AJN v. Bank of Maharashtra & Anr.

Mr. Girish Agarwal i/b Mr. Mangesh Patel for the petitioner. Mr. N.K. Kamat for respondent 1. CORAM : SMT. RANJANA DESAI & A.A. SAYED, JJ. DATED : 24TH AUGUST, 2009. P.C. :-

Petitioner 1 is a partnership firm and petitioners 2 and 3 are its partners. Petitioner 1 claims to be the owner of Flat No.401, Sheetal Apartment, Golanjee Hill Road, Sewree, Mumbai – 400 015 (for short, “the said flat”). In this petition filed under Article 226 of the Constitution of India, the petitioners have inter alia prayed that the action AJN 2 initiated by respondent 1 i.e. the Bank of Maharashtra under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, “the NPA Act”) be declared as null and void.

It is necessary to begin with the facts of the case. The petitioners approached respondent 1 for cash credit facility of Rs.75 lakhs. The said cash credit facility was availed of by the petitioners prior to 2004. In the year 2006, the petitioners approached respondent 1 with a request that the existing cash credit facility be enhanced from Rs.75 lakhs to Rs.150 lakhs against the security of the said flat. Accordingly, respondent 1 extended the said facility and the petitioners executed the required documents.

The petitioners failed and neglected to repay the outstanding dues under the said cash credit facility. Respondent 1, therefore, issued demand notice dated 9/6/2007 to the petitioners under Section 13(2) of the NPA AJN 3 Act and called upon the petitioners to repay to the 1st respondent in full the outstanding amount of Rs. 2,02,97,000/- along with interest at 15.25% p.a. from 10/6/2007 within the statutory period of 60 days from the date of receipt of the demand notice. The said notice was served on the petitioners. Learned counsel for respondent 1 has filed a compilation of documents. It contains letter dated 18/12/2007 addressed by the petitioners to respondent 1 confirming that the petitioners have received all notices. Despite the service of the statutory notice, the petitioners did not repay the outstanding loan amount. Respondent 1, therefore, filed application under Section 14 of the NPA Act which was allowed on 23/7/2008. According to the petitioners, they had filed Securitisation Application No.37 of 2008 before the Debt Recovery Tribunal (for short, “the DRT”). The petitioners were, however, not successful. They withdrew it. After obtaining necessary order under Section 14 of the NPA Act, respondent 1 sold the said flat to one Mr. Anwar Umar Kazi and adjusted the net sale proceeds of AJN 4 Rs.59 lakhs to the petitioners’ account. The said sale was confirmed on 25/10/2007. By this petition, the petitioners want to challenge the said sale.

We have heard learned counsel for the petitioners. He submitted that the said flat is sold at a throw away price which is much lower than its market price and this has caused great prejudice to the petitioners. He pointed out that the sale notice is not served on the petitioners as provided under Rule 8(6) of the Security Interest (Enforcement Rules), 2002 (for short, “the said Rules”). Learned counsel submitted that one prospective buyer is prepared to a pay higher purchase price which will reduce the petitioners’ liability to a great extent and in the circumstances, the sale of the said flat be set aside.

We have also heard learned counsel for respondent

1. He submitted that the petition deserves to be dismissed. He has taken us through the affidavit of Ms. Mamata Nitin Sawant, the Chief Manager of respondent 1. AJN 5 Learned counsel submitted that the sale is confirmed way back on 25/10/2007. He submitted that Rs.59 lakhs which were recovered by respondent 1 from the buyer have been adjusted to the petitioners’ account. He submitted that for the remaining amount, respondent 1 has got a decree of the DRT and that decree is to be executed. Learned counsel has taken us through the DRT’s judgment and order dated 2/6/2009. The DRT has directed the petitioners to pay to respondent 1 Rs. 1,21,52,553.88 with interest at 12% per annum from 1/10/2006 till payment. Thus, a huge sum is still outstanding.

In our opinion, the sale which is confirmed on 25/10/2007 cannot be set aside. Respondent 1 extended cash credit facility to the tune of Rs.150 lakhs to the petitioners. The petitioners failed to repay the amount. Action under the NPA Act was initiated by respondent 1. In her affidavit, Ms. Sawant, Chief Manager of respondent 1 has stated that the petitioners had filed two AJN 6 securitization applications. It appears that the petitioners were not successful in challenging the action initiated by respondent 1. The petitioners have approached this court after the confirmation of sale. The rights in respect of the said flat are already transferred to the buyer. It is pertinent to note that the buyer is not made a party to the petition. In the circumstances of the case, such a belated attempt to set aside the confirmed sale cannot be entertained. Hence, the petition is rejected. [SMT. RANJANA DESAI, J.]

[A.A. SAYED, J.]