V. Venkatesh Vs M/S. Phoneix Arc Private Limited

SHRI K.V. SHANKAR S/O. LATE K. VENKATE GOWDA AGED ABOUT 38 YEARS RESIDING AT NO.53-45 11TH MAIN, 18TH CROSS R.K. LAYOUT PADMANABHANAGAR BENGALURU-560 069.

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K.H. ASHOK KUMAR S/O. HANUMANTHAPPA AGED ABOUT 40 YEARS RESIDING AT NO.1 THAYAPPA REDDY COMPLEX PWD MAIN ROAD OPPOSITE RELIANCE FRESH AKASH NAGAR, A. NARAYANAPURA BENGALURU-560 016.

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SRI CHANDRA SHEKAR REDDY S/O. SRI PILLA REDDY AGED ABOUT 51 YEARS RESIDING AT NO.1-79 BASIMANYALLI (VILLAGE) GUDIPALLI (MARIDAL), CHITOOR DISTRICT ANDHRA PRADESH-517 423.

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…RESPONDENTS

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(BY SRI MAHABALESHWAR G.C., ADVOCATE, FOR R-1; SRI V. RAVI PRAKASH, ADVOCATE, FOR R-2; SRI C.A. DEVENDRA BABU, ADVOCATE, FOR R-3, AND SRI S.A. SUDHINDRA, ADVOCATE, FOR R-4)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH AND SET ASIDE THE ORDER OF THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT CHENNAI, DATED 5-9-2017 IN RA(SA) NO.101 OF 2013 AT ANNEXURE-Y, AND ETC.

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THIS WRIT PETITION IS COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE D K SINGH AND HON'BLE MR. JUSTICE VENKATESH NAIK T

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ORAL ORDER

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(PER: HON'BLE MR. JUSTICE D K SINGH)

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The present writ petition has been filed by the petitioner-borrower impugning the order dated 05.09.2017 passed by the Debts Recovery Appellate Tribunal at Chennai in RA(SA) No.101 of 2013 instituted against the order dated 27.04.2012 passed by the Debts Recovery Tribunal, Bengaluru, in SA No.259 of 2012.

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The petitioner had purchased the property in question by a Registered Sale Deed on 02.06.2003. The petitioner had obtained a loan of ₹16,00,000/- from UCO Bank Limited to construct a house on the said property. Thereafter, M/s. Standard Chartered Bank agreed to sanction a loan of ₹46,00,000/- by taking over the loan of UCO Bank Limited. M/s. Standard Chartered Bank released only a part of the amount and stopped further disbursement. As the petitioner did not pay the loan as per

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the terms of the Agreement, the Bank classified the loan account of the petitioner as NPA and issued notice to him on 15.06.2006 under Section 13(2) of the Securitisation

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and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (for short, 'SARFAESI Act') for recovery of the dues.

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Again, a notice under Section 13(4) of the SARFAESI Act was issued to the petitioner on 30.08.2006. According to the petitioner, the said notice was never served upon him.

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The Bank, thereafter, initiated proceedings under Section 14 of the SARFAESI Act for taking physical possession of the property in question. The Additional Chief Metropolitan Magistrate, Bengaluru, passed order on 03.03.2007 in Criminal Miscellaneous No.2 of 2007. The said order was challenged by the petitioner by filing Writ Petition No.4724 of 2008 (GM-RES), but the said writ petition was disposed off on 11.06.2009 with liberty to the petitioner to approach appropriate forum.

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In the meantime, M/s. Standard Chartered Bank on 17.12.2008 assigned the loan liability of the petitioner

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to respondent No.1-assignee, i.e. M/s. Phoenix ARC Private Limited, to recover the amount. The assignee issued possession notice under Section 13(4) of the SARFAESI Act and thereafter, sale notice was issued on 28.01.2012 for auction of the sale property to be held on 29.02.2012.

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In the meantime, it appears that the petitioner had approached the assignee for One Time Settlement and the assignee agreed for One Time Settlement at ₹44,00,000/- to be paid on or before 25.02.2012, i.e. before the date of auction of the sale property. The petitioner did not pay the agreed sum of ₹44,00,000/- as One Time Settlement to the assignee and therefore, the property was sold on the scheduled date, i.e. on 29.02.2012, for a sum of ₹1,10,00,700/-.

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The petitioner had challenged the auction proceedings before the Debts Recovery Tribunal, Bengaluru, by filing SA No.259 of 2012. However, the

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same came to be dismissed by order dated 27.04.2012.

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Against the said order passed by the Debts Recovery Tribunal, Bengaluru, the petitioner had filed the appeal in RA(SA) No.101 of 2013 before the Debts Recovery Appellate Tribunal, Chennai.

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According to the learned counsel for the petitioner, the notices under Sections 13(2) and 13(4) of the SARFAESI Act were not served on him. However, the said contention has been rejected by the Debts Recovery Tribunal, in as much as the notices were not only sent by the assignee, but the paper publication was also made. The petitioner himself had approached the assignee for

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One Time Settlement, and he agreed for payment of ₹44,00,000/- before the due date of auction. When the petitioner failed to make the payment as agreed for One Time Settlement, the auction has taken place. We, therefore, do not find any substance in the submission of the learned counsel for the petitioner that the notices

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under Sections 13(2) and 13(4) of the SARFAESI Act were

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not served on him.

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Learned counsel for the petitioner further submits that the petitioner was not served with the auction notice.

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The Debts Recovery Tribunal has dealt with the said submission and has recorded that after taking physical possession of the secured assets on 07.12.2010, i.e. after eleven months, i.e. on 30.12.2011, the petitioner had issued a request letter to the Bank to permit him to continue the School running in the said premises of the property and undertook to clear the dues before February, 2012. In good faith and also on humanitarian ground, the Bank had allowed the petitioner to run the School and waited till 25.02.2012. The petitioner agreed for One Time Settlement at ₹44,00,000/-, but the petitioner did not pay the said amount and therefore, the auction took place on 29.02.2012. The sale was confirmed on 05.03.2012. The petitioner, as an afterthought, started challenging the

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possession notice under Section 13(4) of the SARFAESI

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Act in the year 2012, which was issued way back in the year 07.12.2010. The petitioner did not challenge the auction sale and not prayed for any relief about it in SA No.259 of 2012 and therefore, at this point of time, the petitioner cannot challenge the auction sale when he did not challenge before the Debts Recovery Tribunal, Bengaluru. We, therefore, do not find that there is any illegality committed by the assignee in conducting the auction sale when the petitioner failed to pay his debts and even, he did not pay One time Settlement of ₹44,00,000/before the due date of auction. We, therefore, find no substance in this writ petition. Accordingly, we dismiss the present writ petition.

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Sd/(D K SINGH) JUDGE

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Sd/(VENKATESH NAIK T) JUDGE

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KVK List No.: 1 Sl No.: 38

V. Venkatesh v. M/S. Phoneix Arc Private Limited

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V. Venkatesh v. M/S. Phoneix Arc Private Limited

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