Bosudeo Prasad vs Allahabad bank and Others

Narendra Nath Tiwari, J.—In W.P.(C) No. 545 of 2007 the writ Petitioner, who was guarantor for the loan sanctioned in favour of the Firm M/s Shree Durga Oil Mill, has prayed for setting aside the auction sale dated 6.1.2007 by the Respondents-bank with respect to the property given as security and for other related prayers.

According to the Petitioner the Respondents-Bank had sanctioned loan in favour of M/s Shree Durga Oil Mill with cash credit limit of Rs. 4 lakhs by letter dated 22.5.1996. the Petitioner and his wife stood as Guarantor for the loan sanctioned in favour of the said firm. In the year 1999 due to reasons beyond control of the firm loan amount of the bank could not be paid. The unit was declared as Non Performing Asset (hereinafter referred to as ''NPA''). the Bank, thereafter, initiated action against the firm under the provision of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred, to as ''SRFAESI Act''). Demand notice was issued on 3.9.2002 for recovery of Rs. 12.74, 120/-The Respondents-Bank agreed for one time settlement in the year 2001. According to the terms of agreement the due amount was to be paid by May, 2002. Out of that, about 25% of the amount was paid to the bank. The Petitioner also deposited post-dated cheques to be liquidated by May, 2007, but in spite of the same the Bank took possession of the assets and subsequently put the same on auction on 6.1.2007. Possession thereof, however, has not been given to the auction purchaser. It has been further stated that the Petitioner is the guarantor of the loanee and he is always ready and willing to liquidate all the dues as per the one time settlement. He also said auction purchaser then paid the entire sale proceeds to the bank. Sale certificate was, accordingly, issued on 1.3.2007 to the said highest bidder. The auction sale held in accordance with law. The allegation made in the writ petition is wholly unfounded and the Petitioner is not entitled to the reliefs prayed for.

Mr. Rajesh Kumar, learned Counsel appeared for the auction purchaser who intervened in this case with the permission of the Court. Learned Counsel submitted that in the auction held under the provisions of the SRFAESI Act, the auction purchaser took part and being the highest bidder, he purchased the property in question legally for the valuable consideration. He has also deposited the bid amount long back on 5th February, 2007 and the sale certificate dated 1.3.2007 has also been issued in his favour. The entire process was in accordance with the legal provisions and there is no illegality. The writ, Petitioner has even failed to avail the alternative statutory remedy of referring appeal within the prescribed period and has approached this Court after an inordinate delay. The writ petition also, for the said laches, is not maintainable and also for the laches on the part of the writ Petitioner.

I have heard learned Counsel for the parties and considered the facts and materials on record. It is not in dispute that the loanee firm had defaulted repayment of the loans. It is also not in dispute that when the opportunity was given for one time settlement to pay the dues within the prescribed period, again the Petitioner-firm did not pay the amount. The Respondents-bank, after advertisement and after giving sufficient opportunity to the borrower firm and the Petitioner, took action under the provisions of SRFAESI Act. Demand notice was issued but the same was not responded to by the firm. The Respondents-bank, thereafter invoked the provisions of Section 13(4) of the said Act and took possession of the secured assets on 7.2.2003. The writ Petitioner had opportunity to prefer an appeal u/s 17 of the said Act, but he did not file appeal. Even after notice to the borrower-firm and thereafter the auction notice for payment of the due amount, the amount was not paid.

According to Section 17 of the SRFAESI Act a person including borrower aggrieved by any of the measures referred to in Sub-Section 4 of Section 13 taken by the secured creditor or his authorised officer under Chapter 3 of the said Act has right to appeal within 45 days from the date on which such measure has been taken. The Petitioner has, thus, got statutory effective remedy of appeal. From the record it appears that the Respondent-bank had taken steps under the provisions of Section 13(4), SRFAESI Act after giving sufficient opportunity to the borrower.

There is, thus, no illegality in taking possession by the Respondent-Bank or in putting the asset on auction sale.

From the record it appears that the auction purchaser has deposited the entire amount and sale certificate has been issued to him long back in the year 2007. The intervenor is, thus, bonafide auction purchaser. There is no illegality in acquisition of the property by auction purchaser.

I, therefore, find no illegality or arbitrariness in the action of the Respondents. There is, thus, no merit in this writ petition and the same is, accordingly, dismissed.

In W.P.(C) No. 5240/2007 the Petitioner-auction purchaser has prayed for direction to hand over physical possession of the asset auction purchased by him. It has been stated that the Petitioner (Raj Kumar Mahto) was the highest bidder in the auction and the bid was settled, in his favour. He had also-deposited the entire bid amount as far back as on 5.2.2007 Sale certificate was issued to him on 1.3.2007, but till date physical possession of the asset has not been handed over to the Petitioner.

Mrs. A.R. Choudhary, learned Counsel appearing on behalf of the Respondent-bank submitted that there is no impediment in handing over the physical possession, so far as the Respondent-bank is concerne(sic), but in view of the pendency of the writ petition being W.P.(C) No. 545/2007 in which the bank had orally assured the Court that he will not change the position of the asset, possession was not handed over to the auction purchaser. Nov the said writ petition is being disposed of, the Respondent-book shall take steps under the legal provisions to hand over the possession of the assets to the auction purchaser.

In view of the said submissions of learned Counsel for the Respondents, the Respondents are oliected to take steps for handing over the possession of the property to the auction purchaser without further delay.

Both the writ petitions are, accorclingly, disposed of.