IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE V.GIRI TUESDAY, THE 25TH NOVEMBER 2008 / 4TH AGRAHAYANA 1930 WP(C).No. 32954 of 2008(W) -------------------------- PETITIONER(S): --------------- JAYALAKSHMI BUILDERS PVT.LTD., GA REGENCY MANOR, KAUDIAR P.O., TRIVANDRUM - 695 003, REPRESENTED BY ITS MANAGING DIRECTOR PRASAD CHAKRAPANI. BY ADV. SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.ANIL D. NAIR RESPONDENT(S): --------------- KERALA FINANCIAL CORPORATION, VELLAYAMBALAM, TRIVANDRUM - 695 033, REPRESENTED BY ITS MANAGING DIRECTOR. ADV. SRI.R.S.KALKURA FOR R1 THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 25/11/2008, ALONG WITH W.P.(C).33186/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: V.GIRI, J ------------------- W.P.(C)s.32954/2008 & 33186/2008 -------------------- Dated this the 25th day of November, 2008 JUDGMENT The issue raised in these writ petitions are identical in so far it relates to the challenge to the action taken by the Kerala Financial Corporation to bring to sale the property in relation to which a loan facility was availed by the petitioner in Writ petition No.32954/2008. I will refer to the facts in Writ Petition No. 32954/2008 in the first instance. 2. Petitioner Company availed of financial assistance to the tune of Rs.1.5 Crores from the respondent Corporation for construction of an apartment complex. Mortgage was created by deposit of title deeds. It now turns out that the property mortgaged, in which the construction was put up belongs to the petitioner in Writ Petition No.33186/2008 and the petitioners in both these writ petitions were associated in a joint venture. W.P.(C).32954 & 33186/2008 2 3. The project could not be completed as there was default in re-payment of the loan availed by the petitioner in Writ petition No.32954/2008. It ended in Ext.P2 letter dated 12.8.2008, whereunder Corporation agreed for an One Time Settlement of the dues on the loanee remitting an amount of Rs.250 Lakhs on or before 25.8.2008. Petitioner approached the Corporation and requested for three months’ time to arrange the One Time Settlement. According to the petitioner, Corporation agreed for extension of time, though there is a dispute as to whether this was actually done. Petitioner approached this Court in the wake of Ext.P4 letter issued by the Corporation pointing out that the Corporation has decided to sell the mortgaged assets to one Ajithkumar, Friends Colony, New Delhi, for an amount of Rs.4 Crores and that it is open to the petitioner to remit an amount of Rs.4 Crores, if he wants to save the property as such. After hearing the learned counsel for the petitioner and learned Standing Counsel for the Corporation, this Court had passed an W.P.(C).32954 & 33186/2008 3 interim order directing further steps, with regard to the sale of the property be kept in abeyance provided the petitioner pays an amount of Rs.2.5 Crores on or before 30.11.2008. 4. Writ petition No.33186/2008 was filed on 10.11.2008 by the owner of the mortgaged property and the essential contention in the said writ petition is that the land forming part of the mortgaged property belongs to him and that he had entered into a joint venture with the petitioner in Writ petition No.32954/2008 and he had proceeded to make an offer of Rs.4 Crores to the Corporation. 5. When Writ Petition No.33186/2008 came up for consideration, I directed that the same be taken up along with Writ Petition No.32954/2008. 6. I heard Mr.Shaffique, learned senior counsel for the petitioner in Writ Petition No.32954/2008, W.P.(C).32954 & 33186/2008 4 Mr.K.R.B.Kaimal, learned senior counsel for the petitioner in Writ Petition No.33186/2008 and Mr.R.S.Kalkura, learned counsel appearing for the KFC in both the writ petitions. 7. I was inclined to seriously consider the offer made by the petitioner in Writ Petition No.33186/2008 for payment of an amount of Rs.2.5 Crores, subject to a reasonable enhancement of the same, because that was the amount which was projected for One Time Settlement in Ext.P2 in Writ petition No.32954/2008. But in circumstances where the owner of the property namely the petitioner in Writ Petition No.33186/2008 has come forward with an offer of Rs.4 Crores, it would not be fair or in public interest to still require the Corporation to abide by the original offer of Rs.2.5 Crores. 8. Once again I take note of the fact that the petitioner in Writ Petition No.33186/2008 was the owner W.P.(C).32954 & 33186/2008 5 of the property originally mortgaged and a construction was made therein, only pursuant to a joint venture between the petitioners in these two cases. 9. But I am of the view that a reasonable opportunity must be given to the petitioner in Writ Petition No.33186/2008 to pay the Corporation an amount of Rs.4 Crores as offered by him. Mr.Kalkura, learned counsel for the Corporation submits that the person who is the bidder of the property, referred to in Ext.P5, is apparently willing to remit an amount of Rs.4 Crores without further delay. This may be so. After all, the owner of the property must be given a reasonable chance to redeem his property and there cannot be any corresponding interest in favour of a stranger bidder for the property. If he has remitted any amount, he must be refunded the same along with interest at a reasonable rate. W.P.(C).32954 & 33186/2008 6 10. In the result, writ petitions are disposed of with the following directions. (i). Petitioner in Writ Petition No.33186/2008 shall make a payment of Rs.4 Crores with interest at the rate of 12%, to be levied with effect from 1.12.2008, on or before 15.1.2009. Payment may be made either in lump or in instalments within the time mentioned above. (ii). If such payment is made, Corporation shall consider the same as a settlement of dues incurred by the loanee, the petitioner in Writ petition No.32954/2008. (iii). If any amount has been deposited by the bidder, same shall be refunded to him immediately after 15.1.2009 and the bidder shall also be entitled to 12% interest on the amount of Rs.5 Lakhs deposited by him with the Corporation. The liability thereon shall also be borne by the petitioner in Writ Petition W.P.(C).32954 & 33186/2008 7 No.33186/2008, provided he proceeds to effect payment as directed in direction No.1 above. (iv). It is made clear that if the petitioner in Writ Petition No.33186/2008 fails to make the payment in the manner aforementioned, then it will be open to the Corporation to proceed against the property as proposed and obviously any expenses incurred by them in this regard could also be recovered from the defaulter. I have not considered the rights inter se the petitioners in the writ petitions, which will have to be worked out by them in accordance with the terms and conditions contained in any joint venture agreement entered into by them. V.GIRI, Judge mrcs