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Judgment
Pratap Krishna Lohra, J.—Matter comes up on an application under Article 226(3) of the Constitution of India laid on behalf of second respondent for modification/vacation of interim order but, with the consent of learned counsel for parties, matter is heard finally at this stage.
Petitioner has preferred this writ petition for claiming under-mentioned reliefs:
i) the instant writ petition may kindly be ordered to be allowed and a writ, order or direction in the appropriate nature may kindly be issued in favour of the humble petitioner.
ii) the impugned action of the respondents herein initiated against the humble petitioner may kindly be ordered to be dropped and the possession notice as has been affixed on the property of the humble petitioner measuring 15629 sq. ft. may kindly be ordered to be quashed and set aside and the possession notice and the sell notice dated 06.08.2015 (Annexure-5) as has been published in the local daily newspaper may kindly be ordered to be quashed and set aside;
iii) any other order of direction, which this Hon''ble Court deems fit and proper in the facts and circumstances of the present case may kindly be passed in favour of the humble petitioner;"
To authenticate her case for granting aforementioned reliefs, it is averred in the writ petition that a converted land situated at 6-E-Chhoti, Tehsil & District Sriganganagar of Khata No. 110/97 in Murabba No. 13 measuring 15629 sq. ft. was sold to her by third respondent. In order to prove the transaction, an agreement to sale, allegedly executed by third respondent in her favour, is placed on record as Annex.1. As per the version of petitioner, the said land is still agricultural land and also recorded in the revenue record as such. A positive assertion is made that, when the agreement to sale was executed by third respondent, the land in question was free from all encumbrances and there was no charge of any bank over the said land including the respondent-Bank. While adverting to the facts pertaining to third respondent, the petitioner has stated in the writ petition that he is an authorised signatory of M/s. Mode Attire Pvt. Ltd., New Delhi and the said company had some financial transactions with the respondent-Bank. Pursuant thereto, third respondent created an equitable mortgage of some properties with the Bank. The amount of credit facility availed by the company from the Bank was not repaid, and therefore, its loan account was classified as Non-Performing Asset (NPA) showing a sum of Rs. 3,51,20,822.20 outstanding as on 31st of March, 2003. Be that as it may, the petitioner has made a positive assertion that so far as the land for which third respondent has executed agreement to sale in her favour was never mortgaged with second respondent-Bank and obviously it was not possible to mortgage the same being agricultural land. However, it is also asserted by the petitioner that subsequently the said land is converted into residential and commercial and lease deed was also executed in favour of third respondent. Copy of lease deed is also placed on record as Annex.3. Respondent-Bank after classifying the loan account of third respondent as NPA initiated proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, ''Act of 2002'') and thereafter also resorted to Section 14 of the Act of 2002 for taking possession of the property by approaching Sub Divisional Officer, Srigangangar. The Bank then proceeded for auction of the property by resorting to E-auction. On coming to know about the E-auction notice, as per petitioner, she has submitted an application before the respondent-Bank showing her intention to purchase the land in question and also tendered a cheque worth Rs. 20 lacs showing her bona fide. Thus, it is in that background, petitioner has taken shelter of this Court with this plea that her handsome amount is lying with the Bank and as such no further action for auction of the property be taken. The aforesaid action of the respondent-Bank is also questioned on various other counts.
The respondent-Bank submitted its preliminary reply to the writ petition. In the return, the respondent-Bank has made an attempt to clarify some of the facts. It is pleaded in the reply that petitioner is an adopted daughter of third respondent and she has very conveniently concealed this material fact from this Court. With this positive assertion, the respondent-Bank has pleaded that this entire litigation is outcome of collusion between petitioner and the third respondent to thwart valid non-adjudicatory process of recovery initiated by the Bank by resorting to the Act of 2002. On the agreement to sale, allegedly executed by third respondent in favour of petitioner, it is submitted by the Bank that the said document is nothing but a farce inasmuch as the same came into offing after the judgment was passed by Debt Recovery Tribunal, Delhi (DRT) in favour of the Bank and against M/s. Mode Attire Pvt. Ltd. as well as third respondent. By the said judgment, DRT issued a recovery certificate to the tune of Rs. 13,40,14,633/- in favour of Bank on 6th of December, 2012 whereas the alleged agreement to sale came into existence on 28th of December, 2012. Therefore, according to submission of respondent-Bank, this agreement to sale was manipulated and maneuvered to frustrate the recovery certificate issued by DRT. The respondent-Bank has also placed on record the sale certificate issued in favour of Shri Aatma Ram and Vikramjit Arora on 24.09.2015 after finalization of the auction of the property of its borrower, third respondent, as Annex.R/2, to show that this material fact was within the knowledge of petitioner but the said fact was not disclosed by her in the writ petition. The possession letter (Annex.R/3), issued to the auction purchaser is also placed on record. The respondent has also made an attempt to question maintainability of the writ petition by urging that so many disputed questions of facts are involved in the matter. The positive assertion of the petitioner that the land in dispute is agricultural land is also denied by the respondent-Bank by submitting that same was converted way-back in the year 1986 and was also mortgaged by third respondent with respondent-Bank while availing credit facility.
I have heard learned counsel for the parties and perused impugned notice (Annex.5) as well as the materials available on record.
Pivotal question for consideration in the instant writ petition is the precise object of the Act of 2002. The Act of 2002 is enacted with laudable objects facilitating recovery of debts by the financial institutions through non-adjudicatory process. Section 13(2) of the Act of 2002 deals with liquidation of liability in a case where there is no scope of any dispute regarding liability. Any action initiated by the secured creditor for enforcement of security interest by way of measures referred to in sub-section (4) of Section 13 as well as Section 14 of the Act of 2002 are permissible. Supreme Court in case of Transcore Vs. Union of India (UOI) and Another, had the occasion to consider a very vital question as to whether there is any dichotomy between Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, ''DRT Act'') and the Act of 2002. The following question was framed for determination by the Supreme Court:
"(i) Whether banks or financial institutions having elected to seek their remedy in terms of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 ("DRT Act") can still invoke the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("NPA Act") for realizing the secured assets without withdrawing or abandoning the original application filed before DRT under the DRT Act."
While answering the question in favour of financial institution (secured creditor) the Court held:
"Therefore, when Section 13(4) talks about taking possession of the secured assets or management of the business of the borrower, it is because a right is created by the borrower in favour of the bank/FI when he takes a loan secured by pledge, hypothecation, mortgage or charge. For example, when a company takes a loan and pledges its financial asset, it is the duty of that company to see that the margin between what the company borrows and the extent to which the loan is covered by the value of the financial asset hypothecated is retained. If the borrower company does not repay, becomes a defaulter and does not keep up the value of the financial asset which depletes then the borrower fails in its obligation which results in a mismatch between the asset and the liability in the books of the bank/FI. Therefore, Sections 5 and 9 talk of acquisition of the secured interest so that the balance sheet of the bank/FI remains clean. Same applies to immovable property charged or mortgaged to the bank/FI. These are some of the factors which the authorised officer of the bank/FI has to keep in mind when he gives notice under Section 13(2) of the NPA Act. Hence, equity exists in the bank/FI and not in the borrower. Therefore, apart from obligation to repay, the borrower undertakes to keep the margin and the value of the securities hypothecated so that there is no mismatch between the asset-liability in the books of the bank/FI. This obligation is different and distinct from the obligation to repay. It is the former obligation of the borrower which attracts the provisions of NPA Act which seeks to enforce it by measures mentioned in Section 13(4) of NPA Act, which measures are not contemplated by DRT Act and, therefore, it is wrong to say that the two Acts provide parallel remedies as held by the judgment of the High Court in Kalyani Sales Co. As stated, the remedy under DRT Act falls short as compared to NPA Act which refers to acquisition and assignment of the receivables to the asset reconstruction company and which authorises banks/FIs to take possession or to take over management which is not there in the DRT Act. It is for this reason that the NPA Act is treated as an additional remedy (Section 37 ), which is not inconsistent with the DRT Act."
In the instant case, respondent-Bank resorted to the coercive measures for recovery of secured interest as per provisions of the Act of 2002 while taking into account the fact that there is no dispute about liability of secured creditor. Therefore, in the considered opinion of this Court, the action initiated by the respondent-Bank under the Act of 2002 cannot be faulted.
It is needless to observe here that the liability of third respondent is also determined by DRT by its judgment (Annex.R/1) and the said judgment has attained finality. It is, in that background, for recovery of the amount determined by the DRT by issuing recovery certificate, the Bank has taken recourse to the Act of 2002, which is permissible in law as per verdict in Transcore (supra).
There is yet another aspect of the matter having direct ramification on the issue involved in the matter, which is conduct of the petitioner. It is really strange that the petitioner is an adopted daughter of third respondent, who is borrower of the Bank and was party to the litigation before DRT, however, this vital fact has not been disclosed while assailing the action of the respondent-Bank in the writ petition. Furthermore, the auction proceedings were completed before filing of the writ petition and even possession of the property was handed over to the auction purchaser on 24th of September, 2015 but this fact has also not been disclosed in the writ petition, which was filed as late as on 15th of October, 2015. As a matter of fact, there is no whisper in the writ petition about the alleged relationship of petitioner with third respondent and the auction proceedings undertaken by the respondent-Bank. Therefore, it is a clear case of misprision, which disentitles the petitioner from claiming any relief under Article 226 of the Constitution.
It is trite that extraordinary jurisdiction under Article 226 of the Constitution is founded on equitable considerations and one who approaches the court by concealing material facts is not entitled for any relief. Thus, the conduct of the petitioner is sufficient to non-suit her in this writ petition.
The allegation of the petitioner that land in question is an agricultural land is also far from truth inasmuch as the same was converted in the year 1986 and it was also mortgaged with the Bank. Therefore, being secured asset, the respondent-Bank was well within its right to put the same to auction for recovery of debts.
After analyzing the afflictions of the petitioner in the light of provisions of the Act of 2002 and considering her conduct, I feel dissuaded to interfere in the matter.
Consequently, the petition fails and same is, hereby, dismissed summarily.