Bokaro Steel Employees ... vs Kanhaiya Kumar Jha;
2022 Latest Caselaw 3788 Jhar

IN THE       HIGH     COURT OF JHARKHAND AT                     RANCHI
                        (Civil Writ Jurisdiction)
                       WP(C) No. 3758 of 2014

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Bokaro Steel Employees Co-operative House Construction Society Limited, B.S. City; a society registered with Society Registration Act having its registered office at Co-operative Colony, Bokaro Steel City Bokaro through its Secretary Sri Virendra Pratap Singh, S/o Late Juleshwar Singh, R/o 44, Co-operative Colony, Bokaro Steel City Bokaro, PO + PS + Dist.- Bokaro ...... ...... Petitioner Versus

1. Kanhaiya Kumar Jha;

2. Manmohan Jha;

Both sons of Late S.N. Jha, R/o 25, Co-operative Colony, Bokaro Steel City, PO Bokaro Steel City, PS Chas, District-Bokaro.

3. United Bank of India through its Branch Manager, Bokaro Steel City Branch, PO Bokaro Steel City, PS Chas, District Bokaro;

4. M/s Beekay Minerals through one of its Partners Sri Umesh Jain, S/o Late Sriram Jain, R/o C-38, City Centre, Sector-IV, PO & PS Bokaro Steel City, District Bokaro;

5. Kamal Kant Jain, S/o Late Shobag Mal Jain, R/o Qtr. No.1010, Sector-V-A, PO & PS Sector-V, Bokaro Steel City, District Bokaro.

                                             ......      ...... Respondents
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                          WP(C) No. 3029 of 2014

1. M/s Beekay Minerals through one of its partners Sri Umesh Jain, S/o Late Sriram Jain, R/o C-38, City Centre, Sector-IV, PO & PS Bokaro Steel City, District Bokaro;

2. Kamal Kant Jain, S/o Late Shobag Mal Jain, R/o Qtr. No.1010, Sector-5A, PO & PS Sector-V, Bokaro Steel City, District Bokaro-827005.

                                                 ......      ...... Petitioners
                                   Versus
1. Kanhaiya Kumar Jha;
2. Manmohan Jha;

Both son of Late S.N. Jha, R/o 25, Co-operative Colony, Bokaro Steel City, PO Bokaro Steel City, PS Chas, District-Bokaro.

3. Branch Manager, United Bank of India, Bokaro Steel City Branch, PO & PS Bokaro Steel City, District Bokaro-827004.

4. Bokaro Steel Employees Co-operative House Construction Society Limited, Bokaro Steel City, PS Chas, District Bokaro through its Secretary.

                                               ......      ...... Respondents
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CORAM: HON'BLE MR. JUSTICE KAILASH PRASAD DEO
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      For the Petitioner(s)        : Mr. Krishna Murari, Advocate
                                     [In WP(C) No. 3758 of 2014]
                                     Mr. Rahul Kumar Gupta, Advocate
                                     [In WP(C) No. 3029 of 2014]

For the Respondent-Borrowers : Mr. Pandey Niraj Rai, Advocate Mr. Rohit Ranjan Sinha, Advocate [In both cases]

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For the Respondent-UBI : Mr. Arbind Kumar Jha, Advocate Mr. Ganesh Ram, Advocate [In both cases] For the Respondent No.4 : Mr. Rahul Kumar Gupta, Advocate [In WP(C) No. 3758 of 2014] For the Respondent No.4 : Mr. Krishna Murari, Advocate [In WP(C) No. 3029 of 2014]

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14/ Dated: 20th September, 2022

Heard, Mr. Krishna Murari, learned counsel appearing on behalf of the petitioner in WP(C) No. 3758 of 2014 and on behalf of the respondent No.4 in WP(C) No. 3029 of 2014, Mr. Rahul Kumar Gupta, learned counsel appearing on behalf of the petitioners in WP(C) No. 3029 of 2014 and on behalf of the respondent No.4 in WP(C) No. 3758 of 2014, Mr. Pandey Niraj Rai, assisted by Mr. Rohit Ranjan Sinha, learned counsel appearing on behalf of the respondent-Borrower in both cases and Mr. Arbind Kumar Jha, assisted by Mr. Ganesh Ram, learned counsel appearing on behalf of the respondent-Bank in both cases.

WP(C) No. 3758 of 2014

2. Mr. Krishna Murari, learned counsel for the petitioner has submitted, that the petitioner has preferred this writ application for quashing the order dated 13.06.2014 passed by the learned Presiding Officer, Debt Recovery Tribunal, Ranchi in Appeal No. 10 of 2013, whereby and whereunder, auction sale executed and confirmed in pursuance of final order dated 28.12.2010 passed in OA No. 98 of 2008 r/w order dated 05.04.2013 passed in RP No. 145 of 2010, has been annulled and set aside by way of review that too when the same stood affirmed and confirmed in Appeal No. 04 of 2013 vide order dated 09.05.2013 dismissing the same. Thus, the same is wholly illegal and without jurisdiction besides being violative of order dated 19.07.2013 passed in WP(C) No. 3249 of 2013 by this Court. Further, for a direction upon the respondents, particularly, the respondent-Bank as well as Recovery Officer to immediately ensure compliance of orders dated 05.07.2013 passed in RP No. 145 of 2010 with consequential direction to immediately release up-to-date outstanding dues of the petitioner-Society as against electricity, TFC, TL, SL, TMC, Water Charges, Utility Charges, Lease Rent etc. out of the sale proceeds, so as to enable the society to transfer the property in question in favour of the auction purchaser in

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accordance with law inasmuch as prior clearance of dues in question as against the said property is a pre-requisite condition for transfer of the same in favour of one or other legal person.

3. Mr. Krishna Murari, learned counsel for the petitioner has further submitted that though he has not incorporated the 3rd relief in the writ petition but in a petition under Article 226 of the Constitution of India such relief can be prayed during argument that such mortgage of the non-transferable property was ipso-facto bad in law and, as such, the DRT has no right to transfer the property of the Bokaro Steel Limited which was given on lease to the Bokaro Steel Employees Co-operative House Construction Society Limited, as such, the entire proceeding is bad in law.

4. Mr. Krishna Murari, learned counsel for the petitioner has further submitted that though he has missed to plead in this writ petition but after having proper knowledge of the fact, he is praying that such mortgage entered by the Bank without making the Bokaro Steel Employees Co-operative House Construction Society Limited as well as Steel Authority of India Limited (SAIL) as a party or by informing the Bokaro Steel Limited, who is the principal owner of the land, such mortgage entered into by the Bank with the loanee, who is a sub-lessee is bad in law, as because the Bokaro Steel Employees Co-operative House Construction Society Limited is the principal lessee and principal lessee has executed lease in favour of Satya Naryan Jha and, as such, transfer of a non-transferable property by the DRT is bad in law.

5. Mr. Krishna Murari, learned counsel for the petitioner has further submitted that the DRT has no right to put to auction sale of the property without protecting the interest of the petitioner-Bokaro Steel Employees Co-operative House Construction Society Limited, which is principal lessee of the Steel Authority of India Limited and, as such, the entire proceeding is bad in law.

6. Mr. Arbind Kumar Jha, leaned counsel assisted by Mr. Ganesh Ram, learned counsel for the respondent-United Bank of India and Mr. Pandey Niraj Rai, learned counsel assisted by Mr. Rohit Ranjan Sinha, learned counsel for the respondent-Borrower have opposed the writ petition on the ground of maintainability and has placed reliance upon the judgment passed by the Hon'ble Apex Court in the case of "United Bank of India v.

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Satyawati Tondon and Ors." reported in (2010) 8 SCC 110. Paragraph Nos.55 of which reads as follows:

"55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such mattes with greater caution, care and circumspection."

WP(C) No. 3029 of 2014

7. Mr. Rahul Kumar Gupta, learned counsel appearing on behalf of the petitioners has submitted, that the petitioner-M/s Beekay Minerals after having notice issued by the DRT, participated in the auction purchase and became the highest bidder and paid Rs.1,10,00,000/- for the aforesaid property against reserve price of Rs.46,00,000/-. Since the petitioner-M/s Beekay Minerals is not a party to the OA or RP proceeding, as such, writ petition has been filed before this Court under Article 226 of the Constitution of India to protect its right granted under Article 300A of the Constitution of India.

8. Learned counsel for the petitioners has further submitted that the respondent-United Bank of India has entered into a mortgage with principal borrower and after the death of Satya Narayan Jha, his sons Kanhaiya Kumar Jha and Manmohan Jha are the guarantors. Since the principal loan amount has not been paid by the principal borrower it was duty of the guarantor to indemnify the loan amount. The loan amount has not been paid. The respondent-Bank moved before the DRT for recovery of the dues, which was registered as OA No. 98 of 2008. The said OA of the bank was allowed against the borrower and the guarantors to recover the amount. Thereafter, RP No. 145 of 2010 was instituted and the property was attached by the recovery officer on 22.11.2011. The valuation report was filed and on 07.02.2013, the property was directed to be put at auction and reserved price was fixed at Rs.46,00,000/-.

9. On 05.04.2013, a direction was issued to upload the public notice for sale on the website. The order dated 07.02.2013 has never been challenged by the borrower, guarantor or the bank as the debtors have no

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grievances, as such, the property was put on auction sale.

10. Mr. Rahul Kumar Gupta, learned counsel for the petitioners has further submitted, that it is relevant to mention here that the guarantors have also preferred Appeal No.04 of 2013, which was dismissed by the learned Presiding Officer, Debt Recovery Tribunal in terms of order dated 09.05.2013 and, accordingly, on 10.05.2013 as mentioned in the newspaper dated 23.03.2013, an e-auction was held and property in question was sold to the highest bidder M/s Beekay Minerals through its proprietor Mr. K.K. Jain.

11. The petitioner-M/s Beekay Minerals is interested so far act done with him is concerned, as M/s Beekay Minerals has never claimed to be a party in any of the DRT proceeding rather on the basis of an e-auction issued by a statutory Court of recovery, petitioner has participated in the bid in accordance with law and became a highest bidder and paid more than twice the money kept as a reserved price and deposited the same and auction sale was also confirmed on 10.06.2013 and on 11.06.2013 the sale certificate was issued.

12. Learned counsel for the petitioners has further submitted that once a sale certificate has been confirmed, the petitioner-M/s Beekay Minerals has every right to invoke the jurisdiction under Article 226 of the Constitution of India to protect its interest granted under Article 300A of the Constitution. Any person shall not to be deprived of property save by authority of law and, as such, the writ petition is maintainable and the judgment passed by the Hon'ble Apex Court in United Bank of India (supra) is not applicable in the case of the petitioners as facts are different.

13. Learned counsel for the petitioners has further submitted, that debtor has never preferred an appeal rather has preferred writ petition before this Court vide WP(C) No. 3249 of 2013, which was also dismissed by a Co-ordinate Bench of this Court and that attains finality.

14. Learned counsel for the petitioners has further submitted, that limited prayer of the petitioners is that once a sale has been confirmed, a right accrued in favour of the petitioners under Article 300A of the Constitution of India, which is considered to be a right enforceable under Article 226 of the Constitution of India. The Bank or the DRT is duty bound to handover the possession to the person.

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15. Learned counsel for the petitioners has further submitted, that if it is found that the property is non-transferable, then the entire amount along with the interest @7.5% must be paid as held by the Hon'ble Apex Court in the case of "Dharampal & Ors. v. U.P. SRTC" reported in (2008) 12 SCC 208 because of variance of the rate of interest during such period with heavy compensation as the entire amount of the petitioners has been blocked because of the act of the respondents.

16. Mr. Arbind Kumar Jha, learned counsel assisted by Mr. Ganesh Ram, learned counsel for the respondent-Bank and Mr. Pandey Niraj Rai, learned counsel assisted by Mr. Rohit Ranjan Sinha, learned counsel for the borrowers have submitted that since alternative remedy is available under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, as such, this writ petition is not maintainable.

17. Heard, learned counsel for the parties and perused the materials available on record in both the writ petitions. The first writ petition i.e. WP(C) No.3758 of 2014 has been preferred by the petitioner- Bokaro Steel Employees Co-operative House Construction Society Limited with regard to two issues. First is that the property of the Bokaro Steel Employees Co-operative House Construction Society Limited was a lease hold property of the Steel Authority of India Limited, for which, Bokaro Steel Employees Co-operative House Construction Society Limited has entered into sub-lease with its member, who are primarily an ex-employee of the same but since the sub-lessee has no right to enter into a mortgage. It is duty of the Bank, that before entering into a mortgage, they must see the title of the property to be mortgaged, as such, the property, which is non-transferable property, cannot be mortgaged without the consent of the Bokaro Steel Employees Co-operative House Construction Society Limited and SAIL (BSL). The Bank has committed a gross violation of the provisions of law. That may be because of the ignorance of law or because of the involvement of the bank employees in financing such parties, for which, the Chairman of the United Bank of India or Punjab National Bank, shall take action against the employees but the property cannot be transferred, which is a non-transferable property and also Bokaro Steel Employees Co-operative House Construction Society Limited was never noticed at the time of mortgage or at the time of initiation of OA proceeding or at the time of

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e-auction, therefore, the property cannot be transferred in such manner, accordingly, the writ petition being WP(C) No. 3758 of 2014 is hereby allowed.

18. So far the case of the petitioner-M/s Beekay Minerals in WP(C) No. 3029 of 2014 is concerned, the petitioner was never a party in the mortgage or in the OA proceeding, as such, the provisions of appeal as considered by the Hon'ble Apex Court in the case of United Bank of India (supra) is not applicable in the case of the purchaser, who participated into an e-auction issued by DRT for enforcement of his right granted under Article 300A of the Constitution of India, accordingly, the writ petition is maintainable under Article 226 of the Constitution of India. The principal emerges held by the Hon'ble Apex Court in the case of "Radha Krishan Industries v. State of Himachal Pradesh & Ors." reported in (2021) 6 SCC

771. Paragraph Nos.27 and 27.1 to 27.6, which may profitably be quoted hereunder:

"27. The principles of law which emerge are that: 27.1. The power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as well. 27.2. The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is where an effective alternate remedy is available to the aggrieved person.

27.3. Exceptions to the rule of alternate remedy arise where :

(a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution;

(b) there has been a violation of the principles of natural justice; (c) the order or proceedings are wholly without jurisdiction; or (d) the vires of a legislation is challenged. 27.4. An alternate remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternate remedy is provided by law.

27.5. When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion.

27.6. In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ

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petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with."

19. It has been held by the Hon'ble Apex Court that the writ petitions is maintainable where fundamental right or any right granted by the Constitution of India is violated by the authority concerned. Since the petitioner-M/s Beekay Minerals has nothing to do with the DRT proceeding and thus the writ petition has been considered to be maintainable before this Court, therefore, this Court is of the considered view, that if the Bank has mortgaged a non-transferable property, which cannot be transferred to the petitioner-M/s Beekay Minerals, then the alternative prayer of the petitioner is valid that the petitioner shall not be dragged in the case and the amount deposited by the petitioner to the tune of Rs.1,10,00,000/- along with interest may be refunded.

20. The Bank is directed to refund the entire amount of Rs.1,10,00,000/- with interest @ 7.5% as quantified by the Hon'ble Apex Court because of the variance of rate of interest during such period with a cost of Rs.10,00,000/- to the petitioner-M/s Beekay Minerals within a period of 60 (sixty) days from the date of receipt of copy of this order as the aggrieved party has a right to prefer an appeal within 30 days, as such, 60 days' time is granted.

21. The Chairman of the Bank is directed to ensure compliance of the order and recover the interest part and compensation awarded by this Court to the tune of Rs.10,00,000/- from the erring officer by following due process of law and principles of natural justice within a period of nine months from the date of initiation of the proceeding.

22. Let a copy of this order be communicated to the Chairman of the Bank and the DRT through FAX/E-mail at once.

23. Accordingly, WP(C) No. 3029 of 2014 is allowed.

24. If the petitioner is in possession of the property in question, he shall vacate the same at the time of receiving the amount granted by this Court to the tune of Rs.1,10,00,000/- with interest @ 7.5% and Rs.10,00,000/- as compensation.

25. Mr. Arbind Kumar Jha, the learned counsel for the respondent-Bank is directed to provide the address of the Chairman of the

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Bank to the learned Registrar General, of this Court in course of the day so as to communicate this order to the Chairman of the Bank.

(Kailash Prasad Deo, J.) Madhav/-