MAHESHWAR DUTT MISHRA Vs. PUNJAB NATIONAL BANK

JUDGEMENT

(1.) Heard Shrikant Mishra, learned counsel for the petitioners, Sri P.P. Singh, learned counsel for the respondent nos.1 to 4 and perused the record.

(2.) The instant writ petition has been filed on behalf of the petitioner with the following prayer:-

(3.) It is submitted by learned counsel for the petitioners that the present petition is being filed by the petitioners being aggrieved by the mala fide action of the respondent bank in hastily selling the house of the petitioners situated at House No.3, Sangam Vihar Kaushpuri Colony, Faizabad (now Ayodhya), mortgaged with the respondent bank as security for availing the overdraft loan account facility offered by the respondent bank, to the respondent no.3 inspite of the earnest requests of the petitioner to grant them some time to clear the outstanding dues payable to the respondent bank. The respondent bank, while acting in collusion with the respondent no.3, deliberately and with the intention to deprive the petitioners of their property, frustrated the proposal for one time settlement submitted by the petitioners under the one time settlement scheme floated by respondent bank inspite of the petitioners having deposited an amount of Rs.11,00,000.00 as required by the respondent bank for consideration of their proposal and still willing and ready to pay the entire outstanding dues. It is further submitted that the present petition assails the order dtd. 15/10/2022 passed by the Debts Recovery Tribunal, Lucknow in completely perverse manner rejecting the application of the petitioners seeking grant of extension of time to clear the outstanding dues of the petitioners payable to the respondent bank within a period of two months in terms of settlement recorded in order dtd. 5/10/2021 passed by Debts Recovery Tribunal, Lucknow. It is further submitted that the Debts Recovery Tribunal completely failed to consider and appreciate that the petitioners were put under extreme duress by the respondent bank when they accepted the terms of settlement dictated by the respondent bank, as recorded in order dtd. 5/10/2021 passed by Debts Recovery Tribunal, Lucknow, the petitioners were facing compelling circumstances since the respondent bank, notwithstanding the pendency of the securitisation application preferred by the petitioners, had already hastily and in a completely arbitrary manner auctioned the property of the petitioners and was about to be confirmed in favour of respondent no.3, thus the petitioners left with no other option and were coerced to accept the terms unilaterally dictated by the respondent bank with respect to repayment of the entire outstanding dues within a short time of two months in order to protect the roof over their head from being sold by the respondent bank to a third party, even when the one time settlement scheme which was floated by the respondent bank itself provided for a period of 90 days extendable upto 180 days for clearing the outstanding dues of the respondent bank, hence the impugned order dtd. 15/10/2022 has been passed without non-application of judicial mind, which is liable to be set aside. It is further submitted that in the year, 2016, the petitioners had availed an overdraft loan facility under the oriental mortgage scheme and also a term loan from the respondent bank for establishment of a school at village Shakhupara, Raebareli Road, Ayodhya. The aforesaid facilities were availed in the form of two separate loan accounts vis overdraft loan account no.02945085002245 and term loan account no.02947025002887 respectively. The present petition has been filed being aggrieved by the proceedings initiated by the respondent bank under the Securitisation and Reconstruction of the Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "SARFAESI Act"), relate only to the overdraft loan account wherein the principal borrowing was of Rs.40,00,000.00 which remained sanctioned from the year 2016 to 2020, without any default on the part of the petitioners. It is further submitted that on 31/1/2020, the overdraft loan account of the petitioners was as Non-Performing Asset ("NPA") by the respondent bank as the respondent failed to make payments towards the aforesaid account on account of COVID-19 pandemic and the slowdown in the business as a result thereof. The aforesaid overdraft facility was utilized for development and establishment of a school, however, on account of the COVID-19 pandemic, the school failed to induct sufficient students, which resulted in the total failure of the project. It is further submitted that realizing the extraordinary situation created due to the effects of the COVID-19 pandemic which had adversely affected not only the business operations but also the income of the public in general, a Circular No.38/2020 dtd. 9/9/2020 was issued by the Head Office Respondent Bank, wherein an one time settlement scheme was floated in order to reduce/settle the increasing number of NPA accounts as a result of the pandemic. The scheme was applicable to all NPA accounts upto Rs.5.00 crores and was to remain in force till 31/3/2021. It is further submitted that as soon as the petitioners' overdraft loan account was declared NPA by the respondent bank, the petitioners, on 4/12/2020 made an application to the respondent bank for availing the benefit of the aforesaid one time settlement scheme and also deposited two cheques of Rs.5.00 lacs and Rs.3.00 lacs respectively towards consideration of the same. It is further submitted that even though the OTS proposal of the petitioners was pending before respondent bank, the respondent bank instead of deciding the aforesaid application/proposal of the petitioners first, in the most high handed manner, proceeded against the mortgaged residential property of the petitioners under SARFAESI Act and issued sale notice dtd. 22/2/2021, wherein the property in question was put on auction for recovering the outstanding amount payable towards the overdraft loan account. It is further submitted that being aggrieved by the arbitrary and perverse action of the respondent bank in putting the property in question on auction, the petitioners preferred Writ Petition No.7662 (M/B) of 2021 before this Court, however, the respondent bank in the most unethical manner informed the Court that the OTS proposal of the petitioner had already been disposed of vide letter dtd. 27/1/2021, which had put some precondition with the borrower for considering his OTS and since the petitioner failed to meet the precondition, as such the OTS stood rejected. It is further submitted that the respondent bank never communicated to the petitioner its order dtd. 27/1/2021 whereby the OTS proposal of the petitioners was disposed of and the petitioner was provided a copy of the same only on hearing dtd. 19/3/2021 by the respondent bank. It is further submitted that this Court by means of the order dtd. 19/3/2021, pleased to dispose of the aforesaid writ petition and required the petitioners to approach the Debts Recovery Tribunal, Lucknow by filing a securitisation application under Sec. 17 of the SARFAESI Act and in pursuance of the order dtd. 19/3/2021, the petitioners preferred Securitisation Application No.234 of 2021 before the Debts Recovery Tribunal, Lucknow challenging the sale notice dtd. 22/2/2021 issued by the respondent bank. It is further submitted that the order dtd. 27/1/2021 passed by the respondent bank, requiring the petitioners to pay a further sum of Rs.3.00 lacs for consideration of their OTS proposal within seven days from the date of receipt of the order, was only provided to the petitioners on hearing dtd. 19/3/2021 in the aforesaid writ petition filed by the petitioners and in pursuance of the aforesaid order, the petitioners fortified their OTS proposal by depositing a cheque of Rs.3.00 lacs vide communication dtd. 24/3/2021, which was duly credited in the account of the respondent bank. Since no bids were received pursuant to the sale notice dtd. 22/2/2021 issued by the respondent bank and petitioners were hopeful that their case would be considered favourably by the respondent bank. It is further submitted that however to the utter shock of the petitioners, the respondent bank instead of accepting the OTS proposal of the petitioners, maliciously issued another sale notice dtd. 18/8/2021 putting the property in question again on auction inspite of the petitioners having complied with the terms of the order dtd. 27/1/2021 and having deposited the sum of Rs.3.00 lacs as required by the respondent bank within the stipulated period of seven days from the receipt of the order. Thus, as a result of the mischief and the mala fide action of the respondent bank, the petitioners' OTS proposal got frustrated. It is further submitted that the petitioners forthwith challenged the second sale notice dtd. 18/8/2021 issued by the respondent bank in their pending securitisation application, by preferring the amendment application dtd. 8/9/2021 along with application for interim relief seeking stay of the auction sale in pursuant to the aforesaid sale notice. It is further submitted that the amendment application, seeking to challenge the second sale notice dtd. 18/8/2021 preferred by the petitioners could not be decided due to paucity of time and unavailability of the Presiding Officer at the end of the Debt Recovery Tribunal and as a consequence thereof, the respondent bank succeeded in its mischievous design to auction the residential property of the petitioners mortgaged with it in collusion with the auction purchaser. The auction was conducted by the respondent bank on 17/9/2021 and the respondent no.3 was declared as highest bidder therein. It is further submitted that the respondent bank having successfully auctioned the residential property of the petitioners mortgaged with it without the intervention of the Debt Recovery Tribunal, the petitioners were put under extreme duress and under compelling circumstances were coerced to enter into compromise with the respondent bank, the terms whereof were recorded in the order of the Debts Recovery Tribunal dtd. 5/10/2021 passing in Securitisation Application No.234/2021. It is further submitted that even the Circular No.38 of 2020 dtd. 9/9/2020 vide which the one time settlement scheme was floated by the respondent bank, provided for a period of 90 days extendable upto 180 days for clearing the outstanding dues of the respondent bank, however, the petitioners were put in a corner and were left with no other option but to accept the terms unilaterally dictated by the respondent bank with respect to repayment of the entire outstanding dues within a short time of two months in order to protect the roof over their head from being sold by the respondent bank to a third party. It is further submitted that when the petitioners obtained the certified copy of this order dtd. 5/10/2021 passed by the Debts Recovery Tribunal, Lucknow, they found that certain errors with regard to the quantum of the amount to be paid by the petitioners to the respondent bank in terms of the settlement entered into with the respondent bank had crept in the aforesaid order and as such the petitioners preferred a correction application before the Debts Recovery Tribunal, Lucknow. It is further submitted that despite the best efforts of the petitioners, since the petitioners were unable to arrange enough money to clear entire outstanding dues of the respondent bank within a period of two months, the petitioners filed a supplementary affidavit in aforesaid Miscellaneous Application No.57 of 2021 seeking extension of time for complying with the order dtd. 5/10/2021 passed by the Debts Recovery Tribunal, Lucknow. It is further submitted that thereafter the petitioners preferred Miscellaneous Application No.82 of 2021 dtd. 14/12/2021 before the Debts Recovery Tribunal seeking extension of time. It is further submitted that the aforesaid correction application filed in Securitisation Application seeking correction of order dtd. 5/10/2021 and application for extension of time, kept pending before the Debts Recovery Tribunal, Lucknow from 1/11/2021 and 14/11/2021 respectively, and the respondent bank taking advantage of non-disposal of the aforesaid applications, in the most malicious manner on 15/12/2021, confirmed the sale in respect of the property of the petitioners mortgaged with the respondent bank in favour of respondent no.3 and thereby created third party rights to frustrate the claim of the petitioners. It is further submitted that the petitioners are willing of clearing the entire loan amount pertaining to their overdraft loan account. The petitioners have always been and are ready to deposit the remaining outstanding amount dues against their defaulting loan account vis overdraft loan account no.02945085002245 and are even willing to pay the said amount instantly to the respondent bank and with the view to demonstrate the bona fides of the petitioners, the petitioners are enclosing a copy of the bankers cheque of Rs.38,94,202.00prepared in favour of the respondent bank. This amount of Rs.38,94,202.00 is the exact amount of outstanding in the overdraft loan account of the petitioners, as is evident from the order dtd. 29/3/2021 passed by the Debts Recovery Tribunal, Lucknow in Miscellaneous Application No.82/2021.