Partly allowed

Fazler Rahman v. the Bank of Baroda

Karnataka HC23 Feb 2024WP/21951/2022

Case brief

AI extract

What is this about?

Petitioners challenged auction sale of their 129-acre land by a bank pursuant to a recovery certificate for Rs.3.41 crore, arguing it violated status quo orders and exceeded the certified debt. The High Court declared the auction null and void as illegal, directed refund to the auction purchaser with 18% interest, and required petitioners to deposit the certificate amount.

What did the court decide?

Auction sale declared null and void; Bank directed to refund auction purchaser's deposit with 18% interest; petitioners to deposit Rs.3,41,07,747 plus interest; other two writ petitions dismissed.

Fazler Rahman Vs the Bank of Baroda — Banking and Recovery | Karnataka HC (2024)

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W.P. No. 21951/2022

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C/W W.P. No. 21725/2022

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W.P. No. 21752/2022

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 23^RD DAY OF FEBRUARY, 2024

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PRESENT

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THE HON’BLE MR. P.S. DINESH KUMAR, CHIEF JUSTICE

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AND

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THE HON’BLE MR. JUSTICE T.G. SHIVASHANKARE GOWDA

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WRIT PETITION NO. 21951 OF 2022 C/W

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WRIT PETITION NO. 21725 OF 2022 WRIT PETITION NO. 21752 OF 2022 (GM-DRT)

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IN W.P. No. 21951/2022

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BETWEEN:

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FAZLER RAHMAN S/O LATE HAJI A.R. ABDUL AZEEZ AGED ABOUT 87 YEARS

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SHAMIUNNISSA

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W/O FAZLER RAHMAN

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AGED ABOUT 78 YEARS

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A.F. DUREZ S/O FAZLER RAHMAN

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AGED ABOUT 41 YEARS

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1 TO 3 ARE SHOWN IN THE OA PROCEEDINGS TO BE RESIDING AT NO.536 16^TH MAIN, 3^RD BLOCK BEHIND BDA COMPLEX, KORAMANGALA BANGALORE-560 034.

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W.P. No. 21951/2022 C/W W.P. No. 21725/2022 W.P. No. 21752/2022

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PERMANENT ADDRESS: BAITUL FAZAL OPP. SHANKAR MUTT ROAD K.R. PURAM, HASSAN-563 201. NOW AT BANGALORE

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TANVIR JABBAR S/O ABDUL JABBAR AGED ABOUT 50 YEARS R/AT NO. 819, K.R. PURAM HASSAN-573 201.

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AZAM ALI S/O LATE ZAFAR ALI AGED ABOUT 52 YEARS KOHINOOR HOUSE D. NO.81, VALLABHAI ROAD HASSAN-563 201. …PETITIONERS

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(BY SMT. AMANDA CHAKRAVARTHI, ADVOCATE FOR SHRI. S. AJESH KUMAR, ADVOCATE)

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AND:

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THE BANK OF BARODA (EARLIER KNOWN AS VIJAYA BANK) HASSAN MAIN BRANCH KRUTHIKA ARCADE H.N. PURA ROAD HASSAN-563 201. REPRESENTED HEREIN BY ITS SENIOR MANAGER

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MOHAMMED IDRESS S/O LATE MOHAMMED SAB AGED ABOUT 47 YEARS R/AT NO.144 SUFI’S MANSION RAILWAY STATION ROAD SS PURAM TUMKUR-572 202.

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THE STATE OF KARNATAKA REPRESENTED BY STATION HOUSE OFFICER

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W.P. No. 21951/2022

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C/W W.P. No. 21725/2022

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W.P. No. 21752/2022

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AREHALLI POLICE STATION SAKLESPURA – AREHALLY – TALALLU BELUR ROAD, AREHALLI KARNATAKA-573 101. …RESPONDENTS

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(BY SHRI. UDAYA HOLLA, SENIOR ADVOCATE FOR SHRI. VIGNESH SHETTY, ADVOCATE FOR R1; SHRI. JAYKUMAR S. PATIL, ADVOCATE FOR SHRI. A. SANJAY KUMAR, ADVOCATE FOR R2; SHRI. SUDEV HEGDE, AGA FOR R3)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 23.02.2019 AT ANNEXURE-Y PASSED BY THE RECOVERY OFFICER AND QUASH THE SALE CERTIFICATE ISSUED ON 09.07.2019 BY DRT-2 BANGALORE WHICH WAS SUBSEQUENTLY REVALIDATED ON 10.10.2022 AS PER ANNEXURE-AA AND ETC.

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IN W.P. No. 21725/2022

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BETWEEN:

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FAZLER RAHMAN

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S/O LATE HAJI A.R. ABDUL AZEEZ AGED ABOUT 87 YEARS

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SHAMIUNNISSA

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W/O FAZLER RAHMAN AGED ABOUT 78 YEARS

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A.F. DUREZ S/O FAZLER RAHMAN AGED ABOUT 41 YEARS

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1 TO 3 ARE SHOWN IN THE OA PROCEEDINGS TO BE RESIDING AT NO.536 16^TH MAIN, 3^RD BLOCK BEHIND BDA COMPLEX, KORAMANGALA BANGALORE-560 034.

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PERMANENT ADDRESS: BAITUL FAZAL

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W.P. No. 21951/2022

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C/W W.P. No. 21725/2022

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W.P. No. 21752/2022

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OPP. SHANKAR MUTT ROAD K.R. PURAM, HASSAN-563 201. NOW AT BANGALORE

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TANVIR JABBAR

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S/O ABDUL JABBAR AGED ABOUT 50 YEARS R/AT NO. 819, K.R. PURAM HASSAN-573 201.

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AZAM ALI S/O LATE ZAFAR ALI AGED ABOUT 52 YEARS KOHINOOR HOUSE D. NO.81, VALLABHAI ROAD HASSAN-563 201. …PETITIONERS

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(BY SMT. AMANDA CHAKRAVARTHI, ADVOCATE FOR SHRI. S. AJESH KUMAR, ADVOCATE) AND:

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THE BANK OF BARODA (EARLIER KNOWN AS VIJAYA BANK) HASSAN MAIN BRANCH KRUTHIKA ARCADE H.N. PURA ROAD HASSAN-563 201. REPRESENTED HEREIN BY ITS SENIOR MANAGER

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MOHAMMED IDRESS S/O LATE MOHAMMED SAB AGED ABOUT 47 YEARS R/AT NO.144 SUFI’S MANSION RAILWAY STATION ROAD SS PURAM TUMKUR-572 202.

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THE STATE OF KARNATAKA REPRESENTED BY STATION HOUSE OFFICER AREHALLI POLICE STATION SAKLESPURA – AREHALLY – TALALLU

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W.P. No. 21951/2022

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C/W W.P. No. 21725/2022

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W.P. No. 21752/2022

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BELUR ROAD, AREHALLI KARNATAKA-573 101. [DELETED VIDE COURT ORDER DATED 15.11.2022] …RESPONDENTS

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(BY SHRI. UDAYA HOLLA, SENIOR ADVOCATE FOR SHRI. VIGNESH SHETTY, ADVOCATE FOR R1; SHRI. JAYKUMAR S. PATIL, ADVOCATE FOR SHRI. A. SANJAY KUMAR, ADVOCATE FOR R2; V/O DATED 15/11/2022 R3 IS DELETED)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO CALL FOR RECORDS AND ISSUE A WRIT OF CERTIORARI, OR ANY OTHER SUITABLE WRIT, DIRECTION OR ORDER TO QUASH/SET-ASIDE THE ORDER DATED 28/09/2022 AT ANNEXURE-B ISSUED BY THE HON’BLE DEBT RECOVERY APPELLATE TRIBUNAL, CHENNAI AND TO SUBSEQUENTLY ALLOW APPEAL NO.2/2021 BEFORE HON’BLE DEBT RECOVERY APPELLATE TRIBUNAL, CHENNAI AS PER ANNEXURE-A AND GRANT SUCH OTHER RELIEF(S).

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IN W.P. No. 21752/2022

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BETWEEN:

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FAZLER RAHMAN S/O LATE HAJI A.R. ABDUL AZEEZ AGED ABOUT 87 YEARS

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SHAMIUNNISSA

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W/O FAZLER RAHMAN AGED ABOUT 78 YEARS

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A.F. DUREZ S/O FAZLER RAHMAN AGED ABOUT 41 YEARS

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1 TO 3 ARE SHOWN IN THE OA PROCEEDINGS TO BE RESIDING AT NO.536 16^TH MAIN, 3^RD BLOCK BEHIND BDA COMPLEX, KORAMANGALA BANGALORE-560 034.

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W.P. No. 21951/2022

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C/W W.P. No. 21725/2022

W.P. No. 21752/2022

PERMANENT ADDRESS:

BAITUL FAZAL, OPP. SHANKAR MUTT ROAD K.R. PURAM, HASSAN-563 201. NOW AT BANGALORE

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TANVIR JABBAR S/O ABDUL JABBAR AGED ABOUT 50 YEARS R/AT NO. 819, K.R. PURAM HASSAN-573 201.

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AZAM ALI S/O LATE ZAFAR ALI AGED ABOUT 52 YEARS KOHINOOR HOUSE D. NO.81, VALLABHAI ROAD HASSAN-563 201. …PETITIONERS

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(BY SMT. AMANDA CHAKRAVARTHI, ADVOCATE FOR SHRI. S. AJESH KUMAR, ADVOCATE)

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AND:

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THE BANK OF BARODA (EARLIER KNOWN AS VIJAYA BANK) HASSAN MAIN BRANCH KRUTHIKA ARCADE H.N. PURA ROAD HASSAN-563 201. REPRESENTED HEREIN BY ITS SENIOR MANAGER

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MOHAMMED IDRESS S/O LATE MOHAMMED SAB AGED ABOUT 47 YEARS R/AT NO.144 SUFI’S MANSION RAILWAY STATION ROAD SS PURAM TUMKUR-572 202.

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THE STATE OF KARNATAKA REPRESENTED BY STATION HOUSE OFFICER AREHALLI POLICE STATION

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W.P. No. 21951/2022 C/W W.P. No. 21725/2022

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W.P. No. 21752/2022

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SAKLESPURA – AREHALLY – TALALLU BELUR ROAD, AREHALLI KARNATAKA-573 101. [DELETED VIDE COURT ORDER

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DATED 15.11.2022] …RESPONDENTS

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(BY SHRI. UDAYA HOLLA, SENIOR ADVOCATE FOR SHRI. VIGNESH SHETTY, ADVOCATE FOR R1; SHRI. JAYKUMAR S. PATIL, ADVOCATE FOR SHRI. A. SANJAY KUMAR, ADVOCATE FOR R2; V/O DATED 15/11/2022 R3 IS DELETED)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO CALL FOR RECORDS AND ISSUE A WRIT OF CERTIORARI, OR ANY OTHER SUITABLE WRIT, DIRECTION OR ORDER TO QUASH/SET-ASIDE THE ORDER DATED 28/09/2022 AT ANNEXURE-Q ISSUED BY THE HON’BLE DEBT RECOVERY APPELLATE TRIBUNAL, CHENNAI AND TO SUBSEQUENTLY ALLOW APPEAL NO.1/2021 BEFORE HON’BLE DEBT RECOVERY APPELLATE TRIBUNAL, CHENNAI AS PER ANNEXURE-P AND GRANT SUCH OTHER RELIEF(S).

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THESE WRIT PETITIONS, HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 24.01.2024, COMING ON FOR PRONOUNCEMENT OF ORDERS THIS DAY, CHIEF JUSTICE PRONOUNCED THE FOLLOWING:-

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ORDER

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W.P. No. 21951/2022 has been filed against the order

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dated 23.02.2019 in DRC/368/2018 (in O.A. No. 89/2012) passed by DRT¹ -II, Bengaluru, wherein the objections filed by petitioner against the issuance of Recovery Certificate dated 06.04.2018 stood dismissed.

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1 Debt Recovery Tribunal

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W.P. No. 21951/2022

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C/W W.P. No. 21725/2022 W.P. No. 21752/2022

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W.P. No. 21752/2022 has been filed against the

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order dated 28.09.2022 in M.A. No. 1/2021 (arising out of M.A.No.15/2018 in O.A.No.89/2017 on the file of DRT-II, Bengaluru), passed by the DRAT² , Chennai, wherein the appeal filed by petitioners stood dismissed with costs.

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W.P. No. 21725/2022 has been filed against the order dated 28.09.2022 in M.A. No. 2/2021 (arising out of Dairy No.97/2019 in O.A.No.89/2017 on the file of DRT-II, Bengaluru), passed by the DRAT, Chennai, wherein the appeal filed by petitioners stood dismissed with costs.

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Aggrieved by the aforementioned orders, petitioners have preferred the instant Writ Petitions. The subject matter involved in all these three Writ Petitions is same. Hence, they are heard simultaneously and disposed of by this common order.

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2 Debt Recovery Appellate Tribunal

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We have heard Smt. Amanda Chakravarthi, learned

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Advocate for petitioners; Shri. Udaya Holla, learned Senior Advocate for respondent No.1; Shri. Jayakumar S. Patil, learned Advocate for respondent No.2; and Shri. Sudev Hegde, learned AGA for the State.

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Brief facts of the case are, petitioners are the owners of 129 Acres 04 Guntas of agricultural land³ situated at Hassan District and they had availed various agricultural loans from respondent No.1/Bank of Baroda⁴ .Upon default to repay the amount, the Bank initiated proceedings before the DRT in O.A. No. 89/2017.

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An ex-parte order⁵ was passed holding that

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petitioners are jointly liable to pay Rs.3,41,07,747/-along with interest. Aggrieved, petitioner filed miscellaneous application⁶ and the same was dismissed. On appeal⁷ , the

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3 hereinafter referred to as the ‘subject land’

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4 Hereinafter referred to as ‘the Bank’

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5 Dated 03.03.2018 (Annexure K in W.P. No.21752/2022)

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6 M.A. No.15/2018

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7 M.A. No.1/2021 (impugned order in W.P. No. 21752/2022)

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DRAT, Chennai vide order dated 28.09.2022 dismissed the same.

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On 06.04.2018, the Presiding Officer, DRT-II, Bengaluru issued a Recovery Certificate⁸ against petitioners for a sum of Rs.3,41,07,747/-. On 31.01.2019, petitioners filed application in Diary No. 97/2019 assailing the said Recovery Certificate. The Presiding Officer vide order⁹ dated 08.02.2019 inter alia granted four weeks time to petitioners to make the payment as mandated under Section 30(A) of the Recovery of Debts and Bankruptcy Act, 1993¹⁰ and directed the parties to maintain status quo till 08.03.2019.

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The DRT vide order dated 17.06.2019 dismissed the application. Aggrieved by the order 08.02.2019, petitioner preferred an appeal¹¹ before the DRAT, Bengaluru. The DRAT vide order dated 28.09.2022 dismissed the appeal.

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8 Recovery Certificate No. 368/2018 (Annexure R in W.P. No.21752/2022)

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9 Annexure T in W.P. No.21752/2022

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10 ‘the Act’ for short

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11 On 03.07.2019 in M.A. No.2/2021 (impugned order in W.P. No. 21725/2022)

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The Recovery Officer vide order dated

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23.02.2019¹² conducted the public e-auction pursuant to the issuance of the Recovery Certificate. Petitioner filed its objections to the same, however the same was rejected. The Recovery Officer has taken the following steps:

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(i) On 11.09.2018 commenced the sale proceedings

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under 4(a) Rules of the Income Tax schedule read with Section 29 of the Act by issuing a Warrant of Attachment of immovable property;

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(ii) on 10.10.2022 delegated statutory functions to a private Advocate Commissioner;

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(iii) on 04.12.2018, sale notice on the entire subject land was issued;

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(iv) on 09.07.2019, issued a Sale Certificate in favour of respondent No.2/Auction Purchaser.

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12 Impugned order in W.P. No. 21951/2022

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W.P. No. 21951/2022 C/W W.P. No. 21725/2022 W.P. No. 21752/2022

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Aggrieved by various orders, petitioners have

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filed the following writ petitioners before this Court:

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i. W.P.No.35293-97/2019 connected with W.P.No.35299-303/2019¹³ , wherein liberty was granted to petitioners to make an application before the DRAT for reduction of the deposit amount and an interim order was granted directing respondents not to take sale certificate or to dispossess the petitioners for two weeks from the date of receipt of copy of this.

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ii. W.P.No. 10881-10885/2019¹⁴ andW.P. No. 21341-21345/2019¹⁵ , praying to seek leave of this Court to approach the DRAT by filling an appeal and ad interim order dated 20.03.2019 to be extended till they approach the DRAT. This Court granted two weeks time and extended the ad interim order.

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13 disposed of on 11.09.2019 (Annexure AF in W.P. No.21752/2022) 14disposed of on 11.06.2019 (Annexure AB in W.P. No.21752/2022)

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15disposed of on 11.06.2019 (Annexure AH in W.P. No.21752/2022)

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W.P. No. 21951/2022 C/W W.P. No. 21725/2022 W.P. No. 21752/2022

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13 iii. W.P. No. 50345/2019¹⁶ , wherein this Court

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directed the DRAT to consider the appeals on merit.

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Thereafter, petitioners filed M.A. No.1/2021 and M.A. No.2/2021. The DRAT has dismissed both the appeals. Feeling aggrieved, petitionershave preferred these writ petitions.

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Assailing the impugned orders passed by the DRT

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and DRAT, Smt. Amanda Chakravarthi, for the petitioners, mainly submitted that:

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 in O.A. No. 89/2017 proceedings, summons was not served on petitioners in accordance with law.The Presiding Officer erred in rejecting M.A. No. 15/2018 without considering that summons was not served at petitioners’ permanent address in Hassan, whereas, it was served at their temporary address in Bengaluru;

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16 disposed of on 07.01.2020 (Annexure AJ in W.P. No.21752/2022)

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W.P. No. 21951/2022

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C/W W.P. No. 21725/2022

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W.P. No. 21752/2022

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Petitioner had shown 'sufficient cause' in the application and affidavit in support of M.A.No.15/2018, the same was not considered;

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the notice issued in respect to the Recovery Certificate for a sum of Rs. 3,41,07,747/- was not in compliance of Regulation 33(2) read with Section 28(3)(1) of the Act;

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the Presiding Officer had passed an order of ‘Status Quo' in Diary No. 97/2019 DRT from 08.02.2019 to 17.06.2019. Therefore, auction sale proceedings stand terminated;

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in W.P. No. 10881-10885/2019, this Court on 11.06.2019 extended the interim order of stay for 3 weeks. The Recovery Officer ought not to have carried out the auction sale;

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the Sale Certificate at Annexure AA¹⁷ reflects that public e-Auction took place on 22.02.2019, during the subsistence of order dated

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17 in W.P. No. 21951/2022

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W.P. No. 21951/2022 C/W W.P. No. 21725/2022 W.P. No. 21752/2022

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08.02.2019 to maintain status quo. Therefore, the sale proceedings are null and void;

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in view of the orders supra, the Auction Purchaser shall have no title. The Recovery Officer could not have issued the Sale Certificate by revalidating the date on 07.10.2022 and registering subsequently on 10.10.2022;

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the sale has taken place for the entire property;however, the subject land is a small devisable portion of the property, therefore, the Recovery Officer could have sold the subject land to recover the debt due under the Recovery Certificate;

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petitioner has already deposited Rs. 1,60,00,000/- and the same is recorded by the Appellate Tribunal in order sheet dated 28.12.2020.

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W.P. No. 21951/2022 C/W W.P. No. 21725/2022 W.P. No. 21752/2022

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Opposing the petitions, Shri. Udaya Holla, for

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respondent No.1/the Bank, mainly submitted that:

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the Bank had no choice but to sell the entire land because the subject land consists of various survey numbers and the title deeds for all the survey numbers is one. Therefore, bifurcation of the survey numbers could not have been possibly done;

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petitioners have been provided enough opportunity to repay the loan, however, they have failed to comply with the same;

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for nearly 7 years, petitioners did not deposit any amount;

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the recovery proceedings were initiated by the Recovery Officer, at the instance of recovery certificate issued by the DRT, Bangalore. Hence, the contention that it was carried out during the subsistence of an interim relief is untenable.

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W.P. No. 21951/2022 C/W W.P. No. 21725/2022 W.P. No. 21752/2022

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Shri. Jayakumar S. Patil, learned Advocate for

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respondent No.2/Auction Purchaser, mainly submitted that:

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respondent No.2 is the successful auction purchaser with respect to the subject land. He has paid a sum of Rs. 12,92,00,000/- along with the poundage fees of Rs.12,92,000/- to the DRT Account on 04.02.2019;

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Sale Certificate has been issued and registered, therefore, the sale has been concluded.

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We have carefully heard the rival contention and perused the material on record.

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We have clearly set out the facts which led to various proceedings before the DRT and DRAT in detail. The main issues for consideration are the legality of the auction sale proceedings conducted by the Bank and deposit of the debt due.

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W.P. No. 21951/2022 C/W W.P. No. 21725/2022 W.P. No. 21752/2022

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¶185

The undisputed facts in these three writ petitions

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are, petitioners had availed loan from the Bank. On failure to repay the loan, the Bank initiated proceedings before the DRT, wherein it was heldthat petitioners are jointly liable to pay Rs.3,41,07,747/- along with interest. On 06.04.2018, a Recovery Certificate was issued against petitioners for a sum of Rs.3,41,07,747/-. The Recovery Officer conducted e- auction on 23.02.2019¹⁸ and sale was completed. Petitioners have filed these three writ petitioners assailing various orders passed by DRT and DRAT.

¶187

Based on the submissions made on both the sides and material on records, the point that arise for our consideration is whether the auction sale proceedings conducted pursuant to issuance of Recovery Certificate dated 06.04.2018 is bad in law?

¶188

18 Impugned order in W.P. No. 21951/2022

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W.P. No. 21951/2022 C/W W.P. No. 21725/2022 W.P. No. 21752/2022

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It was submitted by Smt. Chakravarthi, for the

¶192

petitioner that the Bank have carried out the auction sale proceeding during the subsistence of ‘Status Quo' passed in Diary No. 97/2019 by the DRT, therefore the sale is null and void. When the subject land is only a part of the entire property, the Bank could not have put the entire property for auction sale.

¶193

We have perused the order dated 08.02.2019 passed in Dairy No. 97/2019. The DRT had granted four weeks time to petitioners to comply with Section 30A of the Act and directed them to deposit 50% of the amount due which was Rs.2,12,20,076/- on or before 08.03.2019 and directed the Bank to maintain status quo until then. Vide order dated 12.03.2019, the DRT further granted time upto 20.03.2019 to comply with the above order and extended the status quo.

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W.P. No. 21951/2022 C/W W.P. No. 21725/2022 W.P. No. 21752/2022

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¶196

Meanwhile, petitioners presented W.P. No.

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10881-10885/2019 before this Court inter alia challenging the order dated 08.02.2019 passed by the DRT. This Court disposed of the matter on 11.07.2019, holding thus:

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“7. I have considered the submissions made by learned counsel for the parties and perused the records. Admittedly, the petitioners have an alternative and efficacious remedy by filing an appeal before the DRAT. Therefore, under the factual situation of the case, I deem it appropriate to grant the liberty to the petitioners to file an appeal before the DRAT along with an application for stay within a period of three weeks. Needless to say that if the petitioners file an application for stay, the DRAT after providing an opportunity to the parties, shall decide the said application by a speaking order within two weeks from the date of filling of such application. Till the application for stay filed by the petitioners is decided, an ad interim order shall continue.”

¶199

It is clear that this Court had extended the

¶200

status quo order. On 17.09.2019, the DRT took a note of the

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above writ petition and disposed of the matter in view of the order passed by this Court.

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W.P. No. 21951/2022 C/W W.P. No. 21725/2022 W.P. No. 21752/2022

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It is also relevant to note that again on

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20.03.2019 in W.P. No. 10881-10885/2019, this Court has recorded thus:

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“Sri. G.K. Krishnamurthy, learned Senior Counsel for Sri. M.A. Rajendra, learned counsel for the petitioners.

¶207

Sri. Vignesh Shetty, learned counsel for the respondent.

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Heard.

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Learned Senior Counsel for the petitioners submits that the petitioners are ready and willing to pay the amount mentioned in the recovery certificate. It is further submitted that even though the total amount due and payable to the petitioners is approximately ₹3,41,07,747/-, however, the entire 129 acres of land belonging to the petitioners has been sold for a sum of ₹12.90 Crores. It is further submitted that the petitioners are ready and willing to find out a buyer and shall produce the particulars of the aforesaid buyer before this Court on or before the next date of hearing by selling approximately 40 acres of land by which the entire dues of the respondent -Bank can be paid.

¶210

On the other hand, learned counsel for respondent-Bank has opposed the aforesaid prayer on the ground that offer of the petitioners lacks bonafide and they have made no attempts to repay the amount to respondent Bank.

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W.P. No. 21951/2022 C/W W.P. No. 21725/2022 W.P. No. 21752/2022

¶212

22

¶213

The order dated 08.02.2019 against the impugned order, an appeal lies under Section 30 of the Recovery of Debts Due to Bank and Financial Institutions Act, 1993 and the auction purchaser has deposited the entire amount.

¶214

I have considered the submissions made by learned counsel for the parties. In the peculiar facts and circumstances of the case with a view to grant an opportunity to the petitioners to repay the amount of loan, it is directed that the sale in question shall not be finalized till the next date of hearing.

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In the meanwhile, petitioners shall find out a buyer and give the particulars of the buyer before this Court on or before the next date of hearing. It is further directed that the respondentBank, If so advised shall also be at liberty to sell approximately 40 acres of land to which the petitioners have agreed to in order to recover the amount, which is due and payable by the petitioners.

¶216

As prayed, list on 10.04.2019.”

¶217

The above extracted portion indicates that this

¶218

Court had directed that ‘the sale in question shall not be finalized till the next date of hearing’.

¶219

In view of the facts recorded hereinabove, an interim order to maintain status quo was in subsistence from

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W.P. No. 21951/2022 C/W W.P. No. 21725/2022 W.P. No. 21752/2022

¶221

¶222

08.02.2019 to 17.09.2019. It is pertinent to note that on 06.04.2018, a recovery certificate was issued for the subject land, indicating a debt amount of Rs. 3,41,07,747/-.Despite the issuance of the recovery certificate for a specific amount, a sale proclamation was issued on 04.11.2018, indicating a higher amount of Rs. 4,36,20,727/- for the entire property. The auction sale proceedings were conducted on 22.02.2019, despite the interim order to maintain the status quo being in effect at that time. The sale was confirmed on 09.07.2019 in favour of respondent No.2 for a sum of Rs. 12,92,00,000/- for the entire property and duly revalidated on 10.10.2022.

¶223

In view of the above, we are of the opinion that the Bank has held the auction sale proceedings in a completely illegal manner and in violation of the order passed by this Court. Furthermore, the recovery certificate was issued only to extent of the subject land, however, the Bank issued sale proclamation for the entire land which

¶224

W.P. No. 21951/2022

¶225

C/W W.P. No. 21725/2022 W.P. No. 21752/2022

¶226

¶227

measures to an extent of 129 acres 4 guntas, which is excess to the debt due.

¶228

In view of the above, we are of the opinion that the issuance of a sale proclamation for more than what is covered by the recovery certificate is exceeding the authority granted to the Bank for debt recovery and affecting the rights of petitioners. Additionally, doing so during the pendency of stay proceedings is an attempt to overreach or abuse of its authority. Hence, we hold that the auction sale proceeding conducted by the Bank as bad in law and is declared as null and void. Accordingly, we answer the point for consideration in the affirmative .

¶229

We find this a fit case to exercise the extraordinary writ jurisdiction conferred under Article 226 of the Constitution of India.

¶230

W.P. No. 21951/2022 C/W W.P. No. 21725/2022 W.P. No. 21752/2022

¶231

¶232

The prayer in W.P. No. 21951/2022 is to set aside

¶233

the order passed by Recovery Officer rejecting plaintiff’s objection to Recovery Certificate.

¶234

The prayer in WP.No. 21725/2022 is to set aside DRAT’s order upholding the direction issued by Recovery Officer to deposit 50%.

¶235

The prayer in W.P. No. 21752/2022 is to set aside DRAT’S order upholding DRT’s order in MA 15/2018.

¶236

The Recovery Certificate dated 06.04.2018 is for

¶237

Rs. Rs.3,41,07,747/-. Admittedly the said Recovery Certificate is based on an ex-parte order. Plaintiffs have offered to deposit Rs. 3,97,72,475.5/-. Without prejudice to their defense before the DRT.

¶238

In any event, the amount recoverable as per the Recovery Certificate was only Rs.3,41,07,747/-. To recovery the said sum, land measuring 129 acres has been brought to action which has yielded Rs. 12,00,00,000/-. This means

¶239

W.P. No. 21951/2022 C/W W.P. No. 21725/2022 W.P. No. 21752/2022

¶240

¶241

sale of about 40 acres would have been sufficient. Though

¶242

the property is mortgaged to the Bank whose value is for an excess of recoverable debt, respondents are required to apply their mind and bring to auction only such quantum of land to cover the recoverable debt.

¶243

In our considered opinion, sale of 129 Acres was uncalled for, and therefore, liable to be set-aside. Admittedly, O.A filed in the year 2017. The auction purchaser has paid money for 129 acres, his money will have to be repaid with reasonable compensation. Also Bank’s interest shall have to be protected. Hence, it would be evitable to direct the plaintiffs to deposit a sum of Rs. Rs.3,41,07,747/-together with interest to be computed as per the contractual rate of interest till the date of deposit within a reasonable period as a condition precedent to set aside the sale.

¶244

W.P. No. 21951/2022 C/W W.P. No. 21725/2022 W.P. No. 21752/2022

¶245

¶246

In light of the above discussion, the following:

¶247

ORDER

¶248

i) W.P. No 21951/2022 is partly allowed . Prayer in Clause (1) & (2) are rejected.

¶249

ii) Prayer Clause (3) is allowed and the Bank is directed to refund the amount received from the Auction Purchaser/Respondent No.2 with simple interest @ 18% P.A from the date of deposit till the date of refund in an outer limit of 8 weeks from the receipt of the order;

¶250

iii) Liberty is reserved to Auction Purchaser/Respondent No.2 to claim expenditure, if any, incurred on the land by placing material before the DRT. The DRT shall adjudicate such claim, if any, the Auction Purchaser, and determine the compensation payable;

¶251

W.P. No. 21951/2022 C/W W.P. No. 21725/2022 W.P. No. 21752/2022

¶252

28 iv) Petitioners shall deposit Rs. Rs.3,41,07,747/together with interest to be computed as per contractual rate of interest till the date of deposit within 8 weeks from the date of this order.

¶253

v) W.P. No. 21752/2022 is dismissed . vi) W.P. No. 21725/2022 is dismissed .

No costs.

Sd/CHIEF JUSTICE

Sd/JUDGE

SPS

Fazler Rahman v. the Bank of Baroda

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Fazler Rahman v. the Bank of Baroda

Case brief

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