Ramdev Ginning Factory vs M/S. Goldy Contractors And Developers & Ors

The challenge in the present appeal is an order passed by the learned Single Bench on 16/01/2018, whereby the writ petition was allowed and the

respondent/Bank was directed to hand-over the title deeds as well as possession of the property to the writ petitioner within 30 days from the date of

receipt of certified copy of the order.

The facts leading to filing of writ petition needs to be noticed first. The appellant availed financial assistance from the respondent/Bank. However,

on account of defaults committed by the borrower in repayment of the loan amount, the account of the appellant was declared as a 'Non Performing

Asset'.Consequently, the proceedings under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security

Interest Act, 2002 (for short 'the Act') was initiated against the appellant when a notice under Section 13(2) of the Act was issued. Thereafter, the

Bank initiated the auction proceedings, but the same were not completed. The appellant filed a writ petition before this Court bearing No. W.P.

3144/2010 challenging the proceedings  under the Act. There was an interim order granted in favour of the appellant. However, the counsel for

the appellant at the time of hearing of the petitioner on 12/07/2010 submitted that a liberty be granted to the appellant to approach the Debt Recovery

Tribunal. The order passed on 12/07/2010 reads as under:

“The petitioner before this Court has filed the present petition being aggrieved by the action of respondent/Bank in initiating the action of recovery

against the petitioner's Unit.

A reply has been filed on behalf of respondent/Bank and the contention of the respondent/Bank is that the present petition is not maintainable against

the ICIC Bank in the light of the judgment delivered in the case of Federal Bank Limited Vs. Sagar Thomas & others 2003(10) SCC 733.

At this stage, learned counsel for the petitioner has fairly stated before this Court that a liberty be granted to the petitioner to approach the Debt

Recovery Tribunal and he has conceded that the present writ petition is not maintainable. However, he prays for continuing the interim order

granted by this Court on 25/03/2010.

In the present case as per the present writ petition itself is not maintainable against the ICICI Bank as conceded by the learned counsel for the

petitioner, the question of continuing the interim order does not arise.

A liberty is granted to the petitioner to approach the Debt Recovery Tribunal in accordance with law.

With the aforesaid, the writ petition stands disposed of. C C as per Rules.â€​

Thereafter, the appellant filed an application under Section 17 of the Act before the Debt Recovery Tribunal (D.R.T) on 25th October, 2010,

which was dismissed by the D.R.T on 11th April, 2012, as barred by limitation. In an appeal against the said order the present appellant filed an

application before the Debt Recovery Appellate Tribunal, Allahabad (D.R.A.T.) to submit an offer of purchase of the property by the present

respondent in the sum of Rs.2.70 crores. During the pendency of the writ petition, the respondent No.3 herein, filed an application for intervention

that an amount of Rs.1crore deposited by the borrower was in fact, deposited by it on 30th of April, 2012 and it is the real purchaser of the property in

question for Rs.2.70 crores. The said respondent pointed out that it is ready to deposit the remaining amount of Rs.1.70 crores. The Debt Recovery

Appellate Tribunal passed an order on 13/12/2012, deciding the appeal by issuing the following directions:

“18. On the basis of the aforesaid, this is also unfortunate situation created by the Bank that as to why at the first instance the name of the

purchaser who purchased the property through the Private Treaty for a sum of Rs.1.75 crores has not been disclosed and why the Bank did not agree

to sale the property to the appellant who offered approximately more than Rs.1.00 crores than the purchaser of the property through Private

Treaty. The Bank did not agree to redeem the property, the redemption of the property does not mean that all the dues of the Bank are liquidated

but the property in question should fetch the highest price and for rest of the recoveries the Bank further has the right to proceed as per law as held by

the Apex Court that the best price of a property must be received.

Under these circumstances, the offer so made by the appellant to redeem the property by paying Rs.2.70 crores is to be accepted and the property

sold for a lower price i.e. Rs.1.75 to an unidentified person is to be quashed and accordingly, the appeal preferred by the appellant stands allowed.Â

The amount of Rs.1.00 crores deposited with the Tribunal be disbursed to the Bank and the remaining amount of Rs.1.70 shall be deposited by the

appellant with the Bank within a period of 30 days from the date of passing of this order. The right of the Bank is not restricted to proceed with the

recovery of remaining outstanding amount.â€​

The said order was challenged by the respondent/Bank by filing a writ petition being W.P. No.603/2013 (Chief Manager, Authorised Officer,

ICICI Bank Limited and Anr. vs. M/s. Ramdev Ginning Factory), which was dismissed on 3s1t July, 2013. This Court while dismissing the writ

petition, vide order dated 31/07/2013, upheld the order dated 13/12/12 passed by D.R.A.T and inter alia, held as under:

“25. There is nothing on the record to prove that after receiving a offer from respondent No.2 the same was ever communicated to the respondent

No.1. Similarly on 1.5.2012, learned appellate tribunal directed the respondent No.1 to deposit Rs.1 Crore with the respondent-bank and granted

interim relief to the effect that the respondent bank shall not get the sale of the property registered without the leave of the Court. This interim order

was continued till the appeal is finally decided. As per Annexure I/7 filed by the intervenor is an application for submitting offer to purchase the

mortgage property for Rs. 2.70 Crore filed by the respondent No.1. In para 4 of the said application, it has been stated that the intervenor is agreeable

to purchase the property of Rs.2.70 Crore. It is also averred that demand draft of Rs.1.00 Crore was prepared from the account of M/s. Gold

Contractor and Developers (P) Ltd. and this fact has been admitted by the intervenor's bank in its letter dated 29.8.2012. The sale agreement

executed between intervenor and respondent No. 1 is also on record. xxx xxx xxxÂ

…...................... In the present case, the reserve price in 2010 was Rs. 2.75 Crores fixed by the secured creditor in October 2010. As per Rule

8(8), the bank was required to settle the terms of the sale through private treaty with the respondent No.1 borrower, but the perusal of the letter dated

17.2.2010 discloses, that the bank has only intimated the respondent No.1 that a decision has been taken to sell the property through private treaty. It

was obligatory on the part of the bank to have settled the terms of the sale before materialising through private treaty. As per letter dated 31.8.2009,

the bank has not proceeded to sell the property through private treaty and the bank has chosen to sell the property through auction notice dated

24.3.10 and 2.8.10, thus, the stand so taken by the bank that they tried to settle the terms with the appellant through letter dated 31.8.09 for selling the

property through private treaty and the respondent No.1 had not responded is not correct and, therefore, we are of the view that learned appellant

tribunal rightly held so in para 14 of the impugned order.

xxx xxx xxxÂ

In respect of the dispute between intervenor and the respondent No.1, the same cannot be decided in this writ proceedings. The intervenor is

having other remedy and therefore, we are not inclined to resolve the controversy between the respondent No.1 and intervenor. We also take a

note that Shri S.M. Sanyal, learned counsel for the respondent No.1 during the course of arguments made an offer of Rs.3crores and also submitted

that he will deposit Rs.30,00,000/- (Rs. Thirty Lacs) more to the offer made before the appellate tribunal.

For the forgoing reasons, we are of the view that the order passed by the appellate tribunal is just and proper and in the interest of secured creditor

as well as of the borrower, no case for interference with the said order as prayed by the petitioner-bank is made out. The writ petition has no merit

and is accordingly, dismissed. No costs.â€​

It is thereafter, the respondent No.3 filed an application for review ofthe said order passed by D.R.A.T on 13th December, 2012 seeking release

of the original documents and to execute a sale certificate, such application was allowed by Tribunal on 08/10/2013.

The appellant challenged the said order passed in review by way of W.P. No.12718/2013. The order passed by the D.R.A.T in review petition

dated 08/10/2013 was set aside on 30th of June, 2016 by the Division Bench of this Court. Thereafter, the appellant is said to have executed sale deed

on 25th November, 2016 in favour of the writ petitioner. The title documents and the physical possession was not handed over to the purchaser by

the Bank even though the order of DRAT had become final. Therefore, the purchaser filed a writ petition before this Court, bearing No. W.P.

No.4548/2017, which has been allowed by the learned Single Bench vide the order impugned in the present appeal.

It may be stated that the appellant has filed a civil suit challenging thesale deed executed by the appellant on or about 8th of May, 2017, the said

civil suit is admittedly pending adjudication.

Before this Court, learned counsel for the appellant has raised the following arguments:

That no writ petition is maintainable against the private Bank as such bank is not performing any public duty. Reliance is placed upon the orders

passed by Hon'ble Supreme Court in the case of Federal Bank Limited vs. Sagar Thomas reported as 2003(10) SCC 733 and K.K. Saxena vs.

International Commission on Irrigation and Drainage and Ors., 2015(4) SCC 670. Learned Counsel for the appellant also placed relied upon an

order passed by the Single Bench of this Court in writ petition filed by the appellant itself that the writ petition against the private Bank is not

maintainable.

2.Next argument is that the remedy of the purchaser is only by filing an application under Section 17 of the Act before the D.R.T and since the writ

petitioner has effective alternative remedy, the writ petition could not have been entertained and the order passed by the learned Single Bench.

3.It is also argued that the sale deed executed on 25th November, 2016 is not binding on the appellant as the balance payment of Rs.1crore has not

been made to the appellant, which is a condition precedent for transfer of title in favour of the purchaser.

We have heard learned counsel for the parties and find no merit in the present appeal. The judgments referred to that no writ petition is

maintainable against the private Bank is not tenable. The judgment in Federal Bank Limited (Supra) arises out of a matter, wherein the challenge

was to the disciplinary proceedings initiated by the Bank against its employee. The Supreme Court held that the challenge to the disciplinary

proceedings by a Bank, which is not a State is not maintainable in a writ petition under Article 226 of the Constitution of India. 10. We do not find that

the principles laid down in the aforesaid judgment are anyway remotely applicable to the facts of the present case as the Bank is a secured creditor in

terms of the Act and has taken possession of the property to realize its dues. Though during the pendency of the proceedings, the borrower has

executed a sale-deed of the secured assets but the possession of the secured assets was with the Bank and also the title deeds, therefore, what the

purchaser sought the possession and the title documents so as to enjoy the property, the sale of which has been executed by the appellant. The

Bank has conceded before the learned Single Bench that it has no objection to hand-over the title deeds and the physical possession to the

purchaser. Therefore, it is not a case of challenge o any action of the Bank by the borrower or by the auction purchaser but inaction of the Bank in

not handing over the title documents to the purchaser, which led the purchaser to invoke the writ jurisdiction of this Court. Therefore, judgment in

Federal Bank Limited and K.K. Saxena (Supra), which are the cases of action relating to employment of an employee are not relevant for

determining the question raised in the present appeal, which is directed against a Bank performing statutory function. Similarly an order passed in a

writ petition filed by the appellant is not laying down any principle of law as the appellant has sought to invoke jurisdiction of the Tribunal.Â

Consequently, we do not find any merit in the first argument raised by the learned counsel for the appellant.

In respect of the argument that the remedy of the purchaser is onlybefore the D.R.T. under Section 17 of the Act is again not tenable. Such

remedy is against any of the measures taken by the secured creditor or its authorities/officers under the Act.  However, the challenge in the writ

petition was not to any action of the secured creditor, but the inaction of the Bank to hand over the physical possession of the secured assets

consequent to the sale by the appellant of the property, the possession of which was taken over by it in pursuance to the provisions of the Act. The

permission to sell the property to the writ petitioner was granted by D.R.A.T on 13th December, 2012 and the said order has attained finality when

W.P. No.603/2013 was dismissed on 31st July, 2013.  Therefore, the purchase of property by respondent No.3 is in terms of an order passed by

D.R.A.T only. Therefore, the remedy under Section 17 of the Act was not available to the purchaser.

Even otherwise, the availability of the alternative remedy is selfimposed restriction not to exercise writ jurisdiction when alternative remedy is

available. But where there is no dispute about the facts and that the secured creditor has no objection to hand over the physical possession of the

secured assets and to hand over the title deeds, the objections by the seller not to hand over the possession are not tenable and thus misconceived.Â

Therefore, we do not find any merit in the second argument as well.

In respect of an argument that the sale would be complete only on payment of balance amount of Rs.1crore, is again need not to be examined in

the present appeal. Admittedly, the appellant has filed a suit before the civil Court challenging the said sale deed. The prayer made in the civil suit

is that the purchaser does not get any right on the basis of sale deed executed on 25th November, 2016. The reliance of the appellant is on the

judgment of the Supreme Court in the case of Kaliaperumal vs. Rajagopal reported as 2009(4) SCC 193. The said judgment itself contemplates that as

to when the title in the property will pass depends upon the intention of the parties from the reading of the sale-deed.

The relevant extract reads as under : -

“17. It is now well settled that payment of entire price is not a condition precedent for completion of the sale by passing of title, as Section 54 of

Transfer of Property Act, 1882 (`Act' for short) defines `sale' as a transfer of ownership in exchange for a price paid or promised or part paid and

part promised. If the intention of parties was that title should pass on execution and registration, title would pass to the purchaser even if the sale price

or part thereof is not paid. In the event of non- payment of price (or balance price as the case may be) thereafter, the remedy of the vendor is only to

sue for the balance price. He cannot avoid the sale. He is, however, entitled to a charge upon the property for the unpaid part of the sale price where

the ownership of the property has passed to the buyer before payment of the entire price, under Section 55(4)(b) of the Act.

Normally, ownership and title to the property will pass to the purchaser on registration of the sale deed with effect from the date of execution of

the sale deed. But this is not an invariable rule, as the true test of passing of property is the intention of parties. Though registration is prima facie

proof of an intention to transfer the property, it is not proof of operative transfer if payment of consideration (price) is a condition precedent for

passing of the property.

The answer to the question whether the parties intended that transfer of the ownership should be merely by execution and registration of the deed

or whether they intended the transfer of the property to take place, only after receipt of the entire consideration, would depend on the intention of the

parties. Such intention is primarily to be gathered and determined from the recitals of the sale deed. When the recitals are insufficient or ambiguous

the surrounding circumstances and conduct of parties can be looked into for ascertaining the intention, subject to the limitations placed by Section 92 of

Evidence Act.â€​

Since the appellant is before the civil Court, we do not wish to say anything more than the fact that having executed the sale-deed, the rights of the

parties will arise in terms of the sale-deed. Therefore, it is open to the appellant to assert his claims before the civil Court, in accordance with law.

However, the purchaser is entitled to the physical possession of the property and the title deeds subject to the decision of the civil suit filed by the

appellant.

Thus, we do not find any reason to interfere in the present appeal against an order passed by the Learned Single Judge, which is accordingly,

dismissed.