IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM FRIDAY, THE 18TH FEBRUARY 2011 / 29TH MAGHA 1932 WP(C).No. 34470 of 2010(G) ---------------------------------------- PETITIONER(S): ------------------------ T.A.MOUNAGURUSWAMY, S/O.LATE T.L.RAMASWAMI PILLAI, AGED 54 YEARS, NOW RESIDING AT THOKKUVETTIL HOUSE, ADIMALI P.O, VIVEKANANDA NAGAR, ADIMALI-685561. BY ADV. SRI.JOHNSON MANAYANI SRI.BENHUR JOSEPH MANAYANI RESPONDENT(S): -------------------------- 1. DEPUTY TAHSILDAR (RR) KERALA FINANCIAL CORPORATION, KATTAPPANA, IDUKKI DISTRICT.685 508 2. THE KERALA FINANCIAL CORPORATION(KFC) VELLAYAMBALAM, TRIVANDRUM REP.BY ITS MANAGING DIRECTOR.PIN 695 001 3. THE STATE OF KERALA, REP.BY ITS SECRETARY TO FINANCE, DEPARTMENT,SECRETARIAT,TRIVANDRUM * 4. ADDL.R4 IMPLEADED ADDL.R4: K.V.DRAVIDA MANI, S/O.NACHIMUTHU, 5/3 AISWARYA NAGAR, UDUMALPETTA, THIRUPUR-642 154, TAMILNADU. * IS IMPLEADED AS ADDITIONAL RESPONDENT NO.4 AS PER ORDER DATED 12/1/2011 IN I.A.NO.553/2011. R2 BY ADVS. SRI.M.M.SAYED MUHAMMED, SC, KFC R4 BY SRI.K.P.DANDAPANI, SENIOR ADVOCATE BY ADV. SRI.N.J.JOHNSON THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 18/02/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: sts C.K.ABDUL REHIM,J. ------------------------------- WP(C).NO. 34470 of 2010 --------------------------------- Dated this the 18th day of February, 2011 JUDGMENT Petitioner is the guarantor with respect to a loan availed by the company, M/s. Marayoor Paper Boards (P) Ltd. from the 2nd respondent. Immovable property belonging to the petitioner was mortgaged for securing the loan. Consequent to default committed in repaying amounts due to the 2nd respondent, property of the petitioner was put to auction, by proclaiming sale through Ext.P1 notice. In this writ petition the petitioner was challenging the steps taken for conduct of sale by publishing Ext.P1 proclamation. 2. Contentions raised challenging Ext.P1 was stoutly refuted by respondents 1 to 3 through detailed counter affidavit filed by the 2nd respondent. The chequered history with respect to various steps taken for recovery of amounts due in the loan transaction was narrated. Considering such history of the matter, this court found that there is no material to interfere WP(C).34470/2010 2 with the sale proceedings. During pendency of the writ petition the sale took place and the property in question was bid in auction by the additional 4th respondent, on 14.12.2010, for a sum of Rs.74,16,000/-. Under such circumstances the petitioner had impleaded the additional 4th respondent and also raised challenge against the sale proceedings. 3. Learned Standing Counsel appearing for the respondent Corporation submitted that the auction purchaser had already remitted the entire bid amount and that the petitioner had not chosen to challenge the sale proceedings by approaching the appropriate authority. Confronted with such situation the petitioner made an appeal to this court to the effect that, he is ready and willing to make payment of the entire sale amount with a view to save the property being sold. On 12.1.2011 when the matter was taken up for consideration learned counsel for the petitioner made an offer that he will remit a sum of Rs.20 lakhs immediately in order to prove his bonafides. On that premise this court issued an interim order directing the respondents to keep in abeyance further steps for confirmation of sale and the petitioner was directed to make payment of a sum of Rs.20 WP(C).34470/2010 3 lakhs, on an unconditional basis. It was reported that the petitioner had remitted the said amount on 19.1.2011. The petitioner further made an offer to make payment of the balance amount of the sale price , along with a reasonable compensation payable to the 4th respondent, to be suggested by this court with a view to save the property from being sold. 4. In a counter affidavit filed by the 4th respondent it was contended that on the date of auction itself he had remitted 15% of the purchase money and the balance amount was remitted on 12.1.2011. It is contended that the petitioner had failed to approach the appropriate authority seeking to set aside the sale by resorting either to section 52 or section 53 of the Kerala Revenue Recovery Act. The 4th respondent contended that steps for sale initiated by the 1st respondent was perfectly legal and valid and the price for which the bid was fixed in favour of the 4th respondent is consistent with the market value of the property. On the other hand, contention of the petitioner is that the property in question will fetch more than Rs.2.5 crores and if it is sold for a sum of Rs.74.16 lakhs, that will cause severe prejudice and irreparable loss to the petitioner. WP(C).34470/2010 4 5. Considering the situation as narrated above, the question arose as to whether any equitable relief can be granted in favour of the petitioner, in order to allow him to save the property from being sold. Petitioner is making offer to pay the entire sale amount along with compensation if any due to the 4th respondent. As far as respondents 1 to 3 are concerned, by granting such relief they will not be prejudiced in any manner . On the other hand, the Corporation will get the sale amount (value of the property). At the same time they will be getting right to continue with a lien over the property to enable them to keep it as security for realisation of the balance amount. 6. However, the 4th respondent is objecting the grant of any relief in favour of the petitioner, which according to him, will be against the provisions contained in the Revenue Recovery Act. Question arise as to whether the 4th respondent has got any 'locus standi' to challenge granting of the relief which is proposed in favour of the petitioner. It is settled law by this time through various precedents that, unless the sale is confirmed in favour of an auction purchaser, he may not getting any right to WP(C).34470/2010 5 challenge any steps which will be taken in relation to the sale proceedings, including its confirmation. Under such circumstances I am inclined to grant an equitable relief to the petitioner by permitting him to pay the sale amount with a view to save the property from being sold. 7. The next question arising for consideration is in what manner the additional 4th respondent can be compensated, taking note of the fact that he is the successful bidder and he had deposited the entire sale amount. Learned counsel appearing for the 4th respondent draws my attention to the provisions contained in section 52 of the Revenue Recovery Act to canvass that when the sale is set aside under that provision, the bidder will be entitled for getting compensation to the tune of 5% to the sale amount. But it is pertinent to note that the sale is not proposed to be set aside by virtue of any proceedings initiated under section 52 or under section 53 of the Act. Here is a case where the owner of the property is seeking equitable relief on the basis that he is ready and willing to make payment of the amount for which the sale is proposed to be confirmed, with a view to save the property from being lost. Under such WP(C).34470/2010 6 circumstances I am of the view that interest of justice will be served if the 4th respondent is paid reasonable interest on the amount which was deposited towards sale price. I am of the considered opinion that payment of interest at the rate of 12% p.a. will serve the ends of justice. 8. Under the above mentioned circumstances the writ petition is disposed of directing the petitioner to make deposit of a sum of Rs.74.16 lakhs, less the amount of Rs.20 lakhs already paid, along with interest payable to the 4th respondent at the rate of 12% p.a. calculated on the basis of the respective dates of deposits, due till the date of payment. 9. The amount as stipulated above shall be deposited on or before 10.3.2011. If the deposit as directed above is made within the time stipulated, the 1st respondent shall treat the sale conducted on 14.12.2010 by virtue of Ext.P1 notice as cancelled. The 1st respondent shall also refund the amount deposited by the 4th respondent along with the amount of interest which will be paid by the petitioner, without any further delay . 10. It is made clear that on the event of default in payment of the amount as stipulated above, the respondents will WP(C).34470/2010 7 be free to proceed with further steps for confirmation of sale and for issuance of sale certificate in favour of the 4th respondent. C.K.ABDUL REHIM,JUDGE pmn/