Madras High Court
M/S. Capro Connections vs Canara Bank on 10 February, 2021
Rev.P.Nos.2 to 5 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 10.02.2021
CORAM :
THE HON'BLE MR.SANJIB BANERJEE, CHIEF JUSTICE
AND
THE HON'BLE MR.JUSTICE SENTHILKUMAR RAMAMOORTHY
Review Petition Nos.2 to 5 of 2020
M/s. Capro Connections
rep. by its Proprietor
Philip S.Sakthivel
No.1220, 20th Main Road
Anna Nagar West Petitioner-1 in
Chennai 600 040. ... Rev.A.Nos.2 & 3/21
Philip S.Sakthivel ... Petitioner-2 in
Rev.A.Nos.2 & 3/21 &
Petitioner-1 in
Rev.A.Nos.4 & 5/21
Hepshiba ... Petitioner-3 in
Rev.A.Nos.2 & 3/21 &
Petitioner-2 in
Rev.A.Nos.4 & 5/21
Vs.
Central Bank of India
Asset Recovery Management Branch
rep. by its Authorised Officer
No.48/49, Montieth Road
Egmore, Chennai 600 008.
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Rev.P.Nos.2 to 5 of 2020
Canara Bank
Asset Recovery Branch
rep. by its Authorised Officer
New No.524, Anna Salai
Teynampet, Chennai 600 018
Also at Respondents 1 & 2 in
Spencer Tower-II Rev.A.Nos.2 to 4/21 &
First Floor, 770A, Anna Salai Respondents 2 & 3 in
Chennai 600 002. ... Rev.A.No.5/21
R.S.Perumal ... Respondent-3 in
Rev.A.Nos.3 & 4/21 &
Respondent-1 in
Rev.A.No.5/21
Prayer: Application under Order XLVII, Rule 1, read with Section 114
of Civil Procedure Code, to review the common order dated
05.07.2019 made in CRP (NDP) Nos.4500, 4499 of 2014, 3518 & 3517
of 2017.
For Petitioners : Mr.P.H.Arvindh Pandian, S.C.
For Mr.C.V.Shailandhran
For Respondents : Mr.S.Sethuraman
for R1 in Rev.A.Nos.2 to 4/20
& for R2 in Rev.A.No.5/20
Mr.R.Umasuthan
for R2 in Rev.A.Nos.2 to 4/20
& R3 in Rev.A.No.5/20
ORDER
(Made by the Hon'ble Chief Justice)
The only questions that fall for consideration are whether the
review petitioners had challenged two sale notices and whether the
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review petitioners had remained mute spectators while two sets of
secured creditors fought over the property that the review petitioners
now seek to retrieve.
2. These questions arise out of paragraph 28 of the judgment
and order under review dated July 5, 2019 which is quoted below:
"28. From the above facts, it is clear that the
petitioners have not challenged both the sale notices,
dated 28.08.2009 and 26.11.2010 and they became
final. The petitioners have remained as mute
spectators for the entire proceedings and only after
issuance of sale certificate, the petitioners filed
S.A.No.5 of 2015, before the DRT-I, to set aside the
same."
3. The review petitioners claim that the sale notices of August
28, 2009 and November 26, 2010 were duly challenged and the Court
erred in not discovering the petitioners' challenge thereto. The review
petitioners also assert that since they had challenged the steps taken
by the two concerned banks, they could not have been "mute
spectators" as referred to in the operative part of the impugned order.
To boot, the review petitioners contend that there is error writ large on
the face of the order impugned since the petitioners had both
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Rev.P.Nos.2 to 5 of 2020
challenged the sale notices and had taken appropriate steps to protect
their interest pertaining to the relevant property.
4. It appears that the writ petitioners had obtained credit
facilities from, inter alia, the two banks which are arrayed as
respondents herein. Some of the orders which need not be specifically
referred to noticed the credit facilities to be in excess of Rs.14 Crore.
The petitioners seek to make a distinction between the credit facilities
for which the property, which is the subject-matter of the present
proceedings, had been mortgaged and the other credit facilities that
were obtained. It is the further case of the review petitioners that the
subject property had been mortgaged with Central Bank and no charge
in respect thereof had been created in favour of Canara Bank.
5. Canara Bank appears to have proceeded against the relevant
property which prompted Central Bank to carry a petition before the
relevant Debts Recovery Tribunal seeking a relief in the nature of a
declaration that it was Central Bank which was entitled to the entirety
of the property and Canara Bank enjoyed not even an inferior charge.
The review petitioners may have attempted to be impleaded in the
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tussle between Central Bank and Canara Bank over the relevant
property, but ultimately carried a petition under Article 227 of the
Constitution against an order of June 24, 2014 passed in S.A.No.210 of
2009 and SA SR No.5775 of 2011. The review petitioners succeeded
and the order dated June 24, 2014 was set aside by this Court by its
order of September 11, 2014.
6. The sixth and final paragraph of such order of September 11,
2014 is quoted:
"6. Accordingly, both the Civil Revision
Petitions are allowed. The impugned order dated
24.6.2014 passed in S.A.No.210 of 2009 and also in
S.A.SR.No.5775 of 2011, for hearing on 22.9.2014
and pass appropriate orders, on merits and in
accordance with law, within a period of three weeks
therefrom. Since we have set aside the impugned
order only on the ground that the petitioners herein
were not heard before the Tribunal, we are not
expressing anything on the merits of the case. The
connected miscellaneous petitions are closed. No
costs."
7. Pursuant to the leave granted to the petitioners herein by the
order of September 11, 2014, the review petitioners herein applied
before the relevant Debts Recovery Tribunal and had, professed, to be
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Rev.P.Nos.2 to 5 of 2020
impleaded in view of the observations made by this Court. In course of
the adjudication of Central Bank's grievance against Canara Bank, the
Debts Recovery Tribunal recorded inter alia as follows in an order of
October 31, 2014:
"4.5 The Respondents 3 to 4 reiterates that
there was no security interest in favour of the 1st
Respondent Bank. Apart from that, the 1st
Respondent Bank has violated mandatory provisions
of security interest Rules and the process of sale is a
collusive one between the 1st Respondent Bank and
purchaser amounting to be fraud on the mortgagors.
Under the circumstances, these Respondents prayed
this Tribunal to pass appropriate orders, including
setting aside of sale of the property conducted on
30.12.2010."
8. The review petitioners also referred to an earlier order
passed by the Debts Recovery Tribunal in S.A.No.5 of 2015 on
February 4, 2015 that was filed by the review petitioners or some of
them. By such order, a total amount of Rs.1.67 Crore was directed to
be deposited by the review petitioners with the Central Bank.
9. According to the review petitioners, the relevant property was
valued at Rs.1.67 Crore. The review petitioners claimed to have
deposited Rs.1.67 Crore by or about the end of 2015 and made a
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Rev.P.Nos.2 to 5 of 2020
further deposit of an amount of Rs.40 Lakh subsequent thereto. The
review petitioners claim that since an amount in excess of Rs.2 Crore
has been deposited with the Central Bank, the property which was
valued at Rs.1.67 Crore ought to be released in their favour at the
mortgage discharged.
10. For the completeness of the narrative, it must be recorded
that Canara Bank has, in the meanwhile, auctioned the property in
favour of the first respondent herein. There is also no dispute that the
first respondent has deposited the entire consideration and awaits the
outcome of the present proceedings to taste the fruits of its payment.
An interim order in the present proceedings stands between the
auction purchaser and the relevant property.
11. On the basis of the material referred to above, the review
petitioners assert that this Court committed an error evident from the
face of the order impuged dated July 5, 2019 that warrants correction
at this level in course of the present review. To repeat, the two errors
are the observation in the 28th paragraph of the order impugned that
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the two sale notices were not challenged by the review petitioners
herein and the further recording in the same paragraph that the review
petitioners had remained mute spectators.
12. The petitioners herein have not been able to demonstrate
that the petitioners had, indeed, challenged the sale notices dated
August 28, 2009 and November 26, 2010. It is possible that the
review petitioners may have carried loudspeakers to nearest rooftops
to decry the sale notices, but there was no legitimate challenge before
an appropriate forum as may be regarded as a valid challenge. There
is no dispute that the first order passed on September 11, 2014 on the
initial revision petition permitted the present petitioners to have a say
in the proceedings brought by Central Bank against Canara Bank.
However, such order has to be seen in the context of the present
petitioners assertion that the property involved in the lis was one that
was owned by the petitioners and had been mortgaged to one or the
other of the two banks. The scope of the lis before the Debts Recovery
Tribunal was whether Canara Bank was entitled to proceed against the
relevant property in the wake of Central Bank's assertion that the
immovable property had been exclusively charged and mortgaged in
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favour of Central Bank. Notwithstanding the leave granted by this
Court for the petitioners to be impleaded in the action, the scope of
the lis could not have been enlarged by such order, nor could the
Debts Recovery Tribunal have travelled beyond the prayers made by
Central Bank before it to get into the validity or otherwise of the sale
notices issued by Canara Bank. It is for such reason that the two
Banks reached a compromise and, ultimately, it was Canara Bank
which went on to sell the property.
13. Even in the proceedings in which the order dated February 4,
2015 came to be made, the petitioners herein cannot demonstrate that
they had questioned the permissibility or the validity of the two sale
notices dated August 28, 2009 and November 26, 2010. In the
circumstances, the first ground of challenge on the ground that there
is error apparent in the face of the order impugned dated July 5, 2019
is exceptionable and does not hold any water.
14. The other ground is whether the Court was justified in
perceiving the present petitioners to have remained mute spectators,
while the secured creditors took steps to sell the relevant asset. Apart
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from the fact that a review petition cannot be founded on certain
words which are erratically used in a judicial order, the relevant words
in this case are sufficiently justified by the conduct of the petitioners
herein. As to whether the petitioners were spectators or not and as to
whether the petitioners even as spectators were mute or not, had to
be assessed in the context of the challenges carried by the petitioners
to the steps taken by the secured creditors against the relevant
property. If the sale notices issued by Canara Bank - which ultimately
went through - remained unchallenged, it follows from the earlier
sentence in the relevant paragraph of the order impugned that the
petitioners remained mute spectators to the proceedings. Not only is
there no mistake, whether on the face of the order or otherwise, in the
observations and findings rendered in paragraph 28 of the order
impugned dated July 5, 2019, it is evident that the petitioners herein
had deliberately designed a wild goose chase to obtain the interim
benefit that the petitioners enjoyed to keep the banks and the auction
purchaser at bay.
There is no merit in the review petitions and Review Petition
Nos.2 to 5 of 2020 are dismissed. Consequently, CMP Nos.111 and
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115 of 2020 are closed. All the review petitioners collectively should
pay token costs assessed at Rs.10,000/- to the auction-purchaser.
(S.B., CJ.) (S.K.R., J.)
10.02.2021
Index : Yes
kpl
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Rev.P.Nos.2 to 5 of 2020
THE HON'BLE CHIEF JUSTICE
AND
SENTHILKUMAR RAMAMOORTHY, J.
(kpl)
Rev.Appln.Nos.2 to 5 of 2020
10.02.2021
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