AMITI GUPTA Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) The petitioners through the instant writ petition pray for a writ in the nature of certiorari for quashing the impugned sale notice dtd. 6/3/2018, Annexure P.1 and all proceedings and actions taken by respondent No. 1-State Bank of India consequent and pursuant thereto, including auction proceedings dtd. 20/4/2018, Annexure P.2, sale confirmation letter dtd. 23/4/2018, Annexure P.3, qua house No. 315, Sector-9, Panchkula being wholly, arbitrary, illegal, unfair and unjust, thereby causing undue loss to them. Direction has also been sought to respondent No. 1-Bank to consider the offer of a much higher price of Rs.2.05 crore than the auction price of Rs.1,81,50,000.00 for the house in question.

(2.) A few facts relevant for the decision of the controversy involved as narrated in the petition may be noticed. Petitioners No. 1 and 2 were owners of residential house No. 315, Sector-9, Panchkula which was mortgaged as collateral security for availing loan from respondent No. 1-bank. The loan was availed by M/s. Swami Automobiles Private Limited in which son of the petitioner No. 2 and brother of petitioner No. 1 is one of the Directors. M/s. Swami Automobiles Private Limited defaulted in re-payment of the loan. Respondent No. 1 -bank in exercise of powers under the provisions of Securitization and Reconstruction of Financial Assets Enforcement of Securities Interest Act, 2002 ("SARFAESI Act") issued the notice under Sec. 13(2) and Sec. 13(4) of the said Act and also took symbolic possession. Thereafter, part physical possession of the house in question was also taken by respondent No. 1 -bank. Since, the borrower-M/s. Swami Automobiles Private Limited who had entered into one time settlement with respondent No. 1 -bank and had failed to honour the terms thereto, the bank had put the properties to sale, including the only residential house i.e. House No. 315, Sector-9, Panchkula where the petitioners were residing. In pursuance to the sale notice, auction proceedings took place on 20/4/2018 and for the property situated in the prime location/sector of Panchkula. Respondents No. 2 and 3 jointly were the' sole participants and were the only bidder. Against the reserve price of Rs.1,81,00,000.00, a bid of Rs.1,81,50,000.00 was received. According to the petitioners, despite having received only one bid for the residential house in question, the sale was confirmed by the bank vide sale confirmation letter dtd. 23/4/2018. The petitioners allege that respondent No. 1-bank acted in collusion with the bidder and wrongly confirmed the sale. According to the petitioners, the market value of the residential house in question with latest design and construction is much higher than the reserve price fixed by respondent No. 1 -Bank or the price offered by the bidder. Respondents No. 2 and 3-auction purchasers, who had made an offer of Rs.1,81,50,000.00, had paid only 50% of the said amount. Against the cancellation of one time settlement by the bank, M/s. Swami Automobiles Private Limited had filed CWP No. 7559 of 2018 in this Court on 20/3/2018. During the pendency of the said writ petition, respondent No. 1-bank carried out the auction proceedings vide notice dtd. 6/3/2018. Since the petitioners were residing in the said residential house and had no other place to go, respondent No. 1-bank had filed CWP No. 16811 of 2018 in this Court seeking directions to the Tehsildar, Panchkula to help in getting possession of the said house. Upon notice, petitioners No. 1 and 2 appeared. The petitioners offered to pay a sum of Rs.2.00 crore as against the offer of Rs.1,81,50,000.00 made by respondent No. 2-auction purchaser. The petitioners had arranged the draft for a sum of Rs.2.00 crore and the said amount was paid to the bank in Court. CWP No. 16811 of 2018 filed by bank came up for hearing on 6/9/2018 alongwith CWP No. 7559 of 2018 filed by M/s. "Swami Automobiles Private Limited against the cancellation of one time settlement. CWP No. 7559 of 2018 was withdrawn by M/s. Swami Automobile Private Limited with liberty to avail remedy in accordance with law. Since CWP No. 16811 of 2018 was filed by the bank for possession of the secured asset and petitioners No. 1 and 2 were respondents in the said writ petition, they could not have questioned the validity of the auction proceedings. As the auction proceedings had taken place during the pendency of CWP No. 7559 of 2018 filed by M/s. Swami Automobiles Private Limited, it was considered appropriate by petitioners No. 1 and 2 to seek refund of Rs.2.00 crores and to hand over keys of the house in question in CWP No. 16811 of 2018 filed by the bank as no relief could have been sought by them in the said proceedings. According to petitioners, the action of respondent No. 1-bank in accepting the solitary bid of Rs.1,81,50,000.00 as against reserve price of Rs.1,81,00,000.00 for the property capable of fetching much higher price is arbitrary and unfair. The petitioners assert that they have a buyer ready to put the secured asset for a sum of Rs.2,05,00,000.00 and the entire payment could be made as and when directed by this Court. Hence the instant writ petition by the petitioners.

(3.) A written statement has been filed on behalf of respondent No. 1-State Bank of India wherein it has been inter alia stated that one M/s. Swami Automobiles Private Limited through its directors namely Sh. Pradeep Mittal and Smt. Monika Mittal had availed the loan facility from the respondent Bank to the tune of Rs.12.00 crores in the year 2015. The petitioners stood-as guarantors for the loan availed by the borrower. The property i.e. H. No. 315, Sector 9, Panchkula was mortgaged as security with the Bank by the petitioners. The borrower did not adhere to Financial Discipline and thus the loan was classified as NPA on 23/10/2015. Notice under Sec. 13(2) of the SARFAESI Act was issued by the Bank to the borrower. Thereafter, the Bank issued notice under Sec. 13(4) of the SARFAESI Act for certain amount including interest and other charges which were due and payable by the borrower. Some property was sold on 29/11/2017 and sale proceeds were adjusted towards the outstanding amount. In order to recover its dues, the Bank filed an application under Sec. 14 of the SARFAESI Act before the District Magistrate, Panchkula for taking possession of the mortgaged property. Inspire of orders of the District Magistrate, the Bank was not able to take physical possession of the mortgaged properties. Even one time settlement was arrived with the Bank but the petitioners defaulted in payment. CWP No. 7559 of 2018 was filed by the petitioners for extension/revival of one time settlement. The properties were put on auction on 20/4/2018. The properties were sold. During the hearing of CWP No. 7559 of 2018, a direction was issued to the borrower to bring any buyer paying more than the highest bid received by the Bank. The borrower did not bring any buyer. The proposals given by the borrower were rejected by the Bank. Thereafter, respondent Nos. 2 and 3 deposited the balance payment and the bank issued sale certificate to them. On these premises, prayer for dismissal of the petition has been made.