K.P. Textiles (Coimbatore) P. Ltd. vs The Authorised Officer, Axis Bank Ltd.

A.S. Bopanna, J.—1. The petitioner is before this Court assailing the order dated 14.07.2014 passed in S.A. No. 316/2014 at Annexure-M. The petitioner is also seeking that the letter dated 12.06.2013 at Annexure-L be quashed and the respondent-Bank be directed to refund the sum of Rs. 22,50,500/- with interest at 18% per annum from 10.10.2012 till the date of realization.

The petitioner had participated in the auction conducted by the respondent wherein, a secured asset was brought to sale. The petitioner was the highest bidder offering a sum of Rs. 90,02,000/-. As required, 25% of the said amount in a sum of Rs. 22,50,500/- was deposited by them. The Sale Confirmation Advice dated 10.10.2012 was issued and confirmation was yet to be made. At that point, the borrower, whose secured asset had been brought to sale had approached the Debts Recovery Tribunal (''DRT'' for short) assailing the action of the respondent-Bank in S.A. No. 628/2012. The DRT by its interim order had granted the liberty to the respondent to proceed with the same. However, the confirmation of the same had been directed to be deferred and such order had been granted subject to the condition that the borrower deposit the amount as indicated in the order dated 09.10.2012. Thereafter, the matter has been considered by the DRT.

Insofar as the sale that was conducted by the respondent, the petitioner, taking note of this aspect subsequently had written a letter to the respondent-Bank on 26.11.2012 that in view of the situation where there is no certainty, they are no more interested in proceeding with the transaction. Thereafter, the respondent as well as the petitioner have exchanged correspondences and ultimately, the respondent-Bank through their communication dated 12.06.2013 had called upon the petitioner to remit the balance 75% of the bid amount and in the said communication, it was also made clear that if the petitioner fails to do so, the amount of Rs. 22,50,500/- already remitted would be forfeited without further notice. It is against the said communication/order, the petitioner had approached the DRT in S.A. No. 316/2014. The DRT has by its order dated 14.07.2014 disposed of the appeal holding that the petitioner should avail alternate remedy in civil suit. It is in that view, the petitioner is before this Court.

The respondent has filed their objection statement.

It is contended that against an order passed by the DRT, a writ petition is not maintainable and the Appellate remedy should be availed. It is further contended that insofar as the consideration as made by the DRT, the DRT has taken note of the decision of the Hon''ble Supreme Court as well this Court and has thereafter held that such issue can only be considered by the Civil Court and therefore, the DRT is not in a position to entertain the appeal. It is contended that such order does not call for interference.

Insofar as the transaction, it is contended that the petitioner had taken part in the auction process knowing fully all the consequences and having offered the highest price and the sale being confirmed, the petitioner was required to deposit the balance amount and as such, the action taken by the respondent is justified.

In the light of the rival contentions, insofar as the order passed by the DRT which is assailed herein, since a contention is urged that an appeal under Section 18 of the SARFAESI Act is required to be filed, the learned counsel for the respondent-Bank would refer to the decision of a Full Bench of this Court in the case of M/s. Deepak Apparels Pvt. Ltd. Rep. by its Managing Director K. Kotrabasappa & Others v. City Union Bank Ltd. [CDJ (216) KAR HC 156]. The said situation was while considering the contention that had been putforth by a borrower and there was conflicting decisions rendered by two different Division Benches of this Court. Ultimately, having taken note of all aspects, the Hon''ble Full Bench has held that normally, the Court should not entertain a writ petition but, when the extraordinary writ remedy is invoked in the facts and circumstance falling under the exceptional categories, a writ petition could be entertained.

In the instant case, as noticed, the petitioner is neither a borrower nor a guarantor in respect of the loan. That apart, the DRT itself while disposing of the appeal has held that the petitioner''s right is to filing a civil suit. If that be the position, it is not a case where the DRT has rejected the claim of the petitioner as not being sustainable but, has only indicated the alternate forum where the petitioner would have to make the claim. If in that light, the exceptional circumstance which would arise in the present case for consideration herein is that the petitioner while seeking refund of the amount, the petitioner could have either gone to the Civil Court directly without approaching the DRT or could have also assailed the communication by which the right of the petitioner was affected by filing a writ petition before this Court.

Therefore, in the present circumstance, when the petitioner was not required at the first instance itself to file an appeal under Section 17 of the Act but, had chosen such remedy, merely for the said reason, the petitioner need not be relegated to the remedy of appeal under Section 18 of the Act to the Debts Recovery Appellate Tribunal as the instant petition could be considered dehors the remedy availed by approaching the DRT at the first instance.

In that view of the matter, what requires consideration herein is as to whether the second prayer made in the petition assailing the communication dated 12.06.2013 would arise for consideration. On that aspect also, since the respondent has raised a contention that there are disputed questions and the petitioner should be relegated to the remedy before the Civil Court as has been observed by the DRT, what is necessary to be taken into consideration is that the present case does not consist of the disputed factual aspects as is required to be decided by tendering evidence before the Civil Court. As noticed, the transaction was one where the petitioner had participated in a tender process for sale of secured asset and thereafter, the confirmation of the sale was not done as would be done in a normal circumstance as the borrower was before the DRT assailing the action of the bank and in that proceedings there was an interim order that had been granted. It is in that circumstance, due to the delay that had occurred, the petitioner was seeking that the transaction shall not be proceeded further and the amount already paid be refunded. These aspects of the matter could be decided entirely on the proceedings that had taken place between the borrower and the bank before the DRT earlier and also the communication that has been exchanged between the petitioner and the respondent.

Therefore, in that light, though the learned counsel for the respondent contends that the instant petition is filed under Article 227 of the Constitution of India, the law is well settled that when a power is available to the Court, the wrong mentioning of the provision or non-mentioning of the relevant provision by itself cannot be a bar.

In that light, when the factual aspects herein are taken into consideration, the fact that the petitioner was the highest bidder is not in dispute. The amount of 25% as required had also been deposited by the petitioner immediately thereafter is clear. The Sale Confirmation Advice was issued on 10.10.2012 but, confirmation was not made. As on the said date, the DRT had already considered the appeal filed under Section 17 of the Act by the borrower and the interim order dated 09.10.2012 was issued where there was restraint on the respondent-Bank to confirm the sale and the borrower had also been granted the benefit of depositing the amount and regularizing the transaction or in such manner negotiate with the bank or be subject to the order that would be ultimately passed by the DRT.

If that be the position, as on 09.10.2012, the respondent-Bank in any event could not have proceeded with the confirmation of the sale and in respect of that aspect, the petitioner in any event cannot be held responsible for the further transaction not having been completed by paying the remaining 75% of the amount. The confirmation thereafter could be made by the respondent only after obtaining necessary orders from the DRT. Due to the said delay which had occurred, the petitioner had already issued the communication dated 26.11.2012 indicating that since the period of one month had already elapsed and there was no certainty with regard to the sale certificate being issued, they would not be interested in proceeding further and had sought for return of the amount which they had paid by retracting from the proceedings.

No doubt, the respondent-Bank through their communication dated 12.04.2013 though had indicated with regard to the appeal in S.A. No. 628/2012 pending before the DRT but, did not proceed to act on the communication that had been issued by the petitioner seeking to retract from the transaction. Thereafter, the petitioner had addressed letters on 24.04.2013 and 06.06.2013, though such letters were addressed and all the letters addressed by the petitioner was referred to by the respondent, by the communication dated 12.06.2013, the respondent-Bank has informed the petitioner that the request of the petitioner cannot be accepted and the amount would be forfeited. Such action of the respondent would not be justified inasmuch as in a circumstance when the borrower had approached the DRT and when there was restraint on the Bank and there was delay and at that stage, the petitioner was retracting from the transaction seeking refund of the amount, the respondent-Bank should have taken into consideration these aspects of the matter and conclusion should have been reached to refund the amount since, in any event the secured asset was still available for the benefit of the respondent. If borrower had failed in the appeal or leave was granted, the respondent-Bank in any event could have proceeded to realize the amount by bringing the property once over to sale through auction.

In the present circumstance, there is no dispute to the fact that the property has thereafter been auctioned and sold to a different purchaser though the details of the same need not be referred to herein to come to a conclusion as to whether the respondent-Bank has realized a higher amount or not. But, in any event when the petitioner had retracted and sought for refund, at that stage, the respondent-Bank was required to accede to the same and the amount should have been refunded.

To the said extent, the decisions relied on by the learned counsel for the petitioner in the case of E. Ali v. The Syndicate Bank and Ors. [LAWS (KAR)-2015-6-3] and in the case of Hotel Sharada Paradise v. Secretary to the Government of India [2015 (3) Bankers''s Journal 126] would be relevant for the said purpose.

Therefore, if all these aspects of the matter are kept in view, even without finding fault with the order dated 14.07.2014 passed by the DRT in S.A. No. 316/2014, this Court is required to hold that the action of the respondent-Bank through the communication dated 12.06.2013 to forfeit the EMD paid by the petitioner would not be justified and an appropriate direction is necessary to be issued to the respondent-Bank to refund the amount of Rs. 22,50,500/- to the petitioner.

Insofar as the interest, I am of the opinion, at this juncture, the quantum of interest as prayed cannot be ordered in a writ petition of the present nature. However, taking note of the fact that the respondent-Bank is a Banking Institution and all the amount received by them in any event would be invested by the bank for earning returns, as an interim measure, the respondent-Bank will have to be directed to pay the interest at the rate of 6% per annum to the petitioner on the said amount from the date the amount was deposited with the bank till the date of repayment.

Insofar as the additional interest, if any is claimed by the petitioner, such claim would have to be separately made by the petitioner by filing appropriate proceedings before the Civil Court, so that the rate of interest certainly would be a disputed question to decide as to whether the respondent had earned out of the amount which had been deposited by the petitioner with the respondent-Bank and the loss that was sustained by the petitioner for the act of the respondent.

In that view, for the present, the petition is disposed of with a direction to the respondent-Bank to refund the sum of Rs. 22,50,500/- with interest at 6% per annum within four weeks from the date of receipt of a copy of this order. If the amount is not refunded within the said period, the amount shall carry interest at 12% per annum thereafter.

In terms of the above, the writ petition stands disposed of.