INDIAN BANK, ASSET RECOVERY MANAGEMENT BRANCH AND ORS. Vs. THE OFFICIAL ASSIGNEE, HIGH COURT OF MADRAS AND ORS.

JUDGEMENT

(1.) Loans were obtained from the Indian Bank for which one Mr.Ashok Muthanna deposited the title deeds of his ersonal property for the creation of equitable mortgage. He executed memorandum of deposit of title deeds in his individual capacity on 3.11.1999. The loan accounts have been classified as NPA by the Indian Bank on 31.3.2000. Thereafter, O.A.No.524 of 2000 was filed by the Bank for recovery of Rs.409.61 lakhs before the Debt Recovery Tribunal, Chennai. M/s.Fidelity Industries was ordered to be wound up by the Company Court in C.P.No.526 of 2000 on 14.6.2001 filed by M/s.Escorts Finance Limited. Accordingly, an Administrator was appointed. In the meanwhile, the Indian Bank issued notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short, ''SARFAESI Act'') to M/s.Fidelity Industries Limited and to Mr.Ashok Muthanna on 24.8.2002. Mr.Ashok Muthanna was declared as insolvent in I.P.No.127 of 2000 on 21.10.2002 by the orders of this Court. C.P.No.65 of 2002 was filed by the Reserve Bank of India against M/s.Fidelity Finance Limited, which is a sister concern and Accordingly it was ordered to be wound up by the Company Court on 13.3.2003. Thereafter, the Debt Recovery Tribunal permitted M/s.Indian Bank to implead the Official Assignee in O.A.No.524 of 2000 in and by order dated 20.02.2004. Ashok Muthanna wrote a letter on 29.4.2004 to the Administrator appointed by this Court in C.P.No.65 of 2002 requesting him to sell his personal property mortgaged with Indian Bank to secure the loans availed by M/s.Fidelity Industries Limited for the purpose of repayment to Bank and depositors of M/s.Fidelity Finance Limited.

(2.) The Administrator appointed in C.P.No.65 of 2002 filed an application in C.A.No.1432 of 2004 seeking permission to bring the property for sale through public auction. It was done with the fond hope that after payment of dues to M/s.Indian Bank, the balance amount may be utilised towards the payment to the depositors of Fidelity Finance Limited. The application was ordered on 16.6.2005 permitting the Official Liquidator to assess the property through a valuer and submit the report. The Bank allegedly took possession of the property under Section 13(4) of the SARFAESI Act as per proceedings dated 25.7.2015. The Official Liquidator filed an application in C.A.No.1308 of 2005 in C.A.N0.1432 of 2004 in C.P.No.65 of 2002 inter alia contending that the Indian Bank will have to be restrained from bringing the property for sale except in accordance with the orders passed by this Court.

(3.) Thereafter, Company Application No.1432 of 2004 was allowed permitting the Administrator to conduct auction on 27.4.2006 with the upset price of Rs.7.00 Crores. By the letter dated 12.04.2006, the Official Assignee sought particulars from the Indian Bank on the extent of liability on his dealing with the property mortgaged by Mr.Ashok Muthanna and it was accordingly provided by the letter dated 21.4.2006 of the Indian Bank. For the auction conducted on 27.4.2006, there were no bidders. Thereafter, Indian Bank informed the Official Assignee of its intention to stand outside the Insolvency proceedings. It was also informed that it would not like to give up its secured asset.