Allowed

M/s. Velagapudi Steels Limited. v. Canara Bank (E Syndicate Bank)

Telangana HC4 Feb 2022WP/6322/2022

Case brief

AI extract

What is this about?

High Court allowed petition to stay SARFAESI auction notice contingent on depositing 15% of dues within 30 days, directing parties to approach non-functional Debt Recovery Tribunal under Section 17 of SARFAESI Act.

What did the court decide?

Stayed auction notice if petitioners deposit 15% of outstanding dues within 30 days and approach Debt Recovery Tribunal under Section 17.

M/s. Velagapudi Steels Limited. Vs Canara Bank (E… — 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 SRIJUSTICE UJJAL BHUYAN AND THE HONOURABLE SMT JUSTICE P.SREE SUDHA

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WRIT PETITION NO: 6322 OF 2022

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Between:

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M/s. Velagapudi Steels Limited., Represented by its^{Authorized Person Mr.} V.G.K. Pr5sid Registered Office. Do6r No. 13-8/i, Done^{Atukur,Nidamanuru} (P.O), Vijayawada, Krishna District, A.P. - 521104.

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Sri V.G.K. Prasad, S/o Seetaramaiah R/o Door^{No. 13-B/1} ,^{Done Atukur'} Nidamanuru (P.O), Vijayawada, Krishna District,^{A.P. - 521104}

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Smt. V. Padmaja, Wo V.G.K. Prasad Fi/o^{Door No.13-8/1} ,^DoneAtukur, Nidamanuru (P.O), Vijayawada, Krishna District, A.P.^- 521104

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Sri V. Syamala Rao, S/o Sri Seetaramaiah^{PJo Door No. 10-164, Doneatkuru} Village, Nidamanuru, Vijayawad a 521104

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Smt. B. Shobha Devi, W/o Sri Venkata Rao^{R/oDoor No. 10-164, Done Atukur} Village, Nidamanuru, Vijayawad a^- 521104

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...PETITIONER(S)

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AND

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1 Canara Bank (E Syndicate Bank), Nizam Shai^{Road Branch5-3-1062, Veerji} Towers, Osmdnguhl, Near Old b6gum Bazar^{P.S.Hyderabad - 500001 Rep by} its Authorised Officer

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) Reserve Bank of lndia, Saifabad, Hyderabad,^{Telangana State - 500 004}

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...RESPONDENTS

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Petition under Article 226 of the Constitution of^{lndia praying that in the} circumstances stated in the affidavit filed therewith, the^{HighCourt may be pleased to} issue a Writ or order or direction more^particularly one^{in the nature of Writ of} lVandamus declaring the auction notice dated dt.^03.01 .2022^{(posted on 05.01.2022} and served on Petitioner No. 1 on^{07.01 .2022) issued under Security lnterest} Enforcement Rules read with section 13(4) of the Securitisation^{Act fixing the date of} auction on 05.02.2022 is null and void and to set aside^{the possession notice dated} d1.18.11.2021 for noncompliance of mandatory^{provisions of RuleB (1) and (2), 8(5),} 8(6), I (1) of the Security lnterest Enforcement Rules and consequently^declareall the proceedings initiated by the Respondent No.1 Bank under^{SARFAESIAct as null} and void and consequently declare that the Respondent^{No. '1 is not entitled to} proceed under the Securitisation Act.

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Petition under^{Section 151CPC prayingthat in the circumstances stated in the} affidavit filed^{in support of the petition,the High Court may be pleased to grant stay of} all further^{proceedings initiatedby the RespondentNo 1 undersection 13(4) of the} Securitization^{and Reconstructionof FinancialAssets and Enforcementof Security} lnterestAct,2OO2includingauctiondateOsO2'2O22andalsotakingphysical possession of the^{properties, pending disposal of the above W'P'}

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Counsel^{for the Petitioner(s):Ms' V' DYUMANI}

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Counsel^{for the Respondents:} --^NONEAPPEARED

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The Court made^{the following:ORDER}

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HONOURABLE^{SRI JUSTICEUJJAL BHIryAN} AND

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HONOURABLE^{SMT JUSTICE P. SREESUDHA}

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UIRIT PETITION No.6^{322 of2O22}

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ORDER:^{(PerHon'bte Si Justice Uljal Bhuyan)}

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Heard Ms.^{V.Dyumani,learned counselfor the petitioners'}

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2, By filing this^{petition under Article226 ol lt.Le Constitution of} India, petitioners^{seekquashing of sale notice datedOg'O1'2022} issued by respondent^{No.1. As per the impugned sale notice} auction sale of^{the schedule propertieshas been fixed on} O5.O2.2O22.^{The outstandingdues of the petitioners as persale} notice is Rs.25,81,i9,640.00^{as on 3l'72'2O2O'}

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However,^{learned counsel for the petitionerssubmits that} there was a^{proposalfor One Time Settlement(OTS) which was} accepted by^{respondent No.l and as per the OTS the settlement} amount has^{been arrived atRs'6'25Crores out of which} petitioners have^{deposited Rs.77.50lakhs'She further submits} that against the^{action taken by respondentNo'l under the} Securitisation^{and ReconstructionofFinancial Assets and} Enforcement of^{SecurityInterestAct, 2OO2 (for short'the} SARFAESI^{Act') petitioners have alreadyapproachedthe Debts} Recovery Tribunal-l^{at Hyderabad(for short Tribunal) by filing} securitization^{application under Section 17 of the SARFAESIAct} whichhasbeennumberedasSAIRNo.S3l2022'However,thereis now no^{presidingofficer of the Tribunal as a resultof which} Tribunal has^{been rendered non-functional'}

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Since petitioners^{have already availed their statutory remedy} underSectionlToftheSARFAESIAct,weareoftheviewthatit

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would be^just and^proper if the^{petitionersare relegated to the} Tribunal under Section 17 of the SARFAESI Act.^{Further, if} petitioners deposit 15% of the outstanding dues, within a^periodof thirty (30) days from today, respondent^{No.1 shall not act uponthe} auction notice dated O3.O1.2022 and^{await adjudication beforethe} Tribunal in SAIR No.5312022. However, if^{there is no compliance} by the petitioners to the aforesaid direction,^{respondentNo.1} would be at liberty to proceed against the^{petitioners in accordance} with law.