K.SAHAJA RAO Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) THE writ petitioner is a borrower and the owner of the property which was given as security for the loan taken by the petitioner. It is stated that the petitioner intended to construct a building on the property by availing a bank loan and rent it for non-residential purpose. The Bank is stated to have granted this cash credit loan of an amount of Rs.340 lakhs, repayable in 23 months.

(2.) IN the meantime, there appears to be a dispute pending in W.P.No.25368 of 2008 before the Andhra Pradesh High Court as regards the permissible areas for construction. The petitioner states that on this account, the petitioner could not complete the construction within 23 months. Consequently, there was also a default on the part of the petitioner in complying with the terms of the loan. The petitioner is stated to have paid a sum of Rs.1,10,61,684.00 till December, 2010, which consisted of Rs.55 lakhs towards interest till December, 2010 and principal amount of Rs.50 lakhs. Faced with such a situation and the fact that the Bank had refused to accept further interest payment and insisting on the dues to be paid in full, the petitioner requested the respondent Bank to convert the 23 months SME loan to a term loan or for considering one-time settlement. However, proceedings were taken under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (hereinafter called the SARFAESI Act), which was questioned by the petitioner on the ground that there was no notice served. In spite of written assurance stated to have been given by the Bank through letter dated 08.09.2011 to defer further action, the Bank got an order from the Chief Metropolitan Magistrate, Hyderabad, under Section 14 of the SARFAESI Act to take physical possession of the secured asset on 23.09.2011. Pursuant to that order, on 11.02.2012, the respondent took physical possession of the secured asset through an Advocate Commissioner on 28.02.2012 to bring the property for sale on 29.02.2012. A sale notice was accordingly published by the Bank.

(3.) IT is stated that the Tribunal passed an order on 22.03.2012, directing the petitioner to deposit a sum of Rs.75 lakhs directly to the Bank within four weeks, out of which Rs.15 lakhs was directed to be paid on or before the auction date i.e., 30.03.2012. There was also a default clause therein that in the event of failure of the borrower to deposit the said sum before the auction date, the Bank would be at liberty to go ahead with the sale.