The High Court
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IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.20088 of 2022 Hari Kishan Agrwal & others …. Petitioners Mr. G. Mukherji, Sr. Advocate with Mr. M. Acharya, Advocate -versus- State Bank of India & others …. Opp.parties Mr. S. Sarangi, Advocate for Bank for O.P.No.1 Mr. S.P. Mishra, Sr. Advocate with Mr. S. Acharya, Advocate for opp.party no.5/ Auction Purchaser CORAM: JUSTICE JASWANT SINGH JUSTICE M.S.SAHOO ORDER (Oral) 01.02.2023 Hybrid Mode Order No. 04. 1. Hari Kishan Agarwal (petitioner no.1) is the proprietor of M/s. Krishna Enterprises engaged in the business of
Legal Reasoning
trading minerals and related items. The petitioner no.1 is stated to have availed a cash credit facility to the limit of Rs.2.00 crores in the year 2009 from State Bank of India, SME Branch, Rourkela. Petitioner nos.2 to 5 along with the petitioner no.1 are owners of the mortgaged property offered as collateral security bearing khata no.113, plot no.1011 measuring an area of Ac.2.910 decimal in mouza- Rajgangpur ‘kha’ type: Gharabari. 2. Due to non-servicing of the loan account, it was classified as NPA and a demand notice dated 12th April, 2014 issued under Section 13 (2) of the SARFAESI Act, 2002 recalling the outstanding liability of Rs.2,00,45,562/- due as on the said date along with future interest, expenses etc. The recovery process has culminated into auction sale of the aforesaid mortgaged // 2 // property in favour of Baidanath Bharat LLP/opposite party no.5 on 08.04.2022 for a total sale consideration of Rs.8,37,63,000/-. The sale certificate dated 25.04.2022 was issued upon deposit of the entire sale price. 3. It is a matter of record that the petitioners have filed S.A.No.143 of 2021 challenging the order dated 20.12.2019 passed by the District Magistrate, Sundargarh on an application under Section 14 of the SARFAESI Act, 2002 moved by the Bank, whereby official assistance has been ordered to be provided to take over the actual physical possession of the mortgaged/auctioned property. It is also an admitted fact that the petitioners have moved interim applications in the pending S.A. seeking to challenge the auction proceedings including the sale certificate by impleading the auction purchaser. 4. The petitioners aggrieved by non-taking up the S.A.No.143 of 2021, along with the applications seeking interim protection, by the DRT have approached this Court by filing the present petition primarily seeking a direction to the DRT to take up the proceedings, at least the interim applications in an expedited manner. 5. This Court on 11th August, 2022 passed the following order : “1. This matter is taken up by virtual/physical mode. 2. Mr. Gautam Mukherji, Senior Advocate files a memo of appearance on behalf of the Petitioners in Court today and Mr. Manas Acharya, Advocate and associates enter appearance on behalf of the Petitioners and file Vakalatanama, which are taken on record. Page 2 of 7 // 3 // invoking Articles 226/227 of 3. The only prayer being stressed is for a direction to the the DRT by Constitution of India for an early disposal of I.A. No. 377 of 2022 as well as I. A. No. 1029 of 2021 filed in the pending S.A. No. 143 of 2021 inter alia on the ground of violation of the mandatory provision of serving a 15 days clear cut notice of personal service on the borrowers. If that is true, then keeping in view the law settled by the Hon’ble Supreme Court, the entire sale proceeding culminating in favour of Auction Purchaser- Opposite Party No.5 would be liable to be set aside. The Petitioners are also prepared to deposit a sum of Rs.6.44 crores qua the property situated in the Plot No.1011, which would liquidate the loan account in question. That apart, the Petitioners are also ready to compensate the auction purchaser towards the sale price deposited by him. This extraordinary recourse is being adopted bearing in mind the impending issuance of the sale certificate and consequent registration, thereby multiplying the litigation, in the face of the hearing of the I.As being unnecessarily adjourned time to time (referred to page 278 of the paper book). 4. Issue notice for 14th September, 2022. 5. Mr. D.P. Sarangi, Advocate for Opposite Party Nos. 1 &2 , Mr. L. Samantaray, Additional Government Advocate for Opposite Party Nos. 3 & 4 and Mr. Saswat Acharya, Advocate for Opposite Party No.5 appear and waive off notice on behalf of the Opposite Parties respectively. Let requisite number of copies of the writ petition be served on them during the next two working days. 6. As an interim measure, subject to the Petitioner depositing a sum of Rs. 6.44 crores with the Bank, to be kept in a “no lien account” within next three working days, status quo qua the auctioned property, as existing today, shall be maintained till the disposal of the aforesaid I.As by the DRT or the date fixed before this Court, whichever is earlier. Issue urgent certified copy as per rules.” Page 3 of 7 // 4 // 6. Subsequently on 14th September, 2022, this Court in the presence of the parties, passed the following order: “1. This matter is taken up by virtual/physical mode. 2. At the time of hearing today, Mr. S.P. Misra, Senior Advocate appearing the auction purchaser- Opposite Party No.5 submits the following:- for (i) that S.A. No. 143 of 2021 filed by the borrowerPetitioners essentially would relate to the order dated 20th December, 2019 passed by the District Magistrate, Sundargarh on an application moved by the secured creditor/Bank under Section 14 of the SARFAESI Act, 2002, whereas all subsequent orders passed by the executing authority i.e. Sub- Divisional Magistrate etc. are qua implementation of the original order by deploying official assistance for taking over actual physical possession of the secured assets; i.e. I.A. No. 1029 of 2022 (ii) that the borrower-Petitioners also filed another application (wrongly recorded as I.A. No. 1029 of 2021 in the interim order dated 11th August, 2022 in the present W.P.(C) No.20088 of 2022) in S.A. No. 143 of 2021. The prayer in the instant application is for a direction to the Bank not to handover actual physical possession to the successful auction purchaser during the pendency of the I.A. It is submitted that the prayer in the present I.A. is also misplaced in the light of the pleadings of the S.A. and also the non-maintainability of the I.A. No. 377 of 2022 itself based on subsequent separate cause of action; (iii) that admittedly, aforesaid SA No. 143 of 2021 has been filed on 7th December, 2021 much after the expiry of the period of limitation of 45 days along with an application for condonation of delay, which has not been decided till today, meaning thereby no effective order can be passed in the aforesaid pending S.A.; (iv) that the borrower-Petitioners have filed I.A. No. 377 of 2022 in the aforesaid S.A. No. 143 of 2021 laying challenge to the subsequent sale notice dated 14th March, 2022 fixing the auction sale of the mortgaged property/secured assets on 8th April, Page 4 of 7 // 5 // 2022, which would be an independent cause of action. It is submitted that the limited basis available are to be laid in the pleadings by filing a separate SA.; and (v) that in the auction conducted on 8th April, 2022, his client has purchased two properties auctioned by the Bank, including the one for Rs.6.44 crores relatable to the loan account in question of M/s. Krishna Enterprises. 3. Mr. Gautam Mukherji, Senior Advocate appearing for the Petitioner is unable to counter the aforesaid factual position as canvassed by Mr. S.P. Misra, Senior Advocate appearing for auction purchaser. However, he submits that in compliance of the interim order dated 11th August, 2022, a sum of Rs.6.44 crores stands deposited. He clarifies:-The first property was purchased relatable to the account of the present applicant i.e. the proprietorship concerned of Hari Kishan Agarwal under the name and style of M/s. Krishna Enterprises for a sum of Rs.6.44 crores; and the other property was purchased relatable to a separate loan account provided under the name and style of M/s. Krishna Ferro Products Ltd., which is not the subject matter of the present writ or SA No.143 of 2021. 4. At this stage, counsel for the Petitioners prays for an adjournment whereas counsel for the auction purchaser prays for at least a direction to the DRT, Cuttack not to adjourn the hearing of the main S.A. on the question of maintainability in deference to the interim direction passed by this Court on 11th August, 2022. We find the prayer made on behalf of the counsel for the auction purchaser to be reasonable and justified while accepting the prayer of the counsel for the Petitioner an adjournment. 5. List on 15th December, 2022. from The interim order dated 11th August, 2022 is modified to the extent that the DRT, Cuttack is not precluded the question of first deciding maintainability of not only the S.A. but also of the pending I.As. at its own convenience and keeping in view the interest of justice, without being influenced by any observation made by this Court in the interim Page 5 of 7 // 6 // order dated 11th August, 2022. The Bank is further directed to keep the amount deposited of Rs.6.44 crores in an interest bearing ‘no lien account’. Issue urgent certified copy as per rules.” 7. Now the auction purchaser/opposite party no.5 has moved I.A. No.17190 of 2022 seeking vacation of the interim direction passed by this Court, inter alia on the ground that the petitioners-borrowers are making efforts to thwart the registration of the sale deed qua the properties which are not the subject matter of the present loan under the garb of the status quo order passed by this Court. To substantiate the same, reference has been made to a letter dated 29th September, 2022 written by Hari Kishan Agarwal (petitioner no.1) addressed to the Collector & District Magistrate, Sundargarh. 8. After hearing the learned counsel for the parties and noticing that there are serious disputed question of fact, for which the petitioners have already approached DRT, we therefore, proceed to dispose of the main writ petition itself without deciding the application for vacation of stay. The simple prayer stressed in the present petition is for direction to the DRT to take up the S.A. along with the application for interim protection in an expedited manner, so as to avoid prejudice to either of the parties, which we are now inclined to accept. It is not disputed that the DRT is fully functional these days. It is pointed out that the next date fixed in the aforesaid S.A. before the DRT is 10.02.2023. Page 6 of 7 // 7 // 9. Keeping in view the above, we dispose of the present writ petition with the direction to the learned DRT to decide at least the pending applications, in case the pleadings of the applications are complete on the fixed next date or within next two weeks of the said date in accordance with law. The DRT would be free to adjudicate on the amounts deposited in compliance of the orders passed by this Court. Disposed of in the above terms. Judge (Jaswant Singh) (M.S.Sahoo) Judge 1st February, 2023 Cuttack Gs/Radha Page 7 of 7