for the respondents.
3. Petitioner No.1 is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the hospitality business in what was then the composite State of Andhra Pradesh. In this regard, petitioner No.1 proposed to construct a five star hotel at Tirupati by entering into an agreement with the Holiday Inn Group on 30.12.2008.
4. Petitioner No.1 entered into a term loan agreement dated 30.08.2011 with a consortium of banks, the lead bank being the then State Bank of Hyderabad. As per the term loan agreement, consortium of banks had sanctioned and disbursed loan of Rs.136 crores to petitioner No.1. According to the petitioners there was considerable delay in sanctioning the loan and its disbursement; in fact there was total delay of about 21 months.
5. While executing the project of constructing five star hotel, promoters of petitioner No.1 required more funding. When this was brought to the notice of the consortium of banks, a meeting of joint lenders forum was held on 18.08.2016 and a corrective action plan was formulated to provide additional term loan of Rs.34.57 crores to petitioner No.1.
6. Allegation of the petitioners is that though the lead bank i.e. State Bank of Hyderabad had released the sanction order for additional term loan on 18.11.2016, the same was not executed. However, petitioner No.1 made payment of Rs.10.27 crores anticipating execution of sanction order.
7. On 07.07.2017, the loan account of petitioner No.1 was migrated to the Stressed Assets Management branch of State Bank of India for recovery of the dues. Petitioner No.1 was advised by the respondents to go for One Time Settlement (OTS) of the dues. Though petitioner No.1 submitted proposal for settlement at Rs.80 crores, the same was not accepted by the respondents on the ground that the quantum was too low.
8. According to the petitioners, respondents thereafter issued demand notice under Section 13 (2) of the SARFAESI Act. In response, petitioner No.1 submitted another proposal for OTS at Rs.105 crores. Without responding to the same, respondents issued possession notice under Section 13 (4) of the SARFAESI Act on 30.11.2018. Thereafter, sale notice dated 10.01.2019 was issued for sale of the mortgaged property (secured asset) in respect of which the reserve price was fixed at Rs.83.6 crores.
9. Against such action of the respondents, petitioner No.1 filed securitization application under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal-II, Hyderabad (Tribunal) which was registered as S.A.No.56 of 2019. However, the auction, in terms of the sale notice dated 10.01.2019, did not materialize as no bidders participated in the auction.
10. Petitioner No.1 and respondents entered into a joint memorandum of compromise dated 30.08.2019 as per which petitioner No.1 agreed to pay a total amount of Rs.112 crores in four installments towards full and final settlement of its outstanding liability. In view of such settlement, Original Application filed by the respondents before the Tribunal, being O.A.No.787 of 2018, was withdrawn, vide order dated 19.09.2019, passed in I.A.No.4260 of 2019.
11. It is alleged that without sanctioning the settlement, respondents filed a miscellaneous application before the Tribunal contending that petitioner No.1 had failed to comply with the terms of the said compromis
Point of Law - It is not for a litigant to decide what fact is material for adjudicating a case and what is not material. It is the obligation of a litigant to disclose all the facts of a case and le....
Though existence of an alternative remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution, but a writ petition can be entertained in exceptional....
though existence of an alternative remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution, but a writ petition can be entertained in exceptional....
The court held that when a statute provides specific remedies, writ jurisdiction under Article 226 should not be exercised, affirming the precedence of statutory procedures over equitable remedies.
The SARFAESI Act mandates exhausting statutory remedies before seeking extraordinary relief under Article 226; procedural compliance is essential, and the auction process cannot be set aside absent s....
The court established that the right of redemption under the SARFAESI Act is extinguished upon the issuance of a sale certificate, and timely challenge to bank actions is essential.
The court held that the petitioners, as successful bidders in the e-auction, were entitled to have the sale deed executed in their favor as individuals, despite participating in the auction as a grou....
1. At the stage of issuance of notice under Section 13(2) of the SARFAESI Act, no interference is called for by the Court. 2. No borrower can as a matter of right pray for grant of benefit of OTS sch....
Point of Law : It is well-settled that the jurisdiction exercised by the High Court under Article 226 of the Constitution of India is extraordinary, equitable and discretionary and it is imperative t....
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