IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE ACTING CHIEF JUSTICE MRS.MANJULA CHELLUR & THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON MONDAY, THE 12TH DECEMBER 2011 / 21ST AGRAHAYANA 1933 WA.No. 1612 of 2011() --------------------- ( AGAINST THE JUDGEMENT IN WPC.36918/2010 Dated 28/09/2011 ) APPELLANT/PETITIONER ------------------------ A.M.SHAMSUDHEEN,AGED 54 YEARS, S/O.MEERA SAHIB LABBA,ANIYA VEEDU,THAZHATHUMURI, IRAVON VILLAGE,KOZHENCHERRY TALUK. BY ADV. SRI.ESM.KABEER RESPONDENTS/RESPONDENTS --------------------------------- 1. PRADEEP KUMAR,S/O.PURUSHOTHAMA PANICKER, ADIMURIYIL VEEDU,MANGARAM MURI,KONNI VILLAGE, KOZHENCHERRY TALUK. 2. THE AUTHORISED OFFICER,KERALA STATE CO-OPERATIVE BANK LTD,ZONAL OFFICE, TRIVANDRUM. R2 BY ADV. SRI.NAGARAJ NARAYANAN,SC,K.S.CO-OP BANK THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 12/12/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: MANJULA CHELLUR, Ag. CJ & P.R. RAMACHANDRA MENON, J. .............................................................................. W.A.No.1612 OF 2011 ......................................................................... Dated this the 12th December, 2011 J U D G M E N T MANJULA CHELLUR, Ag. CJ. This appeal is directed against the common judgment dated 28th September 2011 in W.P.(C) Nos.31102 of 2008 and 36918 and 37099 of 2010. One of the writ petitioner/a third party purchaser of the property belonged to the borrower is the appellant. The first respondent is the borrower of the money from the second respondent bank. The property which was mortgaged to the second respondent bank came to be purchased by the appellant without the knowledge of the security to the second respondent bank. In other words, according to the appellant, when he entered into a sale transaction with the first respondent, there was no knowledge or information about the security of the property to the second respondent Bank. Therefore he is a bonafide purchaser for value. 2. Apart from the present appellant, the borrower and the also guarantor approached the learned Single Judge. W.A.No.1612 OF 2011 2 However, only the third party purchaser is before us. The other writ petitioners have not challenged the judgment of the learned Single Judge. 3. When the property in question was mortgaged to the second respondent, the liability on the property would automatically go along with the property in question. In the present case, when the property was brought for sale by sale notice, the appellant herein approached the learned single Judge contending that he is a bonafide purchaser for value. During the pendency of the writ petition, an interim order came to be passed and pursuant to the same, a sum of Rs.15 lakhs came to be deposited by the present appellant. Subsequently, when the auction of the property came up, he deposited a sum of Rs.2 lakhs as E.M.D. (Earnest Money Deposit). However, the sale did not take place as no purchaser came forward to bid for the property. Thereafter, the matter came to be disposed of , by the learned Single Judge. 4. The learned Single Judge, having regard to the facts and circumstances of the case, opined that under Section 17 of W.A.No.1612 OF 2011 3 the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the borrower could approach the Debt Recovery Tribunal (DRT) and disposed of the matter accordingly. 5. The fact remains, neither the borrower nor the guarantor have approached the DRT till date. Similarly, apart from paying the sale consideration amount, as alleged by him, the appellant also has to face the auction proceedings initiated by the second respondent bank for having purchased the property at the instance of the first respondent. However, as on today, neither the borrower nor the guarantor has repaid the loan amount to the second respondent Bank. Therefore, the property is not free from encumbrance. In other words, the appellant has to face the hanging sword on his head with the liability in question. It is obvious that the appellant cannot defend his stand by saying that he is a bonafide purchaser, therefore he is not liable to face any consequence of public auction being a bonafide purchaser. As the offer of the property as security by the first respondent was much prior to the purchase of the property by the appellant, the W.A.No.1612 OF 2011 4 second respondent can always bring the property for sale in an auction to realise the amount due from the borrower. In that view of the matter, the only recourse open to the appellant is either to settle the issue with the second respondent by paying the amount due to the second respondent bank or to participate in the public auction and take a chance. 6. With the above observations, we dispose of the appeal directing the second respondent to return the deposit of Rs.17 lakhs (Rupees seventeen lakhs only) to the appellant within three weeks from today. The appellant is also at liberty to proceed against the first respondent seeking damages, if he desires so. The second respondent is at liberty to proceed with the auction of the property in accordance with the procedure. MANJULA CHELLUR, ACTING CHIEF JUSTICE. P.R. RAMACHANDRA MENON, JUDGE. lk