CORAMTHE HONOURABLE MR v. The Custodian

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 27.09.2007CORAMTHE HONOURABLE MR.JUSTICE M.CHOCKALINGAMW.P.NO.17986 OF 2006ANDM.P.NOS.1 AND 2 OF 2006ICICI Bank Limited,rep. by its Chief Manager,9th Floor,West Wing,93, Santhome High Road,Chennai-600 028.. PetitionerVs.1.The Custodian, Office of the Custodian Special Court (TORTS) Act, 1992, Banking Division, Department of Economic Affairs, Ministry of Finance, Government of India, 3rd Floor, Bank of Baroda Bhavan, 16,Parliament Street, New Delhi-110 001.2.M/s.Alsa Marine & Harvest Ltd., New No.T/23, 1st Floor, 4th Main Road, Anna Nagar, Chennai-600 040.3.State Bank of India, Stressed Asset Management Branch, 5th Floor, New No.157-A, Anna Salai, Chennai-600 002.4.V.Vijayakumar, Manager, Punjab National Bank, Kancheepuram Branch, 514-515, Gandhi Road, Kancheepuram-631 501.. Respondents This writ petition has been preferred under Article 226 of theConstitution of India praying for the issue of a writ of mandamus,forbearing the first respondent from proceeding with the auction of thelanded property situated at S.Nos.343 and 358, Vilambur Kuppam, VilamburPost, Cheyyur Taluk, Kancheepuram District, Tamil Nadu, admeasuring 5.9725 https://hcservices.ecourts.gov.in/hcservices/ acres scheduled to be held on 20.06.2006 pursuant to the publication madein the Chennai Edition of New Indian Express, dated 3.6.2006. For Petitioner : Mr.A.L.Somayaji,Senior Counsel for Mr.A.GovindasamyFor Respondents: Mr.A.S.VijayaraghavanORDERSeeking writ of mandamus, the petitioner Bank has filed thiswrit petition to forbear the first respondent from proceeding with theauction of the landed property situated at S.Nos.343 and 358, VilamburKuppam, Vilambur Post, Cheyyur Taluk, Kancheepuram District, Tamil Naduadmeasuring 5.9725 acres scheduled to be held on 20.06.2006 pursuant tothe publication made in the Chennai Edition of New India Express dated3.6.2006.2.The affidavit filed in support of the petition and also the counteraffidavit are perused. The court heard the learned counsel on either side. 3.The case of the petitioner in short is that the second respondentwas sanctioned from the petitioner Bank the term loan as mentioned in thepetition; that the second respondent had also availed credit facilitiesfrom the State Bank of India in the form of Rupee Term Loan of Rs.819.00lakhs and Working Capital Limit of Rs.1940.00 lakhs; that in order tosecure the above facilities, the second respondent has mortgaged itsproperties on 31.7.1998, namely factory land and building situated atKolkata, Andhra Pradesh and Tamil Nadu by way of Equitable Mortgage bydeposit of original title deeds with the Secured Lenders by way of paripassu first charge in favour of Secured Lenders; that the secondrespondent had also created equitable mortgage in respect of itsproperties, namely the land situated in S.Nos.343 and 358, VilamburKuppam, Vilambur Post, Cheyyur Taluk, Kancheepuram District, admeasuring5.9725 acres in favour of the Secured Lenders, namely the petitioner Bankand the State Bank of India; that since the second respondent was unableto meet the commitments, the Company made a reference to the BIFR, as asick company; that accordingly, the petitioner Bank was appointed asOperating Agency by BIFR to submit the rehabilitation package; that asthere was no scope for rehabilitation, BIFR, vide order, dated 25.8.2003,issued show cause notice for winding up of the company in Case No.421 of2000; that the second respondent preferred a writ petition, challengingthe order of the BIFR; that in the meanwhile, interim applications werefiled and they were also pending; that the second respondent also filedWPMP, seeking permission to sell the farm land measuring 85.85 acressituated at Uthukur Village, Vidavalur Mandalam, Kovur Taluk, Nellore,Andhra Pradesh and also the factory situated at Plot No.E-37, IndustrialEstate, Podalakur Road, Nellore; that the High Court has also grantedpermission on 21.9.2004 to sell the land and also the factory buildingwith a direction to deposit the entire sale proceeds with the Banks forappropriation; that the farm land could not be sold; that the factory landand building have been sold and the entire sale proceeds were actuallydeposited; that further, the second respondent filed another WPMP, seekingpermission to sell the factory land measuring 0.5875 acres situated atWest Bengal; that permission was granted and accordingly, the propertieswere sold and the sale proceeds were deposited; that while the matterstood thus, the second respondent has also filed another WPMP, seeking https://hcservices.ecourts.gov.in/hcservices/ permission to sell the land and building situated at Beach Road,Bheemanipattinam, Visakhapatnam; that a public notice has been publishedin the Chennai edition of New Indian Express that the properties situatedin S.Nos.343 and 358, Vilambur Kuppam, Vilambur Post, Cheyyur Taluk,Kancheepuram District, measuring 5.9725 acres, which property had alreadybeen mortgaged in favour of the secured lenders, were to be sold in apublic auction; that from the public notice, it is stated that the SpecialCourt has appointed Punjab National Bank, being the 4th respondent, toconduct the auction scheduled for 20.6.2006 through the first respondentcustodian and that at this juncture, the petitioner has brought forth thiswrit petition seeking relief as one asked for. 4.The only contention put forth by the learned counsel for thepetitioner is that the properties, which are now sought to be sold,pursuant to the order of the Special Court through the custodian, ifallowed to be done so, the entire interest of the petitioner Bank would bejeopardised; that actually the properties, which are sought to be sold,are actually the subject matter of equitable mortgage created by thesecond respondent in favour of the petitioner herein; that when theattachment order was passed by the Special Court, there is no provision ismade in respect of the liability of the second respondent; that so far asthe petitioner was concerned, the attachment which has been made wasoutside the purview of the matter and without jurisdiction for the reasonthat the agreement of Hypothecation and Hire Purchase was entered on20.02.1991, which is prior to the notified period, namely 1.4.1991 and6.6.1992 and under these circumstances, the attachment, which has beenmade, is illegal and hence, the public auction for the sale of theproperty by the first respondent should not be allowed to be done andhence, it has got to be stopped and for that purpose, this writ petitionhas been brought forth.5.The court heard the learned counsel for the respondents. Accordingto him, in a proceedings pending on the file of the Special Court, Mumbaiin M.P.No.104 of 1999 E.A.No.94 of 2005, the attachment has been made inrespect of the property in question. As per the order, the property was tobe sold by the first respondent, custodian, who was appointed by theSpecial Court and under these circumstances, no question of stopping therespondents, including the first respondent, from conducting auction forsale would arise, since the first respondent is acting pursuant to theorder of the Special Court; that if really, the petitioner is aggrieved bysuch an order of attachment either, or for the auction sale, it is for thepetitioner to move the very Special Court for necessary relief; that solong as the attachment order is in force and the auction sale is scheduledto take place pursuant to the attachment order, no question of quashing orstopping the sale would arise; that once the order has been passed by theSpecial Court, Mumbai in exercise of the jurisdiction, no question ofmaking any application before this court either, or stopping or quashingthe proceedings would arise and under these circumstances, the writpetition itself is misconceived and hence, it has got to be dismissed. 6.After careful consideration of the submissions made, the court isof the considered opinion that the writ petition requires a very shortorder, as follows:The case of the petitioner in short is that the properties, which arenow brought for sale by the custodian, the first respondent, wereoriginally mortgaged by the second respondent with the secured lenders, https://hcservices.ecourts.gov.in/hcservices/ including the petitioner Bank for availing loan. The second respondent hasalso executed equitable mortgage and hence, the properties are coveredunder the mortgage. Now, if the properties are allowed to be sold as perthe attachment order passed by the Special Court, Mumbai, all the rightsof the petitioner would be jeopardised. At this juncture, it is pertinentto point out that the first respondent is actually the custodian, who isacting pursuant to the order of the Special Court. It is not incontroversy that the attachment order has been passed in respect of theproperties in question by the Special Court and pursuant to the orders ofthat court, the properties are brought for sale by the first respondentCustodian, who was also appointed by the Special Court. Under thesecircumstances, so long as the orders of attachment and the sale made bythe Special Court are in force, no question of passing any order, stoppingthe sale would arise. Apart from that, as rightly pointed out by thelearned counsel for first respondent, this court has no jurisdiction topass any order. Since the order of attachment was made by the SpecialCourt, Mumbai, this court cannot entertain such a writ petition or grantthe relief. If really the petitioner is aggrieved, he can move theSpecial Court for necessary relief. The petitioner is at liberty to movethe Special Court for necessary relief. With the above observation, thiswrit petition is disposed of. No costs. Consequently, the connected MPsare closed. vvksd/-Asst.Registrar/true copy/Sub Asst.RegistrarTo1.The Custodian, Office of the Custodian Special Court (TORTS) Act, 1992, Banking Division, Department of Economic Affairs, Ministry of Finance,Government of India, 3rd Floor, Bank of Baroda Bhavan, 16,Parliament Street, New Delhi-110 001.2.State Bank of India, Stressed Asset Management Branch, 5th Floor, New No.157-A, Anna Salai, Chennai-600 002.+ 1 cc to Mr.V.Perumal Advocate SR.NO.60301+ 1 cc to Mr.A.S.Vijayaraghavan Advocate SR.NO.60609TEJ(CO)RD 5.10.07W.P.NO.17986 OF 2006