M/S Benzer Steels Pvt. Ltd Represented ... vs The Authorized Officer

Kerala High Court

M/S Benzer Steels Pvt. Ltd Represented ... vs The Authorized Officer on 20 May, 2024

Author: N.Nagaresh

Bench: N.Nagaresh

        IN THE HIGH COURT OF KERALA AT ERNAKULAM
                        PRESENT
          THE HONOURABLE MR.JUSTICE N.NAGARESH
 MONDAY, THE 20TH DAY OF MAY 2024 / 30TH VAISAKHA, 1946
                WP(C) NO. 10528 OF 2024
PETITIONERS:

    1    M/S BENZER STEELS PVT. LTD
         REPRESENTED BY ITS MANAGING DIRECTOR
         M.P. BABU (REGD. OFFICE), IX/181 C1,
         VENGOOR, VENGOOR-POST, ANGAMALY,
         ERNAKULAM DISTRICT, PIN - 683572.
    2    M P BABU
         AGED 65 YEARS
         OCC : BUSINESS, S/O PAILAPPAN M L,
         RESIDING AT :- MOONJELY HOUSE,
         ANGAMALY POST, ERNAKULAM DISTRICT, PIN-683572.
    3    SMT. MOLLY BABU
         AGED 55 YEARS
         OCC : BUSINESS, W/O M P BABU,
         RESIDING AT :- MOONJELY HOUSE,
         ANGAMALY POST, ERNAKULAM DISTRICT, PIN-683572.

         BY ADVS.
         BIJU ANTONY ALOOR
         K.P.PRASANTH
         HASEEB HASSAN.M
         KRISHNASANKAR D.
         REBIN VINCENT GRALAN
RESPONDENT:

         THE AUTHORIZED OFFICER
         STATE BANK OF INDIA,
         ASSET RECOVERY MANAGEMENT BRANCH,
         S R BUILDING, MG ROAD,
         ERNAKULAM DISTRICT, PIN - 682011.

         BY ADV.SMT.S.LAKSHMY

     THIS WRIT PETITION (CIVIL) HAVING COME UP       FOR
ADMISSION ON 20.05.2024, THE COURT ON THE SAME       DAY
DELIVERED THE FOLLOWING:
 W.P.(C) No.10528/2024
                                        :2:




                             N. NAGARESH, J.

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                        W.P.(C) No.10528 of 2024

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                  Dated this the 20th day of May, 2024


                              JUDGMENT

~~~~~~~~~ The 1st petitioner is a Private Limited Company and petitioners 2 and 3 are Partners thereof. The petitioners have filed the writ petition seeking to command the respondent- Bank not to proceed further pursuant to Ext.P5 order of the Debts Recovery Tribunal.

2. The petitioners state that they availed business loan and cash credit of ₹50 lakhs on 04.02.2015 from the respondent-Bank. A property was hypothecated for availing the loan. Petitioners 2 and 3 stood as guarantors. The petitioners were also extended with a credit facility of ₹20 lakhs later. As the petitioners were making repayments promptly, the Bank accepted and issued a sanctioned letter dated W.P.(C) No.10528/2024 :3: 15.03.2017 for an extended amount of ₹70 lakhs.

3. Due to Covid-19 pandemic and consequential financial recession, the 1st petitioner-Company failed to maintain the loan accounts. The Bank thereupon issued Ext.P4 lawyer notice dated 10.03.2020 for realisation of ₹80,06,881/-. The Bank then filed OA No.248/2020 in the Debts Recovery Tribunal for realisation of ₹84,21,081.13. though the petitioners approached the Bank for settling the loan account, the Bank was not ready.

4. The petitioners filed SA No.307/2022 in the Debts Recovery Tribunal. The Debts Recovery Tribunal granted an interim stay subject to payment of ₹16,72,000/- in two instalments. The petitioners deposited one instalment but failed to deposit the second instalment. The Bank approached the Additional Chief Judicial Magistrate's Court, Ernakulam under Section 14. Physical possession of the secured assets of the petitioners was taken over by the Bank.

5. The petitioners thereafter filed IA No.1222/2022 seeking to stay further proceedings pursuant to e-auction sale W.P.(C) No.10528/2024 :4: notices. The Tribunal, however, dismissed the IA as per order dated 27.06.2022.

6. The petitioners state that the respondent-Bank has an intention to grab the disputed property for a nominal amount from the petitioners. The petitioners have been fairly remitting the EMIs without default. The Bank is attempting to charge exorbitant amount as interest.

7. The petitioners further state that they require some more time to settle the amounts and are ready to settle the outstanding dues. The petitioners are residing in the property along with parents and children and the attachment proceedings continue without giving any notice to the petitioners.

8. The respondent resisted the writ petition filing counter affidavit. The respondent submitted that the petitioners defaulted in making repayments and a sum of ₹1,09,28,538.67 was outstanding on the loan accounts on 10.03.2022. Hence, the Bank initiated proceedings under the SARFAESI Act. The Bank offered a One Time Settlement to W.P.(C) No.10528/2024 :5: the petitioners and granted time till 21.02.2022 to settle the loan account. The petitioners, however, failed to clear the liabilities. The petitioners approached the Debts Recovery Tribunal filing SA No.307/2022. The Debts Recovery Tribunal granted an order of stay on condition that the petitioners remit ₹16,72,000/- on or before 27.07.2022 and another sum of ₹16,72,000/- on or before 26.08.2022. The petitioners did not remit the second instalment.

9. The respondent submitted that the respondent had issued sale notice on the petitioners by registered post, by e- mail and by affixture and publication. The respondent further submitted that the secured asset which is subject matter of the writ petition was put to sale. The sale was confirmed in favour of the successful bidder. The sale certificate has been issued on 28.03.2024 in compliance with the provisions of the SARFAESI Act and the Security Interest (Enforcement) Rules, 2002. The writ petition is therefore liable to be dismissed.

10. I have heard the learned counsel for the petitioners and the learned Standing Counsel representing the W.P.(C) No.10528/2024 :6: respondent.

11. The petitioners have no dispute regarding availing of the loan and creation of mortgage. The respondent proceeded against the petitioners under the SARFAESI Act. Statutory notices were sent to the petitioners. Exts.R1(e) to R1(l) would show that before selling the property in question, the respondent had issued sale notice on the petitioners by registered post with acknowledgment due in the known address. Notices were sent by e-mail and by affixture and publication in two leading dailies as required under Rule 8(6) of the Security Interest (Enforcement) Rules.

12. The respondent states that the secured asset of the petitioners was put to sale on 15.03.2024 and the sale was confirmed in favour of Mr. Renji Jose and Mrs. Megha Thampi residing at Koottunkal House, Chennakunnu PO, Ponkunnam, Kottayam. Sale Certificate has been issued on 28.03.2024 to the successful bidders on payment of the entire consideration of ₹99,50,000/- in compliance of the provisions of the SARFAESI Act and the Security Interest (Enforcement) Rules, W.P.(C) No.10528/2024 :7: 2002.

13. I find no illegality or irregularity in the proceedings of the respondent under the SARFAESI Act. The Hon'ble Apex Court has held in the judgment in Celir LLP v. Bafna Motors (Mumbai) Private Limited and others [(2024) 2 SCC 1] that it is the duty of the court to zealously protect the sanctity of any auction conducted. The courts ought to be loath in interfering with auctions, otherwise it would frustrate the very object and purpose behind auctions and deter public confidence and participation in the same. It is in the larger public interest to maintain the sanctity of the auction process under the SARFAESI Act.

14. In the facts and circumstances of the case and in the absence of any palpable irregularity or illegality in the SARFAESI proceedings concluded by the respondent, I do not find any merit in the writ petition.

The writ petition is therefore dismissed.

Sd/-

N. NAGARESH, JUDGE aks/15.05.2024 W.P.(C) No.10528/2024 :8: APPENDIX OF WP(C) 10528/2024 PETITIONERS' EXHIBITS Exhibit P1 TRUE COPY OF THE AGREEMENT DATED 04/02/2015.

Exhibit P2 TRUE COPY OF THE SANCTION DATED 09/05/2016.

Exhibit P3 TRUE COPY OF THE SANCTION LETTER DATED 26/06/2019.

Exhibit P4 TRUE COPY OF THE LAWYER NOTICE DATED 10/03/2020.

Exhibit P5 TRUE COPY OF THE ORDER DATED 27/06/2022.

Exhibit P6 TRUE COPY OF THE APPLICATION DATED 30/11/2023.

Exhibit P7 TRUE COPY OF THE E-AUCTION NOTICE DATED 29/01/2024.

RESPONDENT'S EXHIBITS EXHIBIT (R1) TRUE COPY OF THE INTERIM ORDER IN WPC NO. 21927/2023 DATED 6/7/2023.

EXHIBIT (R1a) TRUE COPY OF THE JUDGEMENT IN WPC NO.

21927/2023 DATED 7/8/2023.

EXHIBIT(R1b) TRUE COPY OF THE OP(DRT) NO.533/2023 BEFORE THE HONOURABLE HIGH COURT OF KERALA DATED 12/12/2023.

EXHIBIT (R1c) TRUE COPY OF THE JUDGMENT IN OP (DRT) NO.533/2023 DATED 02.02.2024.

EXHIBIT (R1d) TRUE COPY OF THE PRIVATE COMPLAINT DATED 21.12.2023 AND THE RECEIPT ISSUED BY STATION HOUSE OFFICER, ANGAMALY.

EXHIBIT (R1e) TRUE COPY OF THE SALE NOTICE DATED 29/1/2024.

EXHIBIT (R1f) TRUE COPY OF THE RETURN POSTAL ACKONOLEDGEMENTS ALONG WITH THE RETURN POSTAL COVERS ISSUED TO THE RESPONDENTS.

:9: EXHIBIT (R1g) TRUE COPY OF THE RETURN POSTAL ACKONOLEDGEMENTS ALONG WITH THE RETURN POSTAL COVERS ISSUED TO THE RESPONDENTS.

EXHIBIT (R1h) TRUE COPY OF THE RETURN POSTAL ACKONOLEDGEMENTS ALONG WITH THE RETURN POSTAL COVERS ISSUED TO THE RESPONDENTS.

Exhibit R1(i) TRUE COPY OF THE NOTICE ISSUED TO THE PETITIONERS BY EMAIL DATED 21/2/2024.

EXHIBIT (R1j)           TRUE COPY OF THE PUBLICATION OF SALE
                        NOTICE    IN    DEEPIKA    DAILY    DATED
                        31/1/2024.
EXHIBIT (R1k)           TRUE COPY OF THE PUBLICATION OF SALE
                        NOTICE    IN    BUSINESS    LINE    DAILY
                        31/1/2024.
Exhibit R1(l)           TRUE COPY OF THE PHOTOGRAPHS EVIDENCING
                        THE AFFIXTURE OF EXHIBIT R1(E).