IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE TWENTY FIRST DAY OF NOVEMBER TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE B.SESHASAYANA REDDY WRIT PETITION NO : 22083 of 2007 Between: 1 Sri Padala Abhiram s/o.Venkat Rama Reddy @ Raju, the petitioner being minor being Rep.by their mother and natural guardian Smt.Padala Suneetha, W/o.Venkat Rama Reddy,@ Raju, Aged about 32 years,Occ:Housewife R/o.Rajahmundry, East Godavari District 2 Kum.Padala Mounamritha D/o.Venkata Rama Reddy @ Raju the petitioner being minor being Rep.by their mother and natural guardian Smt.Padala Suneetha, W/o.Venkat Rama Reddy,@ Raju, Aged about 32 years,Occ:Housewife R/o.Rajahmundry, East Godavari District ..... PETITIONERS AND 1 The State Bank of india. Commercial Branch Kakinada, East Godavari District, rep.by its Chief Manager 2 The Collector and District magistrate, East Godavari Distric 3 The Tahsildar, Boccavolu Mandal, East Godavari District .....RESPONDENTS Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court may be pleased to issue direct or a writ particularly one in the nature of writ of mandamus or any other appropriate writ declaring the action of the respondents in issuing the impugned proceedings bearing L.Dis.CL(M)/420/2007 dated 26.9.2007 issued by the 2nd respondent directing the 3rd respondent herein to take over the possession of the properties of th said proceedings without awaiting for the outcome in the relevant proceedings pending in OA.No.107/2004 on the file of the Debts Recovery Tribunal, Visakhapatnam SA.No.646/2007 on the file of the Debts Recovery Appellate Tribunal ,Chennai and other civil proceedings in OS.No.83/2005 on the file of the I Addl.District Judge, Rajahmundry, East Godavari District as arbitrary, illegal, unjust and in violation of fundamental principles of natural justice and consequently set aside the impugned proceedings bearing L.Dis.CL(M)/.420/2007 dated 26.9.2007 issued by the 2nd respondent. Counsel for the Petitioner: MR.K.GANI REDDY Counsel for the Respondent No.: GP FOR REVENUE The Court made the following : ORDER: The writ petitioners are minors and they are represented by their mother as guardian. They filed this Writ Petition with a prayer to issue a writ or direction, more particularly, one in the nature of writ of Mandamus declaring the action of the respondents in issuing the proceedings bearing L.Dis.CL(M)/420/2007, dated 26.09.2007 pending the proceedings in O.A.No.107 of 2004 on the file of the Debt Recovery Tribunal, Visakhapatnam, S.A.No.646 of 2007 on the file of the Debt Recovery Appellate Tribunal, Chennai and O.S.No.83 of 2005 on the file of I Additional District Judge, Rajahmundry, East Godavari District, as arbitrary, illegal and violative of principles of natural justice. 2. The petitioners are sons of Padala Venkata Rama Reddy @ Raju. The said Venkata Rama Reddy raised loans from the 1st respondent Bank. He offered the immovable properties of him as security for the loans. Consequent on failure of the said Venkata Rama Reddy to liquidate the liability, the 1st respondent Bank filed O.A.No.107 of 2004 on the file of the Debt Recovery Tribunal, Visakhapatnam, for realization of the loan amounts. The petitioners filed O.S.No.83 of 2005 on the file of I Additional District Judge, Rajahmundry, East Godavari District, against their father alleging that the properties are ancestral properties and therefore, they are entitled to have their due share in the properties. They sought for partition and separate possession of their shares in the suit properties. Initially they secured interim injunction in I.A.No.34 of 2006 in O.S.No.83 of 2005. Subsequently, the interim injunction came to be vacated on 18.12.2006. The 1st respondent Bank initiated proceedings under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (54 of 2002) (for short, ‘the Act, 2002’), for sale of the secured property. The petitioners filed two applications in O.A.No.107 of 2004 seeking interim stay. The applications filed by them ended in dismissal and thereupon they carried the matter in appeal being S.A.No.647 of 2007 before the Debt Recovery Appellate Tribunal, Chennai. The Collector and District Magistrate, East Godavari District-2nd respondent issued proceedings under Section 14 of the Act, 2002 authorizing the Tahsildar, Biccavolu Mandal, East Godavari District-3rd respondent to take possession of the secured property. The said proceedings issued by the 2nd respondent are under challenge in this Writ Petition. The text of the proceedings issued by the 2nd respondent reads as hereunder: “ORDER: The Authorized Officer, State Bank of India, Commercial Bank, Kakinada, informed that they have initiated action under Securitisation Act, 2002 by issuing demand and possession notices to the defaulted borrowers, there is no response from the borrower i.e., M/S.DSN Reddy & Others: Contractors: M/s.Abhiram Boiled & Raw Rice Mill, Komaripalem, for clearing off the dues in their respective accounts. The Authorized Officer, State Bank of India, Commercial Bank, Kakinada., requested to assist the bank to take possession of the secured assets under the rules laid down in Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 for conducting panchanama of the property on a convenient date. Under the above circumstances and in exercise of powers conferred u/s.14 of the referred Act, the Tahsildar, Biccavolu, is hereby authorized to take possession of the scheduled property of M/s.DSN Reddy & Others: Contractors : M/s.Abhiram Boiled & Raw Rice Mill, Komaripalem, and handover it to the Bank authorities. SCHEDULE PROPERTY 1. All the part and parcel of the property of Ac.0.08 cents at D.No.2-120 in R.s.No.367/1, Komaripalem, Biccavolu Mandal. 2. All the part and parcel of the property of Ac.0.40 cents of site situated at R.S.No.367/2, Komaripalem, Biccavolu Mandal. 3. All the part and parcel of the property of Ac.0.16 cents of site situated at R.S.No.367/3, Komaripalem, Biccavolu Mandal. 4. All the part and parcel of the property of Ac.0.64 cents of site situated at R.S.No.367/4, Komaripalem, Biccavolu Mandal. 5. All the part and parcel of the property of Ac.0.16 cents of site situated at R.S.No.367/5, Komaripalem, Biccavolu Mandal. 6. All the part and parcel of the property situates in an extent of 904 sq. yds. With a residential building in it, bearingD.No.5-53, 5-58 and 5-59 (3 stored building) at Komaripalem, Biccavolu Mandal, East Godavari District, belonging to Sri P.Venkatarama Reddy, Sri PVBLN Reddy, Smt. P.Savitri and Smt.P.Sesharatnam. 7. All that part and parcel of the propertysituated in an extent of 240 sq. yds. With a residential tiled roof building at D.No.5-77 at Komaripalem, Biccavolu Mandal, East Godavari District, belonging to Sri P.Venkatarama Reddy, Sri PVBLN Reddy, Smt.T.Savitri andSmt.P.Sesharatnam. The SDPO, Rajahmundry, is required to provide necessary police force on the requisition of the Tahsildar, Biccavolu, while taking possession to maintain law & Order.” 3. Notice before admission came to be ordered on 12.10.2007. An interim stay also came to be granted on the even date on condition of deposit of Rs.10,00,000/- within a period of four weeks, vide WPMP No.28629 of 2007. 4. The 1st respondent Bank entered appearance and moved WVMP No.2036 of 2008 with a prayer to vacate the interim stay dated 12.10.2007 passed in WPMP No.28629 of 2007. 5. The counter-affidavit of the 1st respondent Bank, in brief, is: Sri Padala Venkata Rama Reddy, the father of the petitioners herein, is one of the partners of the 2 firms –1) M/s.Dwarampudi Satyanarayana Reddy and other Contractors and 2) M/s.Abhiram Boiled and Raw Rice Mill. The said two firms represented by their partners including the father of the petitioners-Sri Padala Venkata Rama Reddy availed loan facilities from this respondent Bank. The said loan facilities were also secured by mortging the immovable properties including the properties of Sri Padala Venkata Rama Reddy. As the said two firms committed default in repaying the loan amounts, recovery proceedings were initiated under the provisions of the Act, 2002 against the partners/guarantors/mortgagers. Demand Notices dated 21.11.2003 were issued under Section 13(2) of the Act, 2002 calling upon the partners/guarantors/mortgagors including the father of the petitioners-Sri Padala Venkata Rama Reddy for recovery of a sum of Rs.7,83,48,995- 57 ps. Thereafter, this respondent Bank applied to the 2nd respondent for taking possession of the secured assets and the 2nd respondent issued proceedings dated 26.09.2007 directing the 3rd respondent for taking possession of the secured assets. The petitioners approached this Court by filing the present Writ Petition assailing the said proceedings dated 26.09.2007 and secured interim order dated 12.10.2007 on condition of deposit of Rs.10,00,000/- within four weeks. This respondent Bank, on verification, could not notice anywhere the deposit of the said Rs.10.00 Lakhs by the petitioners. This respondent Bank filed O.A.No.107 of 2004 on 04.06.2004 before the Debt Recovery Tribunal, Visakhapatnam, for recovery of the debt due from the partners of the two firms, guarantors/mortgagors and the said suit is pending disposal. The petitioners also filed a suit for partition in O.S.No.83 of 2005 on the file of I Additional District Judge, Rajahmundry, East Godavari District, impleading this respondent Bank as 6th defendant. This respondent Bank filed written statement opposing the relief sought for by the petitioners in the suit. The injunction application filed by the petitioners came to be dismissed on 18.12.2006. The petitioners also filed I.A.No.29 of 2007 in O.A.No.107 of 2004 on the file of the Debt Recovery Tribunal, Visakhapatnam, seeking their impleadment. The said application came to be allowed and consequently they came on record as defendants 20 and 21. They filed I.A.No.28 of 2007 in O.A.No.107 of 2004 for grant of stay of further proceedings initiated by this respondent Bank. The Debt Recovery Tribunal, Visakhapatnam dismissed the two petitions filed by the petitioners on 26.02.2007. The petitioners preferred an appeal being M.A.No.51 of 2007 and the said appeal also ended in dismissal on 17.04.2007. The contention of the petitioners that they are entitled to 2/3rd share in the properties of their father is untenable. This respondent Bank is lawfully exercising the powers conferred under the provisions of Act, 2002. Therefore, the writ petition is liable to be dismissed. 6. When the Vacate Stay Petition came up consideration, with the consent of the learned counsel appearing for the parties, the Writ Petition is taken up for final disposal. 7. Heard learned counsel appearing for the petitioners and learned Standing Counsel appearing for the 1st respondent Bank. 8. Learned counsel appearing for the petitioners submits that the properties which are sought to be taken in possession are agricultural lands and therefore, the proceedings initiated by the 1st respondent Bank for taking possession of the agricultural lands invoking the provisions of the Act, 2002 are liable to be set aside. In support of his submissions, reliance has been placed on a Division Bench judgment of this Court in Neel Madhav Mining Pvt. Ltd. v. Authorised Officer, Union Bank of India[1], wherein it has been held that the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 are not applicable to security interest created in agricultural land. A further submission has been made that the 1st respondent Bank having filed the O.A. for recovery of the loan amounts is barred from taking recourse to the provisions of the Act, 2002. 9. Learned Standing Counsel appearing for the 1st respondent Bank submits that the properties offered as security are not the agricultural lands. Therefore, the decision relied on by the learned counsel appearing for the petitioners is wholly inapplicable to the facts of the case on hand. He would also contend that the remedies under NPA Act and DRT Act are complementary to each other and therefore, the doctrine of election has no application. He placed reliance on the decision of the Supreme Court in M/s. Transcore v. Union of India & Anr.[2] 10. Before dwelling deep into the rival contentions of the parties, I deem it appropriate to note the background facts of the case, which led to the petitioners to approach this Court invoking the jurisdiction under Article 226 of the Constitution of India. The 1st respondent Bank filed O.A.No.107 of 2004 before the Debt Recovery Tribunal, Visakhapatnam, for recovery of the loan amounts. The petitioners got impleaded themselves as parties to the said proceedings and made their efforts to secure interim orders. Their efforts proved to be futile and thereupon, they filed an appeal being M.A.No.51 of 2007 before the Debt Recovery Appellate Tribunal, Chennai, and the said appeal also ended in dismissal on 17.04.2007. They also filed O.S.No.83 of 2005 on the file of I Additional District Judge, Rajahmundry, East Godavari District, seeking partition and separate possession of their 2/3rd share. They tried their luck to get the proceedings initiated by the 1st respondent Bank against the secured assets stalled. Luck did not favour them and therefore, their efforts to stall the proceedings initiated by the 1st respondent Bank against the secured assets proved to be futile. After the petitioners failing before the two Forums, they approached this Court invoking the jurisdiction under Article 226 of the Constitution of India. 11. The principal contention of the petitioners is that the secured assets are agricultural lands and therefore, provisions of the Act, 2002 are not applicable. In the order impugned in this Writ Petition, there are about seven items. These items comprise residential buildings and certain extents of open sites. Anyhow, the petitioners ought to have pleaded before the Debt Recovery Tribunal, Visakhapatnam under an appeal filed under Section 17 of the Act, 2002 with regard to non- applicability of the provisions of the Act, 2002. The petitioners having failed to secure orders before the Debt Recovery Tribunal cannot be permitted to contend that the lands in respect of which proceedings impugned in the Writ Petition are issued are agricultural lands. 12. With regard to the second contention of the learned counsel appearing for the petitioners that the 1st respondent Bank having filed O.A. before the Debt Recovery Tribunal cannot invoke the provisions of the Act, 2002, has no substance in view of the proposition of law laid down by the Apex Court in M/s.Transcore’s case (2 supra), wherein it has been held as follows: “In our view, Section 17(4) shows that the secured creditor is free to take recourse to any of the measures under Section 13(4) notwithstanding anything contained in any other law for the time being in force, e.g., for the sake of argument, if in the given case the measures undertaken by the secured creditor under Section 13(4) comes in conflict with, let us say the provision under the State land revenue law, then notwithstanding such conflict, the provision of Section 13(4) shall over ride the local law. This position also stands clarified by Section 35 of the NPA Act which states that the provisions of NPA Act shall override all other laws which are inconsistent with the NPA Act. Section 35 is also important from another angle. As stated above, the NPA Act is not inherently or impliedly inconsistent with the DRT Act in terms of remedies for enforcement of securities. Section 35 gives an overriding effect to the NPA Act with all other laws if such other laws are inconsistent with the NPA Act. As far as the present case is concerned, the remedies are complimentary to each other and, therefore, the doctrine of election has no application to the present case.” In view of the above proposition of law laid down by the Apex Court in the cited decision, I do not see any substance in the contention of the learned counsel appearing for the petitioners that the 1st respondent Bank cannot invoke the provisions of the Act, 2002 after invoking the jurisdiction of the Debt Recovery Tribunal. 13. Accordingly, the Writ Petition fails and it is dismissed. No costs. ______________________ B.SESHASAYANA REDDY, J. Date:21st November, 2008. Cs ..... REGISTRAR // TRUE COPY // SECTION OFFICER To 1.2CCs to 2.2CD copies Form-NIC-OGS/WP{TRK} [1] 2005 (4) ALT 136 (DB) [2] 2007 AIR SCW 389