Karnataka High Court
M/S. Manasa Hospitality vs M/S Canara Bank on 3 September, 2024
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
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WP No. 21975 of 2023
C/W WP No. 20387 of 2023
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 3RD DAY OF SEPTEMBER, 2024
BEFORE
THE HON'BLE MR JUSTICE M.NAGAPRASANNA
WRIT PETITION NO. 21975 OF 2023 (GM-RES)
C/W
WRIT PETITION NO. 20387 OF 2023 (GM-RES)
IN WP No. 21975/2023
BETWEEN:
1. M/S. MANASA HOSPITALITY
A PROPRIETORSHIP CONCERN
HAVING ITS OFFICE AT
DOOR NO.V 2, 4TH FLOOR
"NANDA GOKULA COMPLEX"
KSSIDC, NEAR CANARA BANK
ELECTRONIC CITY PHASE-1
BENGALURU - 560 100
REPRESENTED BY ITS PROPRIETOR
Digitally signed by
NAGAVENI MR. V. SEKHAR.
Location: HIGH
COURT OF
KARNATAKA
2. M/S. V.S.LOGISTICS
A PARTNERSHIP CONCERN
NO.V 2, NANDAGOKULA COMPLEX
3RD CROSS, KSSIDC
NEXT TO CANARA BANK
ELECTRONIC CITY PHASE- I
BENGALURU
REPRESENTED BY ITS PARNTER
MR. V. SEKHAR.
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WP No. 21975 of 2023
C/W WP No. 20387 of 2023
3. MR.V.SHEKHAR
S/O MR.VENKATAPPA
AGED ABOUT 42 YEARS.
4. MRS.R.MANASA
W/O MR.V. SEKHAR
AGED ABOUT 38 YEARS.
PETITIONER No.3 AND 4 ARE
RESIDING AT VILLA NO.171,
CONCORDE CUPERTINO
ELECTRONIC CITY PHASE-1
BENGALURU - 560 100.
...PETITIONERS
(BY SMT.NALINA MAYEGOWDA, SR.ADVOCATE FOR
SMT.KAVITHA H.C., ADVOCATE)
AND:
M/S. CANARA BANK
ELECTRONIC CITY BRANCH
TATA B.P SOLAR ROAD
POST ELECTRONIC CITY
BENGALURU - 560 100
REPRESENTED BY ITS
AUTHORISED OFFICER/CHIEF MANAGER
MR.PRASHANT PANDEY
...RESPONDENT
(BY SRI VIGNESH SHETTY, ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
QUASH THE E-AUCTION SALE NOTICE DTD 31.08.2023
BEAIRNG NO. ARM-1/SN-037/23-24/YV, ISSUED BY THE
RESPONDENT SEEKING TO AUCTION/SELL LAND AND HOTEL
BUILDING CONSISTING OF GROUND FLOOR PLUS FOUR
FLOORS HAVING TOTAL BUILT UP AREA OF 10,000 SQ FT
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WP No. 21975 of 2023
C/W WP No. 20387 of 2023
(CORRESPONDING SHARE IN LAND (3390.80SQ FT) AT V2
NANDAGOKULA COMPLEX, 3RD CROSS, KSSIDC, NEXT TO
CANARA BANK, ELECTRONIC CITY PHSE I, BENGALURU 560100
BOUNDED BY EAST BY KEONICS ROAD, WEST BY PLOT NO. V6
NORTH BY PLOT NO. V3 AND V5, SOUTH BY PLOT NO V1 AND
V6 AND REFERRED TO IN THE SAID SALE NOTICE DTD
31.08.2023 PRODUCED AS ANNX-K TO THE PETITION AND
ETC.,
IN WP NO. 20387/2023
BETWEEN:
1. M/S. MANASA HOSPITALITY
A PROPRIETORSHIP CONCERN
HAVING ITS OFFICE AT
DOOR NO.V2, 4TH FLOOR
"NANDA GOKULA COMPLEX"
KSSIDC, NEAR CANARA BANK
ELECTRONIC CITY PHASE-1
BENGLAURU - 560 100
REPRESENTED BY ITS PROPRIETOR
MR.V.SEKHAR.
2. M/S V.S.LOGISTICS
A PARTNERSHIP CONCERN
NO.V2, NANDAGOKULA COMPLEX
3RD CROSS, KSSIDC
NEXT TO CANARA BANK
ELECTRONIC CITY PHASE -I
BENGALURU
REPRESENTED BY ITS PROPRIETOR
MR. V. SEKHAR AND MRS.MANASA.
3. MR.V.SHEKAR
S/O MR.VENKATAPPA
AGED ABOUT 42 YEARS.
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WP No. 21975 of 2023
C/W WP No. 20387 of 2023
4. MRS.R. MANASA
W/O MR.V. SEKHAR
AGED ABOUT 38 YEARS.
PETITIONERS NO.3 AND4 ARE
RESIDING AT VILLA NO.171
CONCORDE CUPERTINO
ELECTRONIC CITY PHASE- I
BENGALURU - 560 100.
...PETITIONERS
(BY SMT.NALINA MAYEGOWDA, SR.ADVOCATE FOR
SMT. KAVITHA H.C., ADVOCATE)
AND:
1. M/S.CANARA BANK
ELECTRONIC CITY BRANCH
TATA B P SOLAR ROAD
POST ELECTRONIC CITY
BENGALURU - 560 100.
REPRESENTED BY ITS
AUTHORISED OFFICER/CHIEF MANAGER
MR. PRASHANT PANDEY.
2. MANOJ C.,
S/O CHANNAREDDY
(AUCTION PURCHASER)
R/O CLEBRITY LAYOUT
DODDA THOGUR
BENGALURU SOUTH TALUK
BENGALURU - 560 100
PH NO 998095717
9379681355
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WP No. 21975 of 2023
C/W WP No. 20387 of 2023
...RESPONDENTS
(BY SRI VIGNESH SHETTY, ADVOCATE FOR R-1;
SRI T.N.VISWANATHA, ADVOCATE FOR R-2)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
QUASH THE E-AUCTION SALE PROCEEDINGS DTD
28.08.2023, PERTAINING TO THE LOT NO.1 RESIDENTIAL
LAND AND BUILDING SITUATED AT VILLA NO.AA-02,
'CONCORDE SILICON VALLEY', SY NO.166, DODDATHOGUR
VILLAGE, BEGUR VILLAGE, BANGALORE, REFERRED TO IN
THE SALE NOTICE DATED 19/07/2023, PRODUCED AS
ANNEXURE-F TO THE PETITION AND AS COMMUNICATED
TO THE PETITIONER BY THE RESPONDENT, VIDE
COMMUNICATION DATED 07/09/2023, PRODUCED AS
ANNEXURE-G TO THE PETITION AND ETC.,
THESE PETITIONS, COMING ON FOR PRELIMINARY
HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE M.NAGAPRASANNA
ORAL ORDER
The subject petitions are preferred by the borrowers
calling in question the action of the respondent-Canara Bank in
putting the properties to auction.
2. Heard Smt Nalina Mayegowda, learned senior counsel
appearing for petitioners, Sri Vignesh Shetty, learned counsel
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appearing for respondent-Canara Bank and Sri T N Viswanatha,
learned counsel appearing for respondent No.2 in
W.P.No.20387 of 2023.
3. I deem it appropriate not to narrate all the facts that
are necessary for a disposal of the lis, as the lis is being
disposed not on account of the merit of the matter, but
recording the orders and the payments that are made by the
petitioners to the Bank. This Court on 05-10-2023 had passed
the following order:
"Smt.Nalina Mayegowda, learned Senior Counsel
appearing for the petitioners submits that in the previous
writ petition in W.P.No.20387/2023, the petitioners were
before this Court in respect of the residential properties.
However, in the present writ petition, the mortgaged
assets are commercial properties out of which the income
is to be generated for the petitioners to enable them to
pay the EMI's. However, due to the COVID-19 pandemic,
there was no operation of the commercial premises since
the petitioners were running a restaurant and lodging
facility in the property in question, which is situated at
Electronic City Industrial Township Authority, which has
huge potential. However, it is because of the COVID-19
pandemic, the lockdown, and the aftermath of the lock
down that there was no occupancy of the rooms and
therefore, the petitioners could not pay the EMIs
regularly.
Learned Senior Counsel would therefore submit
that if the petitioners are permitted to operate the
restaurant and lodging facility it would generate income
for the petitioners and the petitioners would be able to
pay the EMIs regularly, after regularising the account. In
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that view of the matter, the learned Senior Counsel
submits that the petitioners will deposit a sum of Rs.1
Crore within a period of fifteen days from today. On
payment of such amount, if a direction is issued to the
respondent-Bank to hand over the physical possession of
the property in question to the petitioners, the petitioners
will be in a position to generate income and pay the EMI's
regularly before regularizing the account within a time
frame fixed by this Court.
Per contra, learned counsel for the respondent-
Bank would submit that the action was taken by the
respondent-Bank in the year 2018 and the submissions
now sought to be made that on account of Covid-19
pandemic the petitioners were not able to pay the EMI's
regularly cannot be accepted.
Learned counsel would also submit that the
remedy available for the petitioners are before the Debts
Recovery Tribunal and not before this Court. It is
submitted that the outstanding as on date
Rs.9,03,41,299/- (Rupees Nine Crores Three Lakhs Forty
One Thousand Two Hundred and Ninety Nine).
This Court has already passed an interim order in
the connected writ petition on 12.09.2023 directing the
respondent-Bank not to confirm sale in respect of the
respondent No.2 herein until specific orders are passed by
this Court. In the present case auction is scheduled to be
held today. Therefore, this Court is of the considered
opinion that at this stage, if the petitioners are permitted
to make a deposit of Rs.1 Crore to the respondent-Bank
and further fix a time frame for regularizing the account,
it would enable the petitioners to start the operation of
the restaurant and lodging which would generate income
for the petitioners.
In that view of the matter, the respondent-Bank is
hereby directed not to proceed any further in the matter
of conducting the auction of the property in question,
subject to the petitioners depositing a sum of Rs.1 Crore
within a period of fifteen days from today, failing which,
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the benefit flowing out of this order shall not enure to the
petitioners and the petitioners will be at the risk of having
both the writ petitions dismissed.
Re-list this matter on 25.10.2023."
By the aforesaid detailed order, the petitioners were directed to
deposit a sum of Rs.1 crore within a period of 15 days, failing
which, the petitions would be dismissed is what was observed.
The petitioners are said to have deposited Rs.1 crore in terms
of the order dated 05-10-2023. The matter again comes up on
25-10-2023 on an application filed by the petitioners. This
Court, passed the following order:
Heard Smt. Nalini Mayegowda, learned senior
counsel for the petitioners and Sri Vignesh Shetty,
learned counsel for the respondent - Bank.
This Court on 05.10.2023, had passed a detailed
order interjecting the issuance of sale certificate against
the property of the petitioners in favour of the auction
purchaser subject to the condition that the petitioners
would deposit Rs.1/- crore. The deposit is admittedly
made by the petitioners.
Learned counsel for the respondent - Bank would
submit that the petitioners have lost the right over the
property on account of the issuance of auction notice or
the sale notice in the light of the judgment of the Apex
Court in the case of CELLIR VS. BAFNA MOTOR
(MUMBAI) PVT. LTD. AND OTHERS reported in 2023
SCC Online SC 1209.
Learned counsel for the respondent would further
submit that no doubt, the bank has offered OTS and that
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having been vitiated in its compliance by the petitioners,
it would not enure to the benefit of entertainment of the
petition. The petition is entertained by this Court and a
detailed order is passed on 05.10.2023, which captures
the entire submissions of both the parties - borrower and
the bank.
Therefore, the interim order in the light of its
compliance, stands continued, till the next date of
hearing.
Learned counsel for the petitioners on record is
directed to serve a set of petition papers upon Sri Vignesh
Shetty, learned counsel for respondent, forthwith.
Sri Vignesh Shetty, learned counsel for respondent
submits that sale certificate is not issued in the present
petition.
List the matters on 16.11.2023."
The interim order earlier granted was extended from time to
time and on the submissions of both, the petitioners and the
respondent, this Court on 03-01-2024 had passed the following
order:
"The petitioners are granted last straw of
opportunity to redeem the mortgage that is now put to
sale. The auction purchaser is also staring at the Bank
seeking refund of the amount.
Interim order subsisting as on date shall continue
till the next date of hearing, subject to the condition that
the petitioners would deposit Rs.3 crores in the next 3
weeks which would be by the end of this month i.e.,
January 2024. In the event petitioners would not deposit
Rs.3 crores as is directed, the straw of opportunity which
is last in the line would vanish and the petition would run
the risk of getting dismissed."
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The continuance of interim order was made subject to deposit
of Rs.3 crores in the next 3 weeks. It transpires that on
01-03-2024 it was undertaken to deposit Rs.1.73 crores.
Recording the said submission, this Court passed the following
order:
"Learned counsel for the petitioners submits that
all efforts would be made to clear the auction amount
i.e., Rs.6.84 Crores by depositing another Rs.1.73 Crore,
as the petitioners have deposited substantial amount
i.e., Rs.5 Crore pursuant to the orders passed by this
Court at intermittent intervals.
In the event, the petitioners would pay the
amount which comes upto Rs.6.84 Crore, possession of
the property shall be delivered to the hands of the
petitioners. Solatium to be paid to the auction purchaser
would be considered on the next date.
Interim order subsisting, subject to the
aforesaid condition shall stand extended, till the next
date of hearing.
List these matters on 03.04.2024."
4. Certain conditions stipulated in the order were left
un-complied. Therefore, the matter was again heard on
23-04-2024 and on which date, this Court passed the following
order:
"Smt. Nalina Mayegowda, learned senior counsel
for the petitioner and the learned counsel for respondent.
The petitioner is before this Court seeking the
following prayer:
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"1. Issue a writ, order or direction to quash the
E auction Sale notice dated 31/08/2023,
bearing no ARM-1/SN-037/23-24/YV, issued
by the respondent, seeking to auction/sell
land and hotel building consisting of ground
floor plus four floors having total built up
area of 10,000 sq ft (corresponding share in
land (3390.80 sq ft) at V2, Nandagokula
complex, 3rd cross, KSSIDC, next to canara
bank, electronic city Phase I, Bengaluru-
560100, boundedby EAST by Keonics road,
WEST By Plot no V6, NORTH by Plot no V3 &
V 5, SOUTH By Plot no V1 & V6 and referred
to in the said sale notice dated 31/08/2023,
produced as Annexure-K to the petition.
2. Issue a Writ of Mandamus directing the
Respondent to revert possession of the
restaurant by name 'Manasa Andhra style &
multicuisine restaurant' and 15 rooms in the
hotel by name 'Manasa residency' in the
schedule premises to the Petitioner; and
3. Any other consequential reliefs that may be
granted by this Hon'ble court in the facts &
Circumstances of the case."
This Court on 05.10.2023, has passed the
following order:
"Smt. Nalina Mayegowda, learned Senior
Counsel appearing for the petitioners submits that
in the previous writ petition in W.P.No.20387/2023,
the petitioners were before this Court in respect of
the residential properties. However, in the present
writ petition, the mortgaged assets are commercial
properties out of which the income is to be
generated for the petitioners to enable them to pay
the EMI's. However, due to the COVID-19
pandemic, there was no operation of the
commercial premises since the petitioners were
running a restaurant and lodging facility in the
property in question, which is situated at Electronic
City Industrial Township Authority, which has huge
potential. However, it is because of the COVID-19
pandemic, the lockdown, and the aftermath of the
lock down that there was no occupancy of the
rooms and therefore, the petitioners could not pay
the EMIs regularly.
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Learned Senior Counsel would therefore
submit that if the petitioners are permitted to
operate the restaurant and lodging facility it would
generate income for the petitioners and the
petitioners would be able to pay the EMIs regularly,
after regularising the account. In that view of the
matter, the learned Senior Counsel submits that the
petitioners will deposit a sum of Rs.1 Crore within a
period of fifteen days from today. On payment of
such amount, if a direction is issued to the
respondent-Bank to hand over the physical
possession of the property in question to the
petitioners, the petitioners will be in a position to
generate income and pay the EMI's regularly before
regularizing the account within a time frame fixed
by this Court.
Per contra, learned counsel for the
respondent-Bank would submit that the action was
taken by the respondent-Bank in the year 2018 and
the submissions now sought to be made that on
account of Covid-19 pandemic the petitioners were
not able to pay the EMI's regularly cannot be
accepted.
Learned counsel would also submit that the
remedy available for the petitioners are before the
Debts Recovery Tribunal and not before this Court.
It is submitted that the outstanding as on date
Rs.9,03,41,299/- (Rupees Nine Crores Three Lakhs
Forty One Thousand Two Hundred and Ninety Nine).
This Court has already passed an interim
order in the connected writ petition on 12.09.2023
directing the respondent-Bank not to confirm sale in
respect of the respondent No.2 herein until specific
orders are passed by this Court. In the present case
auction is scheduled to be held today. Therefore,
this Court is of the considered opinion that at this
stage, if the petitioners are permitted to make a
deposit of Rs.1 Crore to the respondent-Bank and
further fix a time frame for regularizing the account,
it would enable the petitioners to start the operation
of the restaurant and lodging which would generate
income for the petitioners.
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In that view of the matter, the respondent-
Bank is hereby directed not to proceed any further
in the matter of conducting the auction of the
property in question, subject to the petitioners
depositing a sum of Rs.1 Crore within a period of
fifteen days from today, failing which, the benefit
flowing out of this order shall not enure to the
petitioners and the petitioners will be at the risk of
having both the writ petitions dismissed.
Re-list this matter on 25.10.2023."
The order was in detail which observed that at the
relevant point in time, the outstanding amount was
Rs.9,03,41,299/- and Rs.1/- crore was directed to be
deposited within 15 days. That is said to have been
complied. Therefore, the interim order stood complied.
On 25.10.2023, this Court had passed the following
order:
Heard Smt. Nalini Mayegowda, learned senior
counsel for the petitioners and Sri Vignesh Shetty,
learned counsel for the respondent - Bank.
This Court on 05.10.2023, had passed a
detailed order interjecting the issuance of sale
certificate against the property of the petitioners in
favour of the auction purchaser subject to the
condition that the petitioners would deposit Rs.1/-
crore. The deposit is admittedly made by the
petitioners.
Learned counsel for the respondent - Bank
would submit that the petitioners have lost the right
over the property on account of the issuance of
auction notice or the sale notice in the light of the
judgment of the Apex Court in the case of CELLIR
VS. BAFNA MOTOR (MUMBAI) PVT. LTD. AND
OTHERS reported in 2023 SCC Online SC 1209.
Learned counsel for the respondent would
further submit that no doubt, the bank has offered
OTS and that having been vitiated in its compliance
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by the petitioners, it would not enure to the benefit
of entertainment of the petition. The petition is
entertained by this Court and a detailed order is
passed on 05.10.2023, which captures the entire
submissions of both the parties - borrower and the
bank.
Therefore, the interim order in the light of its
compliance, stands continued, till the next date of
hearing.
Learned counsel for the petitioners on record
is directed to serve a set of petition papers upon Sri
Vignesh Shetty, learned counsel for respondent,
forthwith.
Sri Vignesh Shetty, learned counsel for
respondent submits that sale certificate is not issued
in the present petition.
List the matters on 16.11.2023."
Directions were given intermittently to make the
payment to the bank. It is an admitted fact that as on
today, Rs.5/- crores has been paid to the bank including
Rs.50/- lakhs that is paid today.
Learned senior counsel would submit that the
subject property is a Bar and Restaurant with 30 rooms
and has been locked by the respondent - bank and is
under lock and key for the last 4 years. There is no
other source for the petitioner to clear the dues and it is
only by running the Bar and Restaurant, the dues can be
cleared. However, Rs.50/- lakhs is paid today, to the
bank and totally Rs.5/- crores is paid.
Learned counsel for respondent submits that no
indulgence should be shown to the petitioner as the
account has long ago slipped into non-performing asset
in the year 2018 and the possession is taken in the year
2020.
Now the status of the subject property is under
lock and key and the possession of the same is with the
respondent bank for the last four years. Therefore, the
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Bar and Restaurant that has to run the business and
generate income is closed as the proceedings are
initiated by the bank under the provisions of the
SARFAESI Act, 2002 for the last 4 years. The amount
and interest thereon is heaping up due to the closure of
the business of the petitioner.
In the interregnum, the property is put to sale and
there are two auction purchasers who have emerged.
Learned counsel for the auction purchasers
submits that they have paid 25% of the amount to the
bank towards the bid amount.
Therefore, in the peculiar circumstances and in the
light of the fact that Rs.5/- crores is paid by the
petitioner towards the loan and in order to resolve the
conundrum for the present, atleast, so that the bank
should not left high and dry nor the petitioner, I deem it
appropriate to direct the respondent - bank to restore
the possession to the petitioner.
In the light of the submission that the auction
purchaser has deposited 25% of the amount, I further
deem it appropriate to direct the petitioner to pay 25%
that is paid by the auction purchaser if any and the bank
shall produce the details of the receipt of 25% of the
amount to the petitioner.
The petitioner shall satisfy the payment to the
auction purchaser including 10% solatium. It is then,
the bank shall restore the possession to the petitioner
and the petitioner shall run the business and clear the
dues expeditiously.
Subject to the aforesaid conditions, the respondent
- bank shall restore the possession to the petitioner,
forthwith.
List these matters on 30.05.2024, to report
compliance."
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Directions were given to the petitioners to deposit the entire
amount. Entire amount I mean, the amount that the Bank had
secured in the auction that was held putting the property of the
petitioners to sale. The 2nd respondent in W.P.No.20387 of
2023 comes into picture at this juncture, as he is the successful
auction purchaser and has deposited 25% of the amount
towards the auction of the property of the petitioners.
5. The amount of the residential property put to auction is
at Rs.2,60,90,000/-. The commercial property which is the
subject matter of the other petition was sold at
Rs.4,06,60,000/-. The auction purchaser who was the
successful bidder qua the residential property has got
impleaded himself into these proceedings. This Court on 27-06-
2024 had passed the following order:
"Heard the learned Senior counsel, Smt. Nalina
Mayegowda, appearing for the petitioners.
The matter is back before this Court in the garb of
a clarification by way of a special order.
Learned Senior counsel would submit that this
Court had directed 25% of the amount paid by the
auction purchaser to be shown to the petitioners.
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Learned counsel, Sri. Vignesh Shetty submits that
all the communication has been sent.
Learned Senior counsel submits that the amount is
received perhaps after the stay order. Be that as it may.
Seven months have flown by orders being passed
by this Court intermittently and the entire amount is not
paid. What remains to be paid today is Rs.1.64 crores in
respect of the sale of the property. If the petitioners
would not fulfill the amount of Rs.1.64 crores in the next
four weeks, the petition would be rejected without
showing any further indulgence in the matter.
List these matters on 26.07.2024."
The order was not complied with and therefore, on 30-08-2024
the following order was passed:
"This Court on 23.04.2024 had passed the following
order:
"Smt. Nalina Mayegowda, learned senior counsel for the
petitioner and the learned counsel for respondent.
The petitioner is before this Court seeking the following
prayer:
"1. Issue a writ, order or direction to quash
the E auction Sale notice dated 31/08/2023, bearing
no ARM-1/SN-037/23-24/YV, issued by the
respondent, seeking to auction/sell land and hotel
building consisting of ground floor plus four floors
having total built up area of 10,000 sq ft
(corresponding share in land (3390.80 sq ft) at V2,
Nandagokula complex, 3rd cross, KSSIDC, next to
canara bank, electronic city Phase I, Bengaluru-
560100, boundedby EAST by Keonics road, WEST By
Plot no V6, NORTH by Plot no V3 & V 5, SOUTH By
Plot no V1 & V6 and referred to in the said sale
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notice dated 31/08/2023, produced as Annexure-K
to the petition.
2. Issue a Writ of Mandamus directing the
Respondent to revert possession of the restaurant by
name 'Manasa Andhra style & multicuisine
restaurant' and 15 rooms in the hotel by name
'Manasa residency' in the schedule premises to the
Petitioner; and
3. Any other consequential reliefs that may
be granted by this Hon'ble court in the facts &
Circumstances of the case."
This Court on 05.10.2023, has passed the following
order:
"Smt. Nalina Mayegowda, learned Senior Counsel
appearing for the petitioners submits that in the previous
writ petition in W.P.No.20387/2023, the petitioners were
before this Court in respect of the residential properties.
However, in the present writ petition, the mortgaged
assets are commercial properties out of which the income
is to be generated for the petitioners to enable them to
pay the EMI's. However, due to the COVID-19 pandemic,
there was no operation of the commercial premises since
the petitioners were running a restaurant and lodging
facility in the property in question, which is situated at
Electronic City Industrial Township Authority, which has
huge potential. However, it is because of the COVID-19
pandemic, the lockdown, and the aftermath of the lock
down that there was no occupancy of the rooms and
therefore, the petitioners could not pay the EMIs regularly.
Learned Senior Counsel would therefore submit
that if the petitioners are permitted to operate the
restaurant and lodging facility it would generate income for
the petitioners and the petitioners would be able to pay
the EMIs regularly, after regularising the account. In that
view of the matter, the learned Senior Counsel submits
that the petitioners will deposit a sum of Rs.1 Crore within
a period of fifteen days from today. On payment of such
amount, if a direction is issued to the respondent-Bank to
hand over the physical possession of the property in
question to the petitioners, the petitioners will be in a
position to generate income and pay the EMI's regularly
before regularizing the account within a time frame fixed
by this Court.
Per contra, learned counsel for the respondent-
Bank would submit that the action was taken by the
respondent-Bank in the year 2018 and the submissions
now sought to be made that on account of Covid-19
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pandemic the petitioners were not able to pay the EMI's
regularly cannot be accepted.
Learned counsel would also submit that the
remedy available for the petitioners are before the Debts
Recovery Tribunal and not before this Court. It is
submitted that the outstanding as on date
Rs.9,03,41,299/- (Rupees Nine Crores Three Lakhs Forty
One Thousand Two Hundred and Ninety Nine).
This Court has already passed an interim order in
the connected writ petition on 12.09.2023 directing the
respondent-Bank not to confirm sale in respect of the
respondent No.2 herein until specific orders are passed by
this Court. In the present case auction is scheduled to be
held today. Therefore, this Court is of the considered
opinion that at this stage, if the petitioners are permitted
to make a deposit of Rs.1 Crore to the respondent-Bank
and further fix a time frame for regularizing the account, it
would enable the petitioners to start the operation of the
restaurant and lodging which would generate income for
the petitioners.
In that view of the matter, the respondent-Bank is
hereby directed not to proceed any further in the matter of
conducting the auction of the property in question, subject
to the petitioners depositing a sum of Rs.1 Crore within a
period of fifteen days from today, failing which, the benefit
flowing out of this order shall not enure to the petitioners
and the petitioners will be at the risk of having both the
writ petitions dismissed.
Re-list this matter on 25.10.2023."
The order was in detail which observed that at the
relevant point in time, the outstanding amount was
Rs.9,03,41,299/- and Rs.1/- crore was directed to be deposited
within 15 days. That is said to have been complied. Therefore,
the interim order stood complied. On 25.10.2023, this Court
had passed the following order:
Heard Smt. Nalini Mayegowda, learned senior
counsel for the petitioners and Sri Vignesh Shetty,
learned counsel for the respondent - Bank.
This Court on 05.10.2023, had passed a
detailed order interjecting the issuance of sale
certificate against the property of the petitioners in
favour of the auction purchaser subject to the
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condition that the petitioners would deposit Rs.1/-
crore. The deposit is admittedly made by the
petitioners.
Learned counsel for the respondent - Bank
would submit that the petitioners have lost the right
over the property on account of the issuance of
auction notice or the sale notice in the light of the
judgment of the Apex Court in the case of CELLIR
VS. BAFNA MOTOR (MUMBAI) PVT. LTD. AND
OTHERS reported in 2023 SCC Online SC 1209.
Learned counsel for the respondent would
further submit that no doubt, the bank has offered
OTS and that having been vitiated in its compliance
by the petitioners, it would not enure to the benefit
of entertainment of the petition. The petition is
entertained by this Court and a detailed order is
passed on 05.10.2023, which captures the entire
submissions of both the parties - borrower and the
bank.
Therefore, the interim order in the light of its
compliance, stands continued, till the next date of
hearing.
Learned counsel for the petitioners on record is
directed to serve a set of petition papers upon Sri
Vignesh Shetty, learned counsel for respondent,
forthwith.
Sri Vignesh Shetty, learned counsel for
respondent submits that sale certificate is not issued
in the present petition.
List the matters on 16.11.2023."
Directions were given intermittently to make
the payment to the bank. It is an admitted fact that
as on today, Rs.5/- crores has been paid to the bank
including Rs.50/- lakhs that is paid today.
Learned senior counsel would submit that the
subject property is a Bar and Restaurant with 30
rooms and has been locked by the respondent -
bank and is under lock and key for the last 4 years.
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There is no other source for the petitioner to clear
the dues and it is only by running the Bar and
Restaurant, the dues can be cleared. However,
Rs.50/- lakhs is paid today, to the bank and totally
Rs.5/- crores is paid.
Learned counsel for respondent submits that
no indulgence should be shown to the petitioner as
the account has long ago slipped into non-
performing asset in the year 2018 and the
possession is taken in the year 2020.
Now the status of the subject property is under
lock and key and the possession of the same is with
the respondent bank for the last four years.
Therefore, the Bar and Restaurant that has to run
the business and generate income is closed as the
proceedings are initiated by the bank under the
provisions of the SARFAESI Act, 2002 for the last 4
years. The amount and interest thereon is heaping
up due to the closure of the business of the
petitioner.
In the interregnum, the property is put to sale
and there are two auction purchasers who have
emerged.
Learned counsel for the auction purchasers
submits that they have paid 25% of the amount to
the bank towards the bid amount.
Therefore, in the peculiar circumstances and in
the light of the fact that Rs.5/- crores is paid by the
petitioner towards the loan and in order to resolve
the conundrum for the present, atleast, so that the
bank should not left high and dry nor the petitioner,
I deem it appropriate to direct the respondent -
bank to restore the possession to the petitioner.
In the light of the submission that the auction
purchaser has deposited 25% of the amount, I
further deem it appropriate to direct the petitioner to
pay 25% that is paid by the auction purchaser if any
and the bank shall produce the details of the receipt
of 25% of the amount to the petitioner.
The petitioner shall satisfy the payment to the
auction purchaser including 10% solatium. It is
then, the bank shall restore the possession to the
petitioner and the petitioner shall run the business
and clear the dues expeditiously.
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Subject to the aforesaid conditions, the
respondent - bank shall restore the possession to
the petitioner, forthwith.
List these matters on 30.05.2024, to report
compliance."
In the light of the said order, solatium at 10% of
the amount that is paid by the auction purchaser is to be
paid by the petitioner/borrower.
Learned senior counsel Smt.Nalina Mayegowda
submits that if 4 days time is granted needful would be
done.
List the matters on 03.09.2024 in the fresh matters
list.
Interim order, granted earlier, if subsisting, shall
stand extended till the next date of hearing. "
The solatium at 10% which was earlier ordered on 23-04-2024
was directed to be paid to the successful auction purchaser.
The learned senior counsel for petitioners has transmitted a
demand draft of 10% of the auction purchase to be paid to the
auction purchaser. Therefore, there is compliance with the
direction of payment of 10% of solatium.
6. The learned senior counsel for petitioners would submit
that the amount taken as loan was Rs.4.5 crores plus 50 lakhs
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over draft account, as on today, in all, the petitioners have paid
Rs.8.97 lakhs/- as against the said loan, which is disputed by
the learned counsel Sri Vigensh Shetty appearing for the Bank
to clarify that certain amount was paid long before the sale and
it is not after the sale the amount is paid. After the sale what is
paid is Rs.6,17,50,000/- and it is an admitted amount.
7. In view of the compliance with the orders passed by
this Court all quoted supra, I deem it appropriate to direct the
Bank to hand over possession of the property, as it is not that
the petitioners have paid the amount that can be seen as a
pittance, but a huge amount of Rs.6,17,50,000/-. Though they
were in default throughout, today, the petitioners have paid
Rs.6,17,50,000/- to save the property or to retain the property
in their hands.
8. In the light of huge payment coming into the coffers of
the Bank, though with delay, I deem it appropriate to direct the
respondent-Bank to hand over possession of the premises to
the hands of the petitioners both residential and commercial,
the subject matters of these petitions, within two weeks from
the date of receipt of the copy of this order.
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9. In the light of the aforesaid order, since the auction
purchaser has deposited 25% of the amount pursuant to the
auction, the Bank shall refund the same within two weeks, from
the date of receipt of the copy of this order, failing which, the
Bank is bound to pay interest to the auction purchaser. The 2nd
respondent who is present in the Court has received the
demand draft of Rs.6,52,250/- being the solatium as
determined by the order of this Court dated 23-04-2024.
10. The contentions of the petitioners or the respondent
to initiate proceedings or to defend proceedings in accordance
with law is always open, but if initiated, the observations made
in the course of the order shall be borne in mind by the
petitioners.
With these observations, petitions stand disposed leaving
open all remedies to the petitioners and the respondent.
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Pending applications if any, also stand disposed, as a
consequence.
Sd/-
(M.NAGAPRASANNA)
JUDGE
bkp
