IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM TUESDAY, THE 12TH OCTOBER 2010 / 20TH ASWINA 1932 WP(C).No. 3186 of 2010(W) -------------------------------------- PETITIONER: ------------------- MRS. SHAHABANUTH KABEER, W/O. ABDUL KARIM KABEER, MATHILAKATHU HOUSE, THOTTATHIL MUKKU, CLAPPANA, KARUNAGAPPALLY,KOLLAM. BY ADV. SMT.RUBY K.JOSE. RESPONDENTS: ------------------------ 1. THE INDIAN BANK, MADRAS, REPRESENTED BY THE DEPUTY GENERAL MANAGER, CIRCLE OFFICE, PULLEPPADY,ERNAKULAM. 2. THE AUTHORIZED OFFICER UNDER SARFAESI ACT (CHIEF MANAGER), INDIAN BANK, CIRCLE OFFICE, PULLEPPADY, ERNAKULAM. 3. THE BRANCH MANAGER, INDIAN BANK, KARUNAGAPPALLY. *ADDL. R4. IMPLEADED: 4. SRI. GIGI.N., MADATHIL HOUSE, ATHIKALLUKULANGARA.P.O., ALEPPEY. *IMPLEADED VIDE ORDER DATED 05/03/10 IN I.A. NO. 3204/10. R1 TO R3 BY ADV. SRI.S.EASWARAN, S.C, ADDL. R4 BY ADV. SRI.RASHEED C.NOORANAD. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 12/10/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C). NO.3186/2010-W: APPENDIX PETITIONERS' EXHIBITS: EXT.P.1: COPY OF THE PENSION CERTIFICATE ISSUED TO THE HUSBAND OF THE PETITIONER. EXT.P.2: COPY OF THE NOTICE DTD. 24/06/2009 ISSUED TO THE PETITIONER BY THE R.2. EXT.P.3: COPY OF THE LIFE CERTIFICATE DTD. 12/01/2009 OF THE PETITIONER'S HUSBAND. EXT.P.4: COPY OF THE NOTICE DTD. 12/01/2010. EXT.P.5: COPY OF THE PUBLIC AUCTION NOTICE PUBLISHED IN MATHRUBHOOMI DTD. 10/01/2010. EXT.P.6: COPY OF THE STATEMENT OF ACCOUNT ISSUED TO THE PETITIONER IN RESPECT OF THE LOAN ACCOUNT OF THE HUSBAND OF THE PETITIONER. RESPONDENTS' EXHIBITS: EXT.R2.A: COPY OF THE STATEMENT OF ACCOUNT OF THE PETITIONER'S HUSBAND SHOWING THE MONTHLY PENSION. EXT.R2.B: COPY OF THE STATEMENT OF ACCOUNT NO. 532235719 SHOWING REMITTANCE. EXT.R2.C: COPY OF THE STATEMENT OF ACCOUNT NO. 532318348 SHOWING THE REMITTANCE. EXT.R2.D: COPY OF THE STATEMENT OF ACCOUNT SHOWING THE AMOUNT DUE TOGETHER WITH MEMORANDUM OF INTEREST. EXT.R2.E: COPY OF THE VALUATION REPORT IN RESPECT OF THE PROPERTY. EXT.R2.F: COPY OF THE RECTIFICATION FOR INCOME RECOGNITION FOR THE YEAR 2008-09. EXT.R2.G: COPY OF THE SANCTION TICKET NO.39305125 DTD. 30/04/2005. EXT.R2.H: COPY OF THE TERM LOAN AGREEMENT FOR HOUSING FINANCE EXECUTED BY THE PETITIONER'S HUSBAND. //TRUE COPY// P.A. TO JUDGE. Prv. C.K.ABDUL REHIM, J. ------------------------------------------- W.P.(C).No.3186 of 2010 ------------------------------------------- Dated this the 12th day of October, 2010 J U D G M E N T ---------------------- The husband of the petitioner, who is an Ex- military person, had availed a housing loan from the 3rd respondent to the tune of Rs.5 lakhs during the year 2005. Immovable property belonging to the petitioner was mortgaged to secure the loan. According to the petitioner, after construction of the residential house, her husband went to Kuwait in connection with an employment, wherein he was incarcerated in Jail for some petty offences. Consequently repayment in the loan account became defaulted and respondents 1 to 3 had initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). It is stated that due to incarceration of the petitioner's husband payment of his monthly pension from the military was W.P.(C).3186/10-W -2- also stopped, since he could not produce live certificate. The petitioner had approached respondents 1 to 3 requesting to keep in abeyance coercive steps, on the promise that the accumulated pension amounts due for payment, will be adjusted against the loan account. But without taking into consideration of such request steps to take over possession of the property and for sale were pursued. 2. The writ petition was filed at a stage when Ext.P5 proclamation of sale was published. As per Ext.P5 last date for receipt of tenders and for its opening were fixed as 20.2.2010 and 22.2.2010, respectively. On 19.2.2010 this court issued in interim order that, “the confirmation of sale proposed to be held on 22.2.2010 shall be subject to further orders to be obtained from this court, on condition that the petitioner deposits a sum of Rs.50,000/- (Rupees fifty thousand only) on or before 11 A.M. on 22.2.2010.” It is reported that the petitioner had complied with the condition stipulated within the time specified. W.P.(C).3186/10-W -3- 3. In a statement filed on behalf of the respondent, dated 3.3.2010, it is mentioned that on 22.1.2010 sale was conducted (It may be a mistake. The correct date is 22.2.2010) and the additional 4th respondent, was the highest bidder for a bid amount of Rs.15,00,001/- (Rupees Fifteen lakhs and one only) and that the sale was not confirmed pursuant to the interim order passed by this court. On behalf of the respondents it was submitted that the 4th respondent had deposited the bid amount of Rs.15,00,001/- on 22.2.2010. It is also stated that a confirmation letter was issued to the 4th respondent by the 2nd respondent, confirming the sale, subject to further orders from this court. 4 . The proceedings initiated under the SARFAESI Act is at the stage of sale of the secured assets. It is evident that the petitioner had not challenged any of the steps taken earlier as contemplated under Section 13(2) or 13(4) of the Act. Having failed to resort to statutory remedies provided, the challenge now raised against the sale W.P.(C).3186/10-W -4- proceedings could not be entertained in this writ petition. Therefore I am not inclined to entertain this writ petition on merits assailing the proceedings initiated under the SARFAESI Act. 5. However, learned counsel for the petitioner submitted that the property in question is worth about Rs.50 lakhs, whereas the amount due under the loan account as on 31.3.2009 is Rs.6,61,358/- only as evidenced from Ext.P5. According to the petitioner, the total arrears due as on date is around Rs.7 lakhs only. It is submitted by the learned counsel that the petitioner is relinquishing all challenges against the proceedings initiated under the SARFAESI Act as well as the sale conducted and that she is not intending to pursue any of the statutory remedies. On the other hand, the petitioner had raised a limited prayer to permit the petitioner to pay off the entire liability within a reasonable time, in order to save the property, which is highly valuable. In this regard the petitioner makes an offer to effect payment of a sum of Rs.2 lakhs immediately and to W.P.(C).3186/10-W -5- make payment of the entire balance within a short period. Learned counsel for the petitioner made a further submission that the petitioner is ready and willing to bear expenses if any incurred for conduct of the sale and she is ready to bear interest if any to be paid to the 4th respondent while refunding the amount deposited. 6. Learned Standing Counsel appearing for respondents 1 to 3 is opposing the reliefs sought for in this regard. They are disputing maintainability of this writ petition on the ground that the petitioner had not resorted to any of the statutory remedies available. Learned counsel for the petitioner placed reliance on a decision of the Hon'ble Supreme Court in United Bank of India Vs. Satyawati Tondon and others (2010 (8) SCC 110) in which the Hon'ble Supreme Court had deprecated the practice of the High Courts granting stay against proceedings initiated under the SARFAESI Act. As already observed, since the petitioner had not availed any of the statutory remedies, interference on merits will be highly improper and W.P.(C).3186/10-W -6- unjustifiable. However, it is evident that the petitioner is relinquishing all challenges against the proceedings and that she is only seeking an equitable relief from this court. 7. Another contention raised by the respondent bank is that the sale in favour of the 4th respondent stands confirmed and since the petitioner has not challenged the sale proceedings on the basis of any material illegality or irregularity, the sale in question could not be set aside. The counsel for the 4th respondent also supports the above contention on the ground that he had already deposited the bid amount. In this regard it is pertinent to note that the sale in question took place on 22.2.2010 whereas this court in the interim order dt.19.2.2010 had issued specific direction to the effect that confirmation of sale if any shall be subject to further orders to be obtained from this court. Moreover in the statement filed on behalf of the respondent bank, dt. 3.3.2010 it is specifically mentioned that the sale has not been confirmed pursuant to the interim order passed by this court. Hence I am of the opinion that it is W.P.(C).3186/10-W -7- evident that the sale has not been legally confirmed, even though it is contended that a confirmation letter was issued subject to further orders from this court. However, it is evident that the sale conducted is a 'pendente lite' event and the same is subject to the final result of the litigation. Of course, the 4th respondent being an auction bidder bonafide participated in the sale proceedings should be properly compensated. 8. With respect to offer made by the petitioner for effecting payment of the entire arrears within a short period, it is submitted by the learned counsel for the respondent bank that such an offer could not be accepted because the loan account is in chronic default and the same was classified as 'NPA' as on 31.3.2009. 9. However, on principles of equity I am constrained to take note of the fact that valuable property belonging to the petitioner for which a market value of Rs.50 lakhs is claimed was sold for a sum of Rs.15,00,001/-, and that too for an arrears of about Rs.7 lakhs. Under such circumstances I am of the view that interest of justice W.P.(C).3186/10-W -8- demands exercise of equitable jurisdiction to grant a limited relief of providing a chance to the petitioner to save the property from being sold. 10. Accordingly the writ petition is disposed of directing the respondents 1 to 3 to keep in abeyance all further proceedings pursuant to the sale conducted on 22.2.2010 in favour of the 4th respondent. The petitioner is directed to make payment of a sum of Rs.2 lakhs on or before 31.12.2010 and to make payment of the balance amount in 3 (three) equal monthly installments falling due on or before the last day of the succeeding months. The petitioner shall also make payment of an amount equivalent to interest payable on the sum of Rs.15,00,001/- deposited by the 4th respondent at the rate of 12% per annum for the period from 22.2.2010 onwards till the date of such payment. The amount due to the 4th respondent shall be returned on the petitioner remitting the entire arrears in the loan account along with the amount of interest as directed above. The mortgage on the property shall be W.P.(C).3186/10-W -9- released on settlement of payments as directed above. 11. It is made clear that on the event of default in payment of any of the amounts as stipulated above, the respondents 1 to 3 will be free to confirm the sale in favour of the 4th respondent and to proceed with further steps. 12. It is also made clear that the relief granted above is subject to condition that the petitioner is precluded from raising any subsequent challenge against the proceedings. C.K.ABDUL REHIM, JUDGE. okb