IN THE HIGH COURT OF KERALA AT ERNAKULAM WP(C).No. 5876 of 2008(Y) 1. M.AMRITHA KUMAR, ... Petitioner 2. SHAILAJA KUNJAMMA, W/O.M.AMRITHA KUMAR, Vs 1. UNION OF INDIA, ... Respondent 2. THE INDIAN BANK, CIRCLE OFFICE, 3. THE CHIEF MANAGER AND AUTHORISED 4. THE BRANCH MANAGER, INDIAN BANK, 5. MATHEW VARGHESE, MEENATHEKATTIL HOUSE, For Petitioner :SRI.GEORGE POONTHOTTAM For Respondent :SRI.S.SREEKUMAR The Hon'ble MR. Justice S.SIRI JAGAN Dated :12/06/2009 O R D E R S. Siri Jagan, J. =-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-=-= W. P (C) No. 5876 of 2008 =-=-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-= Dated this, the 12th June, 2009. J U D G M E N T
The petitioners are defaulters in repayment of loan amounts taken from the 2nd respondent-Bank. The 2nd respondent filed an O.A before the Debt Recovery Tribunal under the Recovery of Debts due to Banks and Financial Institutions Act, 1993. While that proceedings were pending, the Bank initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Possession was taken under Section 13(4) after a notice under Section 13(2). The petitioners filed S.A.No. 20/2007 before the DRT under Section 17 of the Act. While that was pending, the Bank published a sale notice and the sale was to be conducted on 26-9-2007 under the Act. At that time, the petitioners filed W.P(C) No. 27182/2007, in which by Ext. P15 judgment, this Court passed the following judgment on 20-9-2007:
"Since counsel appearing for petitioners and Standing Counsel for first respondent submitted that O.A along with securitisation appeal are posted for final hearing by the DRT on 12.10.2007, there will be direction to the DRT to hear the parties and dispose of both the cases if possible and if O.A cannot be disposed of for any reason, the DRT should dispose of appeal filed under Securitisation Act without any delay. In between, parties are free to settle liability. However, there will be direction to the Bank to defer the sale posted on 25th of this month by six weeks on petitioner remitting rupees ten lakhs on or before date of sale. Since Bank has already agreed for settlement at Rs. 55 lakhs, I feel Bank should waive interest for the said OTS amount if petitioner offers settlement within a reasonable time and in fact makes payment."
The petitioners paid the amount of Rs. 10 lakhs as stipulated in the judgment. Accordingly, the Bank did not open the tenders received pursuant to the sale notice. While so, the securitisation appeal filed W.P.C. No. 5876/08 -: 2 :- by the petitioners was dismissed by the Debt Recovery Tribunal on 27-12-2007, which became final. Thereafter, the Bank opened the tender received by it on 28-12-2007 and confirmed the sale on 31-12- 2007 for a total amount of Rs. 1,27,00,101/-. Since, according to the Bank, as on 12-1-2008 an amount of Rs. 89,61,787.55 was due in the loan account after appropriating the same from the sale proceeds, the balance amount of Rs. 37,38,313.45 was retained by the Bank. In the meantime, the Tax Recovery Officer, Income-tax Office, Kottayam on 18-1-2008, requested the Bank to retain the balance amount until further instructions from them. Therefore, by Ext. P18, the Bank directed the petitioners as follows:
"Under the above circumstances, it is hereby informed that an amount of Rs. 37,38,313.45 is remaining in balance with the Bank in a Non-interest bearing Account and the same is retained as per the letter of request dated 18.01.2008 of Tax Recovery Officer, Kottayam. The balance amount may be claimed by you jointly from our Willingdon island Branch on production of due identification subject to the satisfaction of the Branch manager and along with the clearance from the IT Department."
The petitioners challenge the Security Interest (Enforcement) Rules as harsh, unreasonable, arbitrary and unconstitutional in so far as it does not give the borrower an opportunity to redeem his property after sale by depositing the sale amount or other amounts as sin the case of similar legislation. They also challenge Securitisation Act on the ground of violation of principles of natural justice in so far as after Ext. P15 judgment, the Bank did not fix a date for opening of the tenders, which was mandatory as per the provisions of the Act and therefore the sale itself is vitiated. They also contend that the sale is vitiated for the reason that the Bank has not in the sale notice disclosed attachment by the Income-tax Department on the property. W.P.C. No. 5876/08 -: 3 :- It is also stated that the sale proceedings are vitiated since the tender was not opened in the presence of the 5th respondent, who was the tenderer.
2. Counsel for the Bank stoutly opposes the contentions of the petitioners. According to him, this is only an exercise in an attempt to postpone the finalisation of the sale somehow or other. He would point out that as settled by the decisions of the Supreme Court, proceedings under the Securitisation Act has to be challenged in an appeal before the DRT. According to him, earlier, when a decision was taken under Section 13(4), they had filed an appeal, which was dismissed. Therefore, this Court should not entertain this writ petition itself in so far as the petitioners have not exhausted the alternate remedy available to them under the Act. He would urge that there is nothing unconstitutional in the Security Interest (Enforcement) Rules, 2002. He would point out that under Section 13(8), the borrower is given an opportunity to redeem the property and therefore on that ground, the Rules cannot be challenged. He points out that the Bank has given ample opportunity to the petitioners to settle the dues. Although an amount of Rs. 86 and odd lakhs were due, the Bank was prepared to settle the loan account by accepting Rs. 55 lakhs. That offer was given to the petitioners by Ext. P7 letter. But, by Exts. P8 and P9, the petitioners offered only an amount of Rs. 47 lakhs, which was not acceptable to the Bank. Counsel for the Bank further points out that the Bank had specifically fixed a date for the sale by fixing the date for opening of the tenders as provided in Section 13(8). It is the petitioners who have approached this Court and obtained a postponement for a period of three weeks Therefore, there is nothing in the Act or the Rules, which obliges the bank to again fix a date and intimate that date to W.P.C. No. 5876/08 -: 4 :- the petitioners. Since it is the petitioners who have obtained Ext. P15 judgment, they are perfectly aware of the fact that the tenders would be opened immediately after the period fixed by this Court is over. He would point out that the DRT dismissed the appeal on 27-12-2007 and the tender was opened on 28-12-2007 and the sale was confirmed on 31-12-2007. According to him, by Ext. P15 judgment, this Court has even given the petitioners an opportunity to settle the matter for Rs. 55 lakhs, which also the petitioners have not availed of. Therefore, according to him, the petitioners are not entitled to any further opportunity in the matter and the writ petition is liable to be dismissed.
3. I have considered the rival contentions in detail.
4. It is obvious that the challenge against the Security Interest (Enforcement) Rules, 2002 is for the purpose of maintaining the writ petition in so far as the Supreme Court had held that this Court shall not entertain challenge against proceedings under the Securitisation Act in view of the appeal provided before the Tribunal. In any event, I do not find any merit in the contention that the Security Interest (Enforcement) Rules is harsh, unreasonable and unconstitutional for the reason that the same do not grant an opportunity to the borrower to redeem his property after the sale by depositing the sale amount or such other amounts. I am of opinion that the Act itself contains such a provision, which is Section 13(8), which reads thus:
"13. Enforcement of security interest:
xx xx xx (8) If the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the secured creditor at any time before the date fixed for sale or transfer, the secured asset shall not be sold or transferred by the secured creditor, and no further step shall be taken by him for W.P.C. No. 5876/08 -: 5 :- transfer or sale of that secured asset."
I do not think that a defaulter is entitled to a further opportunity to redeem the property after the sale as of right, especially when a third party has obtained certain rights pursuant to the sale. The absence of a provision for redemption after the sale cannot make the Rules arbitrary, unreasonable and unconstitutional. Further, the petitioners had ample opportunity till 28-12-2007 to redeem the property by paying the amounts due. In fact, this Court granted them an opportunity by Ext. P15 judgment to avail of the benefit of one time settlement by payment of Rs. 55 lakhs, even though the Bank had not agreed to the same as the time fixed at the time of that offer for payment was not complied with by the petitioners. Therefore, on that account also, the petitioners cannot be aggrieved at all.
5. I am of opinion that the petitioners have not made out any grounds for entertaining this writ petition under Article 226 of the Constitution of India despite the judgment of the Supreme Court holding that this Court shall not entertain challenge against proceedings under the Act and should relegate the party to appeal provided under the Act itself. The main contention raised by the petitioners against the sale is that there is violation of procedure and principles of natural justice. The only violation of principles of natural justice complained of by the petitioners is that after Ext. P15 judgment, when the Bank opened the sealed tenders, the petitioners were not given notice regarding the fixation of the date of sale, which is against Section 13(8). Admittedly, a date for sale was fixed notice of which was issued to the petitioner. The petitioners themselves challenged the sale and obtained Ext. P15 judgment postponing the date of sale for three weeks. Therefore, the petitioners cannot contend that since after the disposal of the appeal, they had not been W.P.C. No. 5876/08 -: 6 :- informed about the date of opening of the tenders, that amounts to violation of principles of natural justice. The petitioners are bound by Ext. P15 judgment, in which this Court postponed the sale till six weeks. Therefore, the petitioners were quite aware that the sale would be completed after six weeks especially when the petitioners' appeal also was dismissed on 27-12-2007. That cannot be stated as a violation of principles of natural justice at all. Therefore, I am of opinion that if the petitioners have any challenge against the procedure violation that can be raised and proved only in an appeal as provided under the Act itself. Even otherwise, the petitioners have not been able to show me any prejudice whatsoever caused to them on account of the alleged violations. The questions as to there are violations themselves are questions of fact, which are to be proved by adducing evidence, which can be done only in an appeal and certainly not in a writ petition. Therefore, I am of opinion that the writ petition itself is not maintainable. The sale has been finally confirmed in favour of the 5th respondent. It is too late in the day for the petitioners to now contend that they are prepared to pay the amounts due and redeem the property. Therefore, there is no merit in the writ petition and accordingly the same is dismissed.
The dismissal of this writ petition will not preclude the petitioners from approaching the Tribunal in an appeal , if, at this point of time, they can validly do so, about which I do not express any opinion and it is for the Tribunal to consider the same on merits in accordance with law.
S. Siri Jagan, Judge.
W.P.C. No. 5876/08 -: 7 :- Tds/