Dismissed

Thanneeru Venkata Bangaru Prasad, v. State Bank of Travencore

Telangana HC12 Aug 2014WP/17054/2014

Case brief

AI extract

What is this about?

Writ petition challenging attachment of properties not listed in the Recovery Certificate. Court held attachment valid as interim step but sale requires certificate transfer to Tribunal with jurisdiction over the property.

What did the court decide?

Writ petition dismissed; sale of properties prohibited until certificate transferred to Tribunal with jurisdiction.

Thanneeru Venkata Bangaru Prasad, Vs State Bank of… — Banking and Recovery | Telangana HC (2014)

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THE HON’BLE SRI JUSTICE K.C. BHANU AND THE HON’BLE MRS JUSTICE ANIS

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WRIT PETITION No.17054 OF 2014

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ORDER:(per Hon’ble Sri Justice K.C.Bhanu)

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This Writ Petition is filed under Article 226 of the Constitution of India to declare the order of attachment of the immovable property, dated 28.05.2014, issued by the 2^nd respondent in relation to the petitioners’ house property in Plot No.37, Mallikarjun Nagar, Saheb Nagar Khure village, Hayatnagar Revenue Mandal, Ranga Reddy District, and property bearing Flat No.102, Silver Line Crest, H.No.12-2-823/C/41, Chakrapuri Colony, Golconda, Hyderabad, though the said properties are not contained in the Certificate, dated 12.11.2007, issued by the Debts recovery Tribunal (for short, ‘the Tribunal’), Visakhapatnam, as illegal and arbitrary and set aside the same.

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2. Petitioner Nos.1 and 2 are husband and wife and they stood as guarantors to the 3^rd respondent, who obtained loan from the 1^st respondent bank. When the 3^rd respondent failed to repay the loan amount, the 1^st respondent bank filed Original Application No.382 of 2002 before the Tribunal, Visakhapatnam, to recover the said loan amount. The Recovery Certificate, dated 12.11.2007, issued by the Tribunal, Visakhapatnam, does not disclose the properties in question, as the said properties were purchased after filing of the above Original Application. It is stated under Section 19(22) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (for short, ‘the Act’) that the Presiding Officer shall issue a certificate under his signature on the basis of

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the order of the Tribunal to the Recovery Officer for recovery of the amount of debt specified in the certificate. Sub-Section (23) of the Act stipulates that where the Tribunal, which has issued a certificate of recovery, is satisfied that the property is situated within the local limits of jurisdiction of two or more Tribunals, it may send copies of certificate for execution to such Tribunals. Section 25 of the Act contemplates the modes of recovery of debts by the Recovery Officer. A conjoint reading of the aforesaid Sections show that the certificate should contain particulars of the property to be attached and sold. The Recovery Officer under Section 25 of the Act would proceed only against the properties shown in the Certificate. Therefore, the 2^nd respondent does not have jurisdiction to proceed against the properties, which are not shown in the schedule of properties of the Certificate. Hence the writ petition.

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3. Respondent No.1-bank filed a detailed counter affidavit stating that the petition is not maintainable; that respondent No.1 bank, in whose favour the Recovery Certificate was issued, is entitled to sell the properties; that under Section 25 of the Act, the Recovery Officer shall, on receipt of the copy of the certificate under sub-section (7) of Section 19, proceed to recover the amount of debt specified in the certificate by one or more of the following modes, namely – (a) attachment and sale of the movable and immovable property of the defendant; (b) arrest of the defendant and his detention in prison; (c) appointing a receiver for the management of the movable and immovable properties of the defendant; that there is no embargo for the Recovery Officer to attach the properties and therefore, the 1^st respondent bank prays to dismiss the writ petition.

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4. The only contention raised by the learned counsel for the petitioners is the property of the petitioners sought to be sold in pursuance of a Certificate issued by the Tribunal is not within the jurisdiction of the Tribunal, which issued the certificate; that in pursuance of the said Certificate, the Authorised/Recovery Officer is not competent to sell the property and therefore, he prays to allow the Writ Petition.

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5. On the other hand, learned Standing Counsel appearing for the 1^st respondent bank contended that the Recovery Officer is not conducting any auction for sale of the properties of the petitioners in pursuance of the Sale Certificate issued by the Tribunal, Visakhapatnam, and that is only the order of attachment of the immovable property of the petitioners; that bank would follow the procedure as contemplated under Section 19(22) and (23) of the Act to proceed further to conduct sale of secured assets, and the bank has got power to proceed against the sale of the properties of the guarantor within the jurisdiction of the Tribunal, Visakhapatnam; that there are no grounds to interfere with the same and prays to dismiss the writ petition.

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6. Section 19(22) of the Act reads as follows:

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“the Presiding Officer shall issue a certificate under his signature on the basis of the order of the Tribunal to the Recovery Officer for recovery of the amount of the debt specified in the certificate”.

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On reading of the above Section, it is clear that there is no need for the Presiding Officer of the Tribunal to issue a certificate containing the description of the secured assets. The Certificate

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only contains the amount due to the bank in pursuance of the adjudication before the Tribunal. Sub Section (23) of Section 19 of the Act lays down that –

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“Where the Tribunal, which has issued a certificate of recovery, is satisfied that the property is situated within the local limits of jurisdiction of two or more Tribunals, it may send the copies of certificate of recovery for execution to such other Tribunals where the property is situated.”

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The above provision makes it clear that when the property is situated outside the jurisdiction of the Tribunal, which issued Certificate to the Recovery Officer, necessarily that Certificate has to be sent to the Tribunal, which is having jurisdiction, to execute the same.

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7. In view of the fact that it is only at the stage where the Recovery Officer attached the properties of the petitioners, which were admittedly situated in the jurisdiction of the Tribunal, Hyderabad, the Recovery Officer cannot proceed to sell the properties unless the Certificate issued by the Tribunal, Visakhapatnam, is transferred to the Tribunal, Hyderabad, to enable him to proceed further in selling the properties, as already attachment was effected.

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8. Section 25 of the Act reads as follows:

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“25. Modes of recovery of debts.- The Recovery Officer shall, on receipt of the copy of the certificate under sub-section (7) of Section 19, proceed to recover the amount of the debt specified in the certificate by one or more of the following modes, namely –

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(a) attachment and sale of the movable or immovable property of the defendant;

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(b) arrest of the defendant and his detention in prison;

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(c) appointing a receiver for the management

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of the movable or immovable properties of the defendant.

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Section 26 of the Act reads as follows:

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“26. Validity of certificate and amendment thereof.- (1) It shall not be open to the defendant to dispute before the Recovery Officer the correctness of the amount specified in the certificate, and no objection to the certificate on any other ground shall also be entertained by the Recovery Officer.”

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9. Learned counsel for the petitioners contended that unless the Certificate is transferred to the Tribunal, which is having jurisdiction, the Recovery Officer cannot attach the property. But, we are unable to accept the said contention because even under sub- Section (2) of Section 46 of the Code of Civil Procedure, 1908 (for short, ‘CPC’), it reads as follows:

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“The Court to which a precept is sent shall proceed to attach the property in the manner prescribed in regard to the attachment of property in execution of a decree.”

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The principal object of attachment by precept is to enable the decree holder to obtain an interim order of the property of the judgment debtor situated with in the jurisdiction of another Court where it is apprehended that the decree holder may otherwise be deprived of the fruits of the decree. In the similar way, the Recovery Officer can attach the secured assets of borrower after receipt of certificate from Presiding Officer of a Debts Recovery Tribunal. The order of attachment passed by Recovery Officer is merely a step taken to facilitate execution and not an order transferring the certificate containing the amount of debt for execution.

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10. The underlying object of attachment of secured asset of the

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defendants by issuing attachment of secured asset by Authorised Officer is to prevent the defendant from alienating or otherwise dealing with his property to the detriment to the Bank or financial institution till proper proceedings are taken by the Debts Recovery Tribunal to which Certificate containing the amount due is sent for execution to such other Tribunal where the property is situated. Therefore, the Writ Petition is devoid of merit and is liable to be dismissed.

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11. Accordingly, the Writ Petition is dismissed. However, we make it clear that in view of the fact that the properties of the petitioners are located within the jurisdiction of the Debts Recovery Tribunal, Hyderabad, the Recovery Officer shall not sell the properties unless Sale Certificate from the Debts Recovery Tribunal, Visakhapatnam, is transferred to the Debts Recovery Tribunal, Hyderabad. No order as to costs. Miscellaneous Petitions, if any, pending in this Writ Petition shall stand closed.

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_______________________ JUSTICE K.C. BHANU

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___________ JUSTICE ANIS

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Date:12.08.2014 INL

Thanneeru Venkata Bangaru Prasad, v. State Bank of Travencore

Case brief

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Thanneeru Venkata Bangaru Prasad, v. State Bank of Travencore

Case brief

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