VARGHESE UKKEN Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) Whether sale of the secured asset for the 'Reserve Price' fixed in respect of the property will stand vitiated, for not having obtained 'consent of the borrower/ defaulter' by virtue of the 'second proviso' to Rule 9(2) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as 'the Rules') is the primary question to be answered in this case. The incidental question is; whether interference is warranted, invoking the discretionary jurisdiction under Art. 226 of the Constitution of India, in view of the several other writ petitions and proceedings filed earlier, wherein the challenge raised against allegedly inadequate 'reserve price' has been rejected; when the opportunities given to the defaulters to satisfy the liability in a phased manner have not been utilised and when the relief sought for availing alternate remedy under S. 17 of the SARFAESI Act, by filing S.A. 49 of 2007 before the DRT, Ernakulam has been given up, causing the S.A. to be dismissed as withdrawn.

(2.) Before considering the question of law involved as aforesaid, it is necessary to encapsulate the factual matrix for the purpose of effective adjudication. The petitioners, father and son respectively, were running different establishments under different name and style. The first petitioner was running an establishment under the name and style as M/s. Ukken Stores, while the second petitioner was running an establishment in the name and style as M/s. Ukken Paper Marts. Both the petitioners were running, as partners, another establishment by name and style as M/s. Ukken Paper and Boards.

(3.) In connection with the business transactions as above, the petitioner had borrowed various amounts (about Rs. 2 crores), by way of 'cash credit facility' and 'term loan' from the first respondent-Bank, creating security interest over the properties concerned. In the course of events, a total sum of Rs. 1.25 crores was paid and the account in respect of the establishment by name M/s. Ukken Stores was closed. But, since the petitioners continued to be defaulters in respect of the other establishments, the accounts were declared as 'NPA and the Bank proceeded with steps under the SARFAESI Act, leading to issuance of notice under S. 13(2), way back in the year 2006 (22-6-2006).