The Judgment of the Court was delivered by
Ramachandran Nair, J.:— Writ Appeal is filed against the judgment of the learned single Judge declining to interfere with the sale of appellant's property effected by the second respondent-Bank under Securitisation Act. We have heard counsel appearing for the appellant, standing counsel appearing for the creditor-Bank, counsel appearing for the 5th respondent, purchaser of the property, and standing counsel appearing for the Income-tax Department, the 6th respondent.
2. Appellant stood as guarantor for a loan of Rs. 30 lakhs granted by the respondent-Bank to an Export Firm on 8.3.2001 When the borrower defaulted payment, the Bank on 31.12.2001 filed O.A No. 31 of 2002 before the Debt Recovery Tribunal. The amount claimed by the Bank was something around Rs. 34 lakhs. Even though OA did not progress for around 5 years, the Bank had initiated proceedings under the Securitisation Act by issuing notice under Section 13(2) of the Act on 20.2.2007 Immediately the Bank made publication in the newspapers on 22.2.2007 and took over symbolic possession by putting a board in the property of the appellant simultaneously. The appellant immediately approached the Bank with offer to settle the liability under OTS scheme. Even though appellant's offer was not accepted, the Bank vide Ext.P7 produced in the WPC agreed to settle the liability on payment of Rs. 55 lakhs on condition of payment to be made on or before 30.6.2007 The appellant initially applied for extension of time for payment. However, later appellant filed appeal before the DRT challenging the Securitisation proceedings initiated by the Bank. During the pendency of the appeal before the DRT, the appellant filed WPC 27182 of 2007 before this Court and this Court on 20.9.2007 disposed of the WPC vide Ext.P15 judgment directing the DRT to dispose of the appeal filed by the appellant challenging the sale notice. This Court further extended the sale posted by the Bank pursuant to Securitisation proceedings by six weeks on condition of appellant remitting Rs. 10 lakhs on or before the date notified for sale. Admittedly the appellant remitted Rs. 10 lakhs before the date for opening the tender fixed by the Bank pursuant to sale notice, that was 25.9.2007 Even though this Court had not postponed the sale until disposal of the appeal by the DRT, the Bank did not do anything pursuant to sale notice until 27.12.2007 when the appeal was dismissed by the DRT. In fact, had the sale been conducted on expiry of the time granted by this Court pursuant to Ext.P15 judgment, the sale would have taken place within six weeks from 25.9.2007 that is by 10th November, 2007. On the other hand, the Bank waited for disposal of the appeal by the DRT and on the day following the day of dismissal of the appeal by the DRT, opened the tender received from the fifth respondent and accepted the same. While the reserve price fixed was Rs. 1.25 crores, the purchase price offered by the 5th respondent was Rs. 1,27,00,101/-. Even though only one tender was received and this Court had extended the sale by six weeks from 25.9.2007, the Bank had not renotified the sale or even extended the time for receipt of fresh tenders. On the other hand, without doing anything further pursuant to judgment, the sole tender received from the 5th respondent was opened and sale was confirmed in his favour. The fifth respondent remitted the entire sale consideration by 11.1.2008 However, even after confirmation of sale after receipt of full sale consideration, the Bank did not inform the sale to the appellant until 2.2.2008 when Ext.P18 was issued informing the appellant about the excess amount available with them for refund. The appellant thereafter filed Review Petition 157 of 2008 to review Ext.P15 judgment, which was rejected by this Court leaving freedom to the appellant to file appeal before the DRT. The appellant thereafter filed WPC immediately after receipt of Ext. P18 on 18.2.2008 Even though this Court admitted the WPC and granted stay until further orders, and the WPC remained in this Court for over 1-1/2 years and this Court on 12.6.2009 dismissed the same without considering the appellant's contention challenging the sale effected by the Bank in violation of norms and fair play, but relegated the appellant to file appeal before the DRT. Immediately on the next day, the Bank and the 5th respondent arranged for execution of sale before the Sub Registry. It is against the judgment of the learned single Judge that this appeal is filed by the appellant.
3. Counsel for the appellant first contended that it was not just and proper for this Court to have now relegated the appellant to alternate remedy after admitting and keeping the WPC pending for over one and a half years by which time, the time for appellate remedy has expired. Even though counsel appearing for the respondents opposed the same, we are inclined to accept appellants' contention because we are satisfied that the sale was not conducted in a fair and proper manner and that is the reason why WPC was admitted and stay against all proceedings was granted by this Court. It is settled position that High Court in it's discretionary jurisdiction can entertain Writ Petition ignoring alternate remedy available and after keeping the matter pending for long and after lapse of the time provided for seeking alternate remedy, it would not be proper for this Court to relegate the party to alternate remedy. Therefore in our view, the learned single Judge should have considered the pleadings on merits and since it was not done, we proceed to consider the Writ Petition challenging the sale on merits.
4. Appellant has raised various grounds challenging the sale. In the first place, counsel pointed out that the sale is in violation of Ext.P15 judgment, particularly when the appellants had remitted Rs. 10 lakhs, which is 20% of the OTS amount offered by the Bank for settlement of liability, as a condition for stay granted by this Court for six weeks. In fact it is clear from Ext.P15 judgment that it was not brought to the notice of this Court that sale was through tender and not through auction. In any case, when this Court extended the sale by six weeks from 25.9.2007 it was the duty of the Bank to have renotified the sale or at least extended the time for receiving further tenders particularly when only one valid tender was received as on the last date notified for sale. There can be no doubt that the sale should be conducted in a fair and reasonable manner so that borrower's/guarantor's property should fetch maximum price so that borrower can get refund of excess, if any, over the debt amount. The procedure contemplated under the Securitisation Act is a fair one, purpose of which is to give maximum publicity for public sale of property so that it is sold at the highest price in the market. In our view, the Bank violated the direction issued by this Court in Ext.P15 judgment in more than one way. In the first place, the sale was not conducted immediately after the expiry of six weeks granted by this Court. On the other hand, the sale was really conducted on 28.12.2007 that is one year beyond the time granted by this Court in Ext. P15 judgment. Further, it is admitted that the Bank has not issued any fresh publication or extended time for receipt of tenders, even though sale was made beyond one year and three months from the last date originally notified for sale of the property through receipt of tenders. It is a known fact that price of the property was increasing in an unprecedented level during this period and Bank very well knew that the price of notified property would have substantially gone up when they opened the tender, which is one year and seven month after the last date fixed for receipt of tenders. Therefore obviously the sale made based on tender received more than one and a half years back does not reflect the market price.
5. The next contention raised by the appellant is that the sale should not have been based on sole tender which is just above Rs. 2 lakhs of the upset price fixed by the Bank. Here again when the sale did not take place pursuant to Court orders, it was the duty of the Bank to invite fresh tenders so that more tenderers would have participated in the tender. Even though we do not want to go into the allegation of malafide, and collusion between the Bank and the purchaser, the 5th respondent, we cannot rule out the possibility because the sale was not even informed to the appellant and he got communication only after one month of confirmation of sale and receipt of full consideration from the purchaser. In other words, the Bank did the transaction in a clandestine manner without even informing the appellant who even after sale has remitted Rs. 10 lakhs pursuant to Court orders to show his bona fide to retain the property. We also do not approve the Bank's attitude in the whole matter in registering the sale deed immediately after the dismissal of the Writ Petition which is obviously to deny the appellant the remedy of appeal before this Court. We feel there is substance in the contention of the appellant that property which is 70 cents of prime property in the Kochi City worth several crores of rupees is sold for very low amount of Rs. 1.27 crores, and the only loser is the appellant. In the above circumstances, we feel the sale is liable to be set side on the above grounds. However, we feel the fifth respondent is entitled to lumpsum compensation because in our view there were lapses on the part of the appellant also at least in settling the liability under the OTS scheme which we feel is quite reasonable. Further the fifth respondent has remitted the entire sale consideration over two years back. Considering the amount remitted by the fifth respondent, which is Rs. 1,27,00,101/- and the stamp duty and registration charges of Rs. 23 lakhs paid by him, we feel appellant would be ordered to pay a lumpsum amount of Rs. 2 crores to the fifth respondent for cancellation of sale. We make it clear that our order is passed by taking into account interest at the rate of 18% per annum and stamp duty and registration charges spent by him. Accordingly, Writ Appeal is allowed by vacating the judgment of the learned single Judge and by allowing the WPC with the following declarations and directions:
(1) The sale by the Bank of the appellant's property in favour of the fifth respondent will stand set aside and the sale deed shall stand invalidated on condition that appellant gives a DD for Rs. 2 crores from a local Branch of a Nationalised Bank in favour of the fifth respondent and the same will be handed over to him within two months from now. If payment is not made as above, sale in favour of the fifth respondent will stand confirmed and Writ Appeal will stand dismissed.
(2) If appellant makes payment as above, and sale gets cancelled by operation of judgment, then on giving DD the fifth respondent will hand over original sale deed obtained by him from the Bank to the appellant for the appellant to produce before the Sub Registry and revenue authorities for cancellation of registration, mutation, if any effected, and for restoration of property in the records of the Sub Registry and revenue authorities in favour of the appellant.
(3) The Bank will remit the excess amount available with them to the Tax Recovery Officer in pursuance to the demand to be credited in the account of the appellant, and it is for the appellant to claim refund, if eligible for him.
(4) We leave it open to the appellant to claim refund of stamp duty, if refund is eligible. However, we make it clear that in view of the above judgment, if there is eligibility for refund of stamp duty, the same should be paid to the appellant.