Karnataka High Court
M/S Krishna Cnc Tech vs Authorized Officer on 5 April, 2024
Author: S.G.Pandit
Bench: S.G.Pandit
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 5TH DAY OF APRIL, 2024
PRESENT
THE HON'BLE MR. JUSTICE S.G.PANDIT
AND
THE HON'BLE MR. JUSTICE C.M. POONACHA
WRIT PETITION No.51648 OF 2019 (GM-DRT)
BETWEEN
1. M/S.KRISHNA CNC TECH,
REPRESENTED BY
ITS PROPRIETOR
MR. R.B.KESHAVAMURTHY,
S/O.MR.M.RARNASWAMY,
AGED ABOUT 45 YEARS,
SINCE DECEASED REPRESENTED
BY HIS LRS.,
1A) SMT. K. RAJINI,
W/O.R.B.KESHAVAMURTHY,
AGED ABOUT 33 YEARS;
1B) MASTER MONAKSHA K. М.,
S/O.R.B.KESHAVAMURTHY,
AGED ABOUT 13 YEARS,
MINOR REPRESENTED BY HIS MOTHER
AND NATURAL GUARDIAN,
SMT. K. RAJINI;
1C) MASTER KAMALAKSHA K.,
W/O.R.B.KESHAVAMURTHY,
AGED ABOUT 9 YEARS,
MINOR REPRESENTED BY HIS MOTHER
AND NATURAL GUARDIAN,
SMT. K. RAJINI;
2
2. MR. R.B.KESHAVAMURTHY,
S/O.MR.M.RARNASWAMY,
AGED ABOUT 45 YEARS,
SINCE DECEASED
REPRESENTED BY HIS LRS.,
2A) SMT. K. RAJINI,
W/O.R.B.KESHAVAMURTHY,
AGE ABOUT 33 YEARS;
2B) MASTER MONAKSHA K. М.,
S/O.R.B.KESHAVAMURTHY,
AGE ABOUT 13 YEARS,
MINOR REPRESENTED BY HIS MOTHER
AND NATURAL GUARDIAN,
SMT. K. RAJINI;
2C) MASTER KAMALAKSHA K.,
W/O.R.B.KESHAVAMURTHY,
AGE ABOUT 9 YEARS,
MINOR REPRESENTED BY HIS MOTHER
AND NATURAL GUARDIAN,
SMT. K. RAJINI; AND
ALL ARE RESIDENTS OF NO. 6/26,
OM SAKTHINILAYA,
14TH CROSS, 10TH "C" MAIN,
6TH BLOCK, RAJAJI NAGAR,
BANGALORE -560010
...PETITIONERS
(BY SRI SHANKAR S BHAT, ADVOCATE
SRI HEGDE PRAKASH R, ADVOCATE FOR LRs OF
PETITIONER ON IA 1/2021)
AND
1 . AUTHORIZED OFFICER
TAMILNAD MERCANTILE BANK LTD
BANGALORE CITY REGION
(BANGALORE CITY BRANCH)
19F, ABHINAY THEATRE COMPLEX,
3
B V K IYENGAR ROAD
BANGALORE - 560009
2 . MR R SANDEEP
FATHER NAME NOT KNOWN
R/AT 6/27/A 14TH CROSS
10TH C MAIN, 6TH BLOCK,
RAJAJINAGAR
BANGALORE - 560010
3 . K. RAJINI
W/O MR R B KESHAVAMURTHY
R/AT 6/26 OM SAKTHI NILAYA
14TH CROSS, 10TH C MAIN
6TH BLOCK, RAJAJINAGAR
BENGALURU - 560010
...RESPONDENTS
(BY SMT CHITRA NIRMALA, ADVOCATE FOR R1
SRI B S JAYANTH KRISHNA, ADVOCATE FOR C/R2
SRI NARAYAN I NAIK, ADVOCATE FOR R3)
THIS WP IS FILED UNDER ARTICLES 226 & 227 OF THE
CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED
ORDER DTD.19.11.2019 PASSED BY THE DEBT RECOVERY
APPELLATE TRIBUNAL CHENNAI IN RA(SA)-132/2019
ANENXURE-A AND CONSEQUENTLY AND ETC.
THIS PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 28.3.2024, COMING ON FOR
PRONOUNCEMENT OF ORDER, THIS DAY, POONACHA. J.,
DELIVERED THE FOLLOWING:
4
ORDER
The present Writ Petition is filed challenging the
order dated 19.11.2019 passed by the Debts Recovery
Appellate Tribunal, Chennai1, in RA (SA) No.132/2019 as
well as the order dated 18.6.2018 passed by the Debts
Recovery Tribunal - I, Bengaluru2, in SA No.11/2018 and
for other reliefs.
2. The relevant facts necessary for consideration
of the present petition are that the petitioners are the
borrowers from respondent No.1 - bank. Since the credit
facilities availed by the petitioners from the bank remained
unpaid, proceedings under Securitization and
Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 20023 were initiated which was
challenged by the petitioners under SA.No.38/2017 before
the DRT, which was dismissed on 28.08.2017.
Subsequently Respondent No.1 - bank issued a sale notice
dated 18.11.2017 and auction notice dated 21.11.2017 to
Hereinafter referred to as the 'Appellate Tribunal/DRAT'
Hereinafter referred to as the 'Tribunal/DRT'
Hereinafter referred to as 'SARFAESI Act'
auction the mortgaged property, fixing the date of auction
as 03.01.2018. The petitioners preferred WP.Nos.54671-
72/2017 and this Court vide order dated 06.12.2017 has
granted stay for a period four weeks which had expired as
on date of auction. There being no impediment to proceed
with the auction, the same was held as scheduled, on
03.01.2018, wherein Respondent No.2 was the successful
bidder for a sum of `93.00 lakhs. Consequently the sale
was confirmed on 05.01.2018.
3. During the pendency of the WP.Nos.54671-
72/2017, the petitioners preferred SA.No.11/2018 before
the DRT challenging the auction sale. The DRT by its
interim order dated 09.01.2018 granted stay of issuance
of sale certificate in favour of Respondent No.2, subject to
the petitioners paying a sum of `82,52,451/-. It was
further ordered that if the petitioners fail to comply with
the said condition, the bank was at liberty to proceed
further in accordance with law. Subsequently, vide order
dated 18.06.2018, SA.No.11/2018 was dismissed.
4. Being aggrieved, the petitioners preferred the
AIR(SA)383/2018 before the DRAT. The DRAT vide order
dated 11.12.2018 dismissed the appeal since the petitioner
did not comply with the order of the Appellate Tribunal
requiring making of a pre-deposit of `13 lakhs.
5. Being aggrieved the petitioners preferred
WP.No.12700/2019 before the High Court of Judicature at
Madras. Vide order date 14.08.2019, the High Court of
Madras directed the DRAT to restore the appeal, subject to
the condition that the petitioners deposit a sum of `14.00
lakhs. Thereafter, the DRAT vide order dated 19.11.2019
has dismissed the appeal filed by the petitioners. Being
aggrieved the present petition is filed.
6. Learned counsel for the petitioners vehemently
contends that in the auction conducted on 03.01.2018,
there were no bidders and respondent No.2 being the
neighbour participated in the auction. Further respondent
No.1 - bank has erroneously fixed the reserve price of
`92,83,000/-. It is further contended that in the valuation
report dated 24.02.2014 that was taken by the bank at the
time of sanction of loan, the ground floor measurement of
the building in the mortgaged property was noted as 966
sq.ft where as in the valuation report dated 03.10.2017
taken at the time when the sale notice was published the
ground floor measurement is shown as 816 Sq.ft. Hence,
he contends that fixing of the reserve price while issuing
the auction notice is erroneous and the auction sale is
required to be set aside. Hence, he seeks for allowing the
present writ petition and granting of the relief sought for.
7. Per contra, learned counsel for respondent
No.1 - bank submits that the valuation report dated
24.02.2014 was furnished to the bank by the petitioners at
the time of applying for the loan and the valuation report
dated 03.10.2010 was taken by the bank from its
recognized valuer when the property was brought to
auction. That the site area of the mortgaged property is
correctly shown as 1305 sq.ft and with respect to the
construction put up by the petitioner, as per the approved
plan, the construction in the ground floor was only to the
extent of 630 sq.ft. Since the petitioners had put up
additional construction in violation of sanction plan, the
actual measurement of 816 sq.ft is shown in the valuation
report, which is just and proper. She further submits that
the distress value in the valuation report is `8,354,898/-
and the market value was `92,83,220/-. That in the
auction notice the distress value was not mentioned but
the market value as per valuation report in a sum of
`92,83,220/- was mentioned as the reserve price and that
the successful bidder had bid a sum of `93.00 lakhs which
is above the reserve price. Hence, it is contended the sale
conducted by the bank is just and proper.
8. Learned counsel for respondent No.2 - auction
purchaser contends that the petitioners have been granted
sufficient time both by this Court as well as the DRT and
the DRAT to pay the over due amount which has not been
done. It is further submitted that although it is the
contention of the petitioners that the mortgaged property
is of the higher value than what has been sold in auction,
the petitioners have not brought any purchaser for higher
price than what has been bid by respondent No.2.
9. It is further contended by the learned counsel
for respondent No.2 that the respondent No.2 has
bonafidely participated in the auction conducted by
respondent No.1 - bank and being the successful bidder
has paid the requisite sum of `93.00 lakhs within the
stipulated time and the sale certificate has also been
issued. Despite respondent No.2 having been paid the
entire sale consideration amount in the year 2018 itself,
the petitioners have continued to be in actual possession of
the property pursuant to the interim order granted by this
Court and the petitioners had attempted to alienate the
mortgaged property as a result of which Respondent No.2
was constrained to initiate various litigations to safeguard
the property purchased by him in the auction conducted on
03.01.2018. He further submits that no ground has been
made by the petitioners to grant the reliefs sought for in
the present petition and that both the DRT and DRAT have
adequately considered the relevant aspect of the matter
and dismissed the proceedings initiated by the petitioner,
and hence, no interference in the same is warranted.
Hence, he seeks for dismissal of the writ petition.
10. The submissions made by the learned counsels
have been considered and the material on record have
been perused. The question that arises for consideration is
'whether the orders passed by the DRT and DRAT are
erroneous and liable to be interfered with by this Court in
the present writ petition?'
11. The relevant factual matrix with regard to the
mortgaged property belonging to the petitioners being
brought for sale by respondent No.1 - bank by taking
recourse to proceedings under the provisions of the
SRFAESI Act are undisputed. It is further undisputed that
respondent No.2 is the successful bidder in the auction
conduced on 03.01.2018 having paid sum of `93.00 lakhs,
consequent, to which the sale certificate dated 09.02.2018
has been executed and registered.
12. With regard to the contention of the petitioners
that lesser area has been shown in the valuation report
that was taken by respondent No.1 - bank at the time of
bringing the property to sale, it is relevant to note that in
the valuation report dated 24.02.2014 the sital area is
shown as 1305 sq.ft, the ground floor construction is
shown as 630.06 sq.ft as per the sanction plan, whereas
the actual construction is shown as 963 sq.ft. The age of
construction is shown as a fourteen year old building.
13. In the valuation report dated 03.10.2017 the
sital area has been shown as 1305 sq.ft and the ground
floor construction is shown as 630.06 sq.ft and actual
construction in the ground floor is shown as 813 sq.ft. The
age of construction as a fourteen years old building.
14. It is relevant to note that there is no difference
between the actual sital area and the constructed ground
floor area as per the approved plan in both the valuation
reports. The age of construction is shown in the first
valuation report is fourteen years and the same shown in
the second valuation report also.
15. Although actual constructed area is shown as
963 sq.ft in the first valuation report and 816 sq.ft in the
second valuation report, there is no material placed on
record by the petitioner to demonstrate that the actual
constructed area is more than 816 Sq.ft. It is further
relevant to note the contention of respondent No.1 - bank
that the first valuation report was furnished by the
petitioner who were the borrowers at the time applying for
bank loan and the second valuation report was sought for
by the bank from its approved valuer before the
proceedings were initiated as per the provisions of the
SRFAESI Act and the constructed area in the second
valuation report is as per the actual measurement of the
construction in the ground floor.
16. It is also relevant to note that the difference in
the constructed area is demonstrated by the learned
counsel for the petitioners in an attempt to contend that
the property has been sold at a lower price than the actual
market value. In this context it is relevant to notice that
the petitioners have been given adequate opportunity from
the time during the pendency of the proceedings from the
DRT up to the date when the matter is adjudicated by this
Court either to pay the over due amount or to get an
another bidder to purchase the mortgaged property at a
higher price. However, till this date the petitioners have
not either paid the amount due and payable to respondent
No.1 - bank, nor brought any other bidder offering to
purchase the property at a higher price.
17. It is forthcoming that the Tribunal has
adequately appreciated the relevant aspects of the matter
before recording a finding that the auction conducted by
respondent No.1 - bank is just and proper. The Appellate
Tribunal has also adequately re-appreciated entire aspect
of the matter before dismissing the appeal filed by the
petitioner. It is further necessary to note that the
petitioners have not pointed out any aspect which
demonstrates the auction conducted by respondent No.1 -
bank is contrary to the provisions of SRFAESI Act or Rules.
18. The reliance placed by the learned counsel for
the petitioner on the judgment of the Hon'ble Supreme
Court in the case of Mathew Varghese v. M.Amritha
Kumar4 will not aid the case of the petitioner as in the
(2014) 5 SCC 610
said case the Hon'ble Supreme Court has held that 30 days
clear notice is to be given to the borrower before the
property is put to sale. The factual matrix of the said case
is entirely different from the facts of the present case.
19. The reliance placed by the learned counsel for
the petitioner on the judgment of the Hon'ble Supreme
Court in the case of J.Rajiv Subramanyam v. Pandiyas5
will also not aid the case of the petitioner as in the said
case the borrower had filed a writ petition challenging the
auction sale made by the bank. Finding an irregularity in
the same, a learned Single Judge of the High Court had set
aside the auction sale. Thereafter, the borrower repaid
the entire amount due to the bank which was accepted by
the bank. The auction purchaser had preferred a writ
appeal which was dismissed by the Division Bench of the
High Court. The Hon'ble Supreme Court upheld the
judgment of the learned Single Judge as well as of the
Division Bench.
(2014) 5 SCC 651
20. The reliance placed by the learned counsel for
the petitioner on the judgment of the Hon'ble Supreme
Court in the case of Vasu P.Shetty v. Hotel Vandana
Palace6 also will not aid the case of the petitioner since in
the said case the borrower challenged the auction sale
which was rejected by the DRT and the learned Single
Judge of the High Court. However, the Division Bench,
finding various infirmities in the auction sale, set aside the
same. The Hon'ble Supreme Court upheld the order of the
Division Bench. The factual matrix in the said case is
entirely different from the facts of the present case.
21. In view of the aforementioned, it is clear that
the petitioner has failed in demonstrating that the auction
has been conducted in violation of any specific stipulation
contained in the SARFAESI Act or the Rules therein. The
Petitioner has also failed in demonstrating that the orders
of the DRT and DRAT are in any manner erroneous and
liable to be interfered with in the present writ petition.
Hence the question framed for consideration is answered in
(2014) 5 SCC 660
the negative. Hence the above writ petition is dismissed as
being devoid of merit.
Parties to bear their respective costs.
Sd/-
JUDGE
Sd/-
JUDGE
Pnv/nd
