Smt. Bandi Padma vs Canara Bank
2022 Latest Caselaw 889 Tel

      THE HON'BLE SRI JUSTICE UJJAL BHUYAN
                       AND
 THE HON'BLE SRI JUSTICE A. VENKATESHWARA REDDY

                 Writ Petition No.1262 of 2022

ORDER (per Hon'ble Sri Justice A. Venkateshwara Reddy):

1. The petitioner Nos.1 to 3 have filed the present Writ

Petition under Article 226 of the Constitution of India

seeking a direction, more particularly, one in the nature of

Mandamus directing the respondents to close the loan

account No.2498285000368 of M/s. Ganesh Traders and

another loan account No.2498285000369 of M/s. Sri Sai

Traders by receiving the book debts under One Time

Settlement (for short 'OTS'), by deducting unauthorized

debits and exorbitant rate of interest and to release the title

deeds in respect of residential house bearing No.2-1-41//3

(new) corresponding to old house bearing No.2-1-35/B in

Survey No.621 admeasuring 358.81 square yards situated

at Amra Nagar, Vishwanath Complex, Peddapalli,

Karimnagar District (hereinafter referred to as secured

asset), in favour of the first petitioner. Consequently to

declare the measures of the respondents under the

provisions of the Securitization and Reconstruction of

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Financial Assets and Endorsement of Security Interest Act,

2002 (for short 'SARFAESI Act').

2. The first petitioner is the mother and second and

third petitioners are her children. The husband of first

petitioner by name late Ganga Goud has availed credit

facility to an extent of Rs.30 lakhs in the year 2017 from

the first respondent bank in the name of M/s. Narender

Traders, a proprietor concern, whereas the second

petitioner-Narender Goud has availed credit facility to an

extent of Rs.15 lakhs in the year 2017 from the first

respondent bank in the name of M/s. Sri Sai Traders

represented by its proprietor, M/s. Devender Goud, who is

the elder son of the first petitioner.

3. a) This writ petition is filed for a direction to the first

respondent bank to give an opportunity to the petitioners

to pay the entire loan amount in both the loan accounts in

the name of M/s. Ganesh Traders and M/s. Sri Sai Traders

under OTS scheme by deducting unauthorized debits

including the exorbitant rate of interest and to release the

title deeds in favour of the petitioners. Late Ganga Goud

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being the owner of the secured asset has created common

security for credit facilities stated above from the first

respondent bank in the year 2017. But, unfortunately he

died on 22.12.2018 leaving behind the petitioners and

elder son of the first petitioner as the only legal heirs. One

loan account of M/s. Narender Traders was closed and the

substantial amount is paid in another loan account of M/s.

Sri Sai Traders by the borrowers.

3. b) It is further stated that the third petitioner herein

who is the married daughter of late Ganga Goud and the

first petitioner has challenged the e-auction notice

published in the newspaper slating the date of auction on

27.03.2020 by filing Writ Petition No.5991 of 2020 before

this Court and that writ petition was allowed on

18.01.2021, setting aside the demand notice 24.10.2019

and possession notice dated 14.01.2020 with a liberty to

respondent bank to initiate fresh proceedings against the

legal representatives of original borrower - late Ganga Goud

who died on 22.12.2018. During his life time, late Ganga

Goud has executed a Will Deed on 09.04.2011 bequeathing

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the secured asset and other properties in favour of the first

petitioner in the presence of witnesses. However, since the

death of late Ganga Goud, their elder son-Devender Goud

left the house and presently his whereabouts are not

known and he did not bother to cooperate to clear the

liability.

3. c) In the meanwhile, the first respondent bank has

issued notice under Section 13 (2) of SARFAESI Act on

14.09.2021 for loan account No.2498285000368 standing

in the name of M/s.Ganesh Traders and another loan

account No.2498285000369 in the name of M/s. Sri Sai

Traders. The petitioners have suitably replied to it on

12.11.2021, but the respondents have not considered the

objections raised by the petitioners. In fact, the second

respondent bank has issued possession notice under

Section 13 (4) of SARFAESI Act on 21.12.2021. Thus the

respondents without giving an opportunity to the

petitioners to close the above loan accounts of M/s.

Ganesh Traders and M/s. Sri Sai Traders by paying the

entire debt under OTS scheme by deducting unauthorized

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debts including exorbitant rate of interest and to release

the title deeds are proceeding under SARFAESI Act.

Hence, the writ petition is filed.

4. The petitioners have no other efficacious and

adequate alternative remedy except to invoke the

extraordinary jurisdiction of this Court, as the regular

Presiding Officer post of Debt Recovery Tribunal (for short

'DRT'), Hyderabad is vacant.

5. The first respondent bank has filed caveat petition

through their counsel M/s. M.V.K. Viswanatham, caused

their appearance on 07.01.2022 and requested time to get

instructions and to file counter. Accordingly, filed counter

affidavit along with relevant material papers on 17.01.2022

and also filed additional counter with additional papers on

19.01.2022.

6. a) The main averments of the counter and additional

counter filed on behalf of the respondents are that the

petitioners are not entitled for Writ of Mandamus directing

the respondents to close the loan account of M/s. Ganesh

Traders and M/s. Sri Sari Traders by receiving the book

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debts under OTS scheme by deducting unauthorized debits

and to release the title deeds in respect of mortgaged

property in favour of the first petitioner and consequently

to declare the measures of respondents under SARFAESI

Act as illegal etc. Recently, the Apex Court in the case of

Bijnor Urban Cooperative Bank Limited, Bijnor & others v.

Meenal Agarwal & others in Civil Appeal No.7411 of 201

on 15.12.2021 held that a Writ of Mandamus cannot be

issued under Article 226 of the Constitution of India,

directing the bank to positively consider the benefit of OTS

scheme to the writ petitioner and the above judgment

squarely applies to the facts of the present case. Thus, the

present writ petition is liable to be dismissed on this count

alone.

6. b) It is further pleaded by the respondents that the

liability of M/s. Ganesh Traders as on 10.01.2022 is

Rs.45,13,720/- with further interest and the liability of

M/s. Sri Sai Traders is Rs.14,51,307/- with further

interest and the total liability in both the accounts is

Rs.59,65,027/- with further interest. As per the latest

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valuation report submitted by the Approved Valuer of the

respondent bank, the property fetches Rs.98,95,700/-.

Therefore, the bank would be able to recover the entire

amount in public auction and it cannot afford to settle the

debt for lesser amount and that the petitioners have

capacity to pay the dues. The petitioners have introduced a

new element of Will Deed said to have been executed on

09.04.2011 by the deceased-Ganga Goud, but not even a

single word is said about the so-called Will Deed either in

the earlier writ petition or in the objections/representation

against the demand notice filed through their counsel on

14.09.2021. It was also not mentioned in the list of

documents deposited by late Ganga Goud on 17.11.2017,

which was registered as document No.6646 of 2017 and

the rectification deed executed on 15.09.2018.

6. c) It is further stated that the petitioners with an eye on

further litigation developed a new story, that the elder son

of late Ganga Goud, viz., Devender Goud left the house and

his whereabouts are not known so as to keep him out of

the transaction for the present and he will surface after

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settlement of issues if any and to start a fresh litigation.

This is possible because writ petition was filed by married

daughter earlier and now wife and other children have filed

the present writ petition, keeping the elder son out of

litigation. In fact, the whereabouts of said Devendar Goud

are known to the financial institutions and recently on

08.01.2022 he has taken credit card also. Hence, the

petitioners cannot say that, his whereabouts are not

known.

6. d) That on a comparison of the signatures of late Ganga

Goud on the Will Deed with his signatures on the deposited

title deeds executed on 17.11.2017 registered as document

No.6646, the rectification deed dated 15.09.2018 registered

as document No.7561 of 2018 on the file of Sub-Registrar,

Peddapalli, along with approved plan in the year 2008 for

construction of house containing the signatures of late

Ganga Goud and on the Pan Card submitted to the bank,

there is vast difference in the signatures on the Will Deed

and the other documents indicated above same is visible to

the naked eye.

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6. e) The respondent is a nationalized bank, it has

sanctioned overdraft facility of Rs.30 lakhs to late Ganga

Goud, proprietor of M/s. Ganesh Traders to secure due

repayment of overdraft facility of Rs.30 lakhs sanctioned,

late Ganga Goud has executed required loan documents

and mortgaged the secured asset as security for repayment

of loan interest, but he has failed to repay the said amount

as agreed and he owed a sum of Rs.42,44,676/- as on

31.08.2021. The loan was sanctioned on 23.11.2007. He

has stopped operation of the account and not cleared the

dues in spite of telephonic and personal reminders.

Accordingly, the account was classified as Non-Performing

Asset (NPA) on 29.09.2019 as per the guidelines of the

bank as well as the Reserve Bank of India (RBI).

6. f) Thereafter, the respondent bank has invoked the

provisions of SARFAESI Act, issued demand notice dated

24.10.2019, possession notice dated 14.01.2020 and e-

auction notice dated 23.02.2020. At this stage, the third

petitioner has filed WP No.5991 of 2020 alleging that her

father late Ganga Goud died on 22.12.2018 and the

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proceedings against the dead person cannot be continued

and that she along with her brothers are the legal heirs of

late Ganga Goud, they were not put to notice of this loan

transaction. Accordingly, this Court has allowed the writ

petition on 18.01.2021 by setting aside the proceedings

with a liberty to the bank to initiate fresh proceedings

against the legal heirs of late Ganga Goud, the original

borrower.

6. g) Thus the bank has initiated fresh proceedings against

the legal heirs of original borrower by issuing fresh demand

notice on 14.09.2021 u/s. 13 (2) of SARFAESI Act by giving

60 days time to pay the dues. The petitioners got issued a

reply dated 12.11.2021 through their counsel. That on

26.11.2021 the bank has suitably replied to it, issued

possession notice (symbolic) u/s.13 (4) of SARFAESI Act on

21.12.2021 and the bank took symbolic possession of the

mortgaged property on 21.12.2021. There are no

unauthorized debits in the accounts and interest was

charged as per the terms of the contract. Accordingly,

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prayed for dismissal of the writ petition with exemplary

costs.

7. Heard Sri V.V. Ramana, learned counsel for the

petitioners and Sri M.V.K. Viswanatham for the respondent

bank.

8. Detailed submissions have been made by the learned

counsel for the parties which are more or less on pleaded

lines. Therefore, it may not be necessary for us to refer to

in detail such submissions. However, the submissions so

made have received the due consideration of the Court.

9. The relief prayed for through this wit petition is two-

fold. The petitioners have prayed to issue a Writ of

Mandamus directing the respondents to close the loan

account of M/s. Ganesh Traders and another loan account

of M/s. Sri Sai Traders by receiving the entire debt under

OTS scheme by deducting unauthorized debits and

exorbitant rate of interest and to release the title deeds in

respect of secured asset in favour of the first petitioner,

declaring the measures of respondents under SARFAESI

Act as illegal. The petitioners also requested for stay of all

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further proceedings including the possession notice dated

21.12.2021 in respect of the secured asset.

10. Admittedly, the third petitioner (daughter) herein has

filed WP No.5991 of 2020 before this Court, when the

respondent bank has initiated proceedings under

SARFAESI Act as indicated above stating that the original

borrower died on 22.12.2018 leaving behind his wife, two

sons and the daughter and the proceedings initiated

against the dead person are not maintainable and that the

respondent bank has issued demand notice, possession

notice under SARFAESI Act and e-auction was also

scheduled and the proceedings initiated against the dead

person (original borrower) who died in the year 2018 are

not maintainable. The said writ petition was allowed on

18.01.2021 setting aside the proceedings initiated against

late Ganga Goud. Pursuant to the said orders, fresh

proceedings were initiated by the respondent bank. Notice

u/s.13 (2) of SARFAESI Act was issued on 14.09.2021.

Objections were received and considered whereafter

possession notice was issued on 21.12.2021. The

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petitioners who are the wife and younger son and daughter

of the deceased Ganga Goud are challenging these

proceedings leaving behind the elder son of late Ganga

Goud.

11. The contention of the respondent bank is that for the

first time through this writ petition, the existence of Will

Deed dated 09.04.2011 is pleaded. Earlier at no point of

time either at the time of execution of mortgage deed or

rectification deed or in the objections submitted by the

petitioners through their counsel, it was not mentioned

about the said Will Deed. Further on comparison of the

signatures on the Will Deed dated 09.04.2011 with other

documents i.e., the deposit of title deeds, rectification deed,

permission proceedings obtained from the Gram Panchayat

and the Pan Card, there is vast difference in the signatures

of late Ganga Goud found on the said Will Deed and the

other documents, which are the registered/public

documents as indicated above.

12. It is true as per the averments in the affidavit filed in

support of WP No.5991 of 2020, there is no mention of the

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said Will Deed. Similarly, in the objections filed by the

petitioners through their counsel, there is no reference of

the said Will Deed, dated 09.04.2011 and for the first time

such plea is taken in the present writ petition.

Conspicuously the elder son of late Ganga Goud viz.,

Devender Goud is not made a party to the proceedings

stating that his whereabouts are not known. But, the

averments in the counter affidavit shows that the financial

institutions at Hyderabad are aware of his whereabouts,

his address and telephone number and very recently on

08.01.2022, he has also taken a credit card. This averment

in the counter filed by the respondent bank is not seriously

disputed by the petitioners and they did not choose to file

any rejoinder denying the same.

13. That being the factual position, the execution of Will

Deed, bequeathing the property in favour of the first

petitioner/wife leaving behind the other legal heirs, is a

matter to be decided by the jurisdictional civil Court. This

Court in the writ jurisdiction will not entertain such

contentions and issues, which are to be decided after

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hearing the parties and adducing evidence in accordance

with law. Therefore, the contention of the petitioners that

late Ganga Goud has executed a Will Deed dated

09.04.2011, bequeathing the secured asset in favour of the

first petitioner and that the respondent bank may be

directed to receive the entire amount under OTS scheme

and to release the title deeds of secured asset in her favour,

in the absence of making Devender Goud, the elder son of

Ganga Goud as one of the party to the writ petition cannot

be accepted.

14. With regard to the prayer of the petitioners for a Writ

of Mandamus directing the respondents to close the

account under OTS scheme by deducting the unauthorized

debits and exorbitant interest, the learned counsel for the

respondents has relied on the judgment of the Hon'ble

Supreme Court of India in Bijnor Urban Cooperative Bank

Limited's case (stated supra). After elaborate discussions,

the Hon'ble Supreme Court in para-11 of the said

judgment observed as under:

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"11. The sum and substance of the aforesaid discussion would be that no writ of mandamus can be issued by the High Court in exercise of powers under Article 226 of the Constitution of India, directing a financial institution/bank to positively grant the benefit of OTS to a borrower. The grant of benefit under the OTS is always subject to the eligibility criteria mentioned under the OTS Scheme and the guidelines issued from time to time. If the bank/financial institution is of the opinion that the loanee has the capacity to make the payment and/or that the bank/financial institution is able to recover the entire loan amount even by auctioning the mortgaged property/secured property, either from the loanee and/or guarantor, the bank would be justified in refusing to grant the benefit under the OTS Scheme. Ultimately, such a decision should be left to the commercial wisdom of the bank whose amount is involved and it is always to be presumed that the financial institution/bank shall take a prudent decision whether to rant the benefit or not under the OTS Scheme, having regard to the public interest involved and having regard to the factors which are narrated hereinabove."

15. In the present case, a perusal of the averments made

in the counter filed by the respondent bank would show

that as on 10.01.2022 the liability of M/s. Ganesh Traders

is Rs.45,13,720/- with further interest and the liability of

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M/s. Sri Sai Traders is Rs.14,51,307/- with further

interest and the total liability in both the accounts is

Rs.59,65,027/- with further interest. As per the latest

valuation report submitted by the Approved Valuer of the

respondent bank, the subject property fetches

Rs.98,95,700/- and as the bank would be able to recover

the entire amount in public auction, it cannot afford to

settle the debt for a lesser amount.

16. As per the revised guidelines issued by the RBI, the

grant of benefit of OTS scheme cannot be prayed as a

matter of right and the same is subject to fulfilling, the

eligibility criteria in the scheme. Ultimately, it is for the

bank to take conscious decision in its own interest and to

secure/recover the outstanding debt and no bank can be

compelled to accept a lesser amount under OTS scheme.

17. Be it stated that when the facts of the case on hand,

as discussed above, are tested on the touch stone of the

law laid by the Supreme Court in Bijnor Urban Cooperative

Bank Limited's case (stated supra), the answer is in the

negative and a Writ of Mandamus cannot be issued in

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exercise of the powers under Article 226 of the Constitution

of India, directing the respondent bank to positively

consider/grant the benefit of OTS to the wit petitioners.

18. The Supreme Court in K.D. Sharma v. Steel Authority

of India Limited and others1 held that:

"The jurisdiction of the Supreme Court under Article 32 and of the High Court under Article 226 of the Constitution is extraordinary, equitable and discretionary. Prerogative writs mentioned therein are issued for doing substantial justice. It is, therefore, of utmost necessity that the petitioner approaching the writ court must come with clean hands, put forward all the facts before the court without concealing or suppressing anything and seek an appropriate relief. If there is no candid disclosure of relevant and material facts or the petitioner is guilty of misleading the court, his petition may be dismissed at the threshold without considering the merits of the claim.

A prerogative remedy is not a matter of course. While exercising extraordinary power a writ court would certainly bear in mind the conduct of the party who invokes the jurisdiction of the court. If the applicant makes a false statement or

(2008) 12 SCC 481

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suppresses any material fact or attempts to mislead the court, the court may dismiss the action on that ground alone and may refuse to enter into the merits of the case."

19. On a careful examination of the factual matrix of the

case, it is noticed that in the earlier writ petition filed by

the third petitioner, vide WP No.5991 of 2020, there was no

mention of Will Deed dated 09.04.2011 said to have been

executed by late Ganga Goud. Pursuant to the directions

in WP No.5991 of 2020, the respondent bank has initiated

fresh proceedings. Even in the objections submitted

through their counsel, the petitioners did not mention

about the alleged Will Deed. For the first time, through

this writ petition they have pleaded about the execution of

Will Deed dated 09.04.2011 by late Ganga Goud

bequeathing the secured asset in favour of the first

petitioner, but conspicuously, Devender Gound, who is

elder son of late Ganga Goud, is not made a party to this

proceedings stating that his whereabouts are not known.

19.1. Per contra, the respondent bank has come up with a

definite plea raising doubts on the genuineness of the said

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Will Deed on comparison of the signatures of late Ganga

Goud found thereon, with his admitted/undisputed

signatures on registered mortgage deed, rectification deed,

Gram Panchayat permission proceedings and PAN card

which are registered documents/public documents with

the bank. The respondent further asserts that on

08.01.2022 Devender Goud has obtained credit card, the

bank is aware of his address and telephone number and

that his whereabouts are known to the financial

institutions at Hyderabad. Thus the petitioners have

suppressed several facts to suit their convenience, appears

to have initiated collusive action, did not approach the

Court with clean hands, failed to disclose true and

complete facts and therefore not entitled for any benefit

exercising discretionary and extraordinary jurisdiction

under Article 226 of the Constitution of India.

20. Since the respondent bank has initiated the

proceedings under SARFAESI Act, the petitioners along

with Devender Goud, being the legal heirs of late Ganga

Goud have efficacious and adequate alternative remedy

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under the provisions of SARFAESI Act. They may approach

the competent Tribunal and file required application under

Section 17 of SARFAESI Act for redressal of their grievance,

if any.

21. Therefore, in the light of the above judicial

pronouncements of the Supreme Court and considering the

conduct of the petitioners, as discussed above, they are not

entitled to any relief including the interim relief in this writ

proceeding.

22. In the result, the writ petition is dismissed. However,

in the circumstance of the case, there shall be no order as

to costs.

As a sequel, interlocutory applications, if any pending

shall stand closed.

________________________ JUSTICE UJJAL BHUYAN

________________________________________ JUSTICE A. VENKATESHWARA REDDY Date: 24.02.2022 Isn