Partly allowed

Lekha Suresh v. the Authorised Officer

Kerala HC13 Aug 2014WP(C)/8558/2014

Case brief

AI extract

What is this about?

This writ petition challenged a Debts Recovery Tribunal order proceeding with a SARFAESI seizure notice without notice to third-party purchasers. The single-judge court quashed the order for violating natural justice due to lack of notice but restored the application to the DRT for a fresh hearing with all parties.

What did the court decide?

Debts Recovery Tribunal order quashed; Securitisation Application restored to DRT for fresh hearing with notice to all affected parties; deposit ordered.

Lekha Suresh Vs the Authorised Officer — Banking and Recovery | Kerala HC (2014)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN

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WEDNESDAY, THE 13TH DAY OF AUGUST 2014/22ND SRAVANA, 1936

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WP(C).No. 8558 of 2014 (T)

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PETITIONER:

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LEKHA SURESH, AGED 40, W/O. SURESHKUMAR, KAILASOM, GRAC-55, GANDHIPURAM, SREEKARIYAM, THIRUVANANTHAPURAM.

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BY ADVS.SRI.THIRUMALA P.K.MANI, SRI.D.DIPU.

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RESPONDENTS:

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1. THE AUTHORISED OFFICER, KERALA STATE CO-OPERATIVE BANK LTD., OVERBRIDGE JUNCTION, THIRUVANANTHAPURAM-695 001.

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2. THE MANAGER,

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KERALA STATE CO-OPERATIVE BANK LTD., KARAMANA BRANCH, KARAMANA, THIRUVANANTHAPURAM-695 001.

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3. SIVASANKARAN, S/O. VELAYUDHAN,

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KUNNATHUVILAPUTHEN VEETTIL, MUKKOLACKAL, THOZHICHAL DESOM, VENGANOOR VILLAGE, THIRUVANANTHAPURAM-695 001.

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4. B.PREMAKUMARI,

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D/O. NARAYANAN, “RENJINI”, KOLLAMKONAM, KOTTUKKAL, PAYATTUVILA P.O, THIRUVANANTHAPURAM-695 007.

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5. RAMACHANDRAN NAIR,

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S/O. CHELLAPPAN PILLAI, “RENJINI”, KOLLAMKONAM, KOTTUKAL, PAYATTUVILA P.O., THIRUVANANTHAPURAM-695 003.

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R1 & R2 BY SRI.GEORGE POONTHOTTAM, S.C, R3 BY ADV. SRI.T.K.ANANDA KRISHNAN, R4 & R5 BY ADV. SRI.S.MOHAMMED AL RAFI.

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 13-08-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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Prv.

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W.P.(C).NO.8558/2014 - T:

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APPENDIX

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PETITIONER'S EXHIBITS:

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EXHIBIT P1: TRUE PHOTOCOPY OF SALE DEED NO.263/06 DATED 6.2.2006.

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EXHIBIT P2: TRUE PHOTOCOPY OF LAND TAX RECEIPT DATED 10.3.2014.

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EXHIBIT P3: TRUE PHOTOCOPY OF ENCUMBRANCE CERTIFICATE DATED 16.2.2013.

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EXHIBIT P4: TRUE PHOTOCOPY OF SALE DEED NO. 281/05 DATED 3.2.2005.

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EXHIBIT P5: TRUE PHOTOCOPY OF GIFT DEED NO.2357/79 DATED 4.8.1979.

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EXHIBIT P6: TRUE COPY OF PROCLAMATION OF SALE DATED 22.2.2014.

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EXHIBIT P7: TRUE PHOTOCOPY OF ADVOCATE NOTICE DATED 18.3.2014 ISSUED TO RESPONDENTS 3 TO 5.

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EXHIBIT P8: TRUE PHOTOCOPY OF ORDER DATED 15.4.13 OF THE D.R.T, ERNAKULAM.

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EXHIBIT P9: TRUE PHOTOCOPY OF SALE ADVERTISEMENT LETTER DATED NIL.

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EXHIBIT P10: TRUE PHOTOCOPY OF ADVOCATE NOTICE DATED 13.3.2014 ISSUED TO THE 1ST RESPONDENT.

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RESPONDENTS' EXHIBITS: NIL.

//TRUE COPY//

P.A. TO JUDGE.

Prv.

K. VINOD CHANDRAN, J.

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=====================

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W.P.(C) No. 8558 of 2014-T ====================== Dated this the 13^th day of August, 2014

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J U D G M E N T

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The petitioner is aggrieved by the proceedings initiated against the petitioner's property of 14.25 cents of comprised in Survey No.408 of 2010 in Kottukal Village, Neyyattinkara Taluk. The original borrower is the 4^th respondent and the 4^th respondent had availed of a loan from the 2^nd respondent after mortgaging three items of properties; one, the property referred to above and two others being 24.19 cents in Survey No.404 of 2001 and 5 cents of property in Survey No.408 of 2007, all in the same Village and Taluk. The admitted facts before this Court would reveal that the 4^th respondent, owner of the property, had mortgaged the same with the 2^nd respondent, and while the mortgage was subsisting, sold it to the 3^rd respondent. The 3^rd respondent subsequently, sold one item of property to the petitioner by Ext.P1 sale deed. The other

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W.P.(C) No. 8558 of 2014

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two items were also sold by the 4^th respondent to the 3^rd respondent itself and the 3^rd respondent executed identical sale deeds; in favour of the defendants 3 and 4; who appear in Ext.P8 order of the DRT.

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It is to be specifically noticed that, the sale deeds were not executed solely by the 3^rd respondent but the 4^th and 5^th respondents were also parties to the same. The 5^th respondent, who was the husband of the 4^th respondent, though having no right over the property was made a party to execution of the sale deeds. This fact is specifically noticed because, the 4^th respondent has a contention that the sale to the 3^rd respondent was only by way of security and no sale as such was intended. The subsequent sale made by the 3^rd respondent, in which the respondents 4 and 5 were also parties would belie such contentions. The 4^th respondent cannot raise such contention with respect to the sale effected in favour of the 3^rd respondent.

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In any event, the 2^nd respondent proceeded against

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the property under the Securitization and Reconstruction of

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W.P.(C) No. 8558 of 2014

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Financial Assets and Enforcement of Security Interest Act (SARFAESI), 2002. When the sale notice was published, the 4^th respondent filed a Securitisation Application before the Debts Recovery Tribunal, Ernakulam (Kerala and Lakshadweep) (herein after referred to as the 'DRT') contending that, the upset price fixed and notified in the notice, for all the properties together, was in violation of the specific mandate in the enactment, as also the binding precedents of the Hon'ble Supreme Court.

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The Securitisation Application when taken up and at the first instance, the learned Counsel for the Bank also appeared. Specifically what has been noticed by the DRT in Ext.P8 is as follows:

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The learned Counsel Sri.S.Mohammed M. Rafi for the applicant and the learned counsel Shri.K.Ravikumar for the 1^st defendant present. Matter taken up by consent towards disposal of the SA itself. Hence summons to defendant 2 to 4 is dispensed with.

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Hence, no notice was issued to either to the 2^nd respondent, who is the petitioner herein, or the respondents 3 and 4. It is not clear as to why when it was brought to the

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W.P.(C) No. 8558 of 2014

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notice of the DRT, that third party interest were created in the mortgaged property, the DRT proceeded to consider the application without notice and specifically dispensing with such notice to the third parties; on the request of the Counsel for the applicant as also the Bank. It is trite that, third party rights would not affect the mortgage created to the 2^nd respondent Bank and the 2^nd respondent Bank would be entitled to proceed against the mortgaged property, ignoring such conveyance. But however the subsequent purchasers could very well exercise their right to redemption.

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If the DRT had proceeded with the Securitisation Application, and dealt with the contentions of the applicant therein, then definitely there would have been no difficulty. But, however, in Ext.P8 order, the DRT specifically directed the Bank to proceed against one of the properties, since according to the DRT that would satisfy the entire loan amounts. That definitely would cause prejudice to the petitioner herein, whose property was directed to be

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W.P.(C) No. 8558 of 2014

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proceeded against first.

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In such circumstance, Ext.P8 is found to be bad for reason only of violation of principles of natural justice. The learned Counsel for the 4^th respondent would contend that, the petitioner had an alternate remedy before the Debt Recovery Appellate Tribunal. However, this Court is not convinced that the petitioner should be relegated to such alternate remedy, especially since the matter was proceeded with, without notice to the petitioner and orders were passed causing prejudice to the petitioner herein. In any event, it is a matter of discretion as to whether the extra ordinary jurisdiction under Article 226 of the Constitution of India has to be invoked. This Court is convinced that this is a fit case in which, such powers can be invoked. Ext.P8 hence stands set aside.

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However, the respondents 3 and 4, who were also persons, who obtained third party rights over the two other items of property, are not before this Court. In such circumstance, it may not be proper for this Court to allow

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W.P.(C) No. 8558 of 2014

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the petitioner's claim for settlement of the proportionate liability; as apportioned on the valuation of the three properties. Taking into account the valuation of the three properties, that definitely could be done after hearing the affected parties, who have been put in ownership and possession by the 4^th respondent.

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It is to be noticed that this Court had at the time of admission of the Writ Petition, granted interim stay of the sale, on condition of deposit of Rs.4,50,000/- with the respondent Bank, which admittedly has not been complied with. The learned Counsel for the petitioner would contend that the same was not complied with since, there was no order as to the consideration of the proportional liability of the petitioner based on the valuation of the respective properties. As has been noticed earlier, that cannot be done in the present proceedings, since the other two persons are not parties herein. Hence, the petitioner would have to raise such contentions before the DRT. The DRT would consider the Securitisation Application afresh

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W.P.(C) No. 8558 of 2014

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after hearing all affected parties.

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This Court having set aside Ext.P8, Securitisation Application No.304 of 2013 is restored to the files of the DRT. The petitioner, the 4^th respondent and the 2^nd respondent who are respectively the 2^nd defendant, the applicant and the first defendant in the Securitisation Application, shall appear before the DRT on 17.09.2014. The DRT shall issue notice to the defendants 3 and 4. The petitioner; to demonstrate her bonafides shall deposit an amount of Rs.4,50,000/- before the DRT within a period of six weeks from the date of receipt of the certified copy of this judgment. On such deposit being made, the DRT shall consider the issue of proportional liability being apportioned, as against the three properties, considering the valuation of the respective properties, which valuation is directed to be placed on record by the 1^st respondent. On such apportionment of liability, the third parties shall be permitted to get release of the properties by payment of the amounts so made liable on the respective properties within

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W.P.(C) No. 8558 of 2014

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a period stipulated by the DRT. It is made clear that the release of any or all of the properties shall be made only after the entire liability to the Bank is satisfied.

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If any of such parties fail to make the deposit, then the DRT shall direct the 1^st respondent to proceed with the sale of that property and only on realisation of the sale proceeds; shall the property, the subsequent purchaser of which has made the deposit, be released. Any future liability after adjusting the sale proceeds shall also be satisfied by the third party who seeks release of the property.

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The Writ Petition is disposed of.

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Sd/-

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K. VINOD CHANDRAN, JUDGE

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// True Copy // P.A To Judge.

Lekha Suresh v. the Authorised Officer

Case brief

What is this about?

What did the court decide?

Lekha Suresh v. the Authorised Officer

Case brief

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