Allowed

Dr. M. v. Ramana Rao v Uco Bank and 2 Others

Telangana HC4 Feb 2022WP/5275/2021

Case brief

AI extract

What is this about?

The High Court dismissed the Tribunal's refusal to restore a withdrawn securitization application. It held that withdrawing the application based on a bank's assurance of pending settlement negotiations was justified and that the petitioner should not be left without a remedy.

What did the court decide?

The order dated 02.02.2021 in M.A. No. 97 of 2020 was set aside. The miscellaneous application was allowed to restore S.A. No. 1476 of 2017 for hearing on merits by the Tribunal.

Dr. M. v. Ramana Rao Vs Uco Bank and 2 Others — Banking and Recovery | Telangana HC (2022)

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HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

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(Special Original Jurisdiction)

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FRIDAY.THE FOURTH DAY OF FEBRUARY TWO THOUSAND AND TWENTY TWO

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PRESENT

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THE HONOURABLE SRI JUSTICE UJJAL BHUYAN AND THE HONOURABLE SMT JUSTICE P.SREE SUDHA

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WRIT PETITION NO: 5275 OF 2021

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Between:

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Dr. M V Ramana Rao, S/o. Shri. lvl. Ramchandra Rao, Aged 60 years, Ryo. Flat No.302, Jyothi Nest, Road No.2, Green Valley, Banjara Hills, Hyderabad-500034.

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...PETITIONER

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AND

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1 UCO Bank, A Body Corporate Asset Management Branch, Rep. by its Authorized Officer, 6-3-1108, Ground Floor, Navbharat Chambers, Raj Bhavan Road, Somajiguda, Hyderabad-500082.

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2 Authorised Officer, UCO Bank, A Body Corporate 6-3-1 108, Ground Floor, .l Navbharat Chambers, Raj Bhavan Road, Somajiguda, Hyderabad-500082. PH.R lnvent E-ducational Society, (Delhi Public School), Rep. by its Secretary, Sri. P. Narendra Babu, NH-5, Nidamanuru, Andhra Pradesh - 52'1i204.

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...RESPONDENTS

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Petition under Article 226 of the Constitution of lndia praying that in the circumslances stated in the affidavit filed therewith, the High Court may be pleased to issue a direclion, writ order or order more particularly one in the nature of writ of Certiorari calling for records in [,4.A. No.97/2020 in S.A.No.1476/2017 of the Honourable Debt Recovery Tribunal, Hyderabad, and set aside the order dated 0210212021 in M.A.No. 97120?0 in S.A.No. 1476/2017 and consequently restore S.A.No. 1476 ot 2020 on to the file of DRT. Hyderabad. lA NO: 1 OF 2021

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Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct the 3rd respondent not to deal or create any 3rd party interest in respect of property of Sale Certificate dated 11111/2020, pending disposal of the Writ Petition in the interest of^justice.

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Counsel for the Petitioner : SRl. SRINIVASA RAO BODDULURI

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counsel for the Respondent No. 1 & 2 : MS. SUJATHA FOR

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SRI P. V. MARKANDEYULU

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Counsel for the Respondent No. 3 : MS. SESHA RAJ FOR

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SRI MUMMANENI KOTESWARA RAO

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The Court made the following : ORDER

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{ONOURABLE SRI JUSTICE UJJAL BHUYAN AND

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,:ONOURABLE SMT JUSTICE P. SREE SUDHA

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WRIT PETITION No.5275 of 2027

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ORDER: (: er Hon'ble Sn Ju.strce Lljjul lllLuLlurr)

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Hear I Mr Srinivas Rero Boclclr-Llrrri, lcnrnt:d cotLnsel lbr the petitioner; Ms.Sujatha, Iearned counsel for respondent Nos.l and 2; and Ms. Sesha Raj, learned counsel lor respondent No.3.

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By fi ing this petition under Article 226 of the Constitution of India, petit oner seeks quashing of order dated O2.O2.2O21 passed by the Del ts Recovery Tribunal-ll at Hyderabad ( for shoft the TribunalJ n M.A.No.97 of 2O2l in S.A.No.1476 of 2017 and further se:ks a direction for restoration and hearing of S.A.No.147,, of 2Ol7 by the Tribunal on merit.

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It aJ pears that petitioner had availed loan from the respondent UCO Bank, but defaulted in rc'payment. As a result, thc respon ient-UCO Bank initiatecl proceedir.rgs against the petitioner u rder the Securitisation and Reconstructior.r of Financial Assets and lnforcement of Security lnterest Act. 2O02 (lbr short 'the SARFAI Sl ActJ, This led the petitioner to^{fi1c S.A.No. 1476} of 2017 before the Tribunal under^{Section l7 of tht' SARFAESI Act.} While the iecuritization application^{was pending before the} Tribunal, it s submitted^{that talksol negotiationswasgoing on} between the^parties for^{OneTimeSettlement(OTS) However,} respondent '1o.1 informed^{the petitioner and the guarantorsby} letter dated 1'2,O5.2O2O to^close all^{the four mortgageloan} accounts wi h interest at contractual^{rate (compoundratelon} /reducing bal mce inclusive of all expenditure incured by the bank

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in full and final settlement.^{Accordingly,pelitionerand others} were advised to settle all the^{four loan accountsat the contractual} rate of interest.^{Petitionerfiled interlocutory application being} I.A.No.169l of 2O2l^{tor pre-poning hearing of S.A.No. 1476 of 2017 '} The same nas allou'ed trnd^{S.A.No 1476ol 2Ol7was taken up for} con sideration on^{21 .0q.2020.}

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Junior counsel of the^{petitionermadea submissionbefore} the Tribunal that the^{matter was settledout of court and requested} permission to withdraw the^{securitization application' Permission} was granted by the Tribunal,^{where after S.A.No.1476of 2017 was} dismissed as withdrawn.

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According to the^{petitioner,after thesecuritization} application was dismissed^{on withdrawal, respondent-Uco Bank} revived the^proceedings under^{the SARFAESI Act. Faced withthe} above situation^{petitioner filed a miscellaneousapplicationbefore} the Tribunal being^{M.A.No.97ol2O2O forrestorationof} S.A.No.1476 of 2017^{and for hearing the same on merit' By the} order dated^O2.O2.2O21 ,^{Tribunaldismissed thesaid} miscellaneous application.^{Aggrieved by thesame, the presentwrit} petition has becn filed.

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Learned counscl lor rcsPondent^{Nos.t and 2 submits that b]'} the letter clatccl^{12.05.2020, rcspondenI-UCOBank had clearly} informed the^{petitioner that hc was to repay the loan amount with} interest at contractual^{rate. Four months thereafter, submission} was made before the^{Tribunalfor withdrawalof securitization} application. ln the circumstances,^{Tribunalwas justified in not}

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\ I allowing restoration of S.A.No. 1476 of 2077 .

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Learr ed counsel for respondent No.3 submits^that significant naterial changes have taken place in lhe inteftegnum and perhaf s the situation has reached a^{stagewhere the [ratter} cannot be r :vetsed. She submits that^{pursuantto auctionsale,3'd} respondent became the successful bidder and 3'd respondent^had deposited t re sale amount. Thereafter, sale certificate^hasbeen issued and it has also been registered. ln the^{circumstances,} Tribunal hr s become functus offtcio. Tribunal cannot now^revive the matter^, 'hich has attained finalitv.

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Reply ng to the above submissions, Iearned counsel for the petitioner s, bmits that there is morc to it than u'hat meets the eye. Securitizatir n application was filcd^l11'thc petitiolrcr. Petitioner^htrd already mar e substantial deposits. Petitioner^u'as clearll^{made to} understand that talk of amicable settlement was^going on,^To facilitate th( process, the securitization application lvas withdrawn. His submiss ion is that had there been no positive development^or indication r:garding the OTS, no prudent person would have withdrawn t 1e securitization application {iled by himself exposing himself to al the attendant risks.

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Subm ssions made by learned counsel for the^partieshave received the iue consideration of the Court.

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At the outset we may advert to the impugned order^dated 02.02.2021,^-elevant portion of rvhich is extracted here under:

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: is the plea of the applicant that he withdre$' the SA as the res )ondent bank pur a conditioll to consider the OTS applica on. ln other \rords, the .cspondertt bank tnadc him to withdra / the SA rvith an assurancc to consider the OTS^proposal. Bur th ' respondent bank resiled lronl lhe arssurance of conside ing the OTS proposal and it necessitaled^{lhe applicant} seeking restoration of the SA for adjudlcatllrg on^{mcrits whereas} it is th plea of the respondcnt bank lhat the apl)lic?1nt's OTS

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proposal has been turned down in the month of May, 2O2O itself and it is him to pay the outstanding amount. The respondent bank placed on record copy of the letter dated 12.05.2020 addressed to the applicant which finds place at page No.17 of the material papers annexed to the counter affidavit. Even the affidavit liled in support of the petition IA No.1691/2020 liled for advancement of the SA does not indicate of ally peodency of the OTS proposal with the respondent bank. The applicant sought for advancement of SA on the gound that the 3a respondentauction purchaser withdrew from the auction held, on 14,12.2017 and thereby cause of action in the SA No.1476/2017 does not survive. The relevant portion of the affidavit liled in IA No.1691/2020 has already been extracted supra. Therefore, the plea advanced by the applicant that he withdrew the SA No.1476l2017 on the assurance given by the respondent bank to consider the OTS proposal does not deserve acceptance. Accordingl'. this Miscellarleous Application is liable to be dismissed.

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ln thc restllt. Ihis Mrscellaneous Application is dismissed.,,

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It is true that under Section 18 of the SARFAESI Act, petitioner has the alternative remedy against the impugned order by filing appeal belore the appellate Tribunal. However, having regard to the fact that the writ petition is pending before this Court for quite some time and also considering the fact that if the impugned order is allowed to stand, petitioner would be left without a remedy to ventilate his grievance, we deem it fit and proper not to non-suit the petitioner on the ground of not availing the alternative remedy.

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Section 17 of the SARFAESI Act provides that any person including a borrower who is aggrieved by the action of secured creditor under Section 13 (a) of the SARFAESI Act may file an application there under. Supreme Court has held time and again that the Tribunal exercises wide jurisdictron under Section 17 of the SARFAESI Act, even to the extent of setting aside an auction sale. In the instant case, rve arc consciously not referring to the merit of the case. All that \'e are concerned is whether for whatever reason a person who is aggrieved in law should be left

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remediiess. :n the instant^{case, petitioner had invokedhis remedy} by liling secr ritization application^{under Sub-section (1) of Section} 17 of the Sl RFAESI^{Act. The application was pendingfor three} years befor, the Tribunal. From the^{docket orderdated} 2l.Og.2O2O,^we find^{that a juniorcounsel appearingon behalf of} the petitione had reported^{that the matter was settled out of Court} and therefor ,^leave was^{sought lor u'ithdrarving the securitizzttion} application v hich^was accordingly^granted.

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I3. When the settlement^{did not materialize,petitioneru'ent} back to the Tribunal^{lor revivaloI the securitiz.ldon application} which was t owever dismissed on^{the groundthat version of the} petitioner dir not deserve acceptance.

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L4. On th( rough consideration^{of the matter we areof the view} that dismissr I of the^{miscellaneous application of the petitioner by} the Tribunal loes not^appear to^{be justified.}

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Thougl subsequent developments^{may havea bearingon} the grant of ultimate relief^{to a litigantbut the same by ilself} cannot denr rde the adjudicating^{authority of itspower to} adjudicate t} e grievance raised by^{the aggrieved personlvhich it} otherwise^por sess,

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In the :ircumstances and^{\'ithout commentingon the merit} ol the case, re are of the^vieu' that^{thc' sccuritiz,itionappiication} filed by lhe :etitioner shoulcl bc^{hcard anddecidccl on its .:s'rr} merit by the^{' 'ribunal.}

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Conser rently, rve set aside thc^{order d:rted02.02,202I and} allou, M.A.N t.97 ol 2O2O. Let^{the 'lribunal proceed rvitlt}

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S.A.No. 1476 of 2O t7 in accordance with law All parties inclu<.iing the secured creditor tvould be entitled to put forward their case before the Tribunal

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i8. Wdt petition is accordingly, disposed of. Miscellaneous

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applications, if any pending, shall stand closed.

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No costs.

SD/.R.KARTHIKEYAN

ASSISTANT REGISTRAR

//TRUE COPY//

SECTION OFFICER

To,

1 . The Authorized Officer, UCO Bank, A Body Corporate Asset Management Branch, 6-3-1108, Ground Floor, Navbharat Chambers, Raj Bhavan Road, Somajiguda, Hyderabad-500082.

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