Patna High Court
Case Details
IN THE HIGH COURT OF JUDICATURE AT PATNA Civil Writ Jurisdiction Case No.192 of 2013 ====================================================== 1. Anant Kumar Jain S/O Sri Shyam Sundar Sarawagi' R/O Phulori Gali, P.S. Chowk, District Patna. .... .... Petitioner/s Versus 1. The Branch Manager The Central Bank Of India, Jhauganj, P.S. Chowk, District Patna. 2. The Central Bank Of India, CBI, House Nariman Point, Mumbai Through Its Chairman Cum Managing Director. 3. Regional Manager Cum Authorized Officer, The Central Bank Of India, Regional Office, Mourya Lok, Patna. 4. Rakesh Kumar Yadav, R/O Hari Mandir Gali, P.S. Chowk, Patna City, District-Patna. .... .... Respondent/s ====================================================== with Civil Writ Jurisdiction Case No.2760 of 2013 ====================================================== 1. Anant Kumar Jain S/O Sri Shyam Sundar Sarawagi R/O Phulori Gali, P.S.- Chowk, Distt.- Patna .... .... Petitioner/s Versus 1. The Branch Manager State Bank Of Bikaner &Jaipur, Hajiganj Branch, P.S.- Chowk, Distt.- Patna 2. The State Bank Of Bikaner & Jaipur Frazer Road, Patna-1 Through Its Chairman-Cum-Managing Director 3. Regional Manager, Authorized Officer The State Bank Of Bikaner & Jaipur, Regional Office, Abhay Bhawan, Frazer Road, Patna .... .... Respondent/s ====================================================== with Civil Writ Jurisdiction Case No.2782 of 2013 ====================================================== 1. Anant Kumar Jain S/O Sri Shyam Sundar Sarawagi R/O Phulori Gali, P.S.- Chowk, Dist.- Patna .... .... Petitioner/s Versus 1. The Branch Manager, The Punjab National Bank, Chowk, P.S.- Chowk, Dist.- Patna 2. The Punjab National Bank, Through Its Chairman-Cum-Managing Director, Null Buddha Colony, Patna- 1 3. Chief Manager, Special Assets Recovery Cell, The Punjab National Bank, Buddha Colony, Null Patna- 1 .... .... Respondent/s Patna High Court CWJC No.192 of 2013 (13) dt.20-06-2013 2 ====================================================== Appearance : (In CWJC No.192 of 2013) For the Petitioner/s : Mr. N.K. Agrawal, Senior Advocate Mr. P.C. Agrawal For Central Bank : Mr. Ajoy Kumar Sinha For Respondent No.4 : Mr. J.S. Arora (In CWJC No.2760 of 2013) For the Petitioner/s : Mr. N.K. Agrawal, Senior Advocate Mr. P.C. Agrawal . For State Bank of Bikaner And Jaipur : Mrs. Nilu Agrawal (In CWJC No.2782 of 2013) For the Petitioner : Mr. N.K. Agrawal, Senior Advocate Mr. P.C. Agrawal . For Punjab National Bank: Mr. Kumar Priya Ranjan ====================================================== CORAM: HONOURABLE MR. JUSTICE RAMESH KUMAR DATTA ORAL ORDER 13 20-06-2013 Heard learned counsel for the petitioner and learned counsels for the Central Bank of India, State Bank of Bikaner and Jaipur and the Punjab National Bank as also learned counsel for the purchaser (respondent No.4). All the three writ applications pertain to SARFAESI proceedings having been initiated with respect to the same property and they have, accordingly, been heard together and are
Decision
being disposed of by this common order at the stage of Admission itself with the consent of the parties. The short facts of the case are that the petitioner is a part owner of the property in question against the security of which his Patna High Court CWJC No.192 of 2013 (13) dt.20-06-2013 3 elder brother Sumant Kumar by himself or through his wife, Smt. Veena Devi, had taken loans from the three banks for different concerns in different years. The petitioner was the guarantor of the loan taken by Ms. Shyam Enterprises of which Smt. Veena Devi was the proprietor and the father of the petitioner was a guarantor for the other loans and the residential house of the petitioner and other members of the family had been given as collateral security against the said loans. The brother of the petitioner and his wife could not liquidate the loans due to failure of their businesses and fled away from the house and city in the year 2005. The petitioner claims that he has no knowledge about their whereabouts. All the three banks initiated separate proceedings under the SARFAESI Act with respect to different loans in different years; the Central Bank of India in the year 2007, State Bank of Bikaner and Jaipur in the year 2008 and Punjab National Bank in January, 2010. In due course, they also issued notices for taking over possession of the property which was also published in different newspapers. However, the Central Bank of India proceeded further in the matter and issued sale notice on 21.11.2011. The petitioner, who was a guarantor of the said loan, claims that no notice was ever served upon him regarding initiation of SARFAESI proceedings by the respondent Central Bank. Patna High Court CWJC No.192 of 2013 (13) dt.20-06-2013 4 It is the further stand of the petitioner that the sister of the petitioner filed Title Suit No.189 of 2011 in the Court of Subordinate Judge-I, Patna City for the partition of the said residential house in which the Central Bank was also made party. The Central Bank of India filed its written statement in the said suit on 16.1.2012 from which the petitioner came to know that the house in question has been auction-sold by the respondent Bank. The petitioner, thereafter, claims to have immediately approached the Bank and enquired about the status of the residential house and was informed by the officers of the Bank that the auction-sale is yet to be confirmed and sale amount is yet to be received as the process of auction-sale is not completed as yet. The petitioner made an offer that he is ready to liquidate the sale amount and asked for the statement of the loan-account but no such statement was ever given to him. The petitioner continued to regularly visit the bank and demanded the documents so that he could pay the loan amount but on every occasion, the officers of the Bank merely gave him an assurance that nothing was going to happen as the purchaser had failed to deposit the sale amount with the Bank and it had become time barred. The petitioner repeatedly requested the bank that he was ready to pay the substantial amount of the loan account forthwith and he may be given some more time so Patna High Court CWJC No.192 of 2013 (13) dt.20-06-2013 5 that he can arrange money and liquidate the rest amount within a short period of time and again requested to stay further proceedings as it was the only residential house in which he was residing along with his family members since long. However, the same was not heeded by the Bank upon the oral requests made by him. On 20.12.2012, the officials of the respondent Bank along with police came to the residential house of the petitioner and lock was put on the main gate of the house after ousting the petitioner and his family members from the house in question. It is also the stand of the petitioner that the total area of the house in question is 1670 sq. ft., whereas the collateral security was given only for an area of 1502 sq. ft. but the respondents have taken possession of entire 1670 sq. ft. and sold the same. The main allegation of the petitioner, however, is that the house has been sold for an amount of Rs.12.96 Lacs, whereas the loan of the Central Bank of India with interest was to the extent of Rs.12.39 Lacs only which was a gross under valuation of the property which is worth about Rs.70/- lacs according to the petitioner. With respect to the loans taken by the petitioner’s brother from the State Bank of Bikaner and Jaipur and Punjab National Bank, the proceedings were initiated under the SARFAESI Act Patna High Court CWJC No.192 of 2013 (13) dt.20-06-2013 6 and possession notice had been issued by the said Banks on different dates. Learned counsel for the petitioner submits that the sale made by the Central Bank of India is bad on different counts. It is submitted that no such sale could have been made without serving the notice of SARFAESI proceedings upon the petitioner who was the guarantor of the loan and, therefore, he would be considered within the definition of ‘borrower’ under the provisions of Section 2 (f) of the SARFAESI Act, 2002. It is, thus, submitted that non- service of notices of the proceedings at any stage to the petitioner makes the entire sale bad and no right can accrue on the basis of such sale made in favour of the purchaser respondent No.4, Rakesh Kumar Yadav. However, the main stand of learned counsel for the petitioner is that the property in question was grossly undervalued by the bank in collusion with the purchaser so as to just about cover the loan amount outstanding, whereas the value of the property is much higher, i.e., about Rs. 70,00,000/- Lacs. In this regard, it is pointed out by learned counsel for the petitioner that the same property has been got valued by the other two banks also and the State Bank of Bikaner and Jaipur has fixed a reserve price of Rs.21.83 Lacs, whereas the Punjab National Bank has fixed Patna High Court CWJC No.192 of 2013 (13) dt.20-06-2013 7 reserve price of Rs.29.53 Lacs. It is, in fact, urged that the valuation is much higher as even today the petitioner is willing to liquidate the dues of the three Banks in order to save his property and the total outstanding dues of the three Banks, as of today, comes to Rs.48-49 Lacs. It is, thus, submitted that the reserve price of Rs.12.75 fixed by the Central Bank of India was in gross abuse of the powers conferred upon it under the SARFAESI Act and for the said reason alone the auction sale of the property in question made by the Central Bank of India ought to be quashed. Learned counsel for the respondent Central Bank of India, on the other hand, submits that notices had been sent to the petitioner also at the address which was available with the Bank and no change of address was ever communicated by the petitioner to the Bank. It is also submitted that a public notice was also published in the newspaper and it would be presumed that the petitioner was aware of the SARFAESI proceedings. It is also the submission of learned counsel that the entire auction process was legal and the money was also deposited within the time granted and possession has been given and thus the sale cannot be quashed. Learned counsel for the Central Bank of India also contends that the petitioner has become aware of the auction sale on the Patna High Court CWJC No.192 of 2013 (13) dt.20-06-2013 8 basis of the written statement filed by the Bank in the title suit for partition filed by the sisters of the petitioner but he has approached this Court after much delay. It is also contended that the Bank has got the property valued and on the basis of the valuation report, the reserve price has been fixed and thus it is not correct to say that the valuation of the property in question has not been done properly. Learned counsel for the purchaser while reiterating the submission made by the Bank also submits that the petitioner has alternative statutory remedy against the sale and thus the writ petition should not be entertained. It is also the contention that neither the banks nor the petitioner has challenged the sale made in favour of the purchaser and thus the writ petition should not be allowed. Learned counsels for the State Bank of Bikaner and Jaipur and Punjab National Bank, on the other hand, submit that the sale has been made at a valuation which is much less than the valuation according to the reserve price fixed by these two Banks in their sale notices. It is also submitted by learned counsels for the Banks that since the other two Banks have also initiated the SARFAESI proceedings and have issued public notice in the newspapers, the Central Bank of India should not have proceeded in the manner so Patna High Court CWJC No.192 of 2013 (13) dt.20-06-2013 9 as to realize only its loan amount, whereas the property could have been sold at much higher price since the petitioner himself is willing to pay the loan amounts of all the three Banks. It is also the stand of learned counsels for the other two Banks that under a joint sale the price of the property in question could have been obtained which would have been to the benefit of all the three Banks and it was not open to the Central Bank of India to have proceeded alone in the matter under the SARFAESI proceedings ignoring the SARFAESI proceedings initiated by other two Banks. I have considered the submissions of learned counsels for the parties. It is evident from the materials on the record that notices of SARFAESI proceedings have not been served upon the petitioner for whatever reasons. The petitioner being a guarantor of the loan is certainly entitled to receipt of the notice and the registered post notice sent by the Central Bank of India having been returned, steps should have been taken by the Bank so that the notices were duly served. However, the main aspect of the matter is that the property in question appears to have been grossly undervalued by the Central Bank of India while making the sale at a price of Rs.12.96 lacs which appears to be quite unconscionable whereas the reserve price of Rs.21.83 lacs has been fixed by the State Bank of Bikaner Patna High Court CWJC No.192 of 2013 (13) dt.20-06-2013 10 and Jaipur and reserve price of Rs. 29.53 has been fixed by the Punjab National Bank. Moreover, the petitioner has been expressing his willingness not only to return forthwith the entire loan amounts of the Central Bank of India but has also agreed to compensate the purchaser by payment of interest on the amount that he has paid and any further amount that may be directed by the Court and in addition to the same, he is willing to liquidate the entire loan of State Bank of Bikaner and Jaipur and Punjab National Bank which together comes to more than Rs.36 Lacs as per the submissions made by learned counsels for the said respondent Banks within a reasonable period of time as may be fixed by this Court. Thus, it appears that the petitioner is willing to pay an amount of approximately Rs.48-50 Lacs in order to save his property. According to the valuation report of the Government approved valuer filed by the petitioner, the value of the said property comes to Rs.69, 90,000/-. This Court would not normally interfere with an auction- sale under the SARFAESI proceedings but if it is found that the property has been sold for a grossly insufficient amount then it is the duty of this Court to interfere in such matter and quash such sale. This Court is not in agreement with the contention of Patna High Court CWJC No.192 of 2013 (13) dt.20-06-2013 11 learned counsel for the purchaser that no challenge has been made to the sale as the notice dated 18.12.2012 was issued by the Central Bank of India under the provisions of the SARFAESI Act by the Authorized Officer of the Central Bank of India stating that the house in question has been sold and it should be vacated. The same itself is under challenge in the present matter and further direction has been sought directing the respondents to refrain from registering the sale in favour of the buyer in terms of the Security Interest (Enforcement) Rules as also other subsidiary directions. Thus, in effect, the challenge in CWJC No.192 of 2013 is to the entire process under the SARFAESI proceedings leading up to the sale of the house in question. Thus, on a consideration of the facts and circumstances of the case, this Court is of the view that the sale made by the respondent Central Bank of India in favour of respondent No.4, Rakesh Kumar Yadav cannot be allowed to stand. The same is, accordingly, quashed. The petitioner is depositing in Court three demand drafts of Rs.5,00,000/-, Rs. 3,00,000/- and Rs.2,00,000/- totaling Rs.10,00,000/- in favour of the Central Bank of India drawn on the Oriental Bank of Commerce, CBS Branch, Patna. The petitioner also undertakes to deposit within a period of 15 days from today Patna High Court CWJC No.192 of 2013 (13) dt.20-06-2013 12 the remaining amount of dues of the Central Bank with interest up-to-date, the details of which would be supplied to him by the Central Bank of India within a week from today. The Central Bank of India is directed to return the amount of Rs.12.96 to the purchaser with interest at the same rate which it is charging from the loanee till the date of payment. In addition the petitioner shall compensate the purchaser by paying him further 10% of the sale price, i.e. Rs.1,29,600/ within a period of 15 days from today. The petitioner shall also pay an amount of Rs.50,000/- in lump sum to the Central Bank as cost and charges of SARFAESI proceedings. So far as the dues of the State Bank of Bikaner and Jaipur and the Punjab National Bank are concerned, the petitioner shall also pay an amount of Rs. 2,00,000/- to the State Bank of Bikaner and Jaipur and Rs. 1,50,000/- to the Punjab National Bank within a period of one month from today, i.e., on or before 20.7.2013. Learned counsel for the petitioner further submits that waiver of interest is being allowed by the Banks in case of repayment of such non-performing assets and the State Bank of Bikaner and Jaipur and the Punjab National Bank may be directed to give such waiver to the petitioner if such an application is filed. Let the petitioner file an application for waiver of interest before the said two Banks within two weeks from today and the Patna High Court CWJC No.192 of 2013 (13) dt.20-06-2013 13 authorities of the Banks are directed to consider the same favourably keeping in view the benefits that are being granted to other customers who are being proceeded with under the SARFAESI Act and also the peculiar facts and circumstances of the case. The petitioner is directed to deposit a further amount of Rs.5,00,000/- before the State Bank of Bikaner and Jaipur and Rs.3,50,000/- before the Punjab National Bank on or before 20th September and thereafter continue to deposit the same amounts respectively on or before the 20th of each succeeding month until the entire dues of the said Banks are liquidated. The SARFAESI proceedings initiated by the two Banks shall in the meantime remain in abeyance. All the three writ applications are, accordingly, allowed in terms of the aforesaid directions but failure of the petitioner to comply with any part of the directions shall revive the SARFAESI proceedings by the concerned Banks whose instalments are not paid in time from the stage prevailing today. Let the three cheques be handed over to learned counsel for the Central Bank of India. On payment of the entire dues of the Central Bank of India and the purchaser, the respondent No.4 shall hand over possession of the property in question to the petitioner. The possession shall be handed over in the presence of Patna High Court CWJC No.192 of 2013 (13) dt.20-06-2013 14 the officers of the Bank who shall verify that it is as per the inventory made at the time of handing over possession to the purchaser and in case of any missing item state the said fact in the Report to be prepared by the Bank officials in this regard. V.P.Sinha/- (Ramesh Kumar Datta, J)