IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 23RD DAY OF JANUARY 2019 BEFORE THE HON’BLE MR. JUSTICE H. T. NARENDRA PRASAD WRIT PETITION No.30779 OF 2013 (GM-DRT) BETWEEN:
Smt. Mumtaz Begum, W/o. Khwaja Mohiddin, Aged about 70 years, R/at. No.97, 36th Main, BTM Layout, Bengaluru – 560 068. ... Petitioner (By Sri C.S.Kumar, Advocate) AND:
1. Bank of Baroda, Asset Recovery Management, Branch at “Jwalamala Complex” #6, H.Siddaiah Road, Bengaluru – 560 002.
2. Sri. Sadar Pasha, S/o Syed Pasha, Major, Residing at #48/1, Sanjeevappa Lane, Avenue Road Cross, Bengaluru – 560 002. … Respondents (By Sri Y.V.Parthasarathy, Advocate for R1; Sri.K.Chadranath Ariga, Advocate for R2) This Writ Petition is filed under Articles 226 and 227 of the Constitution of India, praying to quash the Order dated 24.06.2013 passed in AOR 4/10, by the Debt Recovery Tribunal, Bengaluru, produced as Annexure – A and etc.
This Writ Petition coming on for Preliminary Hearing this day, the Court made the following:
O R D E R This writ petition is filed by the petitioner seeking the following prayers:
“(i) Issue a writ of certiorari quashing the order dated 24.06.2013 passed in AOR 4/2010 by the Debts Recovery Tribunal, Bangalore (Produced as Annexure-A).
(ii) Issue such other writ, order or directions deemed fit in the circumstances of the case in the interest of justice and equity.
(iii) Direct the respondent No.1 to remit the excess amount recovered out of the sale proceeds in DCP 1401 before the DRT.”.
2. The learned counsel for the petitioner submits that he is not pressing prayer No.1. His submission is placed on record. Accordingly, prayer No.1 is dismissed as not pressed. The main prayer sought by the petitioner is for a direction to respondent No.1 to remit the excess amount recovered out of the sale proceeds in DCP 1401 before the Debt Recovery Tribunal (for short “DRT”).
3. The brief facts of the case are that the petitioner is one of the guarantors to the loan availed by the Company M/s.Nova Tech Appliances and Trading Company Private Limited. The Directors of the Company have approached the first respondent - Bank for a loan and availed the loan in the year 1993-94 and mortgaged nine properties to the Bank. On the loss of the company, the first respondent - Bank approached the DRT and obtained Recovery Certificate for a sum of Rs.2,38,62,640.50 plus future interest till realization. Thereafter parties have filed a joint memo dated 20.09.2001 as per Annexure-R2. This memo has been signed by both the parties. From the joint memo, it is very clear that as on 30.06.2001 the amount due was Rs.88,76,786/- and interest at the rate of 12% p.a. from 1.7.2001 till the date of payment. The defendants requested time to pay the balance amount till 31.03.2002. In terms of the joint memo, the defendants have not paid the balance amount within 31.03.2002. Further, on 13.05.2005 vide Annexure-C the first respondent – Bank has filed a memo before the Recovery Officer, DRT stating that the account was decreed on 31.08.2000 for Rs.109.04 lakhs and it was compromised for Rs.110.77 under One Time Settlement Scheme and the defendants have so far deposited a sum of Rs.65.67 lakhs. Thereafter, the first respondent – Bank has filed yet another memo dated 21.12.2006 vide Annexure-B before the Recovery Officer, DRT stating that as per the joint memo dated 20.09.2001 the defendants have not paid the outstanding amount of Rs.88.76 lakhs on or before 31.03.2002. The company directors repaid a sum of Rs.65.67 lakhs to the respondent No.1-Bank and got seven properties released. Since, the company directors have not paid the remaining amount, the Bank approached the Recovery Officer for issuing notice for auctioning the property. The Recovery Officer has fixed the date for conduct of an auction on 20.06.2007 in respect of property No.261, new site No.8 situated at Bazar Street, Neelasandra, Bangalore- 560 047, measuring East to West 40 ft. and North to South 116 ft. This was sold in the auction sale for Rs.66,00,000/-. In respect of other property bearing Sy.No.229 measuring 3 acres 32 guntas and land in Sy.No.148/2 measuring 1 acre 20 guntas, it was sold for Rs.77.50 Lakhs, totally the property was auctioned for Rs.137.50 Lakhs. Since the property was sold for more than the amount which is settled between the parties, the petitioner has filed this writ petition seeking for a direction to the Bank to remit the excess amount recovered out of the sale proceeds.
4. Sri C.S.Kumar, learned counsel for the petitioner submits that as per the one time settlement, earlier it was agreed for Rs.110.76 lakhs. Subsequently, since Rs.22.00 lakhs was paid, as per Annexure-R2, on 20.09.2001 before the Recovery Officer, the parties have agreed to pay the outstanding amount of Rs.88,76,786 due as on 30.06.2001 on or before 31.03.2002. Since the defendants have not paid the remaining amount, properties have been auctioned for Rs.137.50 lakhs. The petitioner is entitled for the excess amount recovered in auction sale.
5. Per contra, the learned counsel appearing for the first respondent - Bank submits that as per Annexure-R2, compromise memo filed by both the parties dated 20.09.2001, it is very clear that the parties have agreed to settle the dispute as per the RBI guidelines for an amount of Rs.88,76,786/-, which is the amount outstanding as on 30.06.2001 and as per the settlement, the defendants have to pay that amount on or before 31.03.2002. If they fail to pay that amount, the first respondent - Bank is entitled to recover the entire amount as ordered by the Presiding Officer vide recovery certificate dated 26.04.2001. He further submits that since the matters are pending before the Recovery Officer the petitioner can make out his grievance before the same authority and that can be considered by the Recovery Officer.
6. Sri K.Chandrakanth Ariga, learned counsel for respondent No.2 submits that he has purchased this property by auction sale dated 20.06.2007 and he has deposited the entire auction amount before the Recovery Officer and sale certificate was issued on 10.09.2013, but the possession is not handed over.
7. Heard the learned counsel for the parties.
8. The petitioner was a guarantor to the loan which is availed by M/s. Nova Tech Appliances and Trading Company Private Limited and the Company has mortgaged nine properties to the Bank. Since there was a loss to the company, they have not repaid the amount. The Bank has obtained a recovery certificate for a sum of Rs.2,38,62,640.50 with future interest till realization. Subsequently, the matter was settled between the parties for one time settlement at Rs.110 lakhs. The defendants have paid a sum of Rs.65.67 lakhs and they have failed to pay the remaining balance amount to the Bank as per the one time settlement. As per the joint memo dated 20.09.2001 vide Annexure-R2 the amount of Rs.88,76,786/- is the balance outstanding amount as on 30.06.2001. That amount has to be paid by the defendants on or before 31.03.2002. Since the defendants have not paid that amount as per the settlement between the parties dated 20.09.2001 the Recovery Officer has auctioned the properties at item Nos.1 and 7 as mentioned in Annexure- B and the properties were auctioned for Rs.137.50 lakhs. Now the auction amount has been deposited before the Recovery Officer and the dispute is before the Recovery Officer. Regarding the amount which is deposited before the Recovery Officer, the Chief Manager of the first respondent - Bank has made a statement stating that if there is any excess amount the same will be refunded to the petitioner. Since the issue is pending before the Recovery Officer, the petitioner is given a liberty to file an application before the Recovery Officer with all the relevant documents and also place any judgments in support of his case before the Recovery Officer. The Recovery Officer, after considering the same and after hearing the parties may pass an appropriate order in accordance with law including handing over the possession to the respondent No.2.
All the contentions are kept open to be urged before the Recovery Officer.
With the above observations the writ petition stands disposed of.
Sd/- JUDGE GJM