Steps taken by the respondent Bank to cause the property belonging to the petitioner to sold by way of public auction which was scheduled to be held on 03.02.2014, as per Ext.P10 sale proclamation dated 20.11.2013, is under challenge in this writ petition.
2. The petitioner who claims to be an 'Agriculturist', had availed three loans from the respondent Bank, on the strength of mortgage created over three different items of properties, the first one having an extent of 1.20 Acres; second one having an extent of 1.0744 Acres and the third one of 25 cents with a building thereon. The first loan was a 'Housing term loan' of `12 lakhs, availed by the petitioner on 09.07.2002. The second one was a 'Cash Credit Loan' of `5 lakhs availed in the name of the proprietorship concern belonging to the petitioner, whereas the third loan was to the tune of `20 lakhs availed in October 2004 for the purpose of trade in rubber.
3. In the course of transactions, the repayment came to be defaulted. The second item of property was sold by the petitioner and a sum of `19 lakhs generated therefrom was remitted to the Bank. But in view of the persisting default, the accounts were declared as 'NPA' on 28.04.2006. As on 12.06.2007, on which date Section 13(2) notice was issued under the SARFAESI Act, the outstanding liability was nearly `51.94 lakhs. In the course further proceedings, the properties came to be notified for sale, vide Ext.P10, which is subjected to challenge in this writ petition.
4. The prayers raised by the petitioner are in the following terms.
“a) Call for the records leading to Ext.P-10 Proclamation of sale and quash the same by issuance of a Writ of Mandamus or any other appropriate writ, order or direction.
b) Declare that the amount under OTS as on 25-02- 2013 demanded by the Bank before this Hon'ble Court was Rs.42.66 lakhs minus 15 lakhs already paid.
c) Further declare that the action initiated by the defendant Bank under S.13(2) of the SARFAESI Act, 2002 as improper and illegal.
d) Direct the Defendant Bank to furnish a statement of accounts showing the actual amount due as on 22- 11-2013, quantifying Certificate debt of Rs.82,96,797.44 (Rs.Eighty two lakhs ninety six thousands seven hundred ninety seven and paise forty four only)
e) In the event of directing the petitioner to approach DRT declare that the petitioner is entitled to approach DRT to file appeal U/s.30(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, by paying Court Fee for the admitted OTS amounts of Rs.27.66 lakhs only.
f) Declare that if the Bank choose to dispose of the property by its own arbitrary method without giving opportunity to the petitioner for private sale as proposed it will be at its own risk and responsibility and the bank will not be entitled to recover any more amount from the borrower as the account is to be treated as settled finally.
g) Direct the Defendant Bank to inform the amount of OTS at which the liability can be settled against the amount of Rs.15 lakhs paid on 06-02-2013 in the WP no.3278/2013 (H) in OA No.232/2007 before the DRT, Ernakulam
h) Allow the petitioner the cost of these proceedings from the defendant Bank.”
5. When the matter came up before this Court on 31.01.2014, the following interim order was passed.
“Admit. Mr. Kalkura, learned Standing Counsel takes notice for the respondents 1 and 2. Issue urgent notice to the third respondent.
The petitioner shall deposit a sum of Rs.15 lakhs within ten days, subject to which confirmation of sale scheduled to be held on 03.02.2014 shall be kept in abeyance, for the time being.
The respondents are directed to file an affidavit also producing a copy of the statement of accounts with regard to the liability involved.”
Admittedly, the petitioner has not complied with the condition.
6. It is stated that Ext.P11 representation was submitted on 21.01.2014, making an offer to settle the claim under 'One Time Settlement Scheme' agreeing to deposit `27.66 lakhs and to have the accounts closed. It was intimated as per Ext.P12 dated 27.01.2014 by the respondent Bank, that the offer was on the lower side and hence called for a better offer. Guarantor to the loan had submitted Ext.P13 representation dated 01.02.2014 pointing out the plight of the parties concerned. In response to Ext.P12, the petitioner sought the Bank to clarify, vide Ext.P14 dated 03.02.2014, as to what extent should the enhancement be made, to have the liability cleared under the OTS. Thereafter, the petitioner submitted Ext.P15 representation dated 05.02.2014 (produced along with I.A. No.2489/2014) making some marginal enhancement, taking it to `28 lakhs. The petitioner was let known as per Ext.P16 communication issued by the respondent Bank that the matter has been taken up to the higher authorities and that the outcome will be let known to the petitioner in the due course. Subsequently, the Bank informed the petitioner vide Ext.P17 dated 28.04.2014 (produced along with I.A. No.14043/2014) that the revised offer made by the petitioner was approved by the Bank and that, it would be valid till 30.04.2014.
7. According to the petitioner, the said communication was served to the petitioner only on 18.04.2014 and there was no time to comply with the requirements. The petitioner submitted a representation seeking for extension of time. Later, as per Ext.P18 dated 13.09.2014 the petitioner had intimated the Bank that the original prospective purchaser by name M.S. Mathew, who came to purchase the property had backed out, and that another buyer who offered the similar amount had come forward. According to the petitioner, no chance was given to settle the liability. It is contended that the steps pursued by the Bank are not in conformity with the Reserve Bank of India Circular, a copy of which is produced as Ext.P19. As per Ext.P19, the petitioner contends that only 25% of the total amount required to be satisfied under the OTS is to be paid initially and the balance could be remitted by way of instalments. Referring to the law declared by the Apex Court in Central Bank of India V. Ravindra and others (2002 (1) SCC 367) and M/s. Sardar Associates and others V. Panjab and Sindh Bank and Others (AIR 2010 SC 218), it is contended that the Circulars issued by the RBI are binding upon all scheduled Banks, despite which the benefit of the OTS Scheme has been denied to the petitioner and hence the challenge. It is also stated that there is a novation of contract by virtue of acceptance of the OTS proposal and as such, the respondent Bank is not justified in going back from the sanction given to have the liability cleared under the OTS.
8. The respondents have filed a detailed counter affidavit pointing out that the writ petition is neither maintainable in law nor on facts. It is also pointed out that suppression of facts is involved and that the petitioner has not approached this Court with clean hands, particularly, for the reason that the several rounds of litigations pursued by the petitioner before this Court earlier have not been brought to light. Copies of the previous verdicts have been produced as Exts.R1(a) to R1(d). It is pointed out that the petitioner is an 'Agriculturist' and it was an agricultural loan is not correct and that the loan was given for trading in rubber. Applicability Ext.P19 Circular issued by the RBI is disputed, as the said Circular was in respect of the course and events to be finalised by 'October, 2003'; which is no more relevant in respect of the cause of action involved herein.
9. Heard both the sides in detail.
10. Mr.Kalkura, the learned counsel appearing for the respondent Bank submits that, Ext.P19 Circular clearly speaks of the coverage, under Clause 3(A) under the heading [i] Coverage (a) which is reproduced below:
“a) The revised guidelines will cover all NPAs in all sectors irrespective of the nature of business, which have become doubtful or loss as on 31st March 2000 with outstanding balance of Rs.10.00 crore and below on the cut off date.”
From the above, it is clear that the processing under the guidelines was to be completed by 31st October, 2003. This being the position, Ext.P11 proposal submitted by the petitioner on 21.01.2014 was not a matter, which was to be governed by Ext.P19 Circular under any circumstances. This Court finds that the petitioner's case is not covered by Ext.P19.
11. With regard to the merits, it is seen that the petitioner had approached this Court challenging the course and proceedings pursued by the Bank by filing WP(C) No.24569/2008, wherein interference was declined and the writ petition was dismissed as per Ext.R1(a) judgment on 03.04.2009, however granting one months' time to satisfy the liability. Last paragraph of the said judgment is relevant which is reproduced below:
“In the result, this writ petition is dismissed, however clarifying that if the petitioners pay off the entire outstandings and accruals even through a third party who would purchase the entire holdings or part of the holdings that may be sufficient to satisfy the debt, the bank will stand satisfied by that, provided such action is concluded within one month from now, having regard to the fact that Ext.P2 was issued on 08.07.2008.”
12. Being aggrieved of the above verdict, the petitioner filed W.A. No.1273/009. After considering the Writ Appeal along with other connected matters, interference was declined and the Writ Appeal was dismissed as per Ext.R1(a) judgment dated 12.10.2009. Paragraph 11 of the said judgment reads as follows:
“As far as the Writ Appeal is concerned, we have carefully perused the impugned order. Even during the pendency of this writ appeal we had given ample opportunity to the appellants to find out ways and means to pay off the liability so that they could save the property from distress sale. However, despite the indulgence shown to the appellants, they have not been able to find out any safety route to save the property. In that view of the matter having carefully persued the entire materials on record, we do not find any merit in any of the contentions raised by the appellants. In our view, the learned Single Judge had rightly dismissed the Writ Petition. There is no merit in the Writ Appeal and it is liable to be dismissed. We do so.”
13. Thereafter, the petitioner preferred another writ petition as WP(C) No.7039/2010. Interference was declined and the writ petition was dismissed (by me) as per Annexure R1(C) judgment on 12.03.2014, the last paragraph of which reads as follows;
“In the above facts and circumstances this Court does not find any tenable ground to exercise the discretionary jurisdiction under Article 226 of the Constitution of India. Accordingly, interference is declined and the Writ Petition is dismissed. This, however, will not stand in the way of the petitioner from approaching the respondent Bank for having the matter amicably settled, which, of course will be at the hands of the respondent Bank to consider, if found fit and proper and to give effect to the same accordingly.”
14. Still, further challenge was raised by the petitioner by filing another writ petition WP(C) No.25277/2010, wherein, the entire sequence of events was narrated by this Court and it was held that the petitioner was indulging in abuse of process of Court. Accordingly, interference was declined and the writ petition was dismissed with a cost of `10,000/-, vide Ext.R1(d) judgment dated 20.08.2010 (rendered by me). Paragraph 7 of the judgment reads as follows:
“After hearing both the sides, this Court finds that, there is absolutely no reason to call for interference in this Writ Petition. The prayer in the Writ Petition is to release the property concerned by accepting Rs.25 laksh already deposited with the Bank by the intending purchaser, though the fact remains that the amount deposited by the intending purchaser has been re- transferred to his NRI account, as requested, on 11.8.2010. It is borne out by the records that the petitioner had filed different Writ Petitions/Writ Appeals and other proceedings at different points of time, whereby the proceedings initiated by the respondent Bank were not caused to be taken to a logical conclusion and to some extent he has succeeded, which cannot permitted to be perpetuated any further Time of this Court is also precious and there cannot be any more abuse of the process of Court by the petitioner.
In the above circumstances, the Writ Petition is dismissed with a cost of Rs.10,000/- (Rupees Ten thousand only)”
15. Filing of the above writ petitions/writ appeals and outcome has not been mentioned anywhere in the present writ petition. Incidentally, it is also relevant to note that the Bank had approached the DRT, Ernakulam by filing an O.A. and in the course of further proceedings, the property was put to sale. It was at that point of time, that the petitioner approached this Court by filing WP(C) No.3278/2013, which led to Ext.P3 judgment dated 25.02.2013. As per Ext.P2 interim order dated 05.02.2013, confirmation of the sale was intercepted, subject to satisfaction of a sum of `15 lakhs before 5 p.m. on 06.02.2013, which was complied with. On 15.02.2013, the Bank reported that they were agreeable to settle the liability, if the petitioner paid a sum of `42.66 lakhs on or before 31.03.2013. It was accordingly, that the case was adjourned to be posted on 25.02.2013. On the said day, the learned counsel for the petitioner reported that the petitioner was not willing to pay the amount demanded by the Bank, which in turn was recorded and the writ petition was dismissed; finding that there was no reason to interfere with the proceedings. This led to further steps, issuing Ext.P10 'sale proclamation' for causing the property to be sold on 03.02.2014, followed by the subsequent events.
16. In response to the submission made by the learned counsel for the petitioner that the petitioner was not given breathing time to pay the 'compromise settlement amount' of `28 lakhs approved as per Ext.P17, the learned counsel for the respondent Bank submits that the said version is wrong and unsustainable in all respects, as time was extended till 31.05.2014. Two additional documents has been produced as Exts.R1(f) and R1(g) by the respondent Bank along with I.A. No.16807/2014. Ext.R1(f) is a copy of the petition dated 27.05.2014 preferred by the petitioner, wherein the factum of extension given by the Bank till 31.05.2014 is referred to in the 'opening paragraph', stating that steps are being taken on war footing to satisfy the liability within the extended time, which admittedly has not taken place. The said letter was submitted only on 27.04.2014 ie, about 2 or 3 days back before the last date for satisfying the liability under the 'compromise settlement'. But on receipt of the same, it was replied then and there by the Bank, vide Ext.R1(g) dated 30.05.2014, that all necessary steps will be taken to return the documents forthwith, after getting the same returned from the DRT. Still payment was not effected by the petitioner within the extended time as well, and as such, it is no more open for the petitioner to challenge the proceedings any further. It is also pointed out that the challenge raised against Ext.P10 'sale proclamation' no longer survives, as the sale did not take place on that day and fresh proclamation has been issued by the Bank. The said proceedings are not under challenge in this writ petition.
17. With regard to the non-disclosure of the facts as to filing of the earlier writ petitions/writ appeal, which came to be finalised as per Exts.R1(a) to R1(d) verdicts, the learned counsel for the petitioner submits that he was not aware of the proceedings, as the matter was being pursued through some other lawyer. The said explanation does not appear to be palatable to this Court. The petitioner has filed an affidavit along with the writ petition, swearing that he has not filed any other writ petitions, in connection with the issue involved herein. Ext.P11 and other proceedings, leading to acceptance of the proposal under the OTS Scheme are subsequent events, which however cannot be a ground for not mentioning the relevant facts as to filing of the earlier proceedings and the judgments passed thereon. That apart, when the petitioner was all along asserting that no breathing time was given to the petitioner to satisfy the Compromise Settlement amount communicated vide Ext.P17 dated 28.04.2014 (to be satisfied on 30.04.2014 itself). It has been brought on record that the petitioner was very much aware of the extension of time given to clear the same on or before 31.05.2014, as conceded by the petitioner in Ext.R1(f) letter submitted before the Bank. This fact has also not been brought to the notice of this Court at any point of time. The course and conduct of the petitioner, amounting to abuse of process of the Court, was deprecated by this Court earlier, vide Ext.R1(d) judgment, dismissing the writ petition with a cost of `10,000/-. It has not yielded any result in changing the conduct of the petitioner as reflected from the course and events leading to filing of the present writ petition, as discussed above.
18. This Court finds that, there is absolutely no merit or bonafides in the writ petition and that the petitioner has attempted to take this Court for a ride obtaining an interim order on 31.01.2014, getting the 'confirmation of sale' stayed; however enjoying the benefit without choosing to comply with the condition specified therein.
19. In the said circumstances the writ petition dismissed with a cost of `25,000/- (Rupees twenty five thousand only), to be remitted to the Kerala State Mediation and Conciliation Centre within 'one month'. On failure in satisfying the cost as above, it is open for the Registrar General to issue necessary certificate to the beneficiary for realisation of the cost.
A copy of the judgment shall be forwarded to the Director, Kerala State Mediation and Conciliation Centre.
Sd/-
P.R. RAMACHANDRA MENON, JUDGE.
Pn