STATE BANK OF INDIA Vs. VIJAYA CONSTRUCTIONS

JUDGEMENT

(1.) STATE Bank of India is the petitioner. The grievance is mainly with regard to Exhibit P3 order of attachment dated 11.08.2010 issued by the 5th respondent. The first respondent had availed a loan from the petitioner Bank creating equitable mortgage over different extents of properties belonging to the 2nd and 3rd respondents. In spite of the agreement to satisfy the loan installments, the repayment was not at all prompt or proper. In the said circumstance, the Bank declared the account as NPA and proceeded with steps under the SARFAESI Act. Being aggrieved of the steps taken by the Bank, the second respondent herein, who happens to be the sole proprietor of the first respondent, approached this Court by filing WP(C) NO. 19093/2011 which was disposed of as per Exhibit. P5 judgment dated 26.07.2011. The grievance exposed by the second respondent in the said writ petition was that the said petitioner/borrower was not in a position to satisfy the due amount, despite which the Bank was not finalising the proceedings under the SARFAESI Act by causing the property to be sold which virtually enhanced the liability of the petitioner day by day and hence wanted a direction to have the proceedings completed expeditiously. It was accordingly, that the writ petition was disposed of with a direction to the respondent Bank to complete the proceedings under the SARFAESI Act at the earliest, at any rate, within three months from the date of receipt of a copy of the judgment.

(2.) IN tune with the direction, the Bank proceeded with further steps, when it came to the notice of the Bank that the property involved herein was caused to be attached by the 5th respondent, by issuing Exhibit P3 notice dated 11.08.2010, in respect of some liability which was to be cleared by the owner of the property towards the 4th respondent KFC. It is in the said circumstance that the petitioner Bank has approached this Court seeking for a declaration that the respondents 4 and 5 are not justified in proceeding against the property, pursuant to Exhibit P3 attachment, since the petitioner Bank has priority rights. It is also stated that, in the course of further proceedings pursuant to Exhibit P5 judgment, the property was put in public auction and the successful bidder has quoted a sum of Rs. 40 lakhs, as against the outstanding liability of more than 4 crores as on date.

(3.) IN response to the submission made by Sri. George Thomas Mevada - learned senior counsel for the petitioner Bank, the learned counsel appearing for the 4th respondent Corporation submits that, though the factual position as to the prior right of the Bank over the attached properties has been sought to be disputed in the counter affidavit, on verification of the actual facts and figures, the said respondent is now convinced as to the factual position that the mortgage in favour of the 'SBI' was created as early as in the year 2005 i.e., much before the subsequent loan given by the 4th respondent - KFC in the year 2007