Allowed

M/S.N.Ramalinga Iyer v. the Chief Manager & Authorized Officer, Syndicate Bank

Kerala HC8 Jun 2017WA/723/2017

Case brief

AI extract

What is this about?

The High Court allowed writ appeals filed by mortgagors challenging the Tribunal's order confirming an auction sale. After the appellants fully paid the bank's dues and interest before the sale certificate was registered, the Court applied the principle of equity of redemption. It quashed the confirmed sale, directed the refund of auction proceeds with interest to the purchasers, and ordered the r

What did the court decide?

Sale set aside; auction purchasers to be refunded deposit with 5% interest; appellants' dues deposited with bank to be appropriated; appellants to be handed over peaceful vacant possession of the prop

M/S.N.Ramalinga Iyer Vs the Chief Manager & Authorized… — Banking and Recovery | Kerala HC (2017)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE THE CHIEF JUSTICE MR.NAVANITI PRASAD SINGH & THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V

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THURSDAY, THE 8TH DAY OF JUNE 2017/18TH JYAISHTA, 1939 WA.No. 723 of 2017 () IN OP (DRT).123/2016

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-------------------------------------------AGAINST THE JUDGMENT IN OP (DRT) 123/2016 DATED 10-02-2017

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APPELLANT(S)/PETITIONER :-

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M/S.N.RAMALINGA IYER KKN BUILDINGS, BROADWAY, ERNAKULAM - 682 031 REPRESENTED BY ITS PARTNER N.NATARAJAN

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BY SRI.S.EASWARAN

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RESPONDENT(S)/RESPONDENTS :-

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1. THE CHIEF MANAGER & AUTHORIZED OFFICER, SYNDICATE BANK, SHANMUGHAM ROAD BRANCH, PIONNER TOWERS, 1ST FLOOR, ERNAKULAM - 682 031.

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2. THE DEBTS RECOVERY TRIBUNAL ERNAKULAM - 682 031 REPRESENTED BY ITS REGISTRAR

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ADDL.3. SRI.ABDUL GAFOOR K.N., RANGOON, 37/2127A, KATRIKADAVU, KALOOR, KOCHI - 682 011. ADDL.4. SRI.SHUHAIB V.A. RAZAK, RANGOON, 37/2127A, KATRIKADAVU, KALOOR, KOCHI - 682 011. ADDL.5. SRI.HIJAS PARAMBIL RANGOON, 37/2127A, KATRIKADAVU, KALOOR, KOCHI - 682 011.

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ADDITIONAL R3 TO R5 ARE IMPLEADED AS PER ORDER DATED 8.6.17 IN I.A.No.507 OF 2017.

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R1 BY SRI.R.S. KALKURA, SC ADDL.R3, R4 & R5 BY SRI.MATHEW JOHN (K) SRI.DOMSON J.VATTAKUZHY SRI.P.RAVINDRAN (SR.) R2 BY SRI.DINESH R.SHENOY, CGC

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THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 08-06-2017 ALONG WOTH W.A.No.724/2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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NAVANITI PRASAD SINGH, CJ & RAJA VIJAYARAGHAVAN V., J

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W.A. Nos.723 & 724 of 2017

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----------------------------------------------Dated this the 8^th day of June 2017

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J U D G M E N T

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Navaniti Prasad Singh, CJ

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We have heard learned counsel for the appellants, learned counsel for the Bank as also learned counsel for the impleaded respondents at length and with their consent, we are disposing of both the appeals at this stage itself.

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Both the appeals are filed by the appellants being aggrieved by the common judgment of the learned Single Judge dated 10.2.2017 passed in O.P.(DRT) Nos.122 of 2016 and 123 of 2016, whereby, while dismissing the said Original Petitions, learned Single Judge granted time till 3.3.2017 to the petitioners/appellants to pay the complete dues. Let it be noted that upon the writ appeals being filed, by various interim orders, this Court restrained the parties from registering the sale certificate, which had been confirmed on 4.3.2017 by the Bank, after the date fixed by the learned Single Judge expired without full payment. We may also note that the Bank has

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W.A. Nos.723 & 724 of 2017

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-: 2 :-

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received complete payment from the appellants of the dues along with interest as also the appellants have deposited interest to be paid to the auction purchasers upto 3.3.2017. Since the Bank dues having been liquidated and the certificate of sale not having been registered, we set aside the sale and direct to refund the money as deposited by the purchasers with interest already deposited by the appellants. Any further demand of interest for the period after 3.3.2017 would be worked out between the parties. The reasons for this are as follows :-

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It appears that the appellants had taken substantial financial accommodation from the respondent, Syndicate Bank. There were admittedly dues. SARFAESI proceedings were resorted to and the properties were noticed for auction sale. The properties were in fact sold to the impleaded respondents being additional respondents 3 to 5 in both the appeals. The property was auctioned on 28.3.2016 for a value of about `4.70 Crores. Subsequently, the Bank confirmed the sale. The matter being before the Debt Recovery Tribunal (the 'Tribunal' for short), Ernakulam. The appellants moved various

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W.A. Nos.723 & 724 of 2017

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applications including seeking time to pay off the entire dues and consequently, if so permitted, to withdraw the challenge to the same. Various applications were filed before the Tribunal, but, the net result was that the appellants did not pay the entire dues and the Tribunal dismissed the applications. It is this that brought the appellants to this Court in the said writ proceedings. Learned Single Judge heard the matter and was not impressed upon the conduct of the petitioners/appellants. He, accordingly, dismissed the Original Petitions by common judgment dated 10.2.2017, but, while doing so, granted one opportunity to the petitioners to pay off the entire dues by 3.3.2017. The petitioners did not pay off the entire dues by 3.3.2017. Accordingly, on 4.3.2017 the Bank confirmed the sale.

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Let it be noted that the auction purchasers did not object to the order of the Tribunal. It had granted liberty to the appellants to pay and redeem the mortgage even though the auction purchasers had paid the full amount that was required under the auction sale. The auction purchasers were also aware of the judgment of the learned Single Judge, but, they

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W.A. Nos.723 & 724 of 2017

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did not choose to object the same. We hold so because the auction purchasers, in whose favour the sale certificate had to be issued, were not being allowed to register the sale certificate. However, once the learned Single Judge dismissed the Original Petitions, the present appeals were filed, this Court stayed the registration of sale certificate, as in the mean time, the Bank had already confirmed the sale on failure of the appellants discharging the dues. This Court then passed various interim orders including orders for impleading the auction purchasers. They were duly impleaded as additional respondents 3 to 5. Pursuant to various orders passed by this Court, the appellants deposited interest dues and other dues, totalling to about `6.10 Crores, which the Bank was directed to keep in the Suspense Account. Thus, it is clear that the entire dues of the Bank has been paid off by the petitioners/ appellants.

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So far as the auction purchasers are concerned, the compensation interest upto 3.3.2017 has also been deposited with the Bank. Let it be noted that the dues of the Bank was about `5.86 Crores and the property had been auctioned for

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W.A. Nos.723 & 724 of 2017

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about `4.70 Crores. Since the Bank dues having been fully liquidated before registration of the sale certificate, we have decided to cancel the sale, as in view of the judgment of the Supreme Court in the case of Mathew Varghese v. M.Amritha Kumar and others [(2014) 5 SCC 610], equity of redemption will survive until completion of sale by a registered deed.

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In fairness to learned Senior Counsel, who appeared for the auction purchasers, he raised certain fundamental issues, which in view of the fact that the debts having been discharged and the course of the Bank to sell the property having ceased, is of little importance. Even though academic, we may note that the first challenge was that if at all the Original Petition/writ appeal is to be allowed, the matter must be relegated to the Tribunal at the stage where the proceedings before the Tribunal were terminated. We find no substance in the submission for the simple reason that once the dues are fully paid up, even jurisdiction of the Tribunal to deal with the matter would extinguish. The whole exercise is for the recovery of the dues. The second submission was that the

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W.A. Nos.723 & 724 of 2017

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Original Petition was originally filed under Article 227 of the Constitution of India and as such, in terms of Sec.5 of the Kerala High Court Act, no appeal would lie. It is too late in the day to urge such a ground for, the nature of order and the nature of jurisdiction exercised by the Court has to be seen from the order of the Court.

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Learned Single Judge did not exercise the power of superintendence under Article 227 of the Constitution of India but exercised the extra ordinary discretionary jurisdiction as contained under Article 226 of the Constitution of India. Thus, the proceedings though instituted under Article 227 were disposed of as a proceeding under Article 226 and 227 of the Constitution of India and that being the position, the appeal is maintainable.

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Thus, in view of the events noted above, we allow these writ appeals and set aside the sale dated 28.3.2016 as made in favour of the impleaded respondents as also the sale certificate and its confirmation. The auction purchasers shall be entitled to total refund of the money along with 5% interest per annum from the date, amounts were deposited by them

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W.A. Nos.723 & 724 of 2017

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with the Bank. We would also consequently direct the Bank to appropriate the entire amount as deposited by the appellants towards liquidation of the dues as also to ensure that the entire amount as deposited by additional respondents 3 to 5 in both the writ appeals be returned to them forthwith, with interest as indicated above. In case of any further demand on account of interest on this count, the Bank and the appellants would settle the matter as among themselves. We would also observe that in spite of the fact that the appellants have cleared the entire dues of the Bank, in case, they are entitled to any relief from the Bank, it would be open to them to pursue the same notwithstanding the order of the learned Single Judge.

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To conclude, we direct that the possession of the security to be handed over to the appellants in peaceful vacant possession by whomsoever it is in possession of.

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Sd/NAVANITI PRASAD SINGH CHIEF JUSTICE

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Sd/RAJA VIJAYARAGHAVAN V J UDGE

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Jvt/9.6.2017

M/S.N.Ramalinga Iyer v. the Chief Manager & Authorized Officer, Syndicate Bank

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M/S.N.Ramalinga Iyer v. the Chief Manager & Authorized Officer, Syndicate Bank

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