Karnataka High Court
Sri.Aleem Khan S/O Mohammad Khan vs The Zonal Manager And Anr on 6 June, 2024
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WP No. 206584 of 2015
C/W WP No. 203335 of 2015
IN THE HIGH COURT OF KARNATAKA
KALABURAGI BENCH
DATED THIS THE 6TH DAY OF JUNE, 2024
BEFORE
THE HON'BLE MR. JUSTICE R.NATARAJ
WRIT PETITION NO.206584 OF 2015 (GM-RES)
C/W
WRIT PETITION NO.203335 OF 2015 (GM-RES)
IN W.P NO.206584 OF 2015
BETWEEN:
B.VENKATESH
S/O B.SUBBAIA
AGE: 43 YEARS, OCC: BUSINESS,
R/O H.NO. 12-1-318,
BASAVAN BHAVI CHOWK,
GUNJ ROAD, RAICHUR.
...PETITIONER
(BY SRI. RAVINDRA D. K., ADVOCATE)
Digitally
signed by
RENUKA AND:
Location:
High Court 1. THE MANAGER,
Of Karnataka BANK OF MAHARASHTRA
NO.11-2-40 AND 41,1
SHREYAS TOWERS, LOHARWADI,
GANDHI CHOWK, RAICHUR
2. ALEEMKHAN DEAD BY LR'S.,
2(A) SMT. NAFEESA BEGUM
W/O ALEEM KHAN,
AGED ABOUT 53 YEARS,
OCC: HOUSEHOLD WORK,
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WP No. 206584 of 2015
C/W WP No. 203335 of 2015
2(B) SRI IMRAN KHAN
S/O ALEEM KHAN,
AGED ABOUT 38 YEARS,
OCC: BUSINESS,
2(C) SRI IRFAN KHAN
S/O ALEEM KHAN,
AGED ABOUT 37 YEARS,
OCC: BUSINESS,
2(D) SRI. MOHSIN KHAN
S/O ALEEM KHAN,
AGED ABOUT 35 YEARS,
OCC: BUSINESS,
ALL ARE R/O. 12-8-12/225, SHIYA TALAB,
RAICHUR-584101.
RAICHUR TALUK AND DISTRICT.
...RESPONDENTS
(BY SMT. ANITA KULKARNI, ADVOCATE FOR R1;
SRI S.S.MAMADAPUR, ADVOCATE FOR R2)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF CONSTITUTION OF INDIA PRAYING TO ISSUE A
WRIT IN THE NATURE OF MANDAMUS, THEREBY DIRECTING
THE RESPONDENT TO ISSUE N.O.C IN RESPECT OF THE
SCHEDULE PROPERTY INDUSTRIAL SITE NO. 194/7, 8 AND
194/9 MEASURING 5868 SQ METRES SITUATED AT
MANCHALAPUR ROAD RAICHUR AND OPEN PLOT NO. 12-6-
1040 MEASURING 108 SQ METRES SANGA NAIK LAYOUT
RAICHUR, IN THE INTEREST OF JUSTICE AND EQUITY.
IN W P NO.203335 OF 2015
BETWEEN:
1. SRI.ALEEM KHAN,
SINCE DECEASED BY HIS LRS.,
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WP No. 206584 of 2015
C/W WP No. 203335 of 2015
1(A) SMT. NAFEESA BEGUM
W/O ALEEM KHAN,
AGED ABOUT 53 YEARS,
OCC: HOUSEHOLD WORK,
1(B) SRI IMRAN KHAN
S/O ALEEM KHAN,
AGED ABOUT 38 YEARS,
OCC: BUSINESS,
1(C) SRI IRFAN KHAN
S/O ALEEM KHAN,
AGED ABOUT 37 YEARS,
OCC: BUSINESS,
1(D) SRI MOHSIN KHAN
S/O ALEEM KHAN,
AGED ABOUT 35 YEARS,
OCC: BUSINESS,
ALL ARE R/O 12-8-12/225,
SHIYA TALAB, RAICHUR.
...PETITIONERS
(BY SRI. S. S. MAMADAPUR, ADVOCATE)
AND:
1. THE ZONAL MANAGER
BANK OF MAHARASHTRA,
NO.15, POLICE STATION ROAD,
BASAVANAGUDI,
BANGALORE-04
2. THE BRANCH MANAGER,
BANK OF MAHARASHTRA
NO.11-2-40 & 41,
SHREYANSH TOWERS,
LOHAR WADA, GANDHI CHOWK,
RAICHUR-584101.
...RESPONDENTS
(BY SMT. ANITA KULKARNI, ADVOCATE FOR R1 & R2)
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WP No. 206584 of 2015
C/W WP No. 203335 of 2015
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO
ISSUE A WRIT OF MANDAMUS OR ORDER OR ANY OTHER
DIRECTION IN THE NATURE OF A WRIT DIRECTING THE
RESPONDENTS TO EXECUTE THE SALE DEED IN FAVOUR OF
THE PETITIONER PURSUANT TO THE NOTIFICATION DATED
8.1.2014 VIDE ANNEXURE-A , AND DO ALL OTHER ACTS AS
REQUIRED THEREIN IN THE INTEREST OF JUSTICE AND
EQUITY.
THESE PETITIONS, ARE COMING ON FOR PRELIMINARY
HEARING IN 'B' GROUP, THIS DAY, THE COURT MADE THE
FOLLOWING:
ORDER
The petitioner in W.P.No.206584/2015 has sought for a
Writ in the nature of Mandamus to direct the respondents to
issue a 'No Objection Certificate' in respect of the property
bearing Industrial Site Nos.194/7, 8 and 194/9 measuring 5868
sq. mtrs situate at Manchalapur Road, Raichur and an open Plot
No.12-6-1040, measuring 108 sq. mtrs at Sanga Naik Layout,
Raichur. The petitioner has also sought for a direction to the
respondent No.1 to handover possession of the aforesaid sites.
2. The facts in brief are that the petitioner had raised
a loan from the respondent No.1 to establish a unit to
manufacture hollow bricks and RCC pipes. The petitioner had
mortgaged the aforesaid properties as security for the
repayment of loan. The respondent No.1 alleged non-payment
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of installments and initiated proceedings under the
Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (SARFAESI Act) and
took over possession of the mortgaged assets. The respondent
No.1 thereafter initiated proceedings to auction the secured
assets at an auction held on 10.02.2014. The petitioner
challenged the proposed auction before the Debt Recovery
Tribunal in a statutory appeal under Section 17 of the
SARFAESI Act. The Tribunal did not stay the sale but directed
the petitioner to deposit Rs.1,00,000/- by or before 10.02.2014
and remaining outstanding within 24.02.2014. It further
directed that on deposit of Rs.1,00,000/-, the authorized officer
shall defer the confirmation of sale. In the meanwhile, the
respondent No.1 proceeded with the auction on 10.02.2014 and
accepted the bid of Rs.44,22,000/- of the respondent No.2.
The respondent No.2 did not deposit 25% of the bid amount on
the date of auction but handed over a cheque for
Rs.11,81,000/- on 12.02.2014, which was dishonoured and
later he deposited Rs.11,81,000/- on 13.02.2014. The
respondent No.2 then filed I.A.No.429/2015 to be impleaded in
I.R.No.282/2014 before the Tribunal. The Tribunal disposed off
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I.R.No.282/2014 on 27.02.2015 directing the petitioner to pay
the entire loan within one month, failing which respondent No.1
was granted liberty to proceed in accordance with law. Later,
the petitioner filed I.R.No.1326/2015 before the Tribunal for
extension of time, which was disposed off on 15.04.2015
granting two months time to pay the entire dues to the
respondent No.1. The petitioner paid a sum of Rs.14,00,000/-
on 15.06.2015 and again filed applications before the Tribunal
for (i) time to pay the balance due to respondent No.1 (ii) to
stay the registration of sale certificate (iii) to direct the
respondent No.1 to furnish statement of accounts. The
respondent No.2 filed I.A.No.3920/2015 to implead in the
proceedings. In the meanwhile, the respondent No.2 deposited
the balance bid amount on 03.06.2015. However, the
respondent No.1 addressed a letter dated 24.06.2015 to
respondent No.2 to receive back Rs.11,81,000/- deposited on
13.02.2014. The Tribunal rejected the applications filed by the
petitioner and directed him to approach respondent No.1 and
get the matter settled and respondent No.1 was directed to
consider the request of the petitioner. The Tribunal dismissed
the application filed by respondent No.2. Feeling aggrieved by
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the aforesaid order, the respondent No.2 filed M.A.(S.A.)
No.3/2019 before the Debt Recovery Appellate Tribunal. In the
interregnum, the respondent No.1 filed a memo of calculation
on 11.09.2015 stating that the total due as on that day was
Rs.2,51,311/- which was deposited by the petitioner on
29.09.2015 with respondent No.1. He filed a representation on
03.10.2015 requesting the respondent No.1 to return back the
possession of mortgaged properties and to give NOC. The Debt
Recovery Appellate Tribunal after noticing that respondent No.2
had not deposited the entire auction price in time and also the
fact that petitioner had repaid the entire dues to the bank,
dismissed the appeal in terms of the order dated 01.11.2022.
3. The petitioner is therefore, before this Court
seeking for a Writ in the nature of Mandamus to direct the
respondent No.1 to issue the 'No Objection Certificate' in
respect of the mortgaged assets and to handover possession of
the said properties.
4. The auction purchaser (since deceased represented
by his legal representatives) has filed W.P.No.203335/2015 for
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a writ in the nature of Mandamus to execute sale deed in his
favour pursuant to the notification dated 09.01.2014.
5. He has contended that pursuant to the auction held
on 10.02.2014, an order was passed by the Debt Recovery
Tribunal in I.R.No.282/2014 directing the borrower to pay
Rs.1,00,000/- on or before 10.02.2014 and the remaining
within 24.02.2014. He contended that in the event of default
of the borrower to do so, the interim order granted would stand
cancelled automatically and that the bank was at liberty to
proceed in accordance with law. He contended that the
borrower moved an application before the Debt Recovery
Tribunal seeking extension of time to pay balance amount and
that the said application came to be allowed in terms of the
order dated 15.04.2015 granting two months time to pay entire
due. He alleged that despite extension of time, the borrower
did not pay the entire amount. He claimed that as against
auction bid of Rs.44,20,000/-, he deposited entire sum of
Rs.44,20,000/- and the Bank was not coming forward to
execute sale deed in his favour and therefore, sought
appropriate direction to the Bank to conclude auction sale by
executing deed of absolute sale.
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6. The learned counsel for the respective parties
reiterated their submissions as stated above.
7. Learned counsel for the respondent No.1 - Bank
has remained absent and therefore, this Court did not have the
benefit of her submission.
8. Be that as it may, it is not in dispute that the
respondent No.1 - Bank had issued an auction sale notice dated
09.01.2014 proposing to auction the secured asset on
10.02.2014. It is not in dispute that the borrower had
approached the Debt Recovery Tribunal under Section 17(1) of
the SARFAESI Act. The Debt Recovery Tribunal had granted an
interim order permitting the borrower to deposit a sum of
Rs.1,00,000/- on or before 10.02.2014 and the balance by or
before 24.02.2014. It is not in dispute that the borrower had
deposited a sum of Rs.1,00,000/- by 10.02.2014. It is also not
in dispute that the Debt Recovery Tribunal entertained an
application of the borrower and extended time to deposit the
balance by another two months from 24.02.2014. It is equally
not in dispute that the auction was held on 10.02.2014 and the
sale was not confirmed in view of the pending proceedings
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before the Debt Recovery Tribunal and in view of the extension
of time granted by the Debt Recovery Tribunal to the borrower
to deposit balance amount. It is not in dispute that the auction
purchaser did not deposit 25% bid amount on 10.02.2014 but
tendered a cheque for 25% of the bid amount on 12.02.2014
which came to be dishonoured and he deposited the said 25%
by cash on 13.02.2014. The remaining was deposited by the
auction purchaser only on 03.06.2015. Under sub-rule (3) of
Rule 9 of the Security Interest (Enforcement) Rules, 2002, the
auction purchaser was expected to deposit 25% of the auction
price on the same day or the next working day and the balance
amount had to be deposited before the fifteenth day of
confirmation of sale of the property or such extended period as
may be agreed upon in writing between the purchaser and the
secured creditor, in any case not exceeding three months. In
the event of default of the auction purchaser to deposit money
as stated in sub-rules (3) and (4) of Rule 9, the discretion is
vested in the Bank to either to forfeit bid price deposited by the
auction purchaser and resale the secured assets in accordance
with law. The auction in favour of the purchaser was not
confirmed. As a matter of fact, the Debt Recovery Appellate
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Tribunal in its order dated 01.11.2022 noticed the contention of
the respondent No.1 that the auction purchaser had deposited
75% by transferring it into his account but later withdrew it and
what was in deposit with the bank was Rs.11,81,000/-.
Therefore, there was no auction in the eyes of law and the one
held on 10.02.2014 had no legs to stand. The auction
purchaser therefore, had no right to claim that he had any
vested right to compel the respondent No.1 - Bank to clear the
auction sale. This is also the law laid down by the Hon'ble Apex
Court in the case of Sardara Singh (dead) by Lrs. and
another vs. Sardara Singh (dead) and others [(1990) 4
SCC 90]. The relevant portion of the said judgment read0s as
follows:-
"It is clear from this decision that the
requirement of deposit contained in Sections 85, 86
and 88 of the Act, which are substantially the same
as Order XXI Rules 84 and 85 of the Code, are
mandatory and failure to comply with either of them
renders the sale non-est. Once the effect of non-
payment of the amount is to render the sale non-
existent, it becomes the imperative duty of the
authority to re-sell the property as the purchaser
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forfeits all claim to the property for default of
payment."
9. In that view of the matter, the auction purchaser
was not entitled to claim any further reliefs but was only
entitled to request the respondent No.1 - Bank to refund the
money. The auction purchaser was certainly not entitled to
seek for a direction to the bank to execute a sale certificate or
a sale deed in respect of the auctioned properties.
10. In view of the aforesaid, it is declared that the
auction purchaser did not have any vested right to compel the
Bank to conclude the auction sale by executing a sale deed.
Having said so, since the borrower/petitioner in
W.P.No.206584/2015 had deposited the entire amount due, as
stated by the respondent No.1 - Bank before the Tribunal, the
respondent No.1 was bound to issue a 'No Objection Certificate'
or a clearance certificate indicating that the petitioner had
cleared up all the loans payable to it and also to deliver up
possession of the secured assets, which lay within its
possession.
11. In that view of the matter, W.P.No.206584/2015
filed by the borrower, is allowed. The respondent No.1 - Bank
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is directed to forthwith issue a 'No Due Certificate' or a 'No
Objection Certificate' indicating that the borrower has paid up
entire amount due to the Bank and the same shall be done
within fifteen days from the date of receipt of certified copy of
this Order. In case, the respondent No.1 fails to issue
appropriate endorsement, it shall be deemed that the petitioner
is not liable to pay anything to the Bank. The respondent No.1
- Bank shall re-deliver possession of the secured assets to the
petitioner within fifteen days from today, failing which, the
petitioner is entitled to re-enter the possession of the secured
assets after informing the Bank about the date when he would
take over the secured assets.
12. W.P.No.203335/2015 being devoid of merits, is
dismissed. In view of the dismissal of the writ petition
I.A.No.1/2023 and 2/2023 stand disposed off.
Sd/-
JUDGE
PMR
CT:SI
