Kerala High Court
State Bank Of India vs Stephen Bernard on 25 January, 2022
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE V.G.ARUN
TUESDAY, THE 25TH DAY OF JANUARY 2022 / 5TH MAGHA, 1943
WP(C) NO. 179 OF 2022
PETITIONER/S:
STATE BANK OF INDIA
STRESSED ASSET RECOVERY BRANCH
LMS COMPOUND, NEAR VIKAS BHAVAN,
THIRUVANANTHAPURAM-695033,
REPRESENTED BY ITS CHIEF MANAGER.
BY ADV S.EASWARAN
RESPONDENT/S:
1. 1 STEPHEN BERNARD
AGED 70 YEARS,
M/S.STEPHEN BERNARD CONSTRUCTION COMPANY
ROBIN DALE, PADINJARE KADAVIL,
VELLIMON P.O, KOLLAM DISTRICT - 6915117.
X
2 DEBT RECOVERY TRIBUNAL-1,
KSHB BUILDINGS,
PANAMPILLY NAGAR,
ERNAKULAM, REPRESENTED BY
ITS REGISTRAR.
BY ADVS.
LIJU.V.STEPHEN
INDU SUSAN JACOB
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
21.01.2022, THE COURT ON 25.01.2022 DELIVERED THE FOLLOWING:
W.P.(C) No.179 of 2022
-2-
JUDGMENT
Dated this the 25th day of January, 2022
The first respondent along with his wife,
availed credit facilities from the erstwhile
State Bank of Travancore and committed default.
The Bank initiated securitization proceedings in
the year 2016. While so, SBT merged with the
SBI and hence, petitioner Bank continued the
proceedings and took measures for getting
physical possession of the secured assets.
Challenging the proceedings under Section 14 of
the SARFAESI Act, the first respondent filed SA
No.268 of 2017 before the Debts Recovery
Tribunal. The application was dismissed by the
DRT on 10.04.2018. Thereupon, the first
respondent challenged that order before the Debts
Recovery Appellate Tribunal in AIR (SA) 268 of
2018, which got rejected on 30.08.2018.
Thereafter, the secured assets were notified for
W.P.(C) No.179 of 2022
sale. The first respondent challenged those
proceedings in W.P.(C) No.919 of 2020. That writ
petition having been dismissed, he filed
W.A.No.503 of 2020. The writ appeal was also
dismissed vide Ext.P5 judgment dated 11.03.2020.
Undeterred, the first respondent preferred
Special Leave Petition, which the Supreme Court
refused to entertain. While dismissing the SLP
under Ext.P6 order dated 06.12.2021, the Apex
Court observed that it will be open for the first
respondent to approach the DRT against the action
of the petitioner Bank as and when such
proceedings are initiated and the same shall be
considered in accordance with law and on its own
merits.
2. Meanwhile, the petitioner proclaimed
the secured assets for sale by notice dated
11.10.2021, fixing the date of sale as
09.11.2021. The notice of sale and further
proceedings was challenged unsuccessfully and
W.P.(C) No.179 of 2022
repelled by Ext.P4 judgment. The auction sale
was conducted on 09.11.2021 and some properties
were sold for a total consideration of
Rs.97,75,000/-. Thereafter, the petitioner Bank
issued sale notice dated 7.12.2021 scheduling
sale of the balance two properties on 29.12.2021.
The first respondent challenged Ext.P12 notice
and further proceedings before the DRT in
S.A.No.355 of 2021. By the impugned order dated
28.12.2021, the DRT interdicted confirmation of
the sale if any conducted, subject to the
applicant depositing a sum of Rs.1.50 Crores to
the petitioner Bank, out of which a sum of Rs.75
lakhs is to be paid on or before 25.01.2022 and
another Rs.75,00,000/- on or before 22.02.2022.
The petitioner was given the liberty to confirm
the auction sale, if the applicant failed to
deposit any part of the sum as ordered. This writ
petition is filed by the Bank aggrieved by
Ext.P13 order.
W.P.(C) No.179 of 2022
2. Sri.S.Easwaran, learned Counsel for the
petitioner Bank submitted that the Bank is
constrained to approach this Court under Article
226, since the Debts Recovery Appellate Tribunal,
Chennai, which is the Appellate Forum, is not
functioning. Reference is made to the order of
the Honourable Supreme Court in SLP No.10911 of
2021, requesting the concerned High Courts to
entertain matters falling within the jurisdiction
of non-functional DRTs and DRATs till further
orders. It is contended that the DRT committed
gross illegality in issuing the interim order in
a mechanical manner, without considering either
the merits of the challenge or even the previous
judgments of this Court and order of the Apex
Court. The petitioner took over physical
possession of the property, after the borrower's
challenge against the proceedings under Section
14 of the SARFAESI Act was repelled. Hence, the
petitioner is entitled to realise the secured
W.P.(C) No.179 of 2022
debt by bringing the property to sale following
the procedure prescribed under the Security
Interest (Enforcement) Rules, 2002. The first
respondent was unsuccessful in his challenge
against the sale notice dated 11.10.2021 and the
sale was held on 09.11.2021. Some of the
properties were sold in the auction. The impugned
notice dated 07.12.2021 is issued for bringing
the balance properties to sale. The first
respondent has not challenged the sale of the
properties in the auction held on 09.11.2021 and
no legally sustainable ground is raised in the
Securitization Application for interfering with
sale of the balance properties. The challenge
against the earlier proceedings for sale has
attained finality by Ext.P6 order dismissing the
Special Leave Petition. Even though the Apex
Court granted liberty to the first respondent to
approach the DRT against action of the petitioner
Bank, it is specifically directed that the matter
W.P.(C) No.179 of 2022
should be considered in accordance with law and
on merits. Contrary to the direction, the DRT
passed Ext.P13 order without going to the merits
of the case. Finally it is submitted that no
concession, as observed in the impugned order,
was made by the Bank's Counsel. As on 07.12.2021,
an amount of Rs.5,89,88,482/- was due to the Bank
and the DRT should not have interfered with the
sale by directing deposit of Rs.1.5 Crores.
3. Sri.Liju V.Stephen, learned Counsel
appearing for the first respondent submitted that
the action of the Bank is ill-motivated. The
attempt is to wreak vengeance against the first
respondent for approaching the Insurance
Ombudsman and securing an award containing
scathing remarks against the bank officials.
According to the learned Counsel, the amount
claimed is highly exaggerated and the attempt of
the Bank is to sell valuable immovable properties
to persons of their choice for paltry amounts.
W.P.(C) No.179 of 2022
Reliance is placed on the observations in Ext.P6
order of the Apex Court to contend that the first
respondent has been given the liberty to agitate
all issues before the DRT. The first respondent
having done so, the Tribunal was fully justified
in passing the interim order. Moreover, the
Bank's interest having been safeguarded by the
direction to pay portion of the debt, the writ
petition is liable to be dismissed.
4. Indisputably, the borrowers were not
successful in their challenge against the
earlier proceedings under Section 14 of the
SARFAESI Act. Even as against the present sale
notice, the first respondent had preferred a writ
petition (W.P.(C) No.24016 of 2021) before this
Court, which stands dismissed by Ext.P4 judgment.
The sale was conducted thereafter and some of
the properties sold. As rightly contended by the
learned Counsel for the petitioner, the first
respondent has not challenged that sale. The
W.P.(C) No.179 of 2022
notice dated 07.12.2021 was issued for bringing
the balance properties to sale. Section 17 (1) of
the SARFAESI Act enables the borrower to
challenge the proceedings initiated under Section
13(4) and sub-section (2) of Section 17 empowers
the DRT to consider whether any of the measures
referred to in sub-section (4) of Section 13
taken by the secured creditor for enforcement of
the security are in accordance with the
provisions of the Act and the Rules made
thereunder. In Ext.P6 order, while reserving the
first respondent's liberty to approach the DRT
against the action of the Bank, the Apex Court
directed the DRT to consider the challenge in
accordance with law and on its own merits.
Therefore, the DRT was bound to consider the
challenge raised in Ext.P12 securitisation
application in the manner provided in Section
17(2) of the Act. No doubt, if, on such
consideration, the DRT finds a prima facie case
W.P.(C) No.179 of 2022
to have made out, it has the inherent
jurisdiction to pass an interim order. As far as
the instant case is concerned, the Tribunal
passed the order without even going into the
merits of the case. Curiously, no reference is
made to Ext.P6 order of the Apex Court and no
mention is made regarding the judgments of this
Court and the order of the DRAT. In my considered
opinion, the Tribunal was bound to consider the
contentions on merits and to have reached a prima
facie satisfaction about the merits of the
challenge, before passing the interim order. No
such exercise having been undertaken by the
Tribunal, I am compelled to set aside the
impugned order.
In the result, the writ petition is allowed.
Ext.P13 order is set aside. The Debts Recovery
Tribunal is directed to take up S.A.No.355 of
2021 and pass a reasoned order thereon, after
affording an opportunity of hearing to the
W.P.(C) No.179 of 2022
parties, preferably within two weeks of receipt
of a copy of this judgment. Needless to say,
confirmation of the sale conducted pursuant to
the notice dated 7.12.2021 will be subject to the
outcome of S.A.No.355 of 2021.
sd/-
V.G.ARUN
JUDGE
Scl/
W.P.(C) No.179 of 2022
APPENDIX
PETITIONER'S EXHIBITS
P1: TRUE JUDGMENT DATED 29.05.2018 IN WP 17127 OF 2018 ON
THE FILES OF THIS HONOURABLE COURT.
P2: TRUE COPY OF THE JUDGMENT DATED 19.6.20218 IN WA 1151
OF 2018 ON THE FILED OF THIS HON'BLE COURT.
P3: TRUE COPY OF THE JUDGMENT DATED 31.3.2021 IN OP(DRT)
29 OF 2021 ON THE FILES OF THIS HONOURABLE COURT.
P4: TRUE COPY OF THE JUDGMENT DATED 8.11.2021 IN WP 24016
OF 2021 ON THE FILES OF THIS HONOURABLE COURT.
P5: TRUE COPY OF THE JUDGMENT DATED 11.3.2020 IN WRIT
APPEAL NO.503 OF 2020 RENDERED BY THE DIVISION BENCH OF
THIS HONOURABLE COURT.
P6: TRUE COPY OF THE ORDER OF THE HONOURABLE SUPREME
COURT OF INDIA IN SLP 19036 OF 2021.
P7: TRUE COPY OF THE SALE NOTICE DATED 7.12.2021.
P8: TRUE COPY OF THE ACKNOWLEDGMENT CARD SIGNED BY THE
1ST RESPONDENT EVIDENCING THE RECEIPT OF SALE NOTICE.
P9: TRUE COPY OF THE PHOTOGRAPH EVIDENCING THE AFFIXTURE
OF SALE NOTICE.
W.P.(C) No.179 of 2022
P10: TRUE COPY OF THE PAPER PUBLICATION DATED 09.12.2021
OF SALE NOTICE IN THE HINDU ENGLISH DAILY NEWSPAPER.
P11: TRUE COPY OF PAPER PUBLICATION DATED 09.12.2021 OF
THE SALE NOTICE IN KERALA KAUMUDI MALAYALAM DAILY
NEWSPAPER.
P12: TRUE COPY OF THE SA NO.355 OF 2021 FILED BY THE 1ST
RESPONDENT ON THE FILES OF DEBT RECOVERY TRIBUNAL.
P13: TRUE COPY OF THE INTERIM ORDER DATED 28.12.2021 IN
SA NO.355 OF 2021 ON THE FILES OF DEBT RECOVERY TRIBUNAL,
ERNAKULAM.
P14: TRUE COPY OF THE ORDER DATED 16.12.2021 IN SLP
NO.19011 OF 2021 PASSED BY THE HONOURABLE SUPREME COURT
OF INDIA.
