Dismissed

Sri. Gandrothu Veera Venkata Vinayaka Rao v. The Government of The State of Telangana

Telangana HC11 Aug 2014WP/17501/2014

Case brief

AI extract

What is this about?

This writ petition challenged the Bank's finalization of an e-auction in favor of a second bidder after the petitioner faced connectivity issues. The Court held that the petition lacked grounds to bypass the alternative remedy under Section 17 of the SARFAESI Act.

What did the court decide?

Writ petition dismissed; liberty granted to file an appeal under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal.

Sri. Gandrothu Veera Venkata Vinayaka Rao Vs The… — Banking and Recovery | Telangana HC (2014)

¶1

THE HON'BLE SRI JUSTICE K.C.BHANU AND

¶2

THE HON’BLE MRS JUSTICE ANIS

¶3

WRIT PETITION No.17501 OF 2014

¶4

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

¶5

This Writ Petition is filed seeking to issue a Writ of Mandamus declaring the action of respondent No.2/Bank in finalizing the e- auction conducted by it on 13.6.2014 of the properties of M/s.Kawaljith Transport Corporation in favour of respondent No.3 herein without taking into consideration the objection of loosing connectivity taken by the petitioner even though the petitioner was the successful bidder for the same auction, which took place on 6.6.2014 for the very same property and which was nullified on the same objection taken by respondent No.3 herein, as illegal and arbitrary, and consequently, to set aside the auction held on 13.6.2014.

¶6

2. It is stated in the affidavit filed in support of the Writ Petition as under:

¶7

Respondent No.2/Bank issued e-auction sale notice under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, “the SARFAESI Act”) wherein general public at large were invited to participate in the auction for sale of the properties mentioned therein on 28.3.2014 and fixed the reserve price at Rs.25.65 lakhs. But on the said day, the auction could not be held for want of bidders. Again, respondent No.2/Bank fixed the date of auction as 6.6.2014 wherein the reserve price was fixed at Rs.22.80 lakhs. As the petitioner is interested in that property, he participated in the auction and deposited an amount of Rs.23 lakhs towards reserve price. The auction was duly conducted

¶8

by respondent No.2/Bank and the petitioner stood as the successful bidder in the auction and the auction was finalized for Rs.2,47,25,000/. At that point of time, respondent No.3 herein approached respondent No.2/Bank and objected for the auction, as he lost connectivity during the course of auction, and strangely, respondent No.2/Bank, instead of finalizing the auction in favour of the petitioner, entertained the objection of respondent No.3 and postponed the auction. When the petitioner questioned the action of respondent No.2/Bank officials, the officials of respondent No.2/Bank answered him that respondent No.3 was giving better offer than the final auction amount and that respondent No.3 lost the connectivity during auction and hence, they are postponing the auction and they would intimate the next date of auction. Thereafter, respondent No.2/Bank has not given any publicity, but has given a paper publication with a heading correction whereunder respondent No.2/Bank called for the auction of the property on 13.6.2014 with the same reserve price. The petitioner got the information of the auction belatedly, but within time, and as such, participated in the auction. There was a tough competition between the petitioner and respondent No.3 and all of a sudden, the petitioner faced the problem of connectivity and lost connection with the online auction. However, the petitioner informed the same to respondent No.2/Bank over phone and asked for time till he gets connectivity. But respondent No.2/Bank finalized the bid in favour of respondent No.3 for an amount of Rs.2,70,00,000/-. The petitioner personally approached respondent No.2/Bank authority and objected for the finalization of the auction, as the reason for postponing the auction on the previous auction is the same reason for which the petitioner is now raising objection, but without hearing the objection of the petitioner, the auction was finalized in favour of respondent No.3 and therefore, the action of respondent No.2/Bank is illegal and arbitrary. Hence, he filed the present writ petition.

¶9

3. Respondent No.2/Bank filed a detailed counter-affidavit stating that the petitioner and respondent No.3 participated in the e-auction on 6.6.2014 and an amount of Rs.247.25 lacs was offered by the petitioner and he became the highest bidder, but however, respondent No.2 did not accept the highest bid of the petitioner and decided to adjourn the auction to 13.6.2014, as approved valuer stated in his report that market value of the property is Rs.256.50 lacs and there is a possibility of fetching more amount than the highest bid amount and therefore, there is no illegality in conducting the auction, and hence, he prays to dismiss the writ petition.

¶10

4. Learned counsel for the petitioner vehemently contended that in the first instance, when the bid of the petitioner has become final, respondent No.3 objected for the same on the ground of loosing the internet connection in the on-line; that now, the petitioner also faced the same problem when the e-auction was conducted, but respondent No.3 was declared as the highest bidder; that if the auction is conducted among the petitioner and respondent No.3, the amount may fetch more and hence, she prays to set aside the auction held on 13.6.2014 and to give an opportunity to the petitioner to participate in the auction again.

¶11

5. On the other hand, learned counsel appearing for respondent No.2/Bank stated that when the petitioner participated in the e-auction on the earlier occasion, it fetched less amount than the value fixed by the valuer and therefore, the Bank adjourned the auction and conducted the auction again; that it is not the fault of the Bank for the connectivity problem of the petitioner in the on-line; that respondent No.3 has become a successful bidder in the said auction and hence, he prays to dismiss the writ petition.

¶12

6. The disputed question of fact, which arise for consideration before this Court in this writ petition, is whether the auction held on

¶13

13.6.2014 is liable to be set aside on the ground that the petitioner faced the problem of internet connectivity or not?

¶14

7. It is the specific case of the petitioner that he lost the opportunity of participating in the auction due to internet connectivity problem and hence, he requested the Bank to conduct auction again. In the second auction, respondent No.3 became the highest bidder. It is also his case that when he became the highest bidder on the earlier occasion, respondent No.3 objected for the same on the ground that he faced the problem of internet connectivity in the on-line and hence, he prays to cancel the auction held for the second time on the same analogy. But, it is the case of respondent No.2/Bank that the auction conducted earlier in which the petitioner became the highest bidder has not been accepted by the Bank for the reason that the bid amount fetched was less than the value that was fixed by the valuer, and that it necessitated the Bank to go for second auction and therefore, the Bank cannot conduct auction in between two persons.

¶15

8. The petitioner has got an effective alternative remedy of filing an appeal in terms of Section 17 of the SARFAESI Act. The wording of Section 17(1) of the SARFAESI Act reads as under:

¶16

“17(1). Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of Section 13 taken by the secured creditor or his authorized officer under this Chapter, may prefer an appeal to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken.”

¶17

Therefore, the disputed question of fact cannot be resolved by this Court exercising the jurisdiction under Article 226 of the Constitution of India. The petitioner must show that his case falls under any one of the three grounds viz., 1) violation of principles of natural justice, 2) proceedings were wholly without any jurisdiction and 3) violation of fundamental rights, as enumerated in a decision of the Apex Court

¶18

reported in WHIRLPOOL CORPORATION Vs. REGISTRAR OF TRADE MARKS, MUMBAI^[1] , wherein it was held at para No.15 as under:

¶19

“Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by the Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged.”

¶20

The case of the petitioner does not fall under anyone of the aforementioned three grounds. Therefore, the writ petition is liable to be dismissed.

¶21

9. Accordingly, the Writ Petition is dismissed giving liberty to the petitioner to avail the remedy of filing an appeal under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal. There shall be no order as to costs.

¶22

10. Miscellaneous Petitions, if any, pending in this Writ Petition shall stand closed.

¶23

______________________

¶24

_______________

¶25

Date: 11.8.2014 AMD

¶26

THE HON'BLE SRI JUSTICE K.C.BHANU AND

¶27

THE HON’BLE MRS JUSTICE ANIS