The Federal Bank Limited vs State of Kerala

K. Vinod Chandran, J.—The writ petitions are filed by the creditor Bank and the defaulter. The defaulter is the sixth respondent in Writ Petition No. 3026/2014, which is filed by the creditor Bank. The parties are referred to as per their status in the said Writ Petition. The petitioner had proceeded against the sixth respondent for realization of amounts due to the creditor Bank in defaulted loan accounts. SARFAESI proceedings initiated concluded in Exhibit P1 sale certificate being issued. The sale notice itself had earlier been challenged in the Securitisation Application No. 50/2013 before the Debt Recovery Tribunal, Ernakulam, by the sixth respondent, in which the interim application filed for stay was rejected by a detailed order, as evidenced by Exhibit P2. Though an appeal was filed before the Debt Recovery Appellate Tribunal, the same was not taken into file for not having complied with the condition of pre- deposit. The sixth respondent was before this Court with a Writ Petition in which this Court granted time to make the pre deposit, on condition of which, the Debt Recovery Appellate Tribunal was directed to dispose of the appeal on merits. Admittedly, the pre deposit was not made even in the extended time granted by this Court and the appeal stood rejected. The petitioner herein is aggrieved by two attachments, revealed in the Encumbrance Certificate, which admittedly is beyond the time of mortgage to the petitioner, on the very same properties now sold under the SARFAESI proceedings. These two attachments were made by the very same Debt Recovery Tribunal in proceedings initiated by two Banks being the fourth and fifth respondents herein.

The petitioner seeks for lifting of attachments and effecting mutation in the name of the alleged purchaser, the seventh respondent herein in the present writ petition. The registration of Exhibit P6 having not been effected till date by reason of the attachments, there is also prayer made to effectuate such registration. The petitioner relies on two decisions of this Court to contend that the attachments made subsequent to the mortgage are of no consequence. The decisions placed before this Court are Housing Development Finance Corporation Vs. Sub Registry Officer, and Madhan S. Vs. Sub Registrar, Kollam and Others, .

The learned counsel for the fourth respondent Bank however takes me through the sale certificate which in unequivocal terms makes the sale subject to the attachments made by the DRT and Schedule II of the certificate specifically referring to the two attachments, which has resulted in the Sub Registrar declining registration. Hence the respondent Banks contend that the sale was subject to the two attachments, which liability go with the property. It is an admitted fact that the petitioner Bank has filed interlocutory applications before the DRT seeking to lift the attachments and in such circumstances a consideration of the said prayer by this Court would pre-empt the Tribunal, which should consider the issue, at the first instance, if necessary, after taking evidence as also in the light of the binding precedents, aforecited. The parties would be entitled to raise all their contentions before the Debt Recovery Tribunal. Writ Petition No. 3026/2014 is hence closed leaving liberties to the parties to raise their contentions in the applications said to have been filed before the DRT by the petitioner Bank.

The sixth respondent defaulter, has filed W.P. (C) No. 3839/2013, purportedly challenging an order of the Lok Adalath produced as Exhibit P2. The sixth respondent contends, it is not clear as to how the Kerala State Legal Service Authority was seized of the matter. The sixth respondent asserts that the reference made was not proper and they had no notice of the same. In any event, a dispute between the Bank and the borrower being a Charitable Society, along with some party respondents were taken up before the Lok Adalath. The Lok Adalath recorded the undertaking of the respondents to pay Rs.1,99,04,449/- to the creditor Bank towards full and final settlement on or before 15.03.2012. It was further directed that if the said condition is not complied with, then such payments could be made with interest at the rate of 10.75% per annum on or before 15.06.2012. The petitioner Bank was reserved the liberty to realize the loan amount as per the original agreement, if none of the aforesaid conditions were complied with.

The said order of the Lok Adalath is passed on consent and the executive members of the sixth respondent too have endorsed it. In any event, Exhibit P1 is seen passed on 22.02.2012 and the sixth respondent or its members cannot feign ignorance of the same since they have put their signature to it. The present Writ Petition is filed after an year, that too after the Securitisation Application filed before the Lok Adalath was considered at the interlocutory stage. That I.A. as revealed from Exhibit P2 in W.P. (C) No. 3026/2014 was heard on 22.01.2013 and a detailed order was passed on 12.02.2013.

The proceedings initiated under the SARFAESI Act has also concluded in the sale of the properties to the seventh respondent which issue is again pending consideration before the Debt Recovery Tribunal, but with respect to the lifting of two attachments made by the Tribunal itself in two other cases. It is also pertinent that the Bank has produced the resolution passed by the Executive Committee of the Charitable Society, the sixth respondent, resolving to attend the Lok Adalath, as evidenced by Exhibit R1(c). This belies the contention of the sixth respondent that the Society and its members were unwittingly led to concede before the Lok Adalath. The lack of notice to two Executive Committee members also stand belied on the strength of the authorisation made on behalf of the five members, who counter signed the award of the Lok Adalath, on behalf of themselves and the two absent members. The absent members authorized the said five members and were present when the resolution was passed. The sixth respondent society does not contest the document with any reply affidavit.

Considering all the above circumstances, W.P.(C) No. 3839/2013 stands dismissed. Considering the plea of the seventh respondent, the alleged purchaser, and in view of the contentions raised as also the stage at which the proceedings are before the Tribunal, it is only proper that if any of the parties move the Debt Recovery Tribunal for expeditious consideration of the applications pending before it, the Tribunal consider the same and dispose of the pending applications before it, expeditiously, at any rate, within a period of three months from the date of such application. W.P.(C) No. 3026/2014 is closed without prejudice and W.P.(C) No. 3839/2013 is dismissed. Parties to bear their respective costs.