IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 23RD DAY OF AUGUST 2019 BEFORE THE HON’BLE MR. JUSTICE ALOK ARADHE WRIT PETITION NO.31687 OF 2018 (GM-RES) Between:
M/s Sree Jayalakshmi Textiles A registered Partnership firm Having its registered office at P.B.No.50, Garehatti, Chitradurga- 577 501 Represented by its Partner Sri. K. V. Prabhakar (By Sri. Paras Jain, Advocate) And:
M/s. International Asset Reconstruction Company Private Limited Having its office at # A/508, 5th Floor, 215 Atrium, Kanakia Spaces Andheri Kurla Road, Andheri (E) Mumbai – 400 093 … Petitioner … Respondent (By Smt/Ms. Tamarra Sequeira, Advocate For Sri. O.P. Agarwal, Advocate) This Writ Petition is filed under Articles 226 and 227 of the Constitution of India, praying to direct the respondent to pay to the petitioner the interest at the rate of 18% per annum accrued on Rs.2,00,25,000/- for the period commencing from 24.02.2014 to 27.07.2016 Annexure-B viz., 27 months, at the rate of 18% per annum.
This Writ Petition coming on for Preliminary Hearing in ‘B’ Group, this day, the Court made the following:-
ORDER Sri. Paras Jain, learned counsel for the petitioner.
Ms. Tamarra Sequeira, learned counsel for Sri. O. P. Agarwal, learned counsel for the respondent.
The petition is admitted for hearing. With the consent of learned counsel for the parties, the same is heard finally.
2. In this petition, the petitioner inter alia seeks a writ of mandamus directing the respondent to pay interest on the amount deposited by the petitioner at the rate of 18% p.a. for the period from 24.02.2014 till 27.07.2016.
3. The facts giving rise to filing of the writ petition briefly stated are that on 21.02.2014, the Debts Recovery Tribunal passed an order directing the respondent not to finalize the auction. Despite being aware of the aforesaid order, respondent- Bank proceeded with the sale and held the auction on 24.02.2014. The petitioner participated in the auction and had quoted a sum of `8,01,00,000/- and the petitioner was declared as the highest bidder. Thereupon, the petitioner was called upon to deposit 25% of the sale consideration by the respondent. The petitioner deposited the sale consideration amounting to `2,00,25,000/- on 24.02.2014 itself. In the meanwhile, under One Time Settlement scheme, the borrower paid the amount to respondent. Thereupon, the respondent issued a cheque in favour of the petitioner on 16.06.2015. For the same, he had deposited 25% of the bid amount. The petitioner did not choose to encash the amount of cheque tendered to him by the respondent even under the protest. Instead of encashing the amount, the petitioner chose to file W.P.No.22348/2015 before a Bench of this Court in which challenge was made on the ground that the sale could not have been cancelled by the respondent-Bank. The aforesaid writ petition was dismissed by a Bench of this Court by an order dated 15.12.2015. The aforesaid order was upheld in an appeal by the Division Bench of this Court vide order dated 30.03.2017. Being aggrieved, the petitioner approached the Hon’ble Supreme Court by filing the Special Leave Petition and the same was dismissed on 03.11.2017 on the ground that since the sale in favour of the petitioner was not confirmed, no right accrues in his favour. In the aforesaid factual background, the petitioner has approached this Court seeking the relief as quoted supra.
4. Learned counsel for the petitioner submitted that the respondent had retained 25% of the bid amount from 24.02.2014 till 27.07.2017. Therefore, they are liable to pay the interest on the aforesaid amount at the rate of 18% p.a. In support of the aforesaid submission, reliance has been placed on decision of the Hon’ble Supreme Court in ‘UNION OF INDIA V/S. TATA CHEMICALS LIMITED’, (2014) 6 SCC 335.
5. On the other hand, learned counsel for the respondent submitted that the petitioner was fully aware of the fact that the sale cannot be confirmed. Despite the aforesaid fact, the petitioner with his eyes vide open participated in the sale and deposited the amount. Thereafter, since the matter was settled under the One Time Settlement scheme with the borrower and the interim order was operating against the respondent, which was passed by the Debts Recovery Tribunal, the respondent had taken a decision to cancel the sale and issued a cheque in favour of the petitioner on 16.06.2015. However, the petitioner did not encash the cheque. It is further submitted that the petitioner cannot seek a writ of mandamus seeking a direction to refund the amount of interest by the respondent and to file a civil suit. It is further submitted that in any case, the respondent is not liable to pay the interest beyond the period of 16.06.2015.
6. I have considered the rival submissions made by learned counsel on both the sides and perused the record. It is well settled in law that whether a particular action falls within public law domain or private law field has to be decided in each case with reference to the particular action. In ‘JOSHI TECHNOLOGIES INTERNATIONAL INC VS. UNION OF INDIA’, (2015) 7 SCC 728, the aforesaid principles have been reiterated and it has been held that once, on facts of a particular case it is found that nature of activity or controversy involves public law element, then the matter can be examined by the High Court in a writ petition under Article 226 of the Constitution of India whether action of the State or its instrumentality or agency of State is fair, just and equitable. It is also held that Dichotomy between public law remedies and private law field cannot be demarcated with precision. Each case has to be examined on its facts whether contractual relations between the parties bear insignia of public element.
7. In the instant case, admittedly, the respondent is registered under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the contractual relations between the parties bear insignia of public element. Therefore, the writ can be issued against the respondent.
8. It is well settled in law that the obligation to refund the amount received and retained without right, implies and carries with it the right of payment of interest. It has further been held that wherever the money has been received by the party without right being to receive the same but ought to have been refunded, the right to interest follows, as a matter of course. [See ‘UNITED OF INDIA’ (Supra)].
9. In view of the aforesaid enunciation of law and in the facts of the case, it is evident that admittedly, the respondent has retained the money which is due and payable to the petitioner for a period from 24.02.2014 till 16.06.2015. Therefore, in the fact situation of the case, I deem it appropriate to direct the respondent to make payment of interest at the rate of 8% p.a. on the amount `2,00,25,000/- to the petitioner for the period from 24.02.2014 till 16.06.2015 within a period of one month from the date of receipt of certified copy of the order passed today. Ordered accordingly.
With the aforesaid directions, the petition is disposed of.
Sd/- JUDGE Mds/-