Dismissed

Ramesh Sadashiv Kadam v. the State of Mah and Ors.

Bombay HC24 Jul 2013PIL/57/2012

Case brief

AI extract

What is this about?

The High Court dismissed a Public Interest Litigation challenging an auction of a society's property under the SARFAESI Act. The court held that the petitioner must exhaust statutory remedies via the Debts Recovery Tribunal and found no ground for judicial interference with the enforcement proceedings.

What did the court decide?

The Public Interest Litigation is dismissed; interim orders stand vacated.

Ramesh Sadashiv Kadam Vs the State of Mah and Ors. — Banking and Recovery | Bombay HC (2013)

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1 PIL 57 of 2012

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD

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Public Interest Litigation No.57 of 2012 With Civil Application No.7632 of 2012

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Ramesh s/o Sadashiv Kadam.

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.. Petitioner.

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Versus

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The State of Maharashtra & Others. .. Respondents.

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Shri. S.S. Thombre, Advocate, for the petitioner.

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Smt. Y.M. Kshirsagar, Assistant Government Pleader, for respondent Nos.1 and 2.

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Shri. D.J. Choudhari, Advocate, for respondent Nos.2 to 4.

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Shri. A.N. Irpatgire, Advocate, for respondent No.5.

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Shri. K.J. Suryawanshi, Advocate, for respondent No.6.

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Shri. P.V. Barde, Advocate, holding for Shri. Avishkar S. Shelke, Advocate for applicant in CA No.7632 of 2012.

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CORAM: NARESH H PATIL & A.I.S. CHEEMA, JJ. DATE : 24^th JULY 2013

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ORDER:

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Heard.

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2 PIL 57 of 2012

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The petitioner, who claims to be a member of respondent No.5–Padmabhushan Dr. Vasantdada Patil Ginning and Pressing Sahakari Sanstha Limited, Kothi, Taluka Kaij, District Beed, has filed this petition as a public interest litigation. By an order dated 28^th June 2012 the Division Bench issued notice and granted ad-interim relief in terms of prayer clauses (E) and (F).

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The petitioner seeks directions to quash and set aside the auction process held on 29-5-2012 of the immovable property of six acres of land belonging to respondent No.5-Society. Respondent No.6 is the auction purchaser. Respondent No.5 had obtained loan of Rs. 16,10,000/- from respondent No.3-Beed District Central Cooperative Bank Limited in the year 1997 for purchasing machinery for running a ginning and pressing factory. On the said loan amount, the respondent No.5-society received subsidy to the tune of Rs.4,70,000/- from the State Government under the relevant scheme. The said amount was credited in the account of the Beed District Central Cooperative Bank Ltd.

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3 PIL 57 of 2012

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The respondent bank sanctioned loan of Rs. 16.10 lakh on 2-12-1997 with 19% interest and 2% penal interest. The Bank issued notice on 7-12-2007 to the respondent No.5 under the provisions of Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, “the Act of 2002”).

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On 14-9-2011 respondent No.3-Bank issued notice directing the petitioner to deposit an amount of Rs. 40,00,000/- towards dues. The Bank had initiated proceedings under the Act of 2002. A notice to the borrower was issued on 21-4-2012 by the Bank authorities under Section 13(4) of the Act of 2002. A public notice for sale of the immovable property was issued in the news papers on 22^nd May 2012. Fair market value, realizable sale value and destressed sale value was determined by the Government Approved Valuer of the property. Certificate of the Valuer is dated 20^th May 2012.

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As per the account extract as on 1-3-2012 there were total dues of Rs.56,62,783.25 paise.

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4 PIL 57 of 2012

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The respondent No.6 was the highest bidder. He submitted his claim for the property in question for Rs. 67 lakh. The bid was accepted by the authorized officer as it was highest bid. The bid was confirmed on 26-5-2012. Respondent No.6 deposited total amount of 66,75,000/with respondent No.3-Bank and the Bank would recover an amount of Rs.25,000/- from the deposit for completion of the transaction.

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The learned counsel Shri. S.S. Thombre appearing for the petitioner submitted that the property has been sold by violating the provisions of the Act of 2002 and the Rules framed thereunder. The intervenor had offered bid for an area of 60 R of the land for an amount of Rs.41 lakh. Considering this offer the immovable property was sold at a much lower price. The petitioner alleged collusion in conducting the sale of the immovable property. There was no need for the Bank to sell entire land. According to the learned counsel, Valuer's report was not sought prior to initiating the sale proceedings. The sale proceedings were not conducted in transparent manner. Offset price was not fixed. The

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5 PIL 57 of 2012

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provisions of Rules 5,6 and 9 of the Security Interest (Enforcement) Rules, 2002 were not followed. The tender notice was faulty. The learned counsel places reliance on the following judgments on the principles of maintainability of Public Interest Litigation and the interpretation of the provisions of the Act of 2002 and the Rules framed thereunder.

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(1) Manoj D. Kapasi Vs. Union of India, 2005(3) Bom.C.R. 267.

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(2) Vithal Rambhau Urankar v. The State of Maharashtra, Writ Petition No.4902 of 2008 decided on 19^th December 2008.

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(3) Shaikh Gulab Shaikh Ahmed Vs. The State of Maharashtra, Writ Petition No.10934 of 2010 decided on 29^th November 2011.

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The learned counsel Shri.D.J. Choudhari appearing for respondent No.3-Bank submitted that all the required procedure has been followed reasonably and properly. The Bank advanced loan to the society in the year 1997 for which the Bank is still struggling to recover the amount. Valuer's report was obtained from the Government Approved valuer. Prior notice was issued to the borrower and the public notice was issued for sale of immovable property. The officer concerned finalized the

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6 PIL 57 of 2012

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bid in favour of the highest bidder. The society was very much aware of the proceedings being initiated by the Bank. Still for the reasons best known to them nobody bothered to take any objection at the time when the auction process was going on. Even now the respondent society has not come forward but a member of the respondent-society, claiming to be public spirited person, approached this Court to stall the process of finalization of sale of the immovable property. The Bank authorities have followed the procedure reasonably. The learned counsel submitted that there is efficacious statutory remedy under the Act of 2002 which ought to have been exhausted by the petitioner or any other person supporting the petitioner. In view of availability of the alternate statutory remedy, filing of public interest litigation shall not be encouraged as the questions raised by the petitioner could be determined by the statutory forum established under the Act of 2002. The learned counsel has placed reliance on the following judgments in support of his contention.

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(1) Marathwada Gramin Bank vs. The Maharashtra State Cooperative Bank Ltd., 2007 MCR 456.

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(2) Kanaiyalal Lalchand Sachdev vs. State of Maharashtra, (2011(3) Mh.L.J.(Cri.) 163.

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7 PIL 57 of 2012

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(3) United Bank of India vs. Satyawati Tondon, AIR 2010 SC 3413.

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The learned counsel Shri. A.N. Irpatgire appearing for respondent No.5-society submitted that the in view of section 31(a) of the Act of 2002 the provisions of the Act of 2002 are not applicable to the security created in agricultural land. The counsel submitted that the provisions of the Act of 2002 and the Rules were not complied with. The sale process was conducted in unfair manner. Statutory remedy is not efficacious remedy and there is no bar for this Court to entertain this petition.

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We have perused the provisions of the Act of 2002. Under the provisions of Section 17 any person including borrower aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer is entitled to approach the Debts Recovery Tribunal. The parties could not explain the circumstances as to why none of the interested party approached the Debts Recovery Tribunal. Learned counsel Shri. Irpatgire submitted that due to heavy Court fees, which is required for filing application

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8 PIL 57 of 2012

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to the Debts Recovery Tribunal, the society or its member did not approach the Tribunal. We are not satisfied with the grounds on which the parties said to have selected not to approach the Debts Recovery Tribunal. The statutory tribunal is equipped with necessary powers to go into questions raised by parties and deal with the same in accordance with the scheme framed under the Act of 2002 and the Rules framed thereunder. We are, therefore, of the view that, considering the facts and circumstances of the case, the statutory tribunal could redress the grievance of this nature.

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The petitioner had approached this Court in public interest stating that he is a member of the respondent-society. From the record we find that the Bank advanced loan to the society in the year 1997. For more than 16 years the Bank is still fighting litigation for recovery of the said amount. The purpose of enacting the Act of 2002 would get frustrated if the financial institutions are required to face endless litigation.

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We have seen from the record that the Bank had issued notice to the borrower and thereafter issued

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9 PIL 57 of 2012

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public notice in respect of sale of immovable property. Highest bidder deposited the amount with the financial institution. The argument that the property would have fetched higher price or that a part of the property could have been sold need not be considered in the facts and circumstances of the matter herein.

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We have perused the case law cited before us in respect of maintainability of public interest litigation and regarding provisions of the Act of 2002.

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In the facts and circumstances of the matter we find that no interference is warranted. In case the petitioner chooses to avail statutory remedies, the observations made by this Court herein shall not affect the merits of the proceedings initiated by the petitioner, if any.

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The Public Interest Litigation is dismissed. Interim orders stand vacated. Civil Application No.7632 of 2012 stands disposed of.

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Sd/- Sd/- (A.I.S. CHEEMA, J.) (NARESH H PATIL, J.) rsl

Ramesh Sadashiv Kadam v. the State of Mah and Ors.

Case brief

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Ramesh Sadashiv Kadam v. the State of Mah and Ors.

Case brief

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