STATE BANK OF INDIA vs M/S. SAMRAT ASHOK EXPORTS LTD.

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2023 Supreme(Online)(Kar) 32744

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 23RD DAY OF MAY, 2023 BEFORE THE HON'BLE MR JUSTICE RAVI V HOSMANI WRIT PETITION NO. 9639 OF 2018 (GM-DRT)
BETWEEN:
STATE BANK OF INDIA, A BODY CORPORATE CONSTITUTED UNDER THE PROVISIONS OF THE STATE BANK OF INDIA ACT, 1955 (23 OF 1955) AND THE SUCCESSOR TO STATE BANK OF TRAVANCORE UNDER THE ACQUISITION OF STATE BANK OF TRAVANCORE UNDER ORDER NO.G.S.R.160(E)
DATED 22.02.2017 PASSED BY THE CENTRAL GOVT.
UNDER SECTION 35 OF THE STATE BANK OF INDIA ACT, 1955 (23 OF 1955) AND HAVING INTER-ALIA STRESSED ASSETS MANAGEMENT BRANCH, WITH ADDRESS AT
2ND FLOOR, OFFICE COMPLEX BUILDING, LHO COMPLEX, 65, ST. MARKS ROAD, BENGALURU, REP. BY ITS CHIEF MANAGER, MR. RATAN KUMAR SINHA, AGED ABOUT 52 YEARS, S/O LATE M.M. PRASAD, C/O APPLICANT.
…PETITIONER [BY SRI. G.KRISHNA MURTHY, SR. COUNSEL FOR SRI. VEERENDRA PATIL, ADVOCATE (PH)]
AND:
1. M/S. SAMRAT ASHOK EXPORTS LTD., (REP BY THE OFFICIAL LIQUIDATOR)
O/O OFFICIAL LIQUIDATOR, THE HIGH COURT OF KARNATAKA, BENGALURU-560 001.
2. MR. PRAVEEN CHANDER CHUGH, C/O NO.85/1, SHAKTHI BUILDING, K.H.ROAD, BENGALURU-560 027.
3. MR. ASHOK CHUGH, C/O NO.85/1, SHAKTHI BUILDING, K.H.ROAD, BENGALURU-560 027.
4. MR. DAVINDER KUMAR (DIED) REP. BY SMT. SUSHEELA, W/O LATE DAVINDER KUMAR, AGED ABOUT 66 YEARS, C/O NO.85/1, SHAKTHI BUILDING, K.H.ROAD, BENGALURU-560 027.
5. MR. SHALEEN CHUGH, C/O NO.85/1, SHAKTHI BUILDING, K.R.ROAD, BENGALURU-560 027.
6. MRS. SARITHA CHUGH, C/O NO.85/1, SHAKTHI BUILDING, K.H.ROAD, BENGALURU-560 027.
7. M/S. KHODAY INDIA LIMITED, REGD. OFF: "BREWERY HOUSE", KANAKAPURA ROAD, BANGALORE, HAVING ADMINISTRATIVE OFFICE: NO.612, XV CROSS, SARAKKI I PHASE, 100 FEET ROAD, J.P.NAGAR, BENGALURU - 560 078.
8. M/S. M & S MARKETING COMPANY &
M/S. M & S BOTTLING COMPANY OFFICE: PLOT NO.64, STREET NO.1, SAGAR SOCIETY, ROAD NO.2, BANJARA HILLS, HYDERABAD-500 033.
9. THE RECOVERY OFFICER-1, DEBTS RECOVERY TRIBUNAL-I, SECOND FLOOR, JEEVAN MANGAL BUILDING, NO.4, RESIDENCY ROAD, BENGALURU - 560 025.
…RESPONDENTS [BY SRI. K.S.MAHADEVAN, ADV., FOR OFFICIAL LIQUIDATOR FOR R1 V/O DATED 09.08.2021; NOTICE TO R2 TO 6 IS DISPENSED WITH; SRI. GURUMURTHY M., ADV., FOR R7 (PH);
SRI. ABHINAV R., ADV. FOR R8 (PH); NOTICE TO R9 IS SERVED AND UNREPRESENTED]
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE IMPUGNED ORDER DATED 31.01.2017 PASSED BY THE RECOVERY OFFICER-1 OF DEBTS RECOVERY TRIBUNAL/THE RESPONDENT NO.9 (ANNEXURE-A TO THE WRIT PETITIONER) AND/OR TO DIRECT THAT THE DECISION OF THE IMPUGNED ORDER DATED 31.01.2017 THROUGH THE CLAIM PETITIONS FILED UNDER RULE (11) OF THE SECOND SCHEDULE TO THE INCOME TAX ACT, 1961 IS ERRONEOUS AND NON-BINDING ON THE PETITION AND TO FURTHER DIRECT THE RESPONDENT NO.9 TO INITIATE RECOVERY PROCEEDINGS AGAINST THE SCHEDULE PROPERTY, WITHOUT CONSIDERING THE CLAIMS SET UP BY THE RESPONDENT NO.7 AND 8 AS THE OBJECTORS NO.1 AND 2.
THIS PETITION IS HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 31.03.2023, THIS DAY, THE COURT, PRONOUNCED THE FOLLOWING:

ORDER

Challenging impugned order dated 31.01.2017 bearing DRC.no.1709 arising out of O.A.no.521/1999 passed by Recovery Officer-I, Debt Recovery Tribunal, Bengaluru, ('DRT' for short) at Annexure-T and for declaration of said order as illegal and not binding on petitioners with direction to proceed with recovery proceedings in DRC no.1709 in respect of petition property etc., this writ petition is filed.

2. Sri. G. Krishnamurthy, learned Senior Counsel appearing for Sri Veerendra Patil, advocate for petitioner submitted that petitioner - State Bank of India ('SBI' for short) was constituted under State Bank of India Act, 1955 and was successor to State Bank of Travancore ('SBT' for short). It was submitted that SBT had filed O.A.no.521/1999 (hereinafter 'OA' for short) before DRT for recovery of dues of Rs.30,81,09,931/- from respondents no.1 to 6 herein. It was stated that respondent no.1 - Company was under liquidation through Court and respondents no.2 to 5 being it's Directors had executed personal guarantee in favour of bank for it's dues. It was submitted that said OA was allowed on 03.09.2001 and recovery certificate came to be issued on 28.03.2002 vide DRC.no.1709 for Rs.45,83,60,616.36/-.

3. It was submitted that for recovery of said amount, proceedings were initiated before respondent no.9. In said proceedings, respondent no.7 ('Objector no.1,' for short) filed objections stating that it was absolute owner in possession of property bearing no.612, situated at XV Cross, 100 ft. Road, Sarakki, Phase-I, J.P. Nagar Extension, Ward no.57, Bengaluru ('scheduled property' for short). It was stated that objector no.1 had purchased scheduled property from Smt.Sushila, legal representative of respondent no.4 - Sri. Devindar Kumar, under sale deed dated 19.04.2002.

4. It was submitted that on 17.06.2004, respondent no.9 issued demand notices to all debtors. On 17.04.2005, objector no.1 entered appearance and filed objections claiming to be bonafide purchaser of schedule property and seeking for deletion of said property from recovery certificate. A separate application/obstruction petition seeking for deletion of schedule property from proclamation was also filed.

5. On 24.08.2005, obstruction application of objector no.1 was rejected. Challenging said order, appeal in A.O.R.no.16/2005 was filed before DRT, same was dismissed on 05.02.2008 and reached finality. Thereafter, on 07.08.2012 respondent no.9 issued fresh proclamation against schedule property. At this stage, objector no.1 filed objections on 05.11.2012 under Rule 11(1) of Schedule - II of Income Tax Act, 1961 ('IT Act' for short) for setting aside proclamation.

6. By order dated 04.07.2013, objections were dismissed on ground that claim was already adjudicated as per orders dated 24.08.2005 and 05.02.2008. Said order was challenged before DRT in A.O.R.no.9/2013. On 18.08.2014, same was dismissed with observation that in case objector intended to enforce sale deed, they were required to clear loan and neither gift deed in favour of Smt.Sushila nor sale deed in favour of objector no.1 would come in way for recovery of money. Said order was questioned by filing appeal before Debt Recovery Appellate Tribunal (‘DRAT’ for short). Along with appeal I.A.no.1030/2014 seeking waiver of condition of pre- deposit under Section 21 of Recovery of Debts Dues to Banks and Financial Institutions Act, 1993 (for short 'RDB Act'), was filed. But, DRAT directed deposit of Rs.61.50 Crores.

7. Objector no.1 challenged said order in W.P.no.56387/2014 before this Court, which was dismissed on 09.06.2015. Further challenge before Hon'ble Supreme Court in SLP.no.20940/2015 was also dismissed on 31.07.2015, by extending time for deposit by eight weeks. But, there was no compliance of said order. Thereafter on 06.10.2015, respondent no.8 herein ('Objector no.2,' for short) filed application under Section 22(2)(h) of RDB Act before respondent no.9 for impleading in recovery proceedings. It claimed to b

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