M/S. Kalyani Exporters and Ors. Vs the Greater Bombay Co-Op. Bank Ltd. and Ors.

 IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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 O. O. C. J.

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 WRIT PETITION (LODG.) NO.365 OF 2005

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 M/s.Kalyani Exporters & Ors. ..Petitioners.

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Vs.

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 The Greater Bombay Co-op.

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 Bank Ltd. & Ors. ..Respondents.

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 Mr.S.K.Jain with Mr.Nishit Dhruva with Mr.Prakash

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 Shinde for the Petitioners.

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 Mr.V.R.Walavalkar with Mr.Sameer Bhalekar for

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 Respondent Nos.1 and 2.

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CORAM : DR.D.Y.CHANDRACHUD, J.

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 1st March, 2005.

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P.C.:

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 1. A recovery certificate was issued on 27th July,
 2004 against the Petitioners in pursuance of
 proceedings under Section 101 of the Maharashtra
 Co-operative Societies Act, 1960 in the amount of
 Rs.2,14,06,761/- together with future interest at
 the rate of 17% per annum from 1st May, 2004 on a

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 principal sum of Rs.1,87,20,273/-. The recovery
 certificate was eventually challenged before this
 Court by the Petitioners herein in a petition under
 Article 226 (Writ Petition 8011 of 2004). On 1st
 October, 2004 D.B.Bhosale, J. disposed of the
 petition in the following terms :

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 "Petitioner nos.2 to 4, partners of petitioner
 no.1, have filed affidavit admitting the
 liability to pay the amount as per the
 recovery certificate and have provided the
 Schedule in the affidavit for making payment
 to the Respondent - Bank. Mr.Bhalekar,
 learned counsel for the Respondent-Bank,
 states that the Respondent- Bank has no
 objection for disposing of this petition in
 terms of the affidavit. The affidavit of the
 petitioners is taken on record and marked "X"
 for identification. The undertakings given in
 the affidavit are accepted. The writ petition
 stands disposed of in terms of the
 undertakings.

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 Needless to state that the respondent-Bank
 shall raise the attachment on payment of the

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 amount by the petitioners as mentioned in the
 affidavit."

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 2. An affidavit was filed by the Petitioners
 before this Court in the earlier proceedings to
 which there is a reference in the order dated 1st
 October, 2004 and it was stated in the order that
 the bank had no objection to the petition being
 disposed of in terms thereof. Paragraph 3 of the
 affidavit contained a description of certain
 non-agricultural land situated at Bheemahalli
 Village, Ramnagaram Taluka, Bidadi Hubli. In
 paragraphs 5 and 6 of the affidavit the Petitioners
 stated and undertook thus:

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 "5. We say that the aforesaid pieces of land
 are free from all encumbrances. We hereby
 undertake that if for any reason we fail to
 pay Rs.20,00,000/- within 10 days from today
 or fail to pay the balance amount of
 Rs.2,08,92,326/- along with interest thereon @
 17% - on or before 31st December, 2004, we
 shall handover vacant and peaceful possession
 of the said property to Respondent No.1 and

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 Respondent No.1 will be at liberty to proceed
 with the sale of the said property.

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 6. We further say that if Respondent No.1 for
 any reason not able to sale the said Banglore
 property and/or satisfy their dues after
 selling the said property then in that
 eventuality we hereby undertake to handover
 vacant and peaceful possession of the
 properties mentioned in Exhibit "F" (Notice
 dated 23rd September, 2005) annexed to the
 above Writ Petition herein below to Respondent
 No.1 subject to mortgage of the IndusInd
 Bank."

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 3. On 24th January, 1995, the First Respondent
 addressed a letter to the Petitioners stating that
 it had issued an advertisement calling for bids for
 the Hubli property and that the highest offer which
 was received was in the amount of Rs.55 lacs. The
 Petitioners were furnished with an opportunity to
 obtain a higher bid within seven days of the
 receipt of the letter failing which it was stated
 that the bank would proceed with the sale of the
 property. According to the Petitioners the

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 aforesaid letter was received on 31st January, 2005
 and in response thereto by a letter dated 1st
 February, 2005 the Petitioners stated that they
 were in the process of obtaining bids for a higher
 value. The immediate reason for the institution of
 these proceedings was that on 31st January, 2005
 the recovery officer addressed a letter to the
 Petitioners recording that the auction notice for
 the sale of the Hubli property had not evinced a
 favourable response and that consequently the bank
 would be taking police assistance for taking
 possession of certain commercial and residential
 premises situated at Mumbai, belonging to the
 Petitioners.

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 4. According to the Petitioners, the Special
 Recovery Officer could not have lawfully issued the
 impugned notice dated 31st January, 2005 since in
 terms of the undertaking which was furnished by the
 Petitioners and accepted by the bank it was only if
 the property at Hubli (wrongly referred to as the
 property at Banglore) could not be sold or, if the
 dues of the bank were not satisfied upon the sale
 of the Hubli property that possession of the
 aforesaid properties could have been taken over.

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 The contention of the Petitioners was that without
 waiting for even a response from the Petitioners
 within the stipulated period of one week of the
 receipt of the bank’s communication dated 24th
 January, 2005, the Bank has purported to threaten a
 take over of physical possession with police
 assistance.

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 5. When this matter came up for admission on 8th
 February, 2005, counsel appearing on behalf of the
 Petitioners stated before the Court that the
 Petitioners had three offers in hand for the
 property at Hubli of which the highest was in the
 amount of Rs.1.40 Crores, details whereof were
 indicated in a letter dated 4th February, 2005 to
 the Special Recovery Officer. The parties agreed
 before the Court that in order to furnish to the
 Petitioners a reasonable and bonafide opportunity
 to repay the outstanding dues, the following
 arrangement be made :

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 "i) Within a period of one week from today, the
 Petitioners shall produce before the First
 Respondent a concrete offer by a willing
 purchaser which shall be accompanied by an

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 earnest money deposit in the form of a pay
 order representing 10% of the total
 consideration for the offer for the sale of
 the property at Hubli;

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 ii) The Petitioners shall ensure that the
 purchaser pays 40% of the total consideration
 within a period of three weeks thereafter and
 the balance within a period of 45 days after
 the expiry of the period of four weeks;"

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 6. In the meantime, it has also transpired that
 possession of the properties referred to in the
 bank’s notice dated 31st January, 2005 has been
 taken over by the Indusind Bank on 16th October,
 2004 under the Securitization & Reconstruction of
 Financial Assets and Enforcement of Security
 Interest Act, 2002. Consequently, by the order of
 this Court dated 8th February, 2005 liberty was
 granted to the Petitioners to amend the Petition
 and to implead Indusind Bank as a party Respondent.
 Thereafter when the matter came up before the Court
 on 17th February, 2005, the Court was informed that
 the Petitioners have two offers, the first in the
 amount of Rs.80 lacs which was accompanied by a Pay

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 Order of Rs.8 lacs and wherein the offerer had
 agreed to meet the agreed requirements which were
 stipulated in the previous order of the Court. The
 Second offer which was in a higher amount of Rs.111
 lacs was, however, one where the offerer had asked
 for deferred payment, the last payment to be made
 in July, 2005. The matter was adjourned since the
 parties considered it appropriate to hold further
 meetings at the office of the First Respondent in
 order to explore the possibility of a further
 enhancement of the bids which had been received.

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 7. The Court has now been informed that the

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 highest offer is in the amount of Rs. 115 lacs,
 but the bidder has sought for time until 30th
 September, 2005 to pay the dues. This is not
 acceptable to the bank. The payment schedule by
 which the Hubli property was to be sold is
 reflected in the agreement between the parties as
 recorded in the order of this Court dated 8th
 February, 2005. In the circumstances, it would not
 be either appropriate or proper for this Court to
 insist upon the First Respondent agreeing to an
 offer which involves a deferred payment of
 consideration, the last instalment whereof is to be

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 paid only by the end of September 2005. In their
 affidavit filed before this Court in the earlier
 proceedings, the Petitioners agreed to pay the
 entire dues by 31st December, 2004. Having regard
 to the payment schedule which was agreed upon
 between the parties on 8th February, 2005, it is
 clear that the highest offer which meets these
 conditions is in the amount of Rs.80 lacs. The
 bank is ready and willing to sell the Hubli
 property to the aforesaid bidder. However, in
 order to permit the Petitioners an opportunity to
 persuade the highest bidder of Rs.115 lacs to
 accept a schedule for payment in accordance with
 the terms set out in the order of 8th February,
 2005, which were agreed upon by the parties, it is
 clarified that it would be open to the Petitioners
 to do so within a period of two weeks from today
 failing which it would be open to the First
 Respondent to conclude the sale in favour of the
 highest bidder who meets the agreed payment
 schedule. Ordered accordingly. The affidavit
 which was filed before this Court by the

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 Petitioners on 1st October, 2004 and upon which the
 earlier petition came to be disposed of by consent,
 contains an admission of liability in the amount of

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 Rs.2,28,92,326/- . The Petitioners have paid an
 amount of Rs.20 lacs which they had agreed to pay
 in terms of paragraph 2 of the affidavit. The
 Petitioners had agreed to pay the balance of
 Rs.2,08,92,326/- together with interest at the rate
 of 17% per annum on or before 31st December, 2004.
 The amount has admittedly been not paid in terms of
 the statement which has been made on affidavit
 before the Court.

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 8. The contention of the Petitioners that it was
 only upon the sale of the Hubli property that the
 First Respondent could seek possession of the other
 properties at Mumbai now stands obviated because
 after a joint exercise carried out by the parties,
 it does emerge that the Petitioners still would
 have an outstanding liability of approximately
 Rs.1.40 Crores or more even after the sale of the
 Hubli property. Since it has emerged before the
 Court that the properties at Mumbai have been taken
 possession of by Indusind Bank under the
 Securitization and Reconstruction of Financial
 Assets and Enforcement of Security Interest, Act,
 2002, a statement is made on behalf of the First
 Respondent that the First Respondent shall now take

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 further steps to which they would be entitled in
 accordance with law, for the recovery of the dues
 which remain upon the sale of the Hubli property.

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 No further directions are necessry.

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 The Petition is disposed of in these

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 terms.

M/S. Kalyani Exporters and Ors. v. the Greater Bombay Co-Op. Bank Ltd. and Ors.

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M/S. Kalyani Exporters and Ors. v. the Greater Bombay Co-Op. Bank Ltd. and Ors.

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