KAMLA DEVI Vs. BANK OF INDIA

JUDGEMENT

(1.) Since both these writ petition involve a common issue, they are heard and decided together by this common order. References to the annexures and documents are taken from W.P. No. 19856 of 2015 for the sake of convenience.

(2.) The case, in brief, in W.P. No. 5555 of 2017 is that Late V.P. Singh, the husband of Petitioner No. 1 and father of Petitioner Nos. 2 to 4, is deceased. He, along with Petitioner No. 1, had constituted a partnership firm in the name and style of M/s R&R Oil Mills. The firm was the borrower. The firm availed an overdraft facility from the respondent Bank and mortgaged the following properties: (i) land measuring 7,200 sq. ft. situated at Khasra No. 77/1, Gwarighat, Narmada Road, Jabalpur (M.P.); and (ii) two plots, each measuring 2,400 sq. ft., situated at Khasra No. 77/17, Gwarighat Ward, Jabalpur (M.P.) (hereinafter referred to as the "mortgaged properties"). M/s R&R Oil Mills failed to repay the outstanding dues. Consequently, the respondent Bank initiated recovery proceedings under Sec. 13(4) of the SARFAESI Act, 2002. A sale notice was published in the newspaper dtd. 23/1/2010 by the Bank, and the auction was scheduled for 10/2/2010. However, the Bank failed to auction the mortgaged properties on the said date. Thereafter, it is alleged that the Bank entered into a private treaty with a third party under the guise of an auction, without informing the petitioners or obtaining their written consent. Subsequent to the scheduled auction date, the petitioners secured the release of one of the mortgaged properties measuring 6,000 sq. ft. by paying Rs.24.00 lakhs towards the outstanding dues of M/s R&R Oil Mills. The petitioners claim that they became aware of the alleged private treaty only when Respondent No. 2, Sunita Singh, filed Civil Suit No. 119-A/2013 against the respondent Bank seeking execution of a sale deed in respect of the mortgaged properties. She claimed that the properties had been purchased by her late husband, Shri V.P. Singh, who died on 6/7/2011, and that the Bank had failed to execute the sale deed in her favour. The petitioners remain in possession of the mortgaged properties and are regularly paying property taxes and other dues. One of the mortgaged properties was let out to M/s Hathway Cable and Datacom Ltd. up to 30/9/2015. The Petitioners submitted a representation dtd. 2/11/2015 to the respondent Bank protesting the alleged private treaty conducted without their consent and requesting release of the mortgaged properties. Respondent Bank failed to respond to the said representation and did not release the mortgaged properties. Petitioner No. 1 also issued Cheque No. 680685 in favour of the Bank for Rs.28.00 lakhs and requested the Bank not to create any third-party interest in the mortgaged properties.

(3.) It is submitted that the petitioners have filed this petition raising the following grounds. The Bank acted in an arbitrary and illegal manner, contrary to the provisions of the SARFAESI Act, 2002 and the Security Interest (Enforcement) Rules, 2002. The Bank's letter dtd. 28/9/2012 addressed to Respondent No. 2 clearly indicates that no auction was held on 10/2/2010, nor was any fresh publication issued or notice of extension of the auction date served upon the petitioners. Therefore, the alleged private treaty and related proceedings are illegal, null and void, and not binding upon the petitioners. Entire action of the respondent Bank is contrary to the provisions of the SARFAESI Act, 2002, the Security Interest (Enforcement) Rules, 2002, Sec. 60 of the Transfer of Property Act, 1882, and Article 300A of the Constitution of India.