Kerala High Court
Shafeer U. H vs The Authorised Manager, The Union ... on 25 January, 2022
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS
TUESDAY, THE 25TH DAY OF JANUARY 2022 / 5TH MAGHA, 1943
WP(C) NO. 1433 OF 2022
PETITIONERS:
1 SHAFEER U. H.
AGED 46 YEARS,S/O. HAMSA,
UPPOOTTIL HOUSE,
MUDICKAL P.O., MARAMBILLI, KUNNATHUNADU,
PERUMBAVUR, ERNAKULAM - 683 547.
2 UH HAMZA
UPPOOTTIL HOUSE,
MUDICKAL P. O., MARAMBILLI, KUNNATHUNADU,
PERUMBAVUR, ERNAKULAM - 683 547.
BY ADV LIZA P.CHERIAN
RESPONDENT:
THE AUTHORISED MANAGER,
THE UNION BANK OF INDIA
ANGAMALY BRANCH, V/256,
NATIONAL HIGHWAY, PB NO.2,
ANGAMALY, ERNAKULAM DISTRICT.
BY ADVS.
SRI.A.S.P.KURUP
SRI.SADCHITH.P.KURUP
SRI.C.P.ANIL RAJ
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 21.01.2022, THE COURT ON 25.01.2022 DELIVERED
THE FOLLOWING:
W.P.(C) No.1433/22 -:2:-
BECHU KURIAN THOMAS, J.
-----------------------------------------
W.P.(C) No.1433 of 2022
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Dated this the 25th day of January, 2022
JUDGMENT
Petitioners are challenging proceedings initiated against them
under the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (for short, 'SARFAESI
Act'). Apart from challenging a notice for sale of the secured assets,
petitioners have also sought for a direction to consider the settlement
proposal submitted by them for clearing the outstanding liability.
2. A loan facility was availed by the petitioners in the year 2014
for conducting their business in Timber and the properties belonging
to the petitioners were mortgaged with the erstwhile Corporation
Bank, which later merged with the respondent. According to the
petitioners, though the repayment was regular until 2018, due to
default that occurred thereafter, proceedings were initiated by the
bank. Though several factual aspects have been narrated in the writ
petition, the same are not being reproduced, as the issue has now
boiled down to a sale notice dated 20.01.2022, which is assailed in
this writ petition.
3. Petitioners have also pleaded that on earlier occasions, they
had approached this Court by filing other writ petitions like W.P.(C)
No.9121/2019, W.P.(C) No.22927/2019, W.P.(C) No.23610/2019,
W.P.(C) No.29563/2019 and O.P.(DRT) No.197/2019 wherein this
Court had granted instalment facilities as well as orders not to
dispossess the petitioners or conditional orders. However, since the
petitioners could not fully comply with the conditions imposed by this
Court, the secured creditor initiated proceedings to dispossess the
petitioners. In W.P.(C) No.29563 of 2019 this Court directed the
petitioners to approach the Debts Recovery Tribunal (for short, 'the
DRT') on deposit of Rs.10,00,000/-. Thereafter, petitioners filed S.A.
No.364 of 2019 challenging the measures taken for physical
possession of the secured asset. The Tribunal directed the petitioner
to deposit Rs.20,00,000/-, as a condition for stay of dispossession.
The said order was challenged before this Court in O.P.(DRT)
No.197 of 2019. Ext.P1 is the interim order obtained by the first
petitioner wherein this Court after noticing that the outstanding
amount due from the petitioner was more than Rs.1,30,00,000/-,
granted one month's time to deposit Rs.10,00,000/-, out of the
amount ordered by the DRT in its interim order.
4. Petitioners further contended that, even though an amount
of Rs.11,00,000/- had been paid by them, based on interim orders
passed by this Court, they were served with Ext.P2 notice proposing
the sale of secured assets on 20.01.2022. Petitioners contended that
due to the surge in pandemic and various other illnesses afflicted on
the second petitioner, proceeding with measures under the
SARFAESI Act including the sale of the property, at this juncture,
would cause great prejudice to them. It was also averred that
proceeding to dispossess the petitioners at a time when an
application for a one-time settlement submitted by the petitioners on
10.01.2022 is pending consideration, also amounts to harassment.
Petitioners further pleaded that a total amount of more than Rs.1.50
crores had been paid by the petitioners from the commencement of
the loan, which if borne in mind, ought to enable a favourable
consideration of the one-time settlement proposal submitted. It is
also stated that sale notice produced as Ext.P2 itself is illegal since
there is a violation of rule 8 of the Security Interest (Enforcement)
Rules, 2002.
5. Though the sale was scheduled to 20.01.2022 as per
Ext.P2, this writ petition was filed only on 13.01.2022 and this Court
directed the learned counsel for the respondent to get instructions
and posted the matter to 20.01.2022. Upon instructions, respondent
submitted that there were no bidders for the sale.
6. Notwithstanding the absence of bidders, a statement was
filed by the respondent contending that the writ petition itself is not
maintainable and pointed out that petitioners have been approaching
this Court repeatedly, through several writ petitions, and the
conditions imposed on all those occasions were not complied with. It
was also pleaded that from 2019 onwards, petitioners had been
requesting a one-time settlement facility and when the respondent
offered such a facility, they failed to pay the amount due to the bank
for considering the grant of such a facility. According to the
respondents, other than attempting to delay the proceedings,
petitioners have no intention to clear any liability. It was also pointed
out that, the bank was amenable to consider a one-time settlement
facility, if the petitioners were willing to pay the amount equivalent to
20% of the outstanding loan amount before the date of sale. Despite
intimating the petitioners the above willingness by a letter, there was
no response from the petitioners. The respondent also pointed out
that even in respect of the order produced as Ext.P1, petitioners had
failed to comply with the conditions imposed in the said judgment
and hence the relief sought for by the petitioners against
dispossession, ought not to be considered by this Court.
7. Pursuant to the statement filed by the respondent, an
affidavit has been filed by the first petitioner stating that petitioners
have never tried to evade repayment and that due to absence of
functioning at the DRT, petitioners have no alternative other than to
approach this Court.
8. I have heard Smt. Liza P.Cherian, learned counsel for the
petitioners as well as Sri.A.S.P.Kurup and Sri.A.Sachith P. Kurup,
learned counsel for the respondent.
9. On a consideration of the pleadings and the submissions of
the learned counsel, this Court notices the several writ petitions filed
by the petitioners - a reference to them, will be fruitful in arriving at a
conclusion in the instant case.
10. Through W.P.(C) No.2038 of 2019 the second petitioner
herein, who was the proprietor of M/s.Uppoottil Timbers, along with
his son approached this Court for regularisation of the loan availed
by them from the corporate bank. By judgment dated 25.01.2019,
produced as Annexure R1A, the writ petition was permitted to be
withdrawn reserving liberty of the petitioners to approach the bank
with a request for one-time settlement and all proceedings were
directed to be based upon the decision to be taken by them on the
one-time settlement.
11. Almost a month thereafter, the petitioners approached this
Court again through W.P.(C) No.6042 of 2019 seeking directions
once again to consider the offer for one-time settlement. After
noticing the nature of the proposal submitted by the petitioners, this
Court by judgment dated 27.02.2019 directed the petitioners to
submit a proper proposal for one-time settlement, that too, on a
specific date mentioned in the judgment and directed the bank to
take a decision within one week of receipt of such a proposal. Yet
again, the petitioners invoked the jurisdiction of this Court through
W.P.(C) No.9121 of 2019 assailing the steps initiated by the bank
under the SARFAESI Act. On the basis of the offer made by the
respondent bank, this Court by judgment dated 26.03.2019 permitted
the petitioners to clear the entire outstanding liability of
Rs.1,65,73,473/- as on 06.03.2019 in 10 instalments commencing
from 20.04.2019. Though the aforementioned judgment specified
that the conditions imposed ought to be complied with meticulously
and that no further requests for extension or implementation will be
granted, the first petitioner herein filed W.P.(C) No.22927 of 2019
before this Court, seeking an opportunity for regularising the loan by
paying the overdue amount under the loan account. Noticing that the
principles of res judicata will apply in view of the earlier judgment of
this Court, the writ petition was closed by judgment dated
29.08.2019, reserving the liberty of the petitioner to approach the
bank with a proper representation.
12. Even thereafter, the petitioners moved this Court through
W.P.(C) No.23610 of 2019. Noticing that the attempt of the
petitioners was a virtual review of the judgment in W.P.(C) No.9121
of 2019, this Court permitted the said writ petition to be withdrawn,
reserving liberty of the petitioners to seek an extension of time or
review of the directions in W.P.(C) No.9121 of 2019, however,
directed the respondent bank not to dispossess the petitioners for a
period of two weeks. Taking a cue from the spirit of the judgment in
W.P.(C) No.23610 of 2019, a review petition was filed as R.P. No.869
of 2019 by the petitioners. By order dated 05.09.2019 the following
directions were issued:
"That said, the petitioner admits that he has paid only two
instalments out of the ten ordered by this Court and that three are
now in default, amounting to Rs.51 lakhs. I am, therefore, of the
view that if the petitioner pays Rs.51 lakhs along with the next five
instalments as per the judgment, he can be given offered such
indulgence, because the Bank also does not oppose it.
In the afore circumstances, I direct the petitioner to continue to pay
the 6th, 7th, 8th, 9th and 10th instalments as per the schedule fixed in
the judgment and to pay the defaulted amount of Rs.51 lakhs in
five instalments, each to be paid along with each of the afore
mentioned five instalments remaining as per the judgment."
13. Soon thereafter, the first petitioner's father filed another
writ petition as W.P.(C) No.29563 of 2019 wherein he sought
permission to withdraw the writ petition with liberty to approach the
DRT. The said permission was granted by judgment dated
12.11.2019. After the aforesaid judgment, the second petitioner filed
S.A. No.364 of 2019. In the application for stay against the
proceedings initiated by the bank, an order was passed by the DRT,
directing the petitioner to deposit Rs.20,00,000/- on or before
09.12.2019. Immediately thereafter, an original petition was filed as
O.P.(DRT) No.197 of 2019, challenging the direction to deposit
Rs.20,00,000/- and pleaded for granting further time for depositing
the amount directed by the DRT. After considering the contentions
raised, this Court by judgment dated 11.02.2020, in an attempt to
balance the interest of both sides, directed the petitioner to deposit
an amount of Rs.10,00,000/- on or before 31.12.2019 as an interim
measure.
14. It is after all the above events that Ext.P1 order came to be
issued by this Court in O.P.(DRT) No.197 of 2019. Though the
documents mentioned above have not been produced by the
petitioners in this writ petition, there are passing references to some
of the writ petitions and petitioners selectively choose to produce
only the order dated 11.02.2020 in O.P.(DRT) No.197 of 2019,
produced as Ext.P1.
15. A perusal of Ext.P1 reveals that the petitioners had failed
to deposit even the entire amount of Rs.10,00,000/- directed by this
Court in its order dated 10.12.2019 and had paid only Rs.6,00,000/-
by 31.12.2019 and pursuant to an extension of time granted by this
Court, they deposited the balance amount of Rs.4,00,000/- on
07.02.2020. However, taking note of the deposit of Rs.10,00,000/-
this Court granted one more month's time to deposit the amount of
Rs.10,00,000/- being the balance amount ordered by the DRT in S.A.
No.364 of 2019.
16. Learned counsel for the respondent had pointed out that
petitioners had failed to comply with the directions in Ext.P1 and in
such circumstances, the respondent had no alternative other than to
proceed with the sale of the secured assets.
17. The reference, in detail, to the various judgments of this
Court mentioned above, have been done to show that this Court had
been repeatedly showing indulgence to the petitioners in granting
time to repay the amount. In spite of such indulgence, the petitioners
failed to abide by the conditions of deposit as ordered. In such
circumstances, this Court is of the view that the steps initiated by the
respondent bank for bringing the secured assets for sale is justified
and does not warrant any interference. The petitioners' attempt to
exploit the repeated leniency shown by this Court cannot deprive the
respondent bank of their statutory entitlement to proceed in exercise
of the powers under the SARFAESI Act. This Court as well as the
Supreme Court have repeatedly held that the jurisdiction to interfere
under Article 226 of the Constitution of India against steps initiated
by the secured creditor to enforce the security interest should be
minimal. (See the decisions in ICICI Bank Ltd. and Others v.
Umakanta Mohapatra and Others [(2019) 13 SCC 497] and
Authorized Officer, State Bank of Travancore and Another v.
Mathew K.C [(2018) 3 SCC 85)].
18. Even considering the minimal scope of interference
possible, especially brought about on account of the non-functioning
of the DRT, this Court finds it difficult to show further leniency to the
petitioners. A time has come, in this case, to put an end to such
unwarranted leniency being shown to the petitioners, which no doubt
has been causing great prejudice to the respondent, as submitted by
the counsel for the respondents. Neither have the petitioners been
able to show any merit in the writ petition, nor have they been able to
convince the existence of any circumstance that warrants a further
leniency to be shown to them.
19. Apart from the above, this Court notices that the petitioners
have failed to mention the filing of W.P.(C) No.2038 of 2019 as well
as W.P.(C) No.6042 of 2019, which all warrants dismissal of the writ
petition.
20. The contention raised by the petitioners on the basis of
violation of rules 8(5), 8(6) and 8(7) of the Security Interest
(Enforcement) Rules, 2002 is also without any basis. Learned
counsel for the petitioners could not point out any specific nature of
violation. The vague averment in the writ petition that there is a
violation of the said rules is insufficient to interfere with the sale
notice. In the above view, this writ petition lacks merit and is liable to
be dismissed.
21. However, the learned counsel for the respondent, even
after all what has transpired, upon instructions from the respondent,
submitted that, they are once again willing to consider the grant of a
one time settlement, provided, petitioners abide by the condition of
depositing 20% of the outstanding amount due as on today. The
learned counsel for the respondent submitted that the total amount
due as on date is Rs.1,52,82,153/- and that if the petitioners deposit
Rs.30,00,000/- (Rupees Thirty lakhs only) within 10 days from today,
and submit a fresh proposal for one time settlement, the respondent
bank will consider the proposal with all earnestness in a time bound
manner.
22. Even though going by the sequence of events mentioned
earlier, this Court is not inclined to show any further leniency, having
regard to the offer made by the respondent that they are willing to
consider the grant of one-time settlement, an opportunity can be
granted to the petitioners. Accordingly, the respondent bank shall
consider the grant of one time settlement facility to the petitioners, if
an amount of Rs.30,00,000/- (Rupees Thirty lakhs only) is deposited
by the petitioners on or before 07.02.2022 along with a proposal for a
feasible one time settlement. If such a proposal is submitted along
with the payment, the same shall be considered by the respondent
bank within a period of 15 days thereafter. If the application is not
submitted as directed above, the respondent shall be free to proceed
with appropriate steps under the SARFAESI Act.
23. To enable compliance with the conditions stipulated above,
coercive proceedings against the petitioners will be kept in abeyance
until a decision is taken on the proposal to be submitted. However, if
the petitioners fail to abide by the stipulations mentioned earlier, the
respondents shall be free to proceed in accordance with law.
The writ petition is dismissed subject to the above
observations.
Sd/-
BECHU KURIAN THOMAS
JUDGE
vps
APPENDIX OF WP(C) 1433/2022
PETITIONER'S/S' EXHIBITS
EXHIBIT P1 THE TRUE COPY OF THE INTERIM ORDER IN
OPDRT 197/2019.
EXHIBIT P2 THE TRUE COPY OF THE SALE NOTICE DATED
20.12.2022.
EXHIBIT P3 THE TRUE COPY OF THE ATTACHMENT ORDER
FROM DRT I.
EXHIBIT P4 THE TRUE COPY OF THE OTS ISSUED BY THE
RESPONDENT ON 4.3.2021.
EXHIBIT P5 THE TRUE COPY OF THE REPRESENTATION
ISSUED BY THE PETITIONER DATED
10.1.2022.
EXHIBIT P6 THE TRUE COPY OF PAYMENT PROOF OF 54
LAKHS.
EXHIBIT P7 THE TRUE COPY OF THE AFFIDAVIT AND MC
392/2018.
EXHIBIT P8 THE TRUE COPY OF THE JUDGMENT IN WRIT
APPEAL 999/2018.
EXHIBIT P9 THE TRUE COPY OF THE INTERIM REPORT
FILED BY THE ADVOCATE COMMISSIONER DATED
12/01/2022.
EXHIBIT P10 THE TRUE COPY OF DD NO.005963 TAKEN IN
THE NAME OF RESPONDENT BANK DATED
19/01/2022.
EXHIBIT P11 THE TRUE COPY OF THE STATEMENT FILED BY
THE RESPONDENT BANK IN WPC 27241/2021
EXHIBIT P12 THE TRUE COPY OF THE OTS DATED
22/11/2021 FOR AN AMOUNT OF 98 LAKHS
ISSUED BY THE PETITIONER
EXHIBIT P13 TRUE COPY OF OTS DATED 11/12/2021 FOR AN
AMOUNT OF RS.1CRORE
RESPONDENT'S/S' EXHIBITS
ANNEXURE R1A THE TRUE COPY OF JUDGMENT DATED
25.1.2019 IN WPC 2038/2019
ANNEXURE R1B THE TRUE COPY OF JUDGMENT DATED
27.2.2019 IN WPC 6042/2019
ANNEXURE R1C THE TRUE COPY OF JUDGMENT DATED
26.3.2019 IN WPC 9121/2019
ANNEXURE R1D THE TRUE COPY OF JUDGMENT DATED
29.8.2019 IN WPC 22297/2019
ANNEXURE R1E THE TRUE COPY OF JUDGMENT DATED
30.8.2019 IN WPC 23610/2019
ANNEXURE R1F THE TRUE COPY OF JUDGMENT DATED 5.1.2019
IN RP 869/2019
ANNEXURE R1G THE TRUE COPY OF JUDGMENT DATED
12.11.2019 IN WPC 29563/2019
ANNEXURE R1H TRUE COPY OF THE LETTER DATED 6.12.2021
ISSUED TO THE PETITIONER
