ARSHAD ISPAT Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners are a partnership firm and its partners engaged in the business of manufacture and trade in sponge iron. The petitioners approached the fourth respondent-Bank seeking financial assistance for the project estimated at about Rs.27 crores. By a sanction letter dated 14.10.2009, the fourth respondent-Bank sanctioned a term loan of Rs.12 crores and thereafter under a sanctioned letter dated 05.03.2011, Rs.3 crores were sanctioned under hypothecation of stock-in-trade, book debts and mortgage of immovable properties by deposit of title deeds.

(2.) The fourth respondent-Bank issued notice dated 06.01.2012 under Section 13(2) of the The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act , 2002, (hereinafter referred to as the ' SARFAESI Act ' for short), calling upon the petitioners to pay a sum of Rs.14,85,16,757/-, the outstanding loan amount along with accrued interest thereon. It is the case of the fourth respondent-Bank that since the petitioners failed to comply with the terms of the demand notice, symbolic possession of the immovable property was taken vide possession notice dated 04.07.2012 issued under Section 13(4) of the SARFAESI Act. Although several immovable properties were taken as secured assets, these writ petitions concern a residential apartment built on land measuring 3990 sq. ft. situated at No.39, Ward No.11, Assessment No.39, Opposite Municipal School Ground, College Road Area, Hospet, Ballari District.

(3.) The property in question was put for sale by e-auction under sale notice dated 29.12.2016, fixing the date of auction sale on 30.01.2016. The sixth respondent was declared the successful bidder. At that juncture, the petitioners challenged the sale proceedings before the Debts Recovery Tribunal at Bengaluru, in Appeal I.R.No.652/2016. An interim order was granted by the Tribunal directing the petitioners to deposit a sum of Rs.25,00,000/- on or before 25.02.2016. Admittedly, the petitioners deposited a sum of Rs.10,00,000/- in part compliance of the order of the Tribunal. Thereafter, an application was made by the petitioners seeking extension of time to comply with the orders. Consequently, the Tribunal directed the petitioners to deposit a sum of Rs.1 crore on or before 30.03.2016. Since the petitioners were unable to comply with the terms of the interim order, the ad-interim order passed initially was vacated and subsequently the appeal was dismissed.