Disposed

Thummala Sri Ram Reddy, v. Kanchustambam Venkata Satya Prasad

Andhra Pradesh HC8 Nov 2019WP/17575/2019

Case brief

AI extract

What is this about?

The High Court disposed of a writ petition challenging the Debts Recovery Tribunal's order quashing a bank auction. Noting factual controversies regarding notice service, the Court allowed the petitioners to approach the Appellate Tribunal and maintained status quo until the alternative remedy is pursued.

What did the court decide?

Writ petition disposed; petitioners directed to approach Appellate Tribunal within one month; status quo maintained for three months.

Thummala Sri Ram Reddy, Vs Kanchustambam Venkata… — Banking and Recovery | Andhra Pradesh HC (2019)

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THE HONOURABLE SRI JUSTICE A.V.SESHA SAI AND THE HONOURABLE SRI JUSTICE M.GANGA RAO

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WRIT PETITION No.17575 OF 2019

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ORDER : ( Per Honourable Sri Justice A.V.Sesha Sai)

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Heard Sri K.G.Krishna Murthy, learned senior counsel representing Sri K.Rama Mohan, learned counsel for the petitioners; Sri E.V.V.S.Ravi Kumar, learned counsel for the respondent No.1 and Sri Sudha Madhuri, learned counsel for the respondent Nos.2 and 3 respectively before the Court.

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In the present Writ Petition, challenge is to the order, dated 10.10.2019 passed by the Debts Recovery Tribunal, Visakhapatnam in S.A.No.103 of 2019 and in I.A.No.1672 of 2019.

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The facts and circumstances, leading to the filing of the present Writ Petition are as infra:

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The respondent No.1 herein is the principal borrower and the respondent Nos.2 and 3 advanced loan to him. Since the loan account of respondent No.1 herein became NPA, the respondentsBank pressed into service the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The respondents-Bank issued a notice under Sub-Rule (6) of Rule 8 of the Security Interest (Enforcement) Rules, 2002 on 04.09.2018 and thereafter, the said notice was published in the local newspapers on 16.09.2018 and the same was followed by e-Auction Sale notice on 16.10.2018. Finally, the auction was held on 19.11.2018, wherein the petitioner Nos.1 and 2 herein emerged as highest bidders for items 1 and 2 of the schedule properties respectively. Accordingly, the petitioners paid

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the entire sale consideration and the sale certificates were also issued in their favour and followed by execution of sale deed on 10.01.2019. Thereafter, the respondent No.1 herein filed S.A.No.103 of 2019 before the Debts Recovery Tribunal, Visakhapatnam on 07.03.2019, questioning the proceedings initiated by the respondents-Bank, contending that in deviation and in contravention of Sub-Rule (6) of Rule 8 of the Security Interest (Enforcement) Rules, 2002, the respondent-Bank conducted auction. The learned Debts Recovery Tribunal, Visakhapatnam allowed the S.A.No.103 of 2019 on the ground that there was contravention of Sub-Rule (6) of Rule 8 of the Security Interest (Enforcement) Rules, 2002 i.e., failure to maintain 30 days time and the Tribunal had set aside the proceedings initiated by the respondents-Bank under the SARFAESI Act.

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According to Sri K.G.Krishna Murthy, learned Senior Counsel, the said finding recorded by the Debts Recovery Tribunal is contrary to the material available on record. It is further contended by the learned Senior Counsel that when the notice sent to the first respondent under Sub-Rule (6) of Rule 8 of the Security Interest (Enforcement) Rules, 2002 was returned with an endorsement that addressee left and nobody claimed the said notice, the respondents-Bank published the notice under Section Sub-Rule (6) of Rule 8 of the Security Interest (Enforcement) Rules, 2002 in the local newspaper on 16.09.2018 and the same was followed by e- Auction held on 19.11.2018 and while referring to the said dates, it is contended by the learned senior counsel that strictly adhering to the mandatory requirements as provided under the Rules, the

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auction was conducted, as such the Tribunal grossly erred in setting aside the proceedings.

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On the contrary, it is strenuously contended by Sri E.V.V.S.Ravi Kumar, learned counsel for respondent No.1 that as per Sub-Rule (6) of Rule 8 of the Security Interest (Enforcement) Rules, 2002, it is mandatory on the part of the authorized officer to serve notice of 30 days for sale of immovable secured assets and the non-compliance of the said mandatory requirement is fatal and on this ground alone the entire proceedings get vitiated. It is also the submission of the learned counsel that having regard to the alternative remedy available to the petitioners herein under Section 18 of the Act, the present Writ Petition cannot be maintained before this Court under Article 226 of the Constitution of India. It is further submitted by the learned counsel for respondent No.1 that during every second week of the month, an officer is coming from Allahabad and he is holding the Court at Kolkata, as such the petitioners herein can approach the Appellate Tribunal for redressal of their grievance.

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On the other hand, it is submitted by the learned senior counsel that the said arrangement before the Appellate Tribunal cannot be construed as an effective alternative remedy.

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The above narration clearly reveals that certain factual controversies with regard to the service of notice are required to be gone into, and for redressal of their grievance, petitioners can approach the Appellate Tribunal constituted under Section 18 of the Act. Therefore, leaving it open to the parties to the present

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litigation to have adjudication on these factual controversies, before appropriate forum, this Court deems it appropriate to dispose of this Writ Petition, while making some interim arrangement.

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Having regard to the nature of the controversy and for the aforesaid reasons, the Writ Petition is disposed of leaving it open to the writ petitioners herein to approach the Appellate Tribunal by filing an appeal against the orders impugned in the present Writ Petition, within a period of one month from the date of receipt of a copy of this order. For a period of three months from today, Status quo as on today with regard to the subject property shall be maintained. It is also made clear that in the event of failure on the part of the petitioners herein to avail alternative remedy as indicated supra within the time stipulated, this order would not enure to the benefit of the petitioners and it is open for the respondents to proceed further in accordance with law in terms of the order of the Tribunal.

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Consequently, miscellaneous applications pending if any, shall also stand closed.

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___________________ JUSTICE A.V.SESHA SAI

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___________________ JUSTICE M.GANGA RAO

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Dated 08.11.2019. SPR

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THE HONOURABLE SRI JUSTICE A.V.SESHA SAI AND THE HONOURABLE SRI JUSTICE M.GANGA RAO

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WRIT PETITION No.17575 OF 2019

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Dated 08.11.2019 SPR

Thummala Sri Ram Reddy, v. Kanchustambam Venkata Satya Prasad

Case brief

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Thummala Sri Ram Reddy, v. Kanchustambam Venkata Satya Prasad

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