P MOHANREDDY Vs. DEBTS RECOVERY APPELLATE TRIBUNAL MUMBAI

JUDGEMENT

(1.) Petitioners in this petition filed under Article 226 of the Constitution of India on 22-11-1999 are seeking to have the sale by public auction, held on 30-12-1998 with respect to land situated in Survey Nos. 32/1, 32/2, 32/3, 33/1, 92 and 93 of Jeedimetla village and Pet Basheerabad village (hereinafter referred to as 'the land in question') by the 3rd respondent and the consequential confirmation made on 27-1-1999, set aside as illegal, violative of provisions of the Recovery of Debts Due to Bank and Financial Institutions Act, 1993 (Act No. 51 of 1993), (hereinafter referred to as 'the Act'), without authority of law and against the directions of this Court.

(2.) In order to understand the points urged and raised before us, it will be necessary to mention the background facts in which the petitioner filed the writ petition and the other facts and circumstances which were brought to our notice: The petitioners allege that on 10/10/1991 Respondent No.5 Society through its Managing Director entered into an agreement with the petitioners for sale of the property in question for a total consideration of Rs.90,00,000.00, out of which Rs. 22,53,000.00 was paid on the date of agreement and after adjusting subsequent payments of Rs.18,19,850/- balance amount payable was Rs.49,27,150.00 As the society did not discharge its obligation under the agreement, the petitioners filed suit (O. S. No. 454 of 1994) on 7-10-1994 in the Court of Additional Subordinate Judge, Rangareddy District seeking decree for specific performance of the agreement to sell. Pending the suit interim injunction was obtained restraining Respondent No.5 and their officers from alienating the suit properties.

(3.) Before the aforesaid suit was filed, Respondent No.4-Bank (Syndicate Bank) had filled a suit (O. S. No. 81 of 1993) for recovery of Rs. 4,00 crores in the Court of Additional Subordinate Judge, Rangareddy against the society, inter alia, on the ground that the Bank had advanced amounts towards loan which the defendants have failed repay. Writ petitioners 3 and 7 were also impleaded as defendants in the suit. On constitution of Debt Recovery Tribunal at Bangalore, the suit was transferred to the said Tribunal and was numbered as O. A. No. 406 of 1996. Debt Recovery Tribunal (DRT) on 11-7-1997 allowed the claim of the Bank with direction to the society and other defendants to pay Rs. 4,01,90,485,85 with incidental expenses and future interest. Pursuant to the order of recovery, the Bank sought to have the property in question, beside the other properties auctioned. The Debt Recovery Officer issued auction notice and the same was published in Deccan Chronicle on 23-3-1998. The petitioners case is that they had no knowledge of the claim of the Bank being allowed by the Debt Recovery Tribunal and were surprised to see the auction notice and thus on 16-3-1998 filed a claim petition before the Debt Recovery Officer claiming that the property in question was not liable to be attached and sold in auction for recovery of the amount due to the Syndicate Bank since the petitioners had interest in the property on the basis of the aforementioned agreement to sell. Petitioners also prayed for stay of auction. Stay was not granted. Considering the urgency and the impending auction, scheduled to be held on 23-3-1998, the petitioners filed W. P. No. 7487 of 1998 along with W. P. M. P. No. 9127 of 1998. The Court disposed of the Writ Petition on 20-3-1998 by staying the auction and directed the Debt Recovery Officer to consider the claim petition filed by the petitioners and to pass appropriate orders thereupon.