IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR WEDNESDAY, THE 2ND APRIL 2008 / 13TH CHAITHRA 1930 WP(C).No. 9678 of 2008(B) ------------------------- PETITIONER: ------------ M.O.CHAKKUNNY, S/O.OUSEPH, AGED 68 YEARS, MOOLAN HOUSE, KOODALAPPAD, KOOVAPADY P.O., ERNAKULAM DIST. BY ADV. SRI.RENNY AUGUSTINE RESPONDENTS: ------------- 1. STATE OF KERALA, REPRESENTED BY DISTRICT COLLECTOR, ERNAKULAM. 2. KERALA FINANCIAL CORPORATION, REPRESENTED BY ITS BRANCH MANAGER, PERUMBAVOOR. 3. DEPUTY TAHSILDAR (RR), KERALA FINANCIAL CORPORATION, ERNAKULAM. 4. STATE BANK OF TRAVANCORE, ASSET RECOVERY MANAGEMENT BRANCH, SBT BHAVAN, PANAMPILLY NAGAR, ERNAKULAM, REPRESENTED BY ITS ASST.GENERAL MANAGER. BY ADV. SRI.M.M.SAYED MUHAMMED, SC, KFC SHRI.MATHEW VADAKKEL, GOVERNMENT PLEADER SHRI.SATISH NINAN, SC, SBT SHRI.P.PARAMESWARAN NAIR, SC, KFC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 02/04/2008, ALONG WITH WPC NO. 10702 OF 2008 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR, J. ------------------------- W.P.(C) Nos.9678 & 10702 of 2008 --------------------------------- Dated, this the 2nd day of April, 2008 J U D G M E N T A partnership firm, of which petitioners are partners, and a company, of which petitioners' sons are directors, availed loan from KFC and the total outstanding as of now is stated to be Rs.6.97 crores. Some items of properties of petitioners are mortgaged to KFC for the loan and petitioners are stated to be personal guarantors for the loan availed by the Company of which petitioners' sons are directors. The partnership firm and the company are stated to be in arrears of sales tax and arrears of electricity bill. Besides the arrears due to KFC, KSEB and the State towards sales tax etc., petitioners are in arrears due to State Bank of Travancore. The Bank has not been able to recover the arrears on account of prior charge due to the State. Petitioners have gone for settlement with the Bank and the Bank has agreed to settle the liability on payment of Rs.67 lakhs. 2. The prayer in these writ petitions is to permit the petitioners to sell some items of properties, which are not mortgaged to KFC or State, for settling the Bank arrears under OTS scheme. Certain properties are stated to be mortgaged to the WP(C) Nos.9678 & 10702/2008 -2- Bank. Learned counsel for the KFC submitted that KFC has not been able to sell the properties mortgaged to it on account of resistance from the petitioners. He further submitted that KFC has charge on other properties also because of personal guarantee executed by owners of the property. In the circumstances, petitioners' request for lifting the attachemnt cannot be granted. However, I feel, there is no justification for delaying recovery proceedings for recovery of arrears due to KFC, KSEB and the State towards sales tax arrears. Learned counsel for the KFC further submitted that sales effected in recovery proceedings to the close relatives of the owners of the property are challenged by the KFC before the District Collector on the ground of revenue sale at below market price. 3. In the circumstances, these writ petitions are disposed of directing the District Collector, Ernakulam to personally supervise recovery proceedings and to provide police protection to the recovery agency of the KFC, if there is resistance from the petitioners, to take over possession and to conduct sale of the properties. KFC and recovery authorities should be permitted to first sell the properties other than the properties mortgaged to WP(C) Nos.9678 & 10702/2008 -3- State Bank of Travancore and if sale proceeds are sufficient to satisfy the debts due to KFC and State, then the attachment effected by the KFC on the properties mortgaged to State Bank of Travancore should be lifted without any delay. There would be direction to the Bank to grant reasonable time for payment of liability under OTS scheme on condition of payment of interest on OTS amount for the delay in payment at the rate fixed by the Bank. The District Collector is directed to effect recovery in co-ordination with the KFC within a period of three months from now. Simultaneously, petitioners can arrange purchasers and if liability due to all creditors including State & KSEB are settled, petitioners should be permitted to sell the properties. (C.N.RAMACHANDRAN NAIR, JUDGE) jg