IN THE HIGH COURT OF KARNATAKA AT BENGALURU ON THE 5TH DAY OF APRIL, 2019 BEFORE THE HON'BLE MR. JUSTICE RAVI MALIMATH AND THE HON'BLE MR. JUSTICE S. G. PANDIT WRIT PETITION NO.17086 OF 2017 (GM-DRT) BETWEEN:
1. SMT. RAFATH JAHAN WIFE OF JAVID AHMED AGED ABOUT 52 YEARS RESIDING AT NO.86 8TH CROSS, 1ST MAIN LOWER PALACE ORCHARD SADASHIVANAGAR BENGALURU-560 003.
2. SMT.D.M.SALEEM SON OF LATE B.M.ABDUL RAHIM AGED ABOUT 48 YEARS, RESIDING AT NO.7/69/M MAIN ROAD, VIRAJPET SOUTH KODAGU-571 218.
3. SMT.MIZBAH ANJUM WIFE OF MOHAMMED AZAM AGED ABOUT 44 YEARS NO.6, 2ND FLOOR, 3RD H.B.STREET MARCUM ROAD, ASHOK NAGAR BENGALURU-560 025.
4. SRI.D.M.THANVEER SON OF LATE D.M.ABDUL RAHIM AGED ABOUT 42 YEARS NO.6, 2ND FLOOR, 3RD H.B.STREET MARCUM ROAD, ASHOK NAGAR BENGALURU-560 025.
5. SHAHIMA DAUGHTER OF LATE RASHEEDA AGED ABOUT 43 YEARS RESIDING AT NO.7/68 MAIN ROAD, VIRAJPET SOUTH KODAGU-571 218.
6. SMT.HASINA MOHAMMED ALI WIFE OF LATE MOHAMMED ALI AGED ABOUT 56 YEARS RESIDING AT KABIR MUTT ROAD 2ND IDGHA, MYSORE-570 001.
7. SMT.PARVEEN SIRAJ WIFE OF SRI MOHAMMED SIRAJ AGED ABOUT 52 YEARS KAPALI TAILORS, M.H.ROAD K.R.NAGARA MYSORE DISTRICT-571 602.
(BY SRI.MANU KULKARNI, ADVOCATE) AND:
1. THE AUTHORIZED OFFICER INDIAN BANK VIRAJPET BRANCH MAIN ROAD, VIRAJPET KODAGU DISTRICT-571 218.
... PETITIONERS 2. SRI.G.RAVIKUMAR SON OF SRI C.D.GANAPATHY AGED ABOUT 33 YEARS RESIDING AT MARANDODA VILLAGE YAVAKAPADI POST MADIKERI TALUK KODAGU DISTRICT-571 218.
3. SRI.K.N.MOHAN RAI SON OF LATE K.RAMANA RAO AGED ABOUT 55 YEARS, RESIDING AT BLUE BELL SWEETS MAIN ROAD, VIRAJPET KODAGU DISTRICT-571 218.
4. SRI.N.SRINIVAS SON OF LATE NINGAIAH MAJOR BY AGE OPP. DURGA MEDICALS MAIN ROAD, VIRAJPET KODAGU DISTRICT-571218.
... RESPONDENTS (BY SRI. A KESHAVA BHAT, ADVOCATE FOR RESPONDENT No.1 SRI. SACHIN B.S., ADVOCATE FOR RESPONDENT Nos.2 TO 4) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE IMPUGNED ORDER DATED 28.3.2017 PASSED IN RA (SA) NO.62/2012 BY THE DEBTS RECOVERY APPELLATE TRIBUNAL, CHENNAI (ANNEXURE-A) AS WELL AS THE ORDER DATED 31.03.2010 PASSED IN SA NO.424/2009 BY THE DEBT RECOVERY TRIBUNAL, BENGALURU (ANNEXURE-B) AND CONSEQUENTLY QUASH THE SALE CERTIFICATE, BOTH DATED 09.04.2010 (ANNEXURE-R AND S) THE SALE NOTICE DATED 30.01.2009 (ANNEXURE-Q) ISSUED BY R-1 AND ALL FURTHER PROCEEDINGS IN FURTHERANCE THERETO.
THIS PETITION HAVING BEEN HEARD AND RESERVED FOR PRONOUNCEMENT THIS DAY, S.G. PANDIT J., PASSED THE FOLLOWING:
ORDER The petitioners are before this Court under Articles 226 and 227 of the Constitution of India praying for the following reliefs:
(i) Issue a writ of certiorari or any other writ, order or direction, quashing the impugned order dated 28.03.2017 passed in RA(SA) No.62 of 2012 by the Debts Recovery Appellate Tribunal, Chennai (Annexure-A) as well as the order dated 31.03.2010 passed in SA No.424 of 2009 by the Debt Recovery Tribunal, Bengaluru (Annexure-B), and consequently quash the Sale Certificates, both dated 09.04.2010 (Annexure-R and Annexure-S), the Sale Notice dated 30.01.2009 (Annexure-Q) issued by respondent No.1 and all further proceedings in furtherance thereto.
(ii) Grant costs of the proceedings.
(iii) Grant such other relief(s) as this Hon’ble Court deems fit or proper in the facts and circumstances of the case and in the interest of justice and equity 2. The petitioners claim that petitioners No.1 to 5 are the legal heirs of late Halima Bee and petitioners No.6 and 7 are the legal heirs of late Smt.Zainab Bee. It is stated that respondent No.1/Authorized Officer initiated recovery proceedings against the properties of the petitioners. Respondents No. 2 to 4 are the auction purchasers of the petitioners’ properties. One Mr.D.A.Liyakat Ali had taken loan from first respondent-Bank in the year 1988. Smt.Halima Bee and Smt.Zainab Bee stood as guarantors for the loan transaction of Liyakat Ali. As the loanee Liyakat Ali became defaulter, the first respondent-Bank filed O.S.No.46 of 1994 against the loanee Liyakat Ali and male legal representatives of guarantors for recovery of the amount due. On constitution of Debt Recovery Tribunal (hereinafter referred to as ‘the DRT’ for short) the suit stood transferred to DRT which was re-numbered as O.A.No.493 of 1995. The DRT by order dated 30.06.1997 allowed the said O.A. which was an ex-parte order. The loanee Liyakat Ali filed M.A.No.2 of 1998 against the said ex-parte order. During the pendency of the petition, the Recovery Officer initiated recovery action in DCP No.350 and properties of the guarantors were attached. The petitioners No.6 and 7 herein legal representatives of late Zainab Bee along with Smt.D.M.Mumtaz and Smt.Rasheeda Begum, legal representatives of Smt.Halima Bee filed applications under Section 28(2) and 29 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 read with Rule 12 of II Schedule of the I.T. Act, 1964 to release their share in the attached properties. The Recovery Officer by order dated 30.03.2004 directed the Bank to obtain suitable amendment to the recovery certificate by including all the legal representatives. Thereafter on 21.03.2007, the Recovery Officer issued proclamation of sale of the properties relating to the guarantors. Again, an application was filed before the Recovery Officer seeking for recall of the order of proclamation. In view of the earlier order of the Recovery Officer, cancelled the auction sale. In the meanwhile, the Bank initiated action under SARFAESI Act by issuing notice under Section 13(2) against Liyakat, the loanee and legal representatives of late Halima Bee and Zainab Bee, the guarantors. Against the said notice, the legal representatives of Late Halima Bee and Zainab Bee filed ASA No.245 of 2008. The said appeal was dismissed by DRT, by order dated 08.08.2008. Possession notice under Section 13(4) of the SARFAESI Act read with Rule 9 of the Security Interest (Enforcement) was issued on 05.08.2008. Thereafter petitioners No.5,6, and 7 filed ASA No.279 of 2008 questioning the possession notice and sale notice dated 30.08.2008. The said ASA was dismissed by order dated 13.01.2009. In the sale notice, the Bank had fixed 05.03.2009 as the last date for submitting tenders. As on 05.03.2009 the bank has not received any tenders. The bank had received EMD amount on 06.03.2009; sold the property to respondent No.2 and issued sale certificate dated 09.04.2010. Being aggrieved by the auction sale proceedings, petitioners No.5, 6 and 7 filed SA No.424 of 2009 before the DRT. The DRT by order dated 31.03.2010 dismissed the SA against which, R.A. (SA) 62 of 2012 was filed before the DRAT. The DRAT dismissed the appeal by order dated 28.03.2017 against which, the instant writ petition is filed.
3. Heard the learned counsel for the petitioners and the learned counsels for the first respondent-Bank as well as respondents No.2 to 4. Perused the writ papers.
4. Learned counsel for the petitioners submits that the sale conducted by the first respondent-Bank is not in conformity with the rules. The tender was received on 06.03.2009 even though the last date was fixed on 05.03.2009. Further the learned counsel submits that the loan is of the year 1988 and the said loan was declared as NPA on 31.03.1992. The breach has taken place on 31.03.1992 and the action initiated in the year 2008 after more than 12 years is barred by limitation. It is further submitted that the petitioners are in possession of the schedule property and the bank has not taken possession of the schedule properties. Hence, prays to allow the writ petition.
5. Per contra, learned counsel for the first respondent- Bank submits that there is no irregularity in the sale conducted by the Bank. The second respondent/purchaser deposited the EMD amount on 05.03.2009 with the Bank and the challan is also dated 05.03.2009. It is further submitted that the contention of the petitioners that the action initiated under SARFAESI Act is barred by limitation has no merit, since the guarantee is continuing guarantee and the same is considered and answered in the earlier proceedings.
6. The loan was taken by one Liyakat Ali in the year 1988. Late Smt.Halima Bee and late Zainab Bee stood as personal guarantors for the loan transaction of Liyakat Ali.
The guarantee given by late Smt.Halima Bee and late Smt.Zainab Bee is not in dispute. The petitioners are legal representatives of late Smt.Halima Bee and late Smt.Zainab Bee. It is on record that the petitioners No.5, 6 and 7 had challenged the sale process on an earlier occasion also and they had also filed an appeal before the Appellate Tribunal which was dismissed. The contention of petitioners that the sale is irregular since the last date of submitting bid was 05.03.2009 and the bid of second respondent was received on 06.03.2009 is liable to be rejected for the reason that the first respondent-Bank had produced cogent materials to show that EMD amount of Rs.95,000/- and Rs.1,05,000/- had been deposited on 05.03.2009. The Bank has made available the challans dated 05.03.2009 in support of their contention. Subsequently it is stated that the purchasers have deposited 25% of the bid amount. If bid amount is deposited on the last date of receiving the bid i.e. 05.03.2009, the contention of the petitioners that the bank has received the tender on 06.03.2009 from second respondent has no basis. The next contention urged by the petitioners is that of limitation. It is also to be noted that the Halima Bee and Zainab Bee apart from standing as guarantors to the loan sanctioned to Liyakat Ali had mortgaged schedule property along with one M.Saleem Khan.
7. No doubt, as contended by the petitioners, loan was treated as NPA on 31.03.1992. Immediately thereafter the suit in O.S.No.46 of 1994 is filed which was transferred to the DRT which is numbered as O.A.No.493 of 1995. Recovery Certificate was issued on 30.06.1997. The petitioners 5, 6 and 7, the legal representatives of Halima Bee and Zainab Bee filed S.A. before the DRT and stalled the sale proceedings. Subsequently, on 21.01.2008, the Bank issued Demand notice and on 05.08.2008, the possession notice in respect of schedule property was issued. It is not that, for the first time, action was initiated on 21.01.2008 for recovery of amount even though the account was treated as NPA in the year 1992. Since 1992 several proceedings have taken place and the sale of schedule property has also taken place. From the date of issuance of recovery certificate on 30.06.1997, the loanee and the petitioners have initiated M.A.No.2 of 1998, filed an application under Section 28(2) and 29 of 1993 Act in DCP No.350, ASA No. 245 of 2008, ASA No.279 of 2008 and SA No.424 of 2009, R.A. (SA) 62 of 2012 and presently the instant writ petition. The DRT, by its detailed order dated 31.03.2010 has rejected the petitioners’ SA No.424 of 2009 wherein the Tribunal has also observed that the petitioners have not placed any materials to substantiate that they are the legal heirs of the guarantors and they have not proved their claim before the Competent Authority. It is an admitted fact that the property is also mortgaged and any share claimed by the petitioners would be subject to mortgage. All the proceedings initiated by the petitioners is only to stall the recovery proceedings of the first respondent-Bank and there is no bonafide. The Debt Recovery Appellate Tribunal by reasoned order has rejected the appeal. While rejecting the appeal, the Appellate Tribunal has noted that the loanee Liyakat Ali is none other than the son of Halima Bee, one of the guarantors. Further it is also noted that as the auction purchaser has produced the counter foil for having deposited the EMD amount on 05.03.2009, there is no irregularity in the sale conducted. The petitioners have not made out any ground to interfere with the orders of DRT as well as the DRAT.
8. For the reasons stated above, this petition is dismissed as devoid of merit.
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JUDGE JUDGE mpk/-* CT:bms