Allowed

Thomas Chacko, v. Bank of India

Kerala HC19 Dec 2019WA/2352/2019

Case brief

AI extract

What is this about?

The court resolved an appeal where an auction purchaser sought return of sale amount and interest after a sale was set aside by the Debt Recovery Tribunal. Finding the bank had already offered interest, the court directed payment of the sale consideration plus a specific sum for litigation expenses.

What did the court decide?

Bank ordered to pay Rs. 42,37,762 (principal, stamp duty, registration, interest) within ten days of possession delivery and Rs. 25,000 as litigation charges; bank to cancel sale certificate and infor

Thomas Chacko, Vs Bank of India — Execution and Attachment | Kerala HC (2019)

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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.S.MANIKUMAR

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THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE

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THURSDAY, THE 19TH DAY OF DECEMBER 2019 / 28TH AGRAHAYANA, 1941

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WA.No.2352 OF 2019

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AGAINST THE JUDGMENT IN WP(C) 26579/2017(V) OF HIGH COURT OF KERALA DATED 21.8.2019

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APPELLANT/PETITIONER:

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THOMAS CHACKO, AGED 48 YEARS, S/O T.T. CHACKO, THOPPIL HOUSE, MOTHOLY P.O., PALA, KOTTAYAM DISTRICT.

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BY ADVS. SRI.MOHAN JACOB GEORGE SMT.P.V.PARVATHY (P-41) SMT.REENA THOMAS SRI.T.K.NAVAS SMT.NIGI GEORGE

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RESPONDENTS/RESPONDENTS:

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1 BANK OF INDIA, ZONAL OFFICE, KALOOR TOWERS, KALOOR-KADAVANTHRA ROAD, OPP.A.J.HALL, KALOOR, COCHIN - 17 REPRESENTED BY ITS ZONAL MANAGER.

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2 THE CHIEF MANAGER, AUTHORIZED OFFICER, BANK OF INDIA, TRIVANDRUM BRANCH, ST. MARY'S CHURCH COMPLEX, P.B. NO. 5532, UNIVERSITY P.O., PALAYAM, TRIVANDRUM - 34.

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3 THE SENIOR BRANCH MANAGER, BANK OF INDIA, KOTTAYAM BRANCH, AASHIRWAD TOWERS, SHASTRI ROAD, KOTTAYAM - 686 001.

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W.A.2352/2019

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4 GEORGE THOMAS, PROPRIETOR, MOLOPARAMBIL RUBBERS, PULICKAL HOUSE, CHENGALAM P.O., KOTTAYAM DISTRICT - 686 585.

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5 MATHEW THOMAS, PROPRIETOR, CENTRAL RUBBERS, MOLOPARAMBIL HOUSE, POOVARANI P.O., KOTTAYAM DISTRICT - 686 577

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6 GEORGE JOSEPH, PROPRIETOR, PILICKAL RUBBERS, CHENGALAM P.O., KOTTAYAM DISTRICT - 686 577.

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7 LISAMMA GEORGE, MOLOPARAMBIL HOUSE, POOVARANI P.O., KOTTAYAM DISTRICT - 686 577.

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R1-3 BY SRI.J.HARIKUMAR, SC, BANK OF INDIA R4-7 BY ADV. SRI.PHILIP T.VARGHESE R4-7 BY ADV. SRI.THOMAS T.VARGHESE R4-7 BY ADV. SMT.ACHU SUBHA ABRAHAM BY ADV. SMT. MONISHA.K.R

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THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 19.12.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

W.A.2352/2019

JUDGMENT

Dated this the 19^th day of December, 2019

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S. Manikumar, CJ

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Auction purchaser has filed W.P(C). No.26579 of 2017 for a mandamus directing the Bank of India, Zonal Office, Kaloor, represented by its Zonal Manager (respondent No.1 therein) to forthwith return an amount of Rs.27,77,805/- with interest @ 18% per annum from 12.3.2007 till the date of payment as demanded in Ext.P3.

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Before the writ court, Bank has offered to pay 7.5% interest on the sale consideration deposited by the auction purchaser/writ petitioner, until the amount is actually refunded by the Bank. The writ petitioner did not agree. Adverting to the rival contentions and taking note of Ext.P2 order of the Debt Recovery Tribunal, Ernakulam, made in TSA. No.1198 of 2016 (S.A.No.55 of 2007) dated 5.6.2017 writ court observed that there is nothing on record to show how the quantification of Rs.27,77,805/- has been arrived at by the petitioner, except his assertion that he had spent considerable amount for purchase and protection of the property and taking note of the fact that Ext.P2 order of the Tribunal stated supra has not been challenged, writ court closed the writ petition granting liberty to the petitioner to approach the alternate or such other competent Forum for the reliefs sought for, meaning thereby

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W.A.2352/2019

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approaching competent civil court. Being aggrieved, instant appeal is filed.

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Though Mr. Mohan Jacob George learned counsel for the appellant/auction purchaser made submissions inter alia that adequate compensation ought to have been awarded by the writ court, instead of granting liberty to the auction purchaser to approach the civil court, by inviting attention of this Court to Annexure R3(B), Mr. J. Harikumar, learned counsel for the respondent Bank submitted that Bank would return the sale amount + Stamp duty and registration charges with interest as directed by the Debt Recovery Tribunal in T.S.A. No.1198 of 2016 (S.A. No.55/2007) dated 5.6.2017.

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Mr. Mohan Jacob George, learned counsel for the appellant/auction purchaser submitted that though, after sale, possession was handed over, auction purchaser could not enjoy the property, he had to approach the police and also filed a suit for injunction. He prayed that adequate compensation be awarded towards litigation expenses.

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Ms. K.R. Monisha, learned counsel for borrower submitted that inasmuch as the auction purchaser was in possession of the mortgaged property, the borrower need not be mulcted with liability of payment of interest.

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W.A.2352/2019

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We have heard the submissions of learned counsel for the parties and perused the material on record.

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The Tribunal while disposing of T.S.A. No.1198 of 2016 (S.A.No.55/2017) dated 5.6.2017, has found fault with sale on two grounds:(1) 30 days’ prior notice was not given before auctioning the property; (2) the subject property is an agricultural property and therefore, as per the provisions of Section 31(i) of SARFAESI Act, property ought not to have been put for auction. Thus the Tribunal had set aside the sale held on 12.3.2007. Order of the Tribunal reads thus:

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“O R D E R

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TSA No.1198/2016 (SA No.55/2007) is allowed. The sale held on 12.03.2007 is set aside. In view of this, the purchase consideration remitted by the 4^th respondent/auction purchaser shall be refunded to him forthwith by the Authorised Officer of the respondent bank. Needless to state that the respondent bank has to consider compensating him by way of interest for the period the sale consideration amount had been held by the respondent bank. The respondents 1 to 3 shall take necessary steps to cancel the sale certificate issued in favour of the 4^th respondent without any delay; beforehand the setting aside of the sale shall also be communicated to the concerned SRO immediately. The Authorised Officer of the respondent bank shall also take steps for restoration of possession of the secured asset to the mortgagor. Consequently, all the pending IAs are closed. No order as to costs. Interim order, if any, stands vacated.

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W.A.2352/2019

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Registry is directed to communicate copy of the order to the parties concerned by Registered Post with AD.”

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Though Mr. Mohan Jacob George, learned counsel for the auction purchaser sought for compensation, quantified at Rs.27,77,805/- with cost said to be incurred by the auction purchaser for protecting the property and interest @ 18% per annum, we are not inclined to grant the relief sought for, for the reason that as rightly contended by the learned counsel for the bank, while setting aside the sale, the Tribunal has directed the Bank to consider compensating the auction purchaser by way of interest for the period of sale consideration amount, held by the Bank. Bank has been further directed to take steps for the cancellation of Sale Certificate issued in favour of auction purchaser. Bank has been further directed to communicate the same to the concerned Sub Registrar Office. It is further ordered that the Bank shall take steps for restoration of possession of the secured asset to the

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Mortgagor. Annexure R3(B) filed along with statement dated 12.12.2019 read as under :

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Period		Amount	% of interest	Simple interest
30/03/2007 to 07/08/2007		1970000	8.5	55816
08/08/2007 to 31/12/2007		2127605	8.5	70356
	2008	2127605	9.15	194675
	2009	2127605	6.5	138294
	2010	2127605	6.5	138294
	2011	2127605	8.75	186165

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W.A.2352/2019

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2012	2127605	9	191484
2013	2127605	9	191484
2014	2127605	9.05	192548
2015	2127605	8.75	186165
2016	2127605	6.9	146804
2017	2127605	6.6	140421
2018	2127605	6.65	141485
2019	2127605	6.4	136166

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Total Interest 2110157

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Total Interest 2110157
Total Principal (sale amount + stamp Duty + Registration Fees) 2127605
Grant Total 4237762

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Sale Amount - Rs.19,70,000/Stamp Duty - Rs.1,18,200/Registration Fees – Rs.39,405/Total – Rs.21,27,605/-”

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Perusal of the same shows that Bank has offered to repay the sale amount + Stamp duty and registration charges, and also added simple interest for the period between 30.3.2007 and 31.12.2007, payable on fixed deposits . According to the learned counsel for the Bank, accrued Interest for the period between 30.3.2007 and 31.12.2019 would be around 7.87%. Though there is no precedent for payment of interest while the deposit is repaid to the auction purchaser, in the case on hand, Bank has come forward to repay the sale amount deposited + stamp duty + registration charges by properly compensating the auction purchaser by way of interest as directed by Tribunal in

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W.A.2352/2019

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T.S.A. No.1198 of 2016 (S.A. No.55/2017) dated 5.6.2017. Interest of justice would be met if the auction purchaser/appellant is also awarded a reasonable litigation expenses, which was constrained to spend. Infirmities in the auction conducted by the Bank, has resulted in litigation before the Tribunal, as well as before the civil court.

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In such circumstances, apart from the sum offered to pay as per Annexure R3(a),we deem it fit to direct the Bank of India to pay litigation expenses of Rs. 25,000/-.

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Mr.J. Harikumar, learned counsel for the respondent Bank submitted that no sooner the appellant/auction purchaser delivers possession of the subject property, the above said sum + litigation expenses as ordered, will be paid to the appellant/auction purchaser. Mr. Mohan Jacob George, learned counsel for the auction purchaser/appellant submitted that suitable letter would be given to the Bank .

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Within ten days from the date of receipt of the letter effecting delivery of possession, the Bank shall pay a sum of Rs.42,37,762/towards principal sale amount + Stamp duty and Registration charges and also pay a sum of Rs.25,000/- as litigation charges. The Bank shall take steps to cancel the sale deed as ordered by the Tribunal. Bank shall also take steps to inform the Sub Registration Officer about the setting aside of the sale. Auction Purchaser/appellant shall also return

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W.A.2352/2019

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the original sale deed executed by the Bank in favour of auction purchaser/appellant.

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After the judgment was delivered, Ms. K.R. Monisha, learned counsel for the borrower, submitted that the entire amount ordered by this Court along with incidental expenses, if any incurred by the Bank, will be paid to the Bank, by the borrower/respondent on or before 30.3.2020 and that the Bank be directed to return the sale deeds deposited with them as also to hand over physical possession of mortgaged property to the borrower/respondent.

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Inasmuch as the prayer in this writ appeal is restricted only for repayment of the sale amount with appropriate interest to the auction purchaser, we are not inclined to make any direction. However, it is open to the borrower/respondents to approach the bank with the aforesaid request. If any such request is made, in order to give a quietus to the litigation, the Bank is directed to consider the same. At this juncture, learned counsel for the Bank submitted that if a request is made for one time settlement, the same would be considered. Submission is placed on record.

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Sd/S. Manikumar, Chief Justice

sou.

W.A.2352/2019

APPENDIX

PETITIONER'S/S EXHIBITS:

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ANNEXURE A1 COPY OF SALE CERTIFICATE.

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ANNEXURE A2 PRINTOUT OBTAINED FROM THE INTERNET SHOWING THE RATE OF INTEREST ON FIXED DEPOSITS IN NATIONALIZED BANKS DURING THE YEAR 2007.

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RESPONDENT'S EXHIBITS:

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ANNEXURE R3(A) : TRUE COPY OF THE STATEMENT OF THE AMOUNTS PREPARED BY THE THIRD RESPONDENT WORKING OUT THE INTEREST AT THE RATE PAYABLE TO SAVINGS BANK ACCOUNTS ON THE SALE CONSIDERATION, STAMP DUTY, AND REGISTRATION CHARGES, INCURRED BY THE APPELLANT AS ON 1.12.2019.

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ANNEXURE R3(B) : TRUE COPY OF THE STATEMENT OF THE AMOUNTS PREPARED BY THE THIRD RESPONDENT WORKING OUT AT THE MAXIMUM RATE OF INTEREST PAYABLE ON FIXED DEPOSITS ON THE SALE CONSIDERATION, STAMP DUTY PAID AND REGISTRATION CHARGES, INCURRED BY THE APPELLANT.

Thomas Chacko, v. Bank of India

Case brief

What is this about?

What did the court decide?

Thomas Chacko, v. Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

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