Dismissed

Smt. Shankarapu Suseela, v. M/s Padmavathi Commercial Complex

Telangana HC6 Nov 2009WA/40/2009

Case brief

AI extract

What is this about?

In two writ appeals, the High Court considered a writ petition challenging the auction sale of mortgaged property by the APSFC. The sale price was significantly lower than the estimated market value and superior tenders. Dismissing the appeals, the court upheld the Single Judge's finding that the sale process lacked proper market valuation efforts despite available evidence indicating a much highe

What did the court decide?

Petitioners permitted to pay arrears within six weeks to discharge liability and get possession; appeals dismissed.

Smt. Shankarapu Suseela, Vs M/s Padmavathi Commercial… — Cheque Dishonour | Telangana HC (2009)

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THE HON’BLE SRI JUSTICE B PRAKASH RAO

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AND

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THE HON’BLE SRI JUSTICE B CHANDRA KUMAR

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WRIT APPEAL NOS. 36 AND 40 OF 2009

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COMMON JUDGMENT : (Per Hon’ble Sri Justice B Prakash Rao)

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These two appeals arise out of a common judgment, hence, taken up together for disposal.

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Heard Sri Y V Ravi Prakash and Mr P Veera Reddy counsel appearing for respective appellants and Mr B Chandrasekhar, Mr S Suryaprakash Reddy learned counsel appearing for respondents. When the matter is taken up at the interlocutory proceedings, on the request of the counsel from both sides, the main appeal itself is taken up for hearing and disposal.

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In these appeals, the appellants are respondents 1 and 4 viz., A.P. State Financial Corporation (for short APSFC) and the auction purchaser/4^th respondent in the writ petition. The contesting respondents herein viz., petitioners 1 and 2 filed the writ petition seeking for a mandamus inter-alia declaring the action of the corporation and its officials in effecting the sale and execution of the sale deed dated 21.3.2001 which is registered

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on 22.3.2001 in favour of fourth respondent who is appellant in the other appeal and the entire process of conducting the sale, auction and confirmation thereof, including the delivery of possession. The case of the writ petitioners in short was to the effect that they constitute a partnership firm and are the owners of property admeasuring Ac.0.10 cents in a commercial area in Kadapa, where they propose to construct a commercial complex and on their request the APSFC which is appellant in W A No. 36 of 2009 sanctioned a loan of Rs.10 lakhs on 11.12.1995, however, the same was not immediately released but by October, 1996 a sum of Rs.9,06,500/was released. Accordingly, the property was mortgaged as commercial security in terms of the said mortgage was instituted and petitioners have constructed the complex by 1997, wherein the APSFC itself took the ground floor portion on lease in July, 1997 at the monthly rent of Rs.7316/-. Some amounts have been paid by the petitioners and rents are also being adjusted towards the discharge of the liability under the loan. However, since substantial amounts are due, a remand notice was issued on 15.9.1999 for a sum of Rs. 11,22,558/-. Though certain amounts appears to have been paid, but substantial amount remained unpaid, therefore the corporation in exercise of powers under Section 29 of the A P State Financial Corporations

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Act, 1955 proceeded to conduct the auction for realization of the money.

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There has been repeated attempts to conduct the auction but it failed to do so. Ultimately, an advertisement was issued on 5.2.2000 proposing to sell the newly constructed building together with land, fixing the last date for submission of tenders as 22.2.2000, whereupon certain tenders were received which include the tender for a sum of Rs.15.2 lakhs by the 4^th respondent who is one of the appellant herein and another tender for a sum of Rs.15.5 lakhs. There has been another tender at Rs 19.00 lakhs though beyond the date. Therefore after negotiating with all the tenderers the sale was finalized by the corporation for a consideration of Rs.22 lakhs and accordingly the sale deed was executed on 21.3.2001. Thus, the entire action on the part of the corporation in trying to sell the property in hush and for far below the value than the market value, which is assailed in the writ petition.

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The case of the petitioners was that the rate as fixed at Rs.22 lakhs is no way nearer to the market rate and no attempt was made to see that appropriate amounts are received and for no valid reason the fourth respondent is sought to be shown indulgence at the cost of the petitioners. These objections were sought to be repelled on behalf of respondents who are appellants herein including the APSFC, pointing out that the procedure has been strictly followed without giving any go-bye and ultimately the said amount has been fixed after negotiations and nothing as such can be

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attributable nor the same can be assailed in the manner in which it is sought to be done. Therefore, the writ petition is liable to be set aside. Similar is the stand taken by the purchaser who is again one of the appellants herein, on the self same lines apart from the contention that he is bonafide purchaser.

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By taking into consideration these and other submissions and checkered events, the learned Single Judge, having found that the value of the property as in February,2000 was 27.37 lakhs and even the tender which has been received beyond the last date is far beyond the rate quoted by the other tenderers and therefore the question of negotiating at Rs.22 lakhs is wholly unsustainable , that apart it is also found that even as per the valuation shown in the Sub Registrar office, Kadapa it comes to Rs.31.47 lakhs , therefore the actual market rate even according to the writ petitioners would fetch Rs.60 lakhs. Thus, with these and tell tale figures available on record, which are far higher than the fixed fate of Rs.22 lakhs, the writ petition was allowed, holding that there has been serious defects in the entire process and there is total utter failure on the corporation to make an effort to fetch the appropriate market rate. Hence, the appeal.

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Learned standing counsel for corporation and also the purchaser submitted that the entire process has been duly followed up and nothing as such can be attributable and there is no illegality having found, the writ

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petitioners cannot invoke the remedy under Article 226 of the Constitution and the appropriate remedy is to approach the competent Civil Court for any relief , if they are entitled to. Further, the petitioners not having paid the amounts have not recourse to assail the correctness of the entire auction process and the petitioner was also given sufficient opportunity to discharge the liability. These submissions were repelled by the respondents/writ petitioners contending that even though far higher figures are available on record, nothing has been pointed out on behalf of the appellants in repelling or dispel the correctness thereof. Therefore, once it is found that there is no nearness in between the rate as fixed and rate which could have been brought forth, the appellants cannot make any effort.

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With these and other submissions and on perusal of the material available on record, the point which arises for consideration is ‘whether in the facts and circumstances the sale conducted by the appellants in favour of other appellants in these appeals, is valid?

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There is no dispute to the aforesaid events which lead to the action of opting for auction by the corporation in exercise of power vested in it under Section 29 of the Act. The fact that the writ petitioners have availed a loan which was sanctioned and complex was constructed wherein APSFC itself entered into possession in the ground floor as tenant on payment of rent,

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however, the entire amount as provided to the writ petitioner was not paid back and the liability still continues to exist, therefore in the process of recovery of the said amounts, the corporation has taken a recourse to the action of auction. There has been more than one attempt on the part of the corporation to conduct auction but the same cannot be fortified. It is only the auction which has been conducted in pursuance of the publication issued on 5.2.2000 and taking into consideration the tender received and followed with further negotiations, the present final sale transaction could be

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executed. Even though the auction purchaser in whose favour the present sale has been confirmed and sale deed has been executed, he submitted a tender at Rs.15.2 lakhs whereas there has been another tender at Rs.15.5 lakhs and the later tender beyond the last date for Rs.19 lakhs. According to the petitioner the property is valued at Rs.27.37 lakhs and in fact the market rate is much higher. That apart the valuation shown in the basic value register of the Sub Registrar office, Kadapa is shown as Rs.31.47 lakhs. According to the petitioners, the market value would yield upto Rs.60 lakhs. For these different figures as shown by the petitioners and as sought to be relied on, there is no material produced by the appellant herein either in their counter affidavit or otherwise to show that in all these figures

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at Rs.27.37 lakhs or Rs.31.47 lakhs much less Rs.60 lakhs are in no way a total false and cannot be taken into account. In the absence of any such

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material forthcoming or a sustainable denial , it cannot be said that the figures as shown on behalf of the writ petitioners are either more spelt or exorbitant or not related to the market value. Therefore, if that be the case where the rates admittedly shown almost upto Rs.31 lakhs to Rs.60 lakhs in between which is far beyond the rate fixed by the Corporation at Rs.22 lakhs for finalisation of the sale in favour of the other appellant, it only falls that the corporation has been playing with the property as per its own whims and fancies. When the corporation has received the tenders for Rs.15.2 , Rs.15.5 and the belated tender at Rs.19 lakhs, what made them to go for negotiations with the very same person, is not known.

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If really there is any bonafide attempt on the part of the corporation , the next course could have been to go for fresh tenders rather than to play with the existing tenderers. The corporation has also not explained as to how they could fix the sale at Rs.22 lakhs when the basic value register of the office of the Sub Registrar, Kadapa shows as Rs 31.47 lakhs dehors the actual market value is Rs.60 lakhs. Therefore it is now well established that though the proceedings as contemplated under Section 29 of the APSFC Act, may be beyond anybody’s touch stone and Courts should be slow in disputes relating to sale, however the said proposition would not have been applied, where such glaring disparities are found. It is well established that any auction or sale can be set at naught, if it is found that there is

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suppression in regard to the rate and there has been no proper attempt made by the corporation to find out the actual market rate. The failure on the part of the corporation in making such exercise not only deprive its own interests but it would have direct effect on the owners of the properties or defaulters. It cannot be said that the writ petitioners have no locus to assail the sale proceedings. In spite of the fact that the sale was finalized, having regard to the findings of fact as arrived by the learned Single Judge and even in this appeal, there is no material forthcoming on behalf of the appellants but a doubt is cast on about the aforesaid figures at Rs.22 lakhs, Rs.31.47 lakhs or Rs.60 lakhs, we do not find any justification to interfere or interdict with the findings arrived by the learned Single Judge.

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In view of the aforesaid reasons and reasons already given by the learned Single Judge with which, we are in entire agreement, including the directions given. Further, we permit the respondents/writ petitioners to pay all arrears due, within a period of six weeks from today and on such deposit, we make it clear that any liability existing from them shall stand discharged including any claim under the said agreement and respondents/writ petitioners are entitled to redeliver of the possession.

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Accordingly, the appeals are dismissed. No costs.

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________________

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B.PRAKASH RAO,J

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__________________ B CHANDRA KUMAR,J

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DATE: 6 -11-2009 tvk

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THE HON’BLE SRI JUSTICE B PRAKASH RAO

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AND

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THE HON’BLE SRI JUSTICE B CHANDRA KUMAR

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WRIT APPEAL NOS. 36 AND 40 OF 2009

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Date: 6-11-2009

Smt. Shankarapu Suseela, v. M/s Padmavathi Commercial Complex

Case brief

What is this about?

What did the court decide?

Smt. Shankarapu Suseela, v. M/s Padmavathi Commercial Complex

Case brief

What is this about?

What did the court decide?

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