A borrower sought restoration of a failed one-time settlement and six further months to repay the balance. The Court refused mandamus, noting non-compliance with interim payment orders and applying precedents against judicial rescheduling of loans. It dismissed the writ petition and vacated the interim order.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 12.07.2017
CORAM:
THE HON'BLE MR.JUSTICE S.MANIKUMAR AND
THE HON'BLE MR.JUSTICE V.BHAVANI SUBBARAYAN
Writ Petition No.10018 of 2017 W.M.P.No.11025 of 2017
M/s.Ratna Stores (P) Ltd.,
Rep., by its Director,
S.Sivasundar, S/o.P.S.Sivaperumal .... Petitioner
The Chief Manager, UCO Bank,
MID Corporate Branch, Burkit Road, T.Nagar, Chennai 600 017. .... Respondent
WRIT Petition filed under Article 226 of the Constitution of India, to issue a Writ of Mandamus, directing the respondent bank to restore the OTS Proposal, dated 27.09.2016, vide letter Ref.ARSPL/UCO/OTS/2709, by granting further time of 6 months to the petitioner for repayment of unpaid amount of Rs.27.60 Crores.
For Petitioner : Mr.A.Umashankar
For Respondent : Mr.V.Suthakar
ORDER
(Order of this Court was made by S.MANIKUMAR, J)
M/s.Rathna Stores (P) Ltd., T.Nagar, Chennai, has sister concerns, M/s.Rathna Stores Firm and M/s.Rathna Stores in Chennai. Sister concerns had availed various credit facilities from UCO bank, by mortgaging properties.
“1. Applicant's counsel submitted that, certain negotiations are going on with the officials of the respondent bank and the proposals have been sent to Head Office of the Bank for consideration. In the meantime, Ld. Counsel for respondent bank, on caveat, was present and submitted to this Tribunal that the respondent bank has already issued Sale Notice fixing the sale date as 02.05.2014 for two items of property, namely,
a) Land measuring 6000 sq ft and small commercial building in the [lame of Rathna Stores Pvt Ltd. situated at Plot NoA675, Old NO.AA12 , Present Door No.87, TS No.118, Naduvakkarai Village, Egmore Ward, which is morefully described in the Sale Notice as item No.1 and
b) land measuring 8034 sq ft and commercial building with Ground +5 floors totally measuring . 30240 sq.ft in the name of Rathna Stores Pvt. ltd situated at TS No.6044/1, 6063/1, 6064/1, T.Nagar Village, Mambalam Ward, which is morefully described in the Sale Notice as item No.2 of the Sale Notice.
The applicant's Counsel submitted that they would like to settle the dues and also willing to deposit Rs.4 crore within four weeks from today and also agreed to deposit another Rs.4 crores within four weeks thereafter.
i) Applicant to pay Rs.4 crore (Rupees Four Crore only) either by way of Demand Draft, Cash or Pay Order as may be acceptable to the respondent bank on or before 25.04.2014 and the respondent is directed not to take physical possession of the properties till 25.04.2014;
ii) In the event, the applicant pays the amount as directed above, the proposed sale on 02.05.2014 shall be postponed by the respondent bank. However, if
the applicant fails to deposit the amount as directed herein or seeks extension of time by moving an application, liberty is granted to the respondent bank to proceed with the sale in the manner known to law;
iii) Apart from the payment of Rs.4 crores as directed above, the applicant shall also deposit another sum of Rs.4 crore (Rupees Four Crore only) to the respondent bank on or before 23.05.2014 and the respondent bank shall not dispossess the applicant till such time. However, in the event, the applicant fails to deposit the said amount as directed herein or seeks extension of time by moving any application, liberty is granted to the respondent bank to proceed with the sale as deemed fit under the law.
“IA 141/2014 & IA 142/2014 have been filed by petitioner/applicant seeking extention of time for payment and stay. Respondent bank has to file their counter. Counsel for respondent bank submitted that, as per the order dated 27.03.2014, in the event the applicant fails to deposit the amount as directed or seeks extension of time by moving any application, liberty is granted to the respondent bank to proceed further unless the said order is challenged in appeal. At the same time, the applicant submitted that the bonafides of the applicant has been proved by paying the 1st part of the direction and seeks only extension of time for the payment of 2nd part. For filing counter, call on 06.06.2014.”
enable the petitioner to close the entire loan amount, in the respondent-Bank. Taking note of the submission of the learned counsel for the respondent-Bank that the bank has decided to issue a fresh auction notice, under Rule 8(5) of the SARFAESI Rules, 2002 and since the earlier notice, for conducting auction, had been withdrawn, this Court, vide order, dated 27.10.2015, dismissed the writ petition on the ground that nothing survives in W.P.No.33718 of 2015.
To
The Managing Director/Executive Director, UCO Bank, BTM Sarani, Kolkata 700 071.
Dear Sirs,
Sub: Request for One-Time Settlement – Revised Proposal
Further to our discussions with Executive Director and with the Directors of Rathna Stores Private Limited at UCO Bank, Head Office, today, we submit the following revised proposal for One Time Settlement for the following companies for an amount of Rs.53.60 Crores, due to UCO Bank.
Option A
Amount/Property to be released Time Line Rs.51 Crores : Kennath Lane, During anytime within 4 months Egmore, Usman Road, T.Nagar & on or before 31st January' 2017 Hotal Sivapriya, Kodaikanal subject to a minimum of Rs.5.30 Properties to be released on Crores in the no-lien account payment of Rs.51 Crores. to be deposited on or before 20th October' 2016. Rs.2.60 Crores : T.Nagar, Pondy On or before 31st January, 2017 Bazaar Property to be released on payment of balance Rs.2.60 Crores (after payment of Rs.51 Crores)
Option B
Amount/Property to be released Time Line Rs.26 Crores : Kennath Lane, Shall be paid within one month Egmore property to be released subject to a minimum of Rs.5.30 on payment of Rs.26 Crores Crores in the non-lien account on or before 20th October, 2016 Rs.25 Crores : Usman Road, On or before 31st January, 2017 T.Nagar & Hotal Sivapriya, Kodaikanal to be released on payment of Rs.25 Crores. Rs.2.60 Crores : T.Nagar, Pondy On or before 31st January, 2017 Bazaar Property shall be released on payment of Rs.2.60 Crores
We request UCO Bank to kindly advise your approval in order to proceed with the above One Time Settlement Proposal. Thanking you,
Yours faithfully, For Rathna Stores Private Ltd., Sd/Director.
We write to inform you that Competent Authority has approved the following proposal of the company/firm/yourself for settlement of dues in respect of the financial assistance availed from the Bank envisaging inter alia as under:-
Option B Amount/Property to be released Time Line Rs.26 Crores : Kennath Lane, Shall be paid within one month Egmore property to be released subject to a minimum of Rs.5.30 on payment of Rs.26 Crores Crores in the non-lien account on or before 20th October, 2016 Rs.25 Crores : Usman Road, On or before 31st January, 2017 T.Nagar & Hotal Sivapriya, Kodaikanal to be released on payment of Rs.25 Crores. Rs.2.60 Crores : T.Nagar, Pondy On or before 31st January, 2017 Bazaar Property shall be released on payment of Rs.2.60 Crores 3. Waiver of compound interest and liquidated damages upto the date of settlement.
Please note that the aforesaid settlement proposal shall be subject to the terms and conditions given in the Appendix.
This letter is sent to you in triplicate. Kindly sign the same in triplicate/have the same singed, in triplicate, by duly authorized partner(s)/any of the Directors duly authorized in that behalf in terms of the provision of the Resolution passed by the Board of Directors in this regard if for any reason, it is not possible to have the same signed by any such authorized Directors. Kindly arrange to pass the necessary resolutions in his regard and have the letter singed. In triplicate by a Director duly authorized there under. Thereafter, you should relain the original and return the second and third copies to us. Approved and accepted by .....by the hand of Shri......... Partner..........., Director and Shri...... Granted by the Board of Directors as its meeting held on .....day of ...... Terms and condition
the court agreeing for a consent for the entire amount clamed in the plaint with interest costs and other reliefs prayed for in the plaint with condition that it the agreed compromise amount as above is paid within the agreed time and manner, the entire dues payable to the bank under the decree shall be deemed to have been satisfied. In case of a singe default in payment as per terms of comprise sated hereinabove the entire decretal amount with interest and costs shall be payable forthwith.
Settlement of dues – M/s.Rathna Stores Group of
Accounts, viz., M/s.Rathna Stores Pvt Ltd, M/s.Rathna Stores (Firm) and M/s.Rathna Store
Please refer to our letter ADV/OTS/26/2016-17 dated 05-10-2016 conveying approval of compromise proposal for payment of RS.53.60crores in full and final settlement of dues to the bank by of the above Rathna Group of account.
In connection with the said compromise. you had submitted a representation seeking extended time up to
30.06.2017 for payment of the remaining balance of RS.27.60 crores. We request you to furnish us the source of cash flow along with a firm commitment for payment of the said amount by the due date. it is observed that at the time of submitting the compromise proposal, you have not mentioned the existing attachment of the property by income tax authorities for the tax dues to the department. You are requested to furnish us the reason for not informing the bank about the attachment order of the income tax authorities.
Pending decision of the competent authority on the request for extended time for payment of the balance amount. Please fake notice that the compromise proposal is treated as a failed compromise with attendant consequences.”
“We invite reference to your letter dated 27.02.2017seeking balance payable in respect of the compromise proposal approved. In this connection, we have to inform you that the balance payable in respect of the said compromise is Rs.27.60crores ( Rupees Twenty Seven crores and Sixty Lakh only) secured by mortgage of land and commercial building (basement plus five floor) in New No.79, Usman Road & No.19,20 part, Sarojini Street. T.Nagar, Chennai 600 017 in the name of M/s.Rathna Stores Pvt Ltd. You are aware that the said compromise proposal was valid up to 31.01.2017 and the above said amount payable by the company is subject to the approval of your request for extension of time by the competent authority and also subject to such other terms and conditions including additional interest that may be stipulated by the competent authority in this regard.”
29.03.2017, has been published in New Indian Express, fixing the auction date on 05.05.2017.
“3. In order to save the property from auction at the instance of the bank, when genuine and bona fide attempt has been made by the borrower to repay the remaining amount, instead of proceeding to allow the auctioning of property, we grant time to the borrower/petitioner for the remaining payment till 07.07.2017. Till then, the respondent Bank shall not take coercive steps.
List on 12.07.2017 for compliance.”
Thus, the present writ petition is listed under the caption, “For Compliance”.
respondent-bank submitted that when the mortgaged properties were brought for auction, writ petitions one after another, were filed and the action of the Bank to realise the outstanding dues, is scuttled. He further submitted that even the interim order, dated 27.04.2017, has not been complied with. According to him, there is no bona fide on the part of the writ petitioner. He submitted that the prayer sought for, is not maintainable.
“(1) All the place and parcel of land measuring 3884 sq.ft., and building with Ground + 5 floors measuring 20304 Sq.Ft., in the name of M/s.P.S.Sivaperumal and Mrs.S.Periyaperatti, situated at T.S.No.7526 part, 7559, 7560, T.Nagar Village, Mambalam Ward, Guindy Taluk, Chennai South District, Door No.78, New No.91, Sir Thyagaraya Road, Chennai 600 017, as detailed below: For Doc.No.1425/73, bounded on the North by: Sir Thyagaraya Road, South by: Vendor's property, East by: D.No.77, West by: Shop No.2/78, For Doc.No.1426/73, bounded on the North by: Sir Thyagaraya Road, South by: Vendor's property, East by: Shop No.1/78, West by: Shop No.4/78, For Doc.No.3314/75, bounded on the North by: Shop No.1/78 & 7/78, South by: Deenadayalu St., East by: Shop No.78, West by: Shop No.15.
(2) All the place and parcel of land measuring 8034 sq.ft., and commercial building with Ground + 5 floors totally measuring 30240 Sq.Ft., in the name of Rathna Stores Pvt. Ltd., situated at T.S.No.6044/1, 6063/1, 6064/1, T.Nagar Village, Mambalam Ward, Guindy Taluk, Chennai South District, New No.79, Usman Road &
No.19, 20 part of Sarojni Street, T.Nagar, Chennai 600 017, as detailed below: bounded on the North by: Sarojini Street, South by: OKJ Jewellers, East by: Land & Building, West by: Usman Road.
"7.In our considered opinion it is not proper for the Court to interfere in such matters relating to recovery of loans. Such matters are contractual in nature and writ jurisdiction is not the proper remedy for this. A writ lies when there is an error of law apparent on the face of the record, or there is violation of law. No writ lies merely for directing one time settlement or for directing re-scheduling of the loan or for fixing instalments in connection with the loan. It is only the bank or the financial institution which granted the loan which can reschedule it or fix one time settlement or grant instalments. The Court has no right under Article 226 of the Constitution to direct grant of one time settlement or for re-scheduling of the loan, or to fix instalments.
petitioner can show that he has a legal right to the performance of a public duty by the party against whom the mandamus is sought.
"42. Some of the learned counsel submitted that
the Court should direct one time settlement or fixing of installment or rescheduling the loan. In Tamilnadu Industrial Investment Corporation Vs. Millenium Business Solutions Private Limited, 2004 (5) CTC 689, it has been held that this Court cannot pass any such order in writ jurisdiction, since directing one time settlement or granting installments is really rescheduling the loan, which can only be done by the bank or financial institution which granted the loan. This Court under Article 226 of the Constitution cannot reschedule a loan. A writ is issued when there is violation of law or error of law apparent on the face of the record, and not for rescheduling loans. The Court must exercise restraint in such matters, and not depart from well settled legal principles".
follows:
"46. Writ is a discretionary remedy, and hence this Court under Article 226 is not bound to interfere even if there is a technical violation of law, vide R.Nanjappan v. The District Collector, Coimbatore reported in 2005 WLR 47; Chandra Singh v. State of Rajasthan reported in JT 2003 (6) SC 20; The Managing Director, Tamil Nadu State Transport Corporation (Madurai Division-IV) Ltd., Dindigul v. P.Ellappan reported in 2005 (1) MLJ 639; Ramniklal N.Bhutta and Another v. State of Maharashtra reported in 1997 (1) SCC 134, etc."
it and failed to pay instalments as directed. Neither it raised any grievance against the condition as to payment of instalments nor made any application to the Court for modification of the condition. It continued to enjoy the benefit of stay ignoring and defying the term as to payment of money. The Company is thus in contempt of the order of this Court, has impeded the course of justice and has no right of hearing till it has purged itself of the contempt.
"It is recorded that the stay is transgressed by reason of the admitted non-compliance with the order dated 6-5-2005."
that having regard to the meaning and intendment of the order which he is said to have disobeyed, his actions did not constitute a breach of it."
W.P.No.10018 of 2017 AR(CS VI) CS/08/08/17
2 issues framed by the court
Could mandamus compel the bank to restore a failed one-time settlement and grant six further months for repayment?
Was the borrower entitled to discretionary writ relief despite non-compliance with interim payment orders?
Colour shows how this judgement treated each authority
Tamilnadu Industrial Investment Corporation Vs. Millenium Business Solutions Private LimitedRelied on¶111
2004 (5) CTC 689
M/s.Digivision Electronics Ltd. Vs. Indian BankRelied on¶118
2005 (3) LW 269
Prestige Lights Ltd., v. State Bank of IndiaRelied on¶127
(2007) 8 SCC 449 · Who else cites this
1 provisions across 1 enactments
M/s.Ratna Stores (P) Ltd.
The Chief Manager, UCO Bank
S.MANIKUMAR
V.BHAVANI SUBBARAYAN
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
