1 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 13.12.2011 CORAM THE HONOURABLE MR. JUSTICE V. RAMASUBRAMANIAN W.P.(MD)No.11528 of 2011 And M.P.(MD)No.1 of 2011 M.Ligori Vanchi Arasu .. Petitioner vs. The Chief Manager and Authorised Officer, State Bank of India, Thirunelveli Branch, Thirunelveli. .. Respondent Writ Petition filed under Article 226 of the Constitution of India, praying for the issue of a Writ of Mandamus, directing the respondent-Bank to receive the due amount, cost and other charges from the petitioner as under Section 14(8) of SARFAESI Act, and to discharge the liability on the secured assets, a house bearing D.No.6/25, Chekkady Narayanasamy Koil Street, Palayapettai, Thirunelveli Town. For Petitioner : Mr.R.Suriyanarayanan For Respondent : Mr.K.M.Vijayakumar, Counsel for SBI. O R D E R The petitioner has come up with the above writ petition, seeking a Mandamus, to direct the respondent to receive the amount due to them in terms of Section 13(8) of the SARFAESI Act, and to discharge the liability on the secured assets. 2. I have heard Mr.R.Suriyanarayanan, learned counsel for the petitioner and Mr.K.M.Vijayakumar, learned Counsel for the respondent.. 3. The petitioner and his wife availed a housing loan to the tune of Rs.20 lakhs from the respondent-Bank on 10.1.2005. The house property owned by them was mortgaged to the Bank. The loan was repayable together with interest in 180 equated monthly instalments commencing from March 2005. 4. The petitioner committed default in repayment of the dues forcing the Bank to issue a notice dated 10.11.2009 under Section 13 (2) of the SARFAESI Act. It was followed by a possession notice under Section 13(4) dated 7.4.2010. The respondent filed necessary application before the Chief Judicial https://hcservices.ecourts.gov.in/hcservices/ 2 Magistrate under Section 14 and took actual physical possession of the property on 27.8.2011. 5. The petitioner made an unsuccessful attempt to challenge the action of the respondent before this Court in W.P.No.9285 of 2010. After the said writ petition was dismissed by this Court by order dated 20.7.2010, the petitioner filed an appeal under Section 17 of the SARFAESI Act, before the Debts Recovery Tribunal. It appears that the appeal is pending even at the preliminary stage in S.A.SR.No.908 of 2010. 6. Thereafter the petitioner claims to have approached the Bank with an offer to tender a sum of Rs.17,48,762/-, towards repayment of the entire loan. The petitioner also claims to have taken a demand draft for Rs.17,50,000/- and sent a telegram to the respondent-Bank, offering to settle the amount. But since the offer did not evoke any response, he has come up with the above writ petition. 7. Though the very maintainability of the writ petition is doubtful, in view of the availability of alternative remedy under Section 17 of the SARFAESI Act and also in view of the fact that the petitioner has, in fact, filed such an appeal, a notice was ordered to the respondent-Bank, in view of the fact that the petitioner offered to settle the entire amount. After the Bank entered appearance, the counsel for the respondent-Bank furnished a statement indicating that the total amount payable by the petitioner as on 1.12.2011, to enable the Bank to hand over possession of the house property back to the petitioner would be Rs.21,35,653/-. Therefore, I passed an order on 21.11.2011, after taking note of the break up given by the counsel for the respondent-Bank. The order dated 21.11.2011, reads as follows:- “The learned counsel for the respondent- Bank has filed a statement today, indicating that the amount payable as on 1.12.2011 would be Rs.21,35,653/-. The breakup of the said amount is indicated as follows:- Rs. Ps. 1.Loan outstanding as on 17.11.2011 17,39,081.85 2. Interest upto 1.12.2011 79,321.15 3. Resolution Agent charges 2,75,750.00 4. High Court Advocate Fees, DRT Advocate Fees, CJM Court Advocate Fees 31,000.00 5. Branch Inspection/Attending hearing at Madurai 10,500.00 -------------------- Total 21,35,653.00 ============ 2. Out of the above amounts, there are disputes about what is claimed under Serial Nos.2 to 5. Therefore, a greater scrutiny is necessary, at least in respect of what is claimed as resolution agent charges, in view of the fact that https://hcservices.ecourts.gov.in/hcservices/ 3 the engagement of recovery agents has been deprecated by the Supreme Court. 3. Therefore, for the present, an interim order is passed, directing the petitioner to make payment, without prejudice to the rights of both parties, of an amount of Rs.18,59,903/- (Rupees Eighteen Lakhs Fiftynine Thousand Nine Hundred and Three only). Upon the petitioner making payment of the said amount, the possession of the residential house shall be restored to the petitioner. 4. The Bank shall file a detailed statement regarding each one of the items of claim under Serial Nos.2 to 5 above, within a week. But this shall not prevent the Bank from handing over the possession of the property to the petitioner by collecting the amount as aforesaid. Post on 28.11.2011 immediately after motion cases.” 8. In pursuance of the above order, the petitioner has paid the aforesaid amount and it appears that possession has been handed over. Thereafter the respondent filed a statement of accounts. The statement of accounts shows the following calculation: SUMMARY OF ACCOUNTS Outstanding as on 17.11.2011 17,39,081.85 Add: Unapplied interest (1.7.2011-30.11.2011) 79,321.00 Add: Resolution Agent Charges 2,75,750.00 Add: Advocate Fees 31,000.00 Add: Bank Charges 10,500.00 Add: Security Charges (Amount which was omitted to be included) 32,760.00 Total 21,68,412.85 Less: Amount Received 18,59,903.00 Amount to be recovered 3,08,509.85 9. It appears from the above statement of accounts that the area of dispute is now confined only to two items viz., (i) Resolution Agent Charges of Rs.2,75,750/- and (ii) security charges of Rs.32,760/-, both of which total to Rs.3,08,510/-. 10. Out of these two amounts, I do not think that there can be any dispute about the claim for security charges amounting to Rs.32,760/-. The said amount has been paid to the security agent which employed security guards round the clock in the months of October and November 2011 for safeguarding the property, after taking actual physical possession. The bills raised by the Central Industrial Security Services Private Ltd., have been filed by the Bank. They show that 3 Security Guards were employed on a monthly salary of Rs.5,500/- each. Together with service tax at the applicable rate, the amount paid by the Bank to the Security Agency is Rs.32,760/-. Therefore, this https://hcservices.ecourts.gov.in/hcservices/ 4 amount has to be paid by the petitioner and there is no doubt about that. 11. In so far as the claim for Rs.2,75,750/- made by the Bank under the heading Resolution Agent Charges is concerned, there is some doubt. In the letter dated 26.11.2011, the respondent-Bank has given the justification for the said amount on the following lines:- “Sl.No.3: Rs.2,75,750/-. This represents the Resolution Agent Charges appointed by us in managing the assets. As per the Agreement between the Bank and Resolution Agent, charges were arrived at 10% of total outstanding as on the date of recovery plus service tax. We have already advised to the borrower, vide our letter dated 16.11.2009 about the Recovery Agent Charges which will be recovered from the borrower if SARFAESI action is initiated. The actual bill amounting to Rs.2,50,160/- received from M/s.Reyvish Associates (P) Ltd., Madurai as Resolution Agent Charges is enclosed for your perusal.” 12. I do not know if the engagement of the services of recovery agents can be taken to be legal, especially after the decision of the Supreme Court in ICICI Bank vs. Prakash Kaur {2007 (2) SCC 711}. The notices under Sections 13(2) and 13(4) were issued by the Bank. The possession of the property was taken by filing an application before the Chief Judicial Magistrate's Court under Section 14. Therefore, the role played by the Resolution Agent/Recovery Agent is not clear. Prima facie, the claim for a sum of Rs.2,75,750/- appears to be unsustainable. However, I do not wish to adjudicate the validity of the said claim in a writ petition under Article 226. As a matter of fact, I cannot. Therefore, I am of the view that it would be better to leave it to the Bank to file a civil suit or an application before the Debts Recovery Tribunal, whichever is applicable, in so far as this claim is concerned. 13. In view of the above, the writ petition is disposed of, (i) recording the payment of Rs.18,59,903/- by the petitioner to the Bank (ii) recording the re-delivery of possession of the property by the Bank to the petitioner (iii) directing the petitioner to make a further payment of Rs.32,760/- towards security charges, within two weeks from the date of receipt of a copy of this order and (iv) giving liberty to the Bank to file an appropriate suit or application before Debts Recovery Tribunal for the recovery of the amount claimed towards Resolution Agent Charges. If the petitioner fails to pay the amount Rs.32,760/- towards security charges, within two weeks of receipt of a copy of this order, it will be open to the respondent-Bank to file necessary application before this Court to recall this order and to take back possession of the property. https://hcservices.ecourts.gov.in/hcservices/ 5 14. The writ petition is disposed of on the above terms. There will be no order as to costs. Consequently connected miscellaneous petitions is closed. Sd/- Deputy Registrar(Writs) /True Copy/ Assistant Registrar To The Chief Manager and Authorised Officer, State Bank of India, Thirunelveli Branch, Thirunelveli +One cC to M/s.K.M.Vijayakumar, Advocate, SR.No.43789 Svn rl/3c – 19.12.2011 Order in WP(MD) 11528/2011 https://hcservices.ecourts.gov.in/hcservices/