IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON WEDNESDAY, THE 7TH OCTOBER 2009 / 15TH ASWINA 1931 WP(C).No. 20097 of 2009(F) -------------------------- PETITIONERS: --------------- 1. MAHESWARI, W/O.SOMASUNDARAM,AGED 50 YEARS,MUVALAKAPUDUR KALAM, MUTHALAMADA VILLAGE, CHITTUR TALUK, PALAKKAD DIST. 2. GOVARDHANAGIRI, S/O.MUTHU KRISHNASWAMY KOUNDER, AGED 46 YEARS GOPALAPURAM, MANNUR PO, POLLACHI TALUK, COIMBATORE DIST,TAMIL NADU. 3. THANKARAJ, S/O.KALIYAPPA KOUNDER, AGED 49 YEARS, GOPALAPURAM MANNAR TALUK, POLLACHI TALUK, COIMBATORE DIST,.TAMIL NADU,. 4. MOHANDAS, S/O.VELUSWAMY KOUNDER, AGED 42 YEARS, GOPALAPURAM, MANUR POST, POLLACHI TALUK, COMBATORE DIST, TAMIL NADU. BY SENIOR ADVOCATE MR. K.P. DANDAPANI ADV. MR. JACOB SEBASTIAN RESPONDENTS: --------------- 1. INDIAN BANK, REP,BY THE AUTHORISED OFFICER/CHIEF MANAGER CIRCLE OFFICE PB.NO.3575, 38/1672-B&C, CHITTOOR ROAD,PULLPADY JUNCTION, ERNAKULAM-682 035. 2. INDIAN BANK, VADAKARAPATHY BRANCH, REP.BY ITS BRANCH MANAGER, VADAKARAPATHY, PALAKKAD. 3. M.ARUMUGHA SUNDARAM, S/O. MUTHUSWAMY KOUNDER, AGED 53 YEAR GOPALAPURAM KALAM, KOZHIPATHY VILLAGE, CHITTUR TALUK,PALAKKAD DIST. * 4. N.V. GOUTHAMAN, S/O VELANDY N., AGED 54 YEARS, NADIYIRIPPIL HOUSE, KAHIMBRAM P.O., THRISSUR 680 668 *5. SHERLY DINESH, W/O P.B. DINESH, AGED. 32 YEARS, PANNAKKAL HOUSE, VALAPPAD BEACH P.O., THRISSUR. * 6. K.R. BABU REJENDRAN, S/O RAGHAVAN K.R., AGED. 57 YEARS KANJIRAPARAMBIL HOUSE, NATTIKA BEACH P.O., THRISSUR. R1 BY ADV. MR. S.EASWARAN .R4 TO 6 MR. T.KRISHNAN UNNI, SENIOR ADVOCATE . ADV. MS. P.G.BABITHA MR. BINOY VASUDEVAN (* Impleaded as Additional Respondents 4 to 6 as per order dated 22.07.2009 in I.A. 9077 of 2009) THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 07/10/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No. 20097 of 2009 APPENDIX PETITIONER'S EXHIBITS : EXT.P1 : TRUE COPY OF THE GUIDE LINES FOR IMPLEMENTING THE DEBT RELIEF SCHEMES FOR AGRICULTURISTS. EXT.P2 : TRUE COPY OF THE STATEMENT OF ACCOUNTS IN RELATION TO THE LOANS. EXT.P3 : TRUE COPY OF THE ELECTRICITY BILLS DATED 26.308.08 IN RESPECT OF THE PROPERTY MORTGAGED EXT.P4 : TRUE COPY OF THE POSSESSION NOTICE DATED 06.12.2008 ISSUED BY THE RESPONDENT BANK. EXT.P5 : TRUE COPY OF THE LETTER DATED 04.05.2009 EXT.P6 : TRUE COPY OF THE TENDER CUM AUCTION SALE NOTICE ON 19.05.2009 ISSUED BY THE BANK. EXT.P7 : TRUE COPY OF THE PAPER PUBLICATION FOR THE SALE OF THE PROPERTY DATED 21.05.2009 ISSUED BY THE BANK. EXT.P8 : TRUE COPY OF THE CERTIFICATE OF SALE DATED 16.07.2009 ISSUED BY THE RESPONDENT BANK. EXT.P9 : TRUE COPY OF THE LETTER OF SANCTION IN RESPECT OF THE LOAN EXT.P9 (a) : TRUE COPY OF THE LETTER OF SANCTION IN RESPECT OF THE LOAN. RESPONDENT'S EXHIBITS : EXT. R1 (a) : TRUE COPY OF THE VALUATION REPORT SUBMITTED BY THE APPROVED VALOR OF THE BANK. EXT. R1 (b) : TRUE COPY OF THE CIRCULAR NO. 1/2008 28.5.2008 ISSUED BY THE MINISTRY OF FINANCE, NEW DELHI. EXT. R1 (c) : TRUE COPY OF THE SALE NOTICE PUBLISHED IN MATHRUBHOOMI DAILY DATED 22.5.2009 EXT.R1 (d) : TRUE COPY OF THE SALE NOTICE PUBLISHED IN HINDU DAILY DATED 22.5.2009 EXT. R1 (e) : TRUE COPY OF THE TENDER APPLICATION SUBMITTED BY RESPONDENTS 4 TO 6 EXT. R1 (f) : TRUE COPY OF THE MINUTES OF THE BIDDING PROCESS OF THE BANK .2. EXT. R1 (g) : TRUE COPY OF THE STATEMENT OF ACCOUNT MAINTAINED BY THE 4TH RESPONDENT. EXT. R1(h) : TRUE COPY OF THE INTERIM ORDER DATED 2.5.2009 IN W.P. NO. 18499 OF 20097 EXT. R1(I) : TRUE COPY OF THE LETTER DATED 8.7.2009 ISSUED BY THE BANK TO RESPONDENTS 4 TO 6 EXT. R1(J): TRUE COPY OF THE MINUTES DATED 8.7.2009 OF THE SECURITY ENFORCEMENT COMMITTEE EXT. R1 (k) : TRUE COPY OF THE POSSESSION CERTIFICATE ISSUED BY THE VILLAGE OFFICER, MUTHALAMADA EXT. R1(l) : TRUE COPY OF THE POSSESSION CERTIFICATE ISSUED BY THE VILLAGE OFFICER, MUTHALAMADA EXT. R1(m) : TRUE COPY OF THE POSSESSION CERTIFICATE ISSUED BY THE VILLAGE OFFICER, MUTHALAMADA EXT. R1(n) : TRUE COPY OF THE POSSESSION CERTIFICATE ISSUED BY THE VILLAGE OFFICER, MUTHALAMADA EXT. R1(o) : TRUE COPY OF THE POSSESSION CERTIFICATE ISSUED BY THE VILLAGE OFFICER, MUTHALAMADA /TRUE COPY/ P.S. TO JUDGE P.R. RAMACHANDRA MENON, J. ........................................................................ W.P.(C) No.20097 OF 2009 ......................................................................... Dated this the 7th October, 2009 J U D G M E N T Whether the plea of alternate remedy raised from the part of the respondent Bank should bar the way of the petitioners in challenging the hasty steps pursued by the Bank, effecting sale of 32.46 Acres of Coconut plantation for a paltry sum of Rs.91 lakhs to the 'sole bidder' who turned up, notwithstanding the fact that the total liability to the Bank is about Rs.1.6 crores and further that the petitioners/guarantors have come forward depositing the 'entire sale price' and also expressing willingness to clear the balance amount payable to the Bank (about Rs.69 lakhs) with such other expenses, if any, is the issue involved herein. 2. With regard to the sequence of events, the petitioners herein were guarantors to different loans sanctioned by the respondent Bank vide Ext.P9/P9(a) creating security interest over the properties owned, possessed and enjoyed by them as above. The loans were procured in connection with the W.P.(C) No.20097 OF 2009 2 'agricultural affairs' of the Firm and since the petitioners were stated as mostly in Tamilnadu, the affairs of the Firm were being managed by the third respondent, who was put in charge of the Firm. Subsequently, because of adverse circumstances, the loan amount could not be repaid as scheduled, which compelled the respondent Bank to declare the account as 'NPA' and to proceed with coercive steps invoking the provisions under the SARFAESI Act. 3.Met with the said circumstances, the petitioners along with some others had approached this Court by filing W.P.(C) No. 3265 of 2009 seeking for the benefit of 'OTS', which was disposed of, vide judgment dated 30.01.2009, directing the Bank to consider the application for 'OTS'. But without any regard to Ext.P1 Scheme and the application preferred by the petitioners, the claim for 'OTS' was rejected by the Bank as per Ext.P5, followed by Ext. P6 tender notice and Ext.P7 paper publication. While so, the third respondent, describing himself as the Managing Partner of the Firm filed W.P.(C) No.18499 of 2009 before this Court , challenging the proceedings taken by W.P.(C) No.20097 OF 2009 3 the Bank, which was resisted by the Bank, contending that the third respondent, i.e., the petitioner in the said case was having only a fractional share in the property; that the said person did not have the 'locus standi' to file the Writ Petition and hence that the Writ Petition itself was not maintainable. In the said circumstances, the petitioner in W.P.(C)No.18499 of 2009 sought for permission of this Court to withdraw the matter with liberty to move the statutory authority. Accordingly, the said Writ Petition was dismissed as withdrawn. 4. It is revealed from the pleadings in the present case that, pursuant to further steps taken by the Bank, the sale was conducted on 04.07.2009, accepting the 'sole bid' of Rs.91 lakhs, submitted by the additional respondents 4 to 6 jointly; that the sale was confirmed on that day itself; that the balance sale consideration was obtained on 16.07.2009; that Ext.P8 'sale certificate' was issued in favour of the additional respondents 4 to 6 on that day itself, i.e. on 16.07.2009, in spite of the fact that the above Writ Petition was moved by the petitioners as an 'urgent item' on 16.07.2009, wherein delivery of the property W.P.(C) No.20097 OF 2009 4 was intercepted on condition that the petitioners paid a sum of Rs. 91 lakhs within two days, which condition is reportedly complied with. 5. The case of the petitioners is that there was clandestine dealing between the Bank and the additional respondents 4 to 6 in effecting the sale for an abysmally low sale price of Rs.91 lakhs, when the actual value of the property was nearly Rs. 4.5 crores and further when the total liability to the Bank itself was about Rs.1.6 crores. It is also contended by the petitioners that the third respondent, who was entrusted with the duty of managing the affairs of the Firm, had colluded with the Bank and had filed W.P.(C) No.18499 of 2009, later causing it to be withdrawn, but without pursing further steps to protect the rights and interests of all concerned and for causing the property to be re-conveyed. The alleged 'shady transaction' is sought to be highlighted, also with specific reference to the pleadings raised in paragraph No.6 of the Writ Petition, that the additional respondents 4 to 6 are only 'benamies'/name lenders of somebody else behind the curtain; that they do not have any W.P.(C) No.20097 OF 2009 5 asset or financial capability to raise Rs. 91 lakhs within no time. It is also contended that the property is an 'agricultural land' and stands outside the purview of the SARFAESI Act , by virtue of exclusion under section 31(i) of the Act. 6. The respondent Bank has filed a counter affidavit and additional counter affidavit producing various documents. Similarly, the additional respondents have also filed counter affidavit as well as additional counter affidavit in support of their contentions, seeking to sustain the sale. The petitioners have filed separate reply affidavits in response to the contentions raised from the part of the respondent Bank and the additional respondents 4 to 6. 7. The averments raised by the petitioners that the property is an 'agricultural land' and hence stands outside the purview of the SARFAESI Act by virtue of Section 31(i) of the Act does not appear to be palatable . This is for the obvious reason that the property admittedly is a 'pucca garden land' with coconut plantation, which cannot be considered as an 'agricultural land' where raising of any 'crop' is involved. The W.P.(C) No.20097 OF 2009 6 term 'agricultural land', though not defined in the Statute Book, it can be understood as any common man understands the same. This Court has already taken a view that such coconut plantation is not liable to be classified as an 'agricultural land', so as to oust the jurisdiction under the SARFAESI Act. Further, the respondent Bank, along with the additional counter affidavit, has produced Exts.R1(k) to R1(o) possession certificates issued by the Village Officer, Muthalamada, wherein the property has been clearly described as 'pucca dry land'. It has been made clear by the Apex Court, that the entries in the Revenue records can very well be relied on to ascertain the nature of the property concerned [vide the decision in Commissioner of Wealth Tax,Andhra Pradesh vs. Officer-in-charge (Court of Wards), Paigah (1976 (3) SCC 864)]. As such, the contention raised in this regard stands answered against the petitioners and no benefit can be extended to them, under this Head. 8. Mr. K.P. Dandapani, the learned Sr. Counsel appearing W.P.(C) No.20097 OF 2009 7 on behalf of the petitioners, referring to the sequence of events and also to the specific pleadings as put forth in the amended Writ Petition, submits that there will be total miscarriage of justice, if interference is not made by this Court, particularly when the petitioners have approached this Court depositing the entire sale price of Rs. 91 lakhs, pursuant to the interim order passed on 16.07.2009. It is also pointed out that the petitioners are ready and willing to pay the balance amount due to the Bank (nearly Rs.69 lakhs) and that there is absolutely no rationale in accepting the sale proceeds of just Rs.91 lakhs offered by the sole bidder (additional respondents 4 to 6) as against the actual liability of Rs.1.6 crores, which is being offered to be cleared by the petitioners in toto . It is further contended that there was no sufficient fund in the account of the 4th respondent and that the balance sale consideration was paid only on 16.07.2009 from some hidden source in Mumbai and that Ext. P8 'sale certificate' was issued on the very same day. There is a case for the petitioners that, it is a 'sham transaction' and that the proceedings are rather fabricated, especially when the interim W.P.(C) No.20097 OF 2009 8 order passed by this Court in W.P.(C) No.18499 of 2009 was available till 14.07.2009. Further, the present Writ Petition was admitted by this Court on 16.07.2009 and taking note of the submission made from the part of the Bank that the sale was already confirmed and sale certificate had been issued (both on 16.07.2009), the delivery was ordered to be kept in abeyance. It is also pointed out that the 'sale certificate' is not on the requisite stamp paper and that there is no valid sale. 9. Mr. B.Krishnan Unni, the learned Sr. Counsel for the additional respondents 4 to 6 submits that the said respondents are having their financial roots abroad and have arranged funds in a transparent manner. It is also stated that the sale is complete and that, if Ext. P8 sale certificate is defective in any manner, it can be cured by issuing a proper one. The allegation raised by the petitioners as to the collusive attempt to have the sale effected, is rebutted and interference is sought to be declined in the matter. 10. Mr. S. Easwaran, the learned Counsel for the W.P.(C) No.20097 OF 2009 9 respondent Bank submits that there was no procedural irregularity in conducting the sale. With reference to Ext. R1(g), it is stated that sufficient fund was available in the account of the Addl. 4th respondent on 16.07.2009 and it was accordingly that the balance sale consideration was satisfied, leading to issuance of Ext.P8 sale certificate. The learned Counsel presses much on the existence of alternate remedy, to non-suit the petitioners in the present proceedings. 11. True, this Court seldom interferes with such matters when statutory remedy is available. But availability of alternate remedy is not a bar for exercising the discretionary jurisdiction of this Court under Article 226 of the Constitution of India, and it is only a 'self imposed restriction', as made clear by the Apex Court in State of Himachal Pradesh and Others vs. Gujarat Ambuja Cements Ltd and another (2005 (6) SCC 499), followed by the decision rendered by this Court in M.J. Betty and others vs. Union Bank of India and others [2007(4) KHC 735 (SN)]. The question of law in this regard has been explained on many an occasion, including in the decisions W.P.(C) No.20097 OF 2009 10 rendered by a Division Bench of this Court in Padmanabhan vs. The Commissioner, HR & CE Department and others [ILR (2007)3 (Ker.) 289] and in Finimole T.P. vs. Assistant Commissioner (AA), Commercial Taxes and another (2008 (3) KHC 800). 12. In the instant case, when the matter came up for admission on 16.07.2009, this Court wanted to test the bonafides of the petitioner, particularly to ascertain whether it was a 'dilatory tactics' or if the petitioners had any genuine grievance and the submission that they were ready and willing to clear the liability of the Bank was a bonafide one. It was in the said circumstance, that this Court directed the petitioners to deposit the entire sale price of Rs. 91 Lakhs within two days, as per the interim order dated 16.07.2009, to have the delivery of the property stayed. In tune with the said direction, the petitioners deposited the said amount and admittedly, the same is lying in a 'suspense account'. It was taking note of the turn of events that the petitioners chose to implead the additional respondents 4 to 6 and also caused the Writ Petition to be W.P.(C) No.20097 OF 2009 11 amended as ordered on 22.07.2009, simultaneously taking notice by Special Messenger to the additional respondents 4 to 6. It is also reiterated that the petitioners are ready and willing to clear the outstanding liability to the Bank (Out of the total Rs.1.6 crores, only Rs.91 lakhs having been generated by virtue of the impugned sale). Considering the facts and circumstances, this Court finds that there is no point in relegating the petitioners to avail the statutory remedy, which will not be effective in view of the nature of the transactions and the acts and deeds brought to light so far. As such, the plea of alternate remedy is rejected and the point is answered in favour of the petitioners . 13. Admittedly, there was no other bid submitted by anybody else, than the bid submitted by the additional respondents 4 to 6 jointly, who quoted Rs. 91 lakhs in respect of the Coconut plantation having 32.46 Acres situated on the side of a road in Muthalamada village. The course pursued in accepting the bid and issuing the 'sale certificate' on 16.07.2009, giving credit to the amounts brought in the account of the Addl. 4th respondent from some source in Mumbai, only on the date of W.P.(C) No.20097 OF 2009 12 issuance of the 'sale certificate', i.e., 16.07.2009 cannot but be doubted. More so, when the Bank seriously opposed the Writ Petition to non-suit the petitioners who stated before this Court that they are ready and willing to clear the entire liability of Rs.1.6 crores due to the Bank, while the sale has procured only a sum of Rs.91 lakhs. 14. The petitioners' firm had approached this Court earlier by filing W.P.(C) No.3265 of 2009 seeking for the benefit of OTS, which was directed to be considered vide judgment dated 31.01.2009 leading to Ext. P5 communication issued by the Bank. True, the offer made by the defaulter firm for availing the benefit of OTS was only Rs. 75 lakhs, which was stated as not acceptable to the Bank vide Ext. P5, pointing out that the total dues outstanding in the account as on 31.03.2009 was Rs.156.19 lakhs. Despite the verbal jugglery, the Bank has not mentioned anything in Ext. P5, (while rejecting the offer made by the defaulters, stating that the sum of Rs. 75 lakhs offered as OTS was not acceptable), as to what should be the amount payable by the defaulters/guarantors for granting the benefit of W.P.(C) No.20097 OF 2009 13 OTS. It was immediately thereafter, that the Bank proceeded with hasty steps for sale, as borne by Exts. P6 and P7. As pointed out by the learned Sr. Counsel appearing for the petitioners, the specific pleading raised by the petitioners in paragraph No.6 of the Writ Petition as to the collusion of the officers of the Bank with the additional respondents 4 to 6, has not been rebutted anywhere in the counter affidavit/additional counter affidavit. In short, the sale conducted, accepting the 'sole bid' for a paltry sum of Rs. 91 lakhs, as against the outstanding liability of Rs.1.6 crores, is not liable to be held as proper and with sufficient publicity. 15. Similarly, no specific pleading has been raised from the part of the additional respondents 4 to 6 in their counter affidavit or additional counter affidavit as to whether interference of this Court will cause any irreparable loss, hardship or injury. Obviously, no such loss or injuries could even be deemed as resulted as, necessary funds were arranged by the bidder only on 16.07.2009 (as revealed from Ext.R1(g) statement of accounts), by pumping in necessary funds from some source in W.P.(C) No.20097 OF 2009 14 Mumbai, i.e., on the date on which the Writ Petition was entertained and an interim order was passed by this Court. When the petitioners contend that they did not get adequate opportunity to wipe out the liability and to redeem their property and further when they undertake that the entire liability to the Bank would be cleared by depositing the balance amount within three weeks from the date of direction in this regard, this Court does not understand why the Bank wants to shut their eyes to make it dark and to have satisfied with the sale proceeds of just Rs.91 lakhs tendered by the additional respondents 4 to 6 and to run after the borrower and the guarantors for realisation of the balance amount. In the said circumstance, this Court finds that the sale conducted has procured only abysmally low amount, to wipe out the liability of the Bank and that it was without adequate publicity. As such, Exts. P4 and P6 are set aside. All incidental proceedings are also set aside and the property is directed to be sold only after wide publicity, if so necessitated. 16. it is made clear that the sum of Rs. 91 lakhs deposited by the petitioners pursuant to the interim order dated W.P.(C) No.20097 OF 2009 15 16.07.2009 and stated as lying in the suspense account can be appropriated by the Bank. Taking note of the undertaking made through the learned Senior Counsel during the course of hearing that the petitioners are ready and willing to clear the balance amount due to the Bank within three weeks, the respondent Bank is hereby directed to inform the petitioners as to the balance amount due, to close the loan account within two weeks from the date of receipt of a copy of the judgment. On receipt of communication as above, the balance amount as above shall be paid within a further period of three weeks thereafter. If any default is committed by the petitioners in this regard, the Bank will be at liberty to proceed with further steps for conducting the sale of the property, with wide publicity, after effecting necessary publications in two dailies , as prescribed. The Writ Petition is allowed as above. No costs. P.R. RAMACHANDRA MENON, JUDGE. lk