IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD THURSDAY, THE 31ST DAY OF JULY TWO THOUSAND AND EIGHT PRESENT HON'BLE SRI ANIL R. DAVE, THE CHIEF JUSTICE and HON'BLE SRI JUSTICE R.SUBHASH REDDY WRIT APPEAL No.664 of 2008 (Writ Appeal under Clause 15 of the Letters Patent against the Order dated 28/04/2008 in WP No. 288 OF 2008 on the file of the High Court) Between: Indian Overseas Bank Regional Office, Suryalok Complex., Hyderabad, rep. by its Chief Manager, JDM Prasad, S/o. J. Purushotham, aged 55 years, R/o. Hyderabad. ... APPELLANT AND 1. V. Venkateshwara Rao S/o. Balaji Gupta, R/o. H.No. 6-3-630/A, Anand Nagar Colony, Khairatabad, Hyderabad. 2 The Government of Andhra Pradesh, through the Deputy Registrar, Co-operative Societies, Societies-cum-Official on Special Duty/arbitrator, The Vasavi Co-operative Urban Bank Limited, Malakpet, Hyderabad. 3 The Vasavi Co-operative Urban Bank Ltd., Malakpet, Hyderabad, rep. By its Managing Director, Regd. Office at Malakpet, Hyderabad. 4 A. Goverdhan Rao S/o. Vishnu Vardhan Rao R/o. Plot No. 34, Brindavan Apartments, Czech Colony, G-1, Somnathnagar, Hyderabad. ...RESPONDENTS Counsel for the Appellant: Mr. CH. SRINIVAS Counsel for Respondent No.1: Mr. P. Venugopal Counsel for Respondent No.2: GP, COOPERATION Counsel for Respondent No.3: Mr. A. Ananda Rao Counsel for Respondent No.4: Mr. D. Ramesh The Court made the following: Judgment: (Per R. Subhash Reddy, J) This writ appeal, under clause 15 of the Letters Patent is filed by the third respondent in W.P.No.288 of 2008 aggrieved by the order dated 28-04-2008 passed by the learned single Judge. 2. Necessary facts, in brief, for disposal of this appeal are as under: The first respondent herein, along with others i.e. M/s. Maniraja Constructions and one Smt. V. Manemma, borrowed certain loans from Housing & Urban Development Corporation Ltd., Indian Overseas Bank, Basheerbagh Branch, Hyderabad and Vasavi Co-operative Urban Bank Ltd., Malakpet Branch. An amount of Rs.330 lakhs was borrowed from Housing & Urban Development Corporation Ltd., on 15-03-1996, a sum of Rs.35 lakhs was borrowed from Indian Overseas Bank Ltd., in the year 1994 and a sum of Rs.81 lakhs was borrowed from Vasavi Co-operative Urban Bank Ltd. Different items of properties were mortgaged with the aforesaid financial institutions as security for repayment of loans. Ultimately, there was a default on their part in repaying the loans. Housing & Urban Development Corporation Ltd., filed O.A.No.451 of 2001 before the Debts Recovery Tribunal, Hyderabad to recover a sum of Rs.3,84,88,982/- and the appellant- bank filed O.A.No.383 of 2002 to recover a sum of Rs.58,76,840.79/-. So far as third respondent, Vasavi Co-operative Urban Bank Ltd., is concerned, it had filed ARC No.0219/2002/OSD/VCUB before the Deputy Registrar of Co- operative Societies, under Section 61 of the Andhra Pradesh Cooperative Societies Act, 1964. The said authority, ultimately, passed an award in favour of the creditor-bank on 22-02-2003, holding that the first respondent, along with other borrowers, are liable to pay a sum of Rs.93,72,236/- as on 11-08-2001. The said award passed by the competent authority under the provisions of the Andhra Pradesh Cooperative Societies Act, 1964 has become final. Thereafter, the said bank had filed E.P.No.141 of 2003 for sale of one of the mortgaged properties, which is the subject matter of this writ petition, namely, House No.6-3-630 (Old) or 6-3-630/A (New) with plinth area of 3000 Sft., in the land admeasuring 859 Sq. yards, situated at Khairatabad, Hyderabad. In execution of the award, when the said property was notified for sale by the second respondent, Deputy Registrar of Cooperative Societies, earlier a writ petition in W.P.No.64 of 2004 was filed by one of the creditors, i.e. Housing & Urban Development Corporation Ltd., seeking directions by way of Mandamus not to execute award of the second respondent with regard to aforesaid house property. A learned single Judge of this court, while refusing to grant relief as prayed for, disposed of the said writ petition by order dated 30-08-2007, permitting auction of the mortgaged property by issuing notice as required under the provisions of the Act and the rules made thereunder and allowed Housing & Urban Development Corporation Ltd., and Indian Overseas Bank to take part in the auction proceedings. It was further observed that if the original borrowers bring any prospective purchasers within two weeks from the date of conclusion of auction and if they offer and pay atleast 10% over and above the amount that is fetched in the auction, their offers shall also be considered. Pursuant to directions issued by this court in W.P.No.64 of 2004, the mortgaged property, i.e. the house referred above, was notified for auction in execution of the award passed in favour of the third respondent, Vasavi Co-operative Urban Bank Ltd., and was put to auction on 19-12-2007. In the said auction, the appellant-bank had offered its bid at Rs.3,63,50,000/-. However, the prospective purchaser brought by the original borrowers offered to pay Rs.4,05,00,000/-, which is more than 10% over and above the amount that fetched in the auction. The said prospective purchaser also purchased a demand draft dated 31-12-2007, for an amount of Rs.61,00,000/-. A representation to the same effect was also submitted before the second respondent-sale officer. When their offer was rejected and the bid of the appellant herein was accepted, they questioned the same before this court in W.P.No.288 of 2008. Learned single Judge, mainly on the ground that the rejection of the offer made by the fourth respondent is contrary to earlier directions of this court in W.P.No.64 of 2004, set aside the sale in favour of the appellant herein and granted further directions to conduct further auction between the appellant and the fourth respondent, on the offer made by the fourth respondent – highest bidder. 3. When the matter had come up at first instance on 18-07-2008, this court permitted the appellant to participate in the auction, with a direction not to confirm the sale in favour of the highest bidder. It is stated that though auction was conducted in terms of the directions issued by the learned single Judge, appellant did not respond to the same and the fourth respondent has maintained the same offer of Rs.4,05,00,000/-. 4. In this appeal, it is mainly contended by the learned counsel for the appellant that there was no offer by any prospective purchaser within the time granted by this court in W.P.No.64 of 2004, and therefore, the bid was finalized in favour of the appellant and the appellant deposited the entire amount. It is also contended that offer by the fourth respondent was made before the third respondent-bank, although auction was notified by the second respondent-Deputy Registrar of Cooperative Societies. 5. We have heard Mr. Ch. Srinivas, learned counsel for the appellant, Mr. P. Venugopal for the first respondent, learned Government Pleader for Cooperation for the second respondent, Mr. A. Ananda Rao for the third respondent and Mr. D. Ramesh for the fourth respondent and perused the orders passed by this court in W.P.Nos.64 of 2004 and 688 of 2008. 6. When the sale of the properties in question was notified by one of the creditors, namely, Housing & Urban Development Corporation Ltd., in execution of the award obtained by the third respondent, Vasavi Cooperative Urban Bank Ltd., this court, while permitting sale of the property, imposed a condition permitting the original borrowers to bring any prospective purchaser who is prepared to offer and pay at least 10% over and above the amount that is fetched in the auction. The said condition is obviously imposed to get the best price for the property and that there should not be any monetary loss to the original borrowers, in the auction. For sale of the house aforementioned, auction was conducted on 19-12-2007, for which fourth respondent herein offered Rs.4,05,00,000/-, within the timeframe allowed by this court in W.P.No.64 of 2004. Though it is submitted that on behalf of the appellant that no offer was made before the Deputy Registrar of Cooperative Societies, but it is not in dispute that that the said offer made was before the third respondent-bank, in whose favour award was passed under Section 62 of the Andhra Pradesh Cooperative Societies Act, 1964. Further, it is argued by the learned counsel for the appellant that no amount was deposited, i.e. 10% over and above the highest bid. But, it is to be seen that this court, in its order dated 30-08-2007, did not issue any direction for depositing any amount, but observed that if any prospective purchaser brought by the original borrower is prepared to offer 10% over and above the amount that is fetched in the auction, the said offer shall be considered. It is to be noted that demand draft for an amount of Rs.61,00,000/-, had been purchased by the fourth respondent in favour of the third respondent-bank on 31-12-2007. In view of the representation filed by the fourth respondent, coupled with the draft that is purchased, it is clear that there was an offer within the period of two weeks from the date of auction. In the absence of specifying any authority by this court, before whom the offer has to be made, in the order dated 30-08-2007, in W.P.No.64 of 2004, the offer made before the fourth respondent cannot be easily brushed aside. As much as auction was held on 19-12-2007 and offer, by way of representation, was made before the third respondent-bank on 01-01-2008, any rejection of offer by the second respondent runs contrary to the timeframe fixed by this court in W.P.No.64 of 2004. The said offer of the fourth respondent herein was made prior to deposit of the balance amount by the appellant-bank. The bona fides of the fourth respondent are further strengthened in view of the demand draft purchased for an amount of Rs.61,00,000/- on 31-12-2007 itself. 7. As much as the offer made by the fourth respondent is more than 10% over and above the highest bid that is offered by the appellant-bank, and the opportunity given by this court to the appellant-bank to participate in the auction along with the fourth respondent was not utilized by the appellant- bank and no offer was made by it, we do not find any illegality in the order passed by the learned single Judge. 8. The writ appeal is devoid of merits and is accordingly dismissed with no order as to costs. _________________ ANIL R. DAVE, CJ. ____________________ R. SUBHASH REDDY, J. July 31st, 2008 MRR