Smt. Vemula Vyjanthi And 1 vs The Authorised Officer
2021 Latest Caselaw 3301 Tel

IN THE HIGH COURT FOR THE STATE OF TELANGANA, HYDERABAD
                          ****

W.P.No.14020 of 2019

Between:

Smt. Vemula Jayanthi & Another Petitioners VERSUS The Authorised Officer, State Bank of India, Nizamabad Main Branch, Nizamabad & Another.

Respondents

JUDGMENT PRONOUNCED ON: 09.11.2021

HON'BLE SRI JUSTICE UJJAL BHUYAN AND HON'BLE DR.JUSTICE CHILLAKUR SUMALATHA

1. Whether Reporters of Local newspapers may be allowed to see the Judgments? : Yes

2. Whether the copies of judgment may be Marked to Law Reporters/Journals? : Yes

3. Whether His Lordship wishes to see the fair copy of the Judgment? : Yes

____________________ UJJAL BHUYAN, J

* HON'BLE SRI JUSTICE UJJAL BHUYAN AND HON'BLE DR.JUSTICE CHILLAKUR SUMALATHA

+ W.P.No.14020 of 2019

% 09.11.2021

# Between:

Smt. Vemula Jayanthi & Another Petitioners VERSUS The Authorised Officer, State Bank of India, Nizamabad Main Branch, Nizamabad & Another.

Respondents

! Counsel for Petitioners : Sri G.K. Deshpande

^ Counsel for the respondents : M/s. Podila Hari Prasad

<GIST:

> HEAD NOTE:

? Cases referred

2018 (4) ALD 322 (DB)

(2009) 8 SCC 366

(1998) 8 SCC 1

THE HON'BLE SRI JUSTICE UJJAL BHUYAN AND THE HON'BLE DR. JUSTICE CHILLAKUR SUMALATHA

W.P.No.14020 OF 2019

Order:

(Per Hon'ble Sri Justice Ujjal Bhuyan)

By filing this writ petition under Article 226 of the Constitution

of India, petitioners seek quashing of order dated 09.01.2019 passed

by the Debts Recovery Tribunal - I, Hyderabad, in S.A.No.190 of 2016

and consequently to allow the said securitization application of the

petitioners.

2 Petitioners are mother and son respectively. Petitioner No.1 is

the wife of late Rajeshwar Reddy, whereas petitioner No.2 is the son of

late Rajeshwar Reddy.

3 From the materials on record, it appears that State Bank of

India, Nizamabad Main Branch, Nizamabad, had sanctioned loan of

Rs.25,92,500-00 to the petitioners against security provided by the

petitioners by way of equitable mortgage over the schedule property. It

further appears that petitioners defaulted in repayment of loan on

account of various reasons for which petitioners requested respondent

State Bank of India for settlement of the liabilities under one time

settlement (OTS) scheme. During the course of negotiations

respondent Bank had issued notice to the petitioners for

regularization of the loan account, pursuant to which petitioners had

paid certain amounts on five different occasions towards

regularization of the loan account. Notwithstanding the same,

respondent State Bank of India had quantified the total dues of the

petitioners at Rs.44,75,000-00. Without following the due procedure,

respondent State Bank of India forcibly took physical possession of

the schedule property on 19.4.2016 whereafter e-auction sale notice

was published in the newspapers on 04.5.2016 for auction sale of the

schedule property.

4 Petitioners challenged the legality and validity of the e-auction

sale notice dated 04.5.2016 before the Debts Recovery Tribunal-I at

Hyderabad (briefly, 'the Tribunal' hereinafter) by filing a securitisation

application under Section 17 (1) of the Securitisation and

Reconstruction of Financial Assets and Enforcement of Security

Interest Act, 2002 (briefly referred to hereinafter as 'SARFAESI Act'),

which was registered as S.A.No.190 of 2016. It appears that

petitioners had filed an interlocutory application before the Tribunal

for stay of the auction sale proceedings. Tribunal, by order dated

09.6.2016, took the view that there was no merit in the application for

stay. Accordingly respondent State Bank of India was granted liberty

to go ahead with the sale, but it was clarified that the sale would be

subject to final outcome of the proceedings in S.A.No.190 of 2016.

5 Following the aforesaid order of the Tribunal dated 09.6.2016,

respondent State Bank of India obtained fresh valuation of the

schedule property on 23.01.2017 and issued notice dated 10.5.2017

under Rule 8 (6) of the Security Interest (Enforcement) Rules, 2002

(briefly, the 'SARFAESI Rules' hereinafter) fixing auction sale on

12.6.2017. It is stated that in the auction sale, respondent No.2 was

the highest bidder for Rs.48,00,000-00, which bid was accepted;

accordingly sale certificate was issued on 22.6.2017.

6 At that stage, petitioners preferred a writ petition before this

Court assailing the sale e-auction, which was registered as Writ

Petition No.35574 of 2017. By the order dated 06.11.2017, this Court

observed that S.A.No.190 of 2016 was pending before the Tribunal for

consideration, with the Tribunal permitting the respondent State

Bank of India to go ahead with the auction sale but making the same

subject to final outcome of the proceedings. In such circumstances,

this Court took the view that petitioners should prosecute the pending

S.A.No.190 of 2016 before the Tribunal and that no case was made

out for interference at that stage. Consequently the writ petition was

dismissed as being devoid of merit.

7 Thereafter petitioners proceeded with the securitisation

application, which was heard and decided by the Tribunal, vide, the

impugned order dated 09.01.2019. As per the impugned order,

Tribunal dismissed the securitisation application filed by the

petitioners.

8 Contending that the procedure prescribed under Rule 8(6) and

Rule 9(1) of the SARFAESI Rules r/w Section 13 (8) of the SARFAESI

Act were violated by the respondent State Bank of India which vitiated

the auction sale notice, petitioners have filed the present writ petition

challenging the aforesaid order of the Tribunal dated 09.01.2019.

9 Respondent No.1 i.e. State Bank of India has filed counter

affidavit. Stand taken in the counter affidavit is that the writ petition

should not be entertained in view of the fact that petitioners have

adequate and efficacious alternative remedy in the form of filing

appeal under Section 18 of the SARFAESI Act. Since the petitioners

have not availed the remedy of appeal, the writ petition should not be

entertained.

10 On merits it is contended that principle of Rule 9(1) of the

SARFAESI Rules is applicable in the instant case as the present

auction notice dated 10.5.2017 was a subsequent notice to earlier e-

auction sale notice dated 08.5.2016 which did not materialize in

auction. Referring to the proviso to Rule 9(1) it is contended that if

sale of immovable property by any one of the methods specified by

sub-rule (5) of Rule 8 fails and the sale is required to be conducted

again, then notice of sale has to be given with 15 days time to the

borrower for the subsequent sale. In the instant case respondent

State Bank of India had published e-auction notice dated 10.5.2017

in two leading newspapers of the State on 12.5.2017 fixing auction

sale on 12.6.2017 which shows that the auction was conducted 31

days after publication of auction sale notice, though under the law

only 15 days notice for subsequent sale was adequate. In the

circumstances respondent State Bank of India seeks dismissal of the

writ petition.

11 Respondent No.2 i.e. auction purchaser has also filed counter

affidavit. In addition to the contentions already made by respondent

No.1 to oppose the writ petition, respondent No.2 has stated that the

writ petition was filed after inordinate delay raising technical pleas.

Respondent No.2 is a bona fide purchaser having paid the total sale

consideration following the auction sale. Writ petition should,

therefore, be dismissed.

12 Learned counsel for the petitioners submits that the sale notice

dated 10.5.2017 was issued under Rule 8(6) of the SARFAESI Rules,

calling upon the petitioners to discharge the liabilities in full within

30 days of the notice. But on the same day e-auction sale notice was

issued fixing date / time of e-auction on 12.6.2017 from 2.00 PM to

3.00 PM. This he contends has jeopardized the rights of the

petitioners for redemption of the schedule property by discharging the

liability. According to him, the e-auction sale notice could not have

been issued till completion of 30 days period provided under the sale

notice. In support of his contention, learned counsel for the

petitioners has placed reliance on a Division Bench judgment of this

Court in M/s. Venshiv Pharma Chem (P) Ltd. Vs. State Bank of

India, Stressed Assets Recovery Branch, Koti, Hyderabad1.

13 On the other hand, learned counsel for respondents asserts

that there has been no violation of the procedure laid down under the

SARFAESI Rules. Besides the e-auction, sale has taken place, sale of

the schedule property in favour of the highest bidder i.e. respondent

No.2 has been confirmed, whereafter sale certificate has also been

issued. Impugned order of the Tribunal dated 09.01.2019 is correct

and no interference is called for.

14 Submissions made by learned counsel for the parties have been

duly considered.

15 We have already noted the factual aspect of the dispute leading

to passing of the impugned order dated 09.01.2019 by the Tribunal.

The above order was passed by the Tribunal on a securitisation

application filed by the petitioners under Section 17 (1) of the

SARFAESI Act. As per the aforesaid provision any person (including

borrower) if aggrieved by any of the measures taken under sub-

section (4) of Section 13 by the secured creditor or by his authorised

2018 (4) ALD 322 (DB)

officer, may make an application to the jurisdictional Tribunal within

45 days from the date on which such measures were taken. The

contours of the power of the Tribunal while dealing with such an

application are provided in sub-sections 2 to 7 of Section 17 of the

SARFAESI Act. Supreme Court in Authorised Officer, Indian

Overseas Bank Vs. Ashok Saw Mill2, had examined in detail the

provisions of Section 17 of the SARFAESI Act as it stood then and

discussed the wide powers of the Tribunal. It has been held that

action taken by a secured creditor in terms of Section 13 (4) is open to

scrutiny by the Tribunal and the same can not only be set aside but

even status quo ante can be restored by the Tribunal. In the process

Tribunal can undo an auction sale if the same is in contravention of

the law.

16 Once an order is passed under Section 17 of the SARFAESI Act,

any person aggrieved by the same may prefer an appeal to the

Appellate Tribunal within 30 days from the date of receipt of such

order under Section 18 of the SARFAESI Act. As per the second

proviso, no appeal shall be entertained unless the borrower has

deposited with the Appellate Tribunal 50% of the amount of debt due

from him as claimed by the secured creditor or determined by the

Tribunal, whichever is less. The third proviso confers discretion on

the Appellate Tribunal for reduction of such deposit which should not

be less than 25% of the debt referred to in the second proviso. Under

sub-section (2) of Section 18, the Appellate Tribunal shall, as far as

may be, dispose of the appeal in accordance with the provisions of the

Recovery of Debts Due to Banks and Financial Institutions Act, 1993

and the Rules framed thereunder.

(2009) 8 SCC 366

17 Supreme Court has clarified that even though Section 5 of the

Limitation Act, 1963 may impliedly be inapplicable, delay in filing an

appeal under Section 18 (1) of the SARFAESI Act can be condoned by

the Appellate Tribunal under Section 18 (2) of the SARFAESI Act r/w

the proviso to Section 20 (3) of the Recovery of Debts Due to Banks

and Financial Institutions Act, 1993.

18 Thus, it is seen that the statute itself has provided for the

remedy of appeal if a person is aggrieved by an order of the Tribunal

passed under Section 17 of the SARFAESI Act.

19 While the power of the High Court to issue a high prerogative

writ under Article 226 of the Constitution of India is plenary in nature

and is not limited by any other provision of the Constitution, not to

speak of any statutory limitation, however, the High Court has the

discretion to entertain or not to entertain a writ petition. This

position of law has been beautifully summarized by the Supreme

Court in Whirlpool Corporation Vs. Registrar of Trade Marks,

Mumbai3. It is held as follows:

"15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case-law on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field."

20 Thus from the above, we find that the High Court has imposed

upon itself certain restrictions before invoking its extra-ordinary

jurisdiction under Article 226 of the Constitution of India, one of

(1998) 8 SCC 1

which is that if an effective and efficacious remedy is available, the

High Court would not normally exercise its jurisdiction. However,

this self imposed restriction would not operate as a bar in at least

three contingencies:

1. where the writ petition has been filed for the enforcement of any of the fundamental rights;

2. where there has been a violation of the principles of natural justice; or

3. where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged.

21 In a recent decision of the Supreme Court in Assistant

Commissioner of State Tax Vs. M/s. Commercial Steel Limited,

Civil Appeal No.5121 of 2021, decided on 03.9.2021, it has been held

that though existence of an alternative remedy is not an absolute bar

to the maintainability of a writ petition under Article 226 of the

Constitution, but a writ petition can be entertained in exceptional

circumstances where there is-

1. a breach of fundamental rights;

2. violation of the principles of natural justice;

3. excess of jurisdiction; or

4. a challenge to the vires of the statute or delegated legislation.

22 In the instant case, we find that none of the above exceptions

have been made out by the petitioners. Petitioners have challenged

the impugned order of the Tribunal on the ground that the procedural

requirements under the SARFAESI Act have not been followed

causing prejudice to the petitioners which however has been disputed

and denied by the respondents. This is a matter which can certainly

be agitated and gone into by the appellate forum. Therefore, we are of

the firm opinion that petitioners should be relegated to the forum of

Appellate Tribunal under Section 18 of the SARFAESI Act.

23 In so far the decision of this Court in M/s.Venshiv Pharma

Chem (P) Ltd (supra) is concerned, we find that the said decision has

been stayed by the Supreme Court, vide order dated 24.8.2018

passed in SLP (C) No.18906 of 2018 (State Bank of India Vs.

M/s.Venshiv Pharma Chem (P) Ltd).

24 For the aforesaid reasons, the writ petition fails and is

accordingly dismissed. However, dismissal of the writ petition would

not preclude the petitioners from availing the remedy of appeal under

Section 18 of the SARFAESI Act subject to limitation. However, there

shall be no order as to costs.

25. Miscellaneous petitions, if any pending in this writ petition,

shall also stand dismissed.

___________________ UJJAL BHUYAN, J

_________________________________ Dr.CHILLAKUR SUMALATHA, J

Date: 09.11.2021.

L.R. Copy be marked B/o Kvsn