Idbi Bank Ltd & Anr vs Govt Of Nct Of Delhi & Ors
2019 Latest Caselaw 5381 Del

$~15
*      IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                 Date of decision: 05.11.2019

+      CRL.M.C. 3721/2017 & Crl.M.A. 15115/2017, 15179/2017
       IDBI BANK LTD & ANR                                 ..... Petitioners
                          Through      Mr.Dayan Krishnan, Sr. Adv. with
                                       Ms.Niharika Kaul & Mr.Sumit
                                       Nagpal, Advs.

                          versus

       GOVT OF NCT OF DELHI & ORS               ..... Respondents
                    Through   Mr. K.K. Ghei, APP for State
                              SI Rajpal PS Pahar Ganj.
                              Mr.Sameer Dewan, Adv. with
                              Mr.Rajesh Kumar Mishra, Adv. for
                              R-2.

       CORAM:
       HON'BLE MR. JUSTICE SURESH KUMAR KAIT

                          J U D G M E N T (ORAL)

1. Vide the present petition, the petitioner seeks direction thereby to Set

aside and quash the order dated 07.06.2017 passed by the learned ACMM,

Tis Hazari Court, Delhi, in Complaint Case No.83/1/2015 and emanating

proceedings thereto.

2. The brief facts of the case are that M/s. Krishna Designers, a

Proprietary firm of Sh. Shiv Sareen (the borrower) who had availed Cash

Credit limit of ₹495 lakh from the Petitioner Bank, which was sanctioned

vide letter dated 20.02.2009. The said facilities were renewed and enhanced

to ₹650 lakh vide sanction letter dated 25.05.2010. Further, an adhoc limit of

₹100 Lakh was also sanctioned. The property being Residential property

bearing Plot No.84, Ground Floor & Basement, HU Block, Pitampura, New

Delhi - 110088 was inter alia mortgaged by Shiv Sareen, proprietor of

M/s.Krishna Designers as security towards loan facilities extended by the

Petitioner Bank. However, since Shiv Sareen failed and neglected to

maintain financial discipline and operate the accounts in due compliance of

the terms of sanction and consequently in view of the defaults committed by

the borrower, the account of the borrower became a Non-Performing Asset

(NPA) on 28.01.2011. Pursuant to the same, since the borrower defaulted in

payment of the outstanding dues of the Petitioner Bank, the Petitioner Bank

initiated recovery proceedings and accordingly, in terms of the powers

conferred upon the Petitioner Bank under SARFAESI Act, 2002, the

Petitioner Bank issued a notice under Section 13(2) on 24.05.2012, thereby

calling upon the borrower to pay an outstanding amount of ₹9,07,38,873/- as

on 30.04.2012. In the meantime, during the month of March 2014, an

unknown person introducing himself as "Vicky" and claiming himself to be

an ex-employee of Shiv Sareen, delivered a copy of a document purported to

be an attachment order dated 25.11.2013 issued by the Income Tax

Department in respect of the afore-stated mortgaged property to the

Petitioner Bank. In terms of the said purported attachment order, there was

alleged income tax dues of ₹1,20,40,720/- along with interest payable under

Section 220 (2) of the Income Tax Act against Shiv Sareen. The said

purported order was neither addressed to the Petitioner Bank nor was issued

by the Tax Authorities to the Bank as a Garnishee Order under Section 226

(3) of the Income Tax Act and accordingly, the Petitioner Bank was not in a

position to verify the veracity of said order.

3. Learned senior counsel appearing on behalf of the petitioners submits,

it is generally seen in most NPA cases, when the banks initiate measures for

recovery, it is standard practice of the borrowers to try and create some

obstacle to thwart or delay realization and recovery of dues by the Bank by

raising such kind of innocuous impediments. However, despite the fact that

the Petitioner Bank was proceeding under the provisions of the SARFAESI

Act and thus by virtue of non-obstante provision of Section 35 of the said

Act, the measure being undertaken override anything to the contrary in any

other law, still the Petitioner Bank did not ignore the said alleged attachment

order from Income Tax Department. In order to independently verify the

veracity of the alleged attachment order, visited the said mortgaged property

on 19.03.2014 and again on 30.05.2014 to find out whether any such alleged

attachment order/ notice was pasted on the property in terms of Rule 51 of

PART III of the second schedule of Income Tax Act, 1961 which provides

that, "the order of attachment shall be proclaimed at some place on or

adjacent to the property attached by beat of drum or other customary mode,

and a copy of the order shall be affixed on a conspicuous part of the

property and on the notice board of the office of the Tax Recovery Officer".

Since no such order was found affixed/pasted on the property and in any

case the provisions of SARFAESI Act having an overriding effect, the

Petitioner Bank under powers conferred in terms of Section 13(4) of the

SARFAESI Act, 2002, took symbolic possession of the said mortgaged

property on 30.05.2014. Pursuant to the above, a public notice was also duly

published in newspaper on 03.06.2014.

4. Learned senior counsel further submits, the petitioner Bank, as an

abundant caution, also wrote to the Income Tax Department on 10.09.2014,

15.10.2014 & 03.01.2015 for confirming/verifying the authenticity of the

alleged attachment order dated 25.11.2013 purportedly issued in the name of

the borrower i.e. Shiv Sareen. However, no reply was received from the

Income Tax Department by the Petitioner Bank to any of the said letters and

accordingly, the Petitioner Bank, in terms of the Section 14 of the

SARFAESI Act, 2002, approached the Ld. Chief Metropolitan Magistrate

(CMM), Delhi for appointing a Court Receiver to take possession of the said

property, wherein the Ld. CMM vide order dated 03.01.2015 granted

permission and accordingly, the Petitioner Bank took actual physical

possession of the property on 22.01.2015 with the assistance of the Court

Receiver.

5. Further submitted that Pursuant to the above, a Public Sale Notice was

issued on 24.01.2015, wherein the date of e-auction was fixed on

26.02.2015. The Petitioner Bank even before the e-auction, once again wrote

to the Income Tax Department on 11.02.2015 informing that since the Bank

had not received any response from the Income Tax Department, the Bank

has presumed the said alleged attachment order to be unauthentic and

accordingly, proceeding with the sale of the mortgaged property. Since by

that date no revert from Income Tax Department was received, the Petitioner

No.2 in order to avoid any issue in respect of non-disclosure or concealment

of information about Income Tax liability, if the said alleged attachment

order is found to be true later on, the following was stipulated in the Public

Notice:

"All statutory liabilities/taxes/maintenance fee/Property tax/electricity/water charges etc outstanding as on date and yet to fall due would be ascertained by the bidder(s) and would be borne by the successful bidder. Bank does not take any responsibility to provide Information on the same''.

6. Further it is pertinent to mention that the Public Notice clearly

mentioned that the sale will take place on "As is where is, as is what is &

whatever there is and without recourse basis".

7. Learned senior counsel further submits that despite various letters

issued by the Petitioner Bank to the Income Tax Department, no reply was

received by the Bank. Accordingly, e-auction was conducted on 26.02.2015

and the Respondent No.2's bid was accepted and he was declared as the

successful auction purchaser for the ground floor property. At the time of

Sale, Confirmation was issued to the Respondent No.2 vide letter dated

28.02.2015.

8. Further submits that the Petitioner Bank as a prudent measure further

vide its letter dated 03.03.2015 informed the Income Tax Department that

the Bank had sold the properties in public auction. However, the

Respondent No. 2 did not make payment of balance 75% of the auction

price within the stipulated period of 15 days from the date of confirmation of

sale and vide letter dated 09.03.2015, requested the Petitioner to extend the

repayment time.

9. It is also submitted that in terms of the confirmation of sale terms and

conditions, in case of failure to make payment of balance sale consideration,

earnest money deposited by the Respondent No.2 of ₹15.40 Lakh was liable

to be forfeited.

10. Learned senior counsel further submits that on 18.03.2015 for the first

time, the Petitioner Bank received a letter dated 16.03.2015 from the Income

Tax Department stating that there are income tax dues of Shiv Sareen

amounting to ₹169.66 lakh and requested the Petitioner Bank to remit the

sale proceeds to them. In the mean time, the respondent no.2 again

requested for extension of time vide letter dated 19.03.2015. The Petitioner

Bank granted further extension of time to the Petitioner and the same was

intimated vide e-mail dated 15.04.2015. Pursuant to the above, the

Petitioner Bank vide its letter dated 08.04.2015 informed the Income Tax

Department that IDBI is a secured creditor and the said property has been

mortgaged with the Bank much prior to the attachment by the Income Tax

Department.

11. He further argued that the petitioner is protected under section 32 of

the SARFAESI Act, 2002 which is reproduced as under:

"32. Protection of action taken in good faith.--No suit, prosecution or other legal proceedings shall lie against any secured creditor or any of his officers or manager exercising any of the rights of the secured creditor or borrower for anything done or omitted to be done in good faith under this Act."

12. While advancing arguments, learned senior counsel appearing for the

petitioner submits that there is no inducement or damage caused to the

respondent no.2 and the order passed by the Ld. Trial Court is illegal and

deserves to be set aside.

13. On the other hand, learned counsel appearing on behalf of the

respondent no.2 submits that the auction of the property in question took

place on 26.02.2015 and the petitioner being the successful purchaser of the

same, deposited 25% of the auction proceedings. Accordingly, the petitioner

received letter dated 16.03.2015 on 18.03.2015, despite that he did not

convey the same to the said respondent. Moreover, the extension to deposit

the balance amount was granted twice. The respondent no.2 was kept in dark

due to which the sale deed got delayed. Moreover, the respondent suffered a

lot and was compelled to run from pillar to post to get the sale deed

registered after depositing the auction amount.

14. I have heard learned counsel for the parties and perused the material

available on record.

15. It is not in dispute that till 26.02.2015, when auction had taken place,

the income tax department did not respond to the petitioner regarding

authenticity of the attachment order dated 25.11.2013. Thereafter, only the

petitioner was supposed to apprise the respondents regarding the

confirmation of attachment order dated 25.11.2013, however, the petitioner

admittedly received confirmation letter dated 16.03.2015 on 18.03.2015

from the Income Tax Department.

16. It is also not in dispute that the respondent no.2 filed a suit for

damages against the petitioner which is pending for adjudication. It is also

not in dispute that attachment order dated 25.11.2013 has been set aside vide

order dated 13.07.2016 passed by Division Bench of this court in case of

Suresh Kumar Goyal vs. Chief Commissioner Income Tax and Ors. in

W.P.(C) No. 3430/2016. Thus, admittedly the property is with the

respondent/auction purchaser.

17. It cannot be disputed, the petitioners are protected under Section 32 of

SARFAESI Act. The auction took place on 26.02.2015 and till then, despite

repeated request, the petitioners had not received confirmation of attachment

from Income Tax Department. Therefore,, I am of the considered view that

while dealing with the property in question with the respondent, there is no

criminality on the part of the petitioner.

18. However, as I discussed above, the petitioners are at fault for not

apprising the respondent no.2 of the letter dated 16.03.2015 which they

received on 18.03.2015 due to which the respondent was compelled to run

from pillar to post to get possession of the property in question.

19. Accordingly, I hereby set aside the order dated 07.06.2017 passed by

the learned Trial Court and emanating proceedings thereto. While allowing

the present petition and setting aside impugned order mentioned above, I

hereby impose cost of Rs.5 lacs upon the petitioner to be paid in favour of

the respondent no.2.

20. In view of above, the petition is allowed and disposed of.

21. Pending applications stand disposed of.

22. The cost amount shall be paid within a period of two weeks from the

receipt of this order.

23. Order dasti.

(SURESH KUMAR KAIT) JUDGE NOVEMBER 05, 2019/ab