IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10TH DAY OF JULY, 2019 PRESENT THE HON’BLE MR. ABHAY S. OKA, CHIEF JUSTICE AND THE HON’BLE MR. JUSTICE H.T. NARENDRA PRASAD WRIT PETITION NO.3041/2016 (GM-RES-PIL) BETWEEN 1. G. VENKAT RAO S/O G. SATYANARAYANA AGED ABOUT 43 YEARS VENKATRAMANAGAR CAMP BURMA CAMP POST SINDHANOOR-584128 RAICHUR DISTRICT KARNATAKA 2. G.NAGESHWAR RAO S/O G.RAMA RAO AGED ABOUT 65 YEARS VENKATRAMANAGAR CAMP BURMA CAMP POST SINDHANOOR - 584 128 RAICHUR DISTRICT KARNATAKA 3. M.V.RAMA RAO S/O MADHAV RAO AGED ABOUT 46 YEARS K.GUDDINNI CAMP MANVI - 584 123 RAICHUR DISTRICT KARNATAKA 4. MYNENI MADHAV RAO S/O RAMAIAH AGED ABOUT 70 YEARS K.GUDDINNI CAMP MANVI - 584 123 RAICHUR DISTRICT KARNATAKA 5. D.LAKSHMINARASIMHA RAJU S/O VENKATRAMA RAJU AGED ABOUT 49 YEARS K.GUDDINNI CAMP MANVI - 584 123 RAICHUR DISTRICT KARNATAKA 6. R.SRINIVAS RAJU S/O R SEETHA RAMA RAJU AGED ABOUT 49 YEARS SANGAPUR CAMP MANVI - 584 123 RAICHUR DISTRICT KARNATAKA 7. M.L.V. PRASAD S/O SEETHA RAMAIAH AGED ABOUT 50 YEARS KOLI CAMP NEERMANVI POST MANVI-584 123 RAICHUR DISTRICT KARNATAKA 8. VEMURI PARAMESHWAR RAO S/O RATTHAIAH AGED ABOUT 72 YEARS HARVI RADHAKRISHNA CAMP HARVI POST MANVI-584 123 RAICHUR DISTRICT KARNATAKA 9. C H SURESH S/O C H KOTESHWAR RAO AGED ABOUT 40 YEARS HARVI RADHAKRISHNA CAMP HARVI POST, MANVI-584 123 RAICHUR DISTRICT KARNATAKA 10. S. SUDHEER KUMAR S/O S. SHIVRAM KRISHNA AGED ABOUT 32 YEARS MADAGIRI POST MANVI-584 123 RAICHUR DISTRICT KARNATAKA 11. G RANGANATH S/O BUDDAIAH AGED ABOUT 42 YEARS HARVIBASAVANNA CAMP MANVI-584 123 RAICHUR DISTRICT KARNATAKA 12. Y SURYA BHASKAR RAO S/O PAPARAO AGED ABOUT 59 YEARS NO.102/1,JALAPUR CAMP LAKKAMDINNI POST MANVI-584 123 RAICHUR DISTRICT KARNATAKA 13. A NAGESHWAR RAO S/O A SUBBA RAO AGED ABOUT 67 YEARS JALAPUR CAMP, SIRWAR MANVI-584 123 RAICHUR DISTRICT KARNATAKA 14. V NARASIMHA REDDY S/O NARAYAN REDDY AGED ABOUT 54 YEARS BALIJAPALLI, GHANPUR MANDALM, WANAPARTH MAHABOOBNAGAR TELANGANA 15. SMT. PRAMILA BAI INNANI W/O VITTAL DAS INNANI AGED ABOUT 57 YEARS 5-2-2/1, NETAJI NAGAR RAICHUR-584 101 KARNATAKA 16. SMT. SUREKHA BAI INNANI W/O RADHESHAM INNANI AGED ABOUT 52 YEARS 5-2-2, NETAJI NAGAR RAICHUR-584 101 KARNATAKA 17. N RAMESH S/O SHANKAR AGED ABOUT 35 YEARS NO.1-47/2, KANAGARTHI ODELA, KARIMNAGAR TELANGANA 18. M GANGARAJU S/O RAMACHANDRAM AGED ABOUT 50 YEARS NO.L-279 NIJALINGAPPA COLONY RAICHUR-584 101 KARNATAKA 19. P TULYANANDA RAO S/O RAMA RAO AGED ABOUT 54 YEARS MUTYALA RAO COMPLEX GUNJ ROAD RAICHUR-584 101 KARNATAKA 20. G SRINIVAS S/O G NAGESHWAR RAO AGED ABOUT 35 YEARS VENKATRAMANAGAR CAMP BURMA CAMP POST SINDHANOOR-584 128 RAICHUR DISTRICT KARNATAKA 21. C.H. SRINIVAS RAO S/O KUTUMBH RAO AGED ABOUT 51 YEARS HARVI RADHAKRISHNA CAMP HARVI POST, MANVI-584 123 RAICHUR DISTRICT KARNATAKA 22. S. SATYANARAYANA S/O S. CHANDRANNA AGED ABOUT 38 YEARS VADDEMAAN CHINNACHINTAL MAHABOOBNAGAR TELANGANA 23. SMT. G. PADMAVATHI W/O G. NAGESHWAR RAO AGED ABOUT 56 YEARS VENKATRAMNAGAR CAMP BURMA CAMP POST SINDHANOOR-584 128 RAICHUR DISTRICT KARNATAKA 24. SRINATH SHARMA S/O GOPALACHARI AGED ABOUT 47 YEARS YEDIRA MAHABOOBNAGAR TALUKA AND DISTRICT TELANGANA STATE 25. M. JAGADEESHWARA REDDY S/O NARASIMHA REDDY AGED ABOUT 53 YEARS VELTURU, PEDDAMANDA MAHABOOBNAGAR TELANGANA STATE 26. S. SHIVARAM RAJU S/O RANGA RAJU AGED ABOUT 41 YEARS KADLUR-584 101 RAICHUR DISTRICT KARNATAKA 27. D. SUBBARAJU S/O D. RAMARAJU AGED ABOUT 41 YEARS KADLUR-584 101 RAICHUR DISTRICT KARNATAKA 28. VEERARJUN S/O ACCHA RAO AGED ABOUT 55 YEARS NO.1-11-38/27 BASAVESHWAR COLONY RAICHUR-584 101 KARNATAKA 29. DATLA RAMARAJU S/O D SUBBARAJU AGED ABOUT 42 YEARS KADLUR-584 101 RAICHUR DISTRICT KARNATAKA 30. D. BALAHOSENI S/O DASTAGIRI AGED ABOUT 37 YEARS KONEJEDU VILLAGE PANYAM, KURNOL ANDRA PRADESH 31. K.P. TIRUPALU S/O SUBBARAYADU AGED ABOUT 60 YEARS KONEJEDU VILLAGE PANYAM, KURNOL ANDRA PRADESH 32. SMT. VENU KUMARI W/O E. SATYANARAYANA AGED ABOUT 53 YEARS MOODILLA CAMP MADAGIRI POST MANVI TALUK PIN CODE-584 123 RAICHUR DISTRICT KARNATAKA 33. SRI E. SRINIVAS S/O E. SATYANARAYANA AGED ABOUT 40 YEARS MOODILLA CAMP, MADAGIRI POST MANVI TALUK PIN CODE-584 123 RAICHUR DISTRICT KARNATAKA 34. SMT. K. RAGHAVAMMA W/O K. GOPALAKRISHNAIAH AGED ABOUT 58 YEARS MADAGIRI CAMP, MADAGIRI POST MANVI TALUK PIN CODE-584 123 RAICHUR DISTRICT KARNATAKA 35. K GOPALAKRISHNAIAH S/O VENKATESHWARULU AGED ABOUT 68 YEARS MADAGIRI CAMP, MADAGIRI POST MANVI TALUK, PIN CODE- 584 123 RAICHUR DISTRICT KARNATAKA 36. SRI U SRIKANTH S/O RAMAKOTESHWAR RAO AGED ABOUT 25 YEARS MADAGIRI CAMP, MADAGIRI POST MANVI TALUK, PIN CODE-584 123 RAICHUR DISTRICT KARNATAKA 37. VADDE VENKATRATNAM S/O VENKATAPPAIAH AGED ABOUT 60 YEARS MADAGIRI CAMP MADAGIRI POST MANVI-584 123 RAICHUR DISTRICT KARNATAKA ... PETITIONERS (BY SRI S.P. KULKARNI, ADVOCATE) AND:
1. THE STATE OF KARNATAKA REP BY ITS CHIEF SECRETARY VIDHANA SOUDHA BANGALORE - 560 001 2. THE DEPUTY COMMISSIONER RAICHUR DISTRICT RAICHUR - 584 101 KARNATAKA STATE 3. STATE BANK OF INDIA STRESSED ASSETS MANAGEMENT GROUP BRANCH, 2ND FLOOR OFFICE COMPLEX BUILDING LMO CAMPUS, NO. 65 ST.MARKS ROAD BANGALORE - 560 001 REP BY ITS CHIEF MANAGER AND AUTHORISED OFFICER 4. M/S. VISHWA SHANTHI AGRO INDUSTRIES SY.NO.31/2, BIJENEGERA RAICHUR TALUK AND DISTRICT PIN CODE-584 101 KARNATAKA STATE REP BY ITS MANAGING PARTNER K.V.KRISHNA RAO ... RESPONDENTS (BY SRI D. NAGARAJ, AGA FOR R-1 & 2;
SRI P L VIJAYKUMAR, ADVOCATE FOR R-3;
SRI VISHWANATH R. HEGDE, ADVOCATE FOR R-4) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING THAT IN THE PUBLIC INTEREST OF THE PETITIONERS, DIRECT RESPONDENT NOS.1 TO 3 HEREIN TO RELEASE/PAY TO THE PETITIONERS IMMEDIATELY THE PRICE TOWARDS THE PADDY BAGS BEING SOLD BY EACH ONE OF THEM TO THE RESPONDENT NO.4 INDUSTRY AS REFLECTED IN ANNEXURES-B & B1 TO B36, WHICH IS IN THE CUSTODY OF RESPONDENT NO.3 BANK IN PREFERENCE TO THE CLAIM/ RIGHT OF RESPONDENT NO.3 BANK AT THE EARLIEST & ETC.
THIS WRIT PETITION COMING ON FOR DICTATING ORDERS THIS DAY, CHIEF JUSTICE MADE THE FOLLOWING:
ORDER The submissions of the learned counsel appearing for the petitioners were heard on the earlier date.
2. The petitioners in this petition under Article 226 of the Constitution of India are farmers. According to their contention, they supplied paddy bags to the fourth respondent. On 11th February 2014, an order was passed under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘the SARFAESI Act’) directing possession to be taken of the secured assets of the fourth respondent. The third respondent -Bank seized the industry of the fourth respondent and took physical possession of the industry as well as the paddy bags. The prayer in this petition under Article 226 of the Constitution of India is that the first to third respondents should be directed to release/pay to the petitioners the price of the paddy bags. The second prayer is to direct the respondents to follow the guidelines and directions issued in a decision of the Allahabad High Court in the case of RASHTRIYA KISAN MAZDOOR SANGATHAN (REGD.) THRU CONVENOR vs STATE OF U.P. AND 2 OTHERS1. It is pointed 1 PIL No. 29523 of 2014 out that the decision of the Allahabad High Court has been confirmed by the Apex Court by the order dated 13th October 2014.
3. There are objections filed by the third respondent - Bank. The first contention therein is that an alternative remedy is available. It is stated that the fourth respondent was enjoying credit facilities from the third respondent -Bank. It is contended that the rice/paddy supplied by the petitioners was pledged with the third respondent -Bank. A reference is made to the proceedings filed before the Debt Recovery Tribunal. An order was passed under Section 14 of the SARFAESI Act for taking possession of the mortgaged factory, land and building and other assets of the fourth respondent. It is pointed out that the assets were disposed of in public auction and the sale proceeds have been credited to the loan account of the fourth respondent. It is pointed out that the petitioners have no claim on the secured assets in the form of stock of rice pledged to the Bank in 2009. It is further pointed out that the petitioners cannot claim the price of rice which was sold by them in December 2013 and December 2014 to the fourth respondent.
4. The submission of the learned counsel appearing for the petitioners is based on the aforesaid decision of the Allahabad High Court. He has taken us through the relevant part of the findings recorded by the Allahabad High Court which are confirmed by the Apex Court by summarily dismissing the Special Leave Petition. In this petition, a contention is raised that the total value of paddy stored by the petitioners and other farmers with the fourth respondent is worth about Rs.4,40,00,000/-. He invited our attention to the observations made by the Allahabad High Court which are on page 113 of the said judgment.
5. We have considered the submissions. In the objections filed by the third respondent, reliance was placed on the order passed by the Competent Authority under Section 14 of the SARFAESI Act. It records that the possession of the mortgaged factory, land and building along with other secured assets was taken by the said bank. In fact, the inventory report annexed as Annexure-C to the writ petition is relied upon. The inventory is of 20th November 2015. It is further stated in the objections that the secured assets were disposed of by a public auction on 29th November 2017. In fact, the third respondent relied upon the stock of Sona Brown Rice pledged and deposit of warehouse receipts issued between 24th November 2008 and 6th December 2008. The pledged rice was disposed of by the third respondent and the sale proceeds have been credited to the loan account of the fourth respondent.
6. Thus, the position which emerges is that the power was exercised under Section 14 by the Magistrate for taking over possession of the secured assets. The paddy which was seized has been disposed of by the third respondent and the amount is credited to the overdue account of the fourth respondent.
7. We fail to understand as to how the Bank is expected to pay the price of paddy supplied by the petitioners to the fourth respondent. The action under Section 13 and the direction of the Magistrate under Section 14 of the SARFAESI Act have not been questioned by the petitioners. The remedy of the petitioners and similarly placed persons is against the fourth respondent for recovery of the price of paddy and by no stretch of imagination, any direction can be issued against the Bank.
8. Relying upon the decision of the Allahabad High Court, the learned counsel appearing for the petitioners submits that in the interest of farmers, this Court has to intervene. In the facts of the case, the paddy crop has already been sold by the third respondent and the sale proceeds have been credited to the loan account of the fourth respondent. Hence, the decision of the Allahabad High Court cannot be applied apart from the fact that it does not bind this Court. Therefore, no relief can be granted against the third respondent -Bank. Hence, there is no merit in the petition and the same is accordingly rejected.
9. We make it clear that the statutory remedies available to the petitioners can be always adopted in accordance with law.
Sd/- CHIEF JUSTICE Sd/- JUDGE bkv