THE HON'BLE SRI JUSTICE GHULAM MOHAMMED and THE HON'BLE SRI JUSTICE G.CHANDRAIAH WRIT PETITION No.24630 of 2009 And WRIT PETITION No.8482 of 2010 COMMON ORDER: (per Hon’ble Sri Justice Ghulam Mohammed) Since common questions of fact and issue are involved in these two writ petitions, they are heard together and disposed of by this common order. 2. W.P.No.24630 of 2009 is filed by M/s. Velagapudi Cold Storage, (hereinafter referred to as ‘the auction purchaser’) seeking to issue a writ of Mandamus declaring the inaction of the first respondent in registering the property i.e., an extent of Ac.2.31 cents out of total extent of Ac.3.47 cents covered by D.No.730/A and 729 (91 cents in D.No.730/A and Ac.2.56 cents in D.No.729) at Ankireddypalem Village Guntur in his favour as arbitrary and illegal and consequently direct the first respondent (hereinafter referred to as ‘the Bank’) to refund Rs.3,49,50,000/- received by it towards the sale consideration of the petition schedule property. Whereas W.P.No.8482 of 2010 is filed by Janata Seva Ice & Cold Storage Private Limited (hereinafter referred to as ‘the petitioner’) seeking to issue a writ of Mandamus declaring the common order dated 12.03.2010 passed in I.A.No.1048 of 2009 and I.A.No.226 of 2010 in S.A.No.277 of 2009 on the file of the Debts Recovery Tribunal, Hyderabad as arbitrary and illegal. 3. The petition averments may be stated thus: The petitioner in W.P.No.8482 of 2010 availed credit facilities from the first respondent-bank in the year 1995 and there was delay in disbursement of loan amount for more than three years. However, the loan of Rs.100 lakhs was sanctioned on 24.02.1997. The payment of instalments commenced from 30.06.1998 @ Rs.5 lakh each in 20 quarterly instalments. Since there was delay in sanctioning the loan, the petitioner raised funds by borrowing loans from third parties to meet its business requirements. It has faced severe losses in the business due to drought conditions and recession in the market. The bank filed O.A.No.156 of 2003 on the file of the Debt Recovery Tribunal (DRT), Visakhapatnam, against the petitioner and its guarantors for recovery of the said loan. The matter has been transferred to DRT, Hyderabad and renumbered as O.A.No.177 of 2006 and the same is still pending. While the O.A. is pending, the petitioner offered to settle the loan account under One Time Settlement (OTS) scheme. It is stated that even while the petitioner’s application is pending, the bank issued a demand notice dated 8.10.2005 under Section 13 (2) of the Securitisation and Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (for short ‘the SARFAESI Act’) demanding debt amount of Rs.3,90,37,716/-, with subsequent interest, within a period of 60 days. Even after initiating the proceedings, the petitioner requested the first respondent bank for settlement of loan account under OTS scheme, and the bank, vide its letter dated 28.06.2006, extended the OTS on condition of the petitioner depositing Rs.1,73,26,230/- within a period of one year from the date of the letter. In response to the said letter, the petitioner requested the first respondent bank to adjust the amount of Rs.50,00,000/- paid on 5.01.2006 towards part settlement of the account. A sum of Rs.15 lakh was paid before the DRT, Hyderabad and another sum of Rs.10 lakh was paid on 5.06.2007, in total a sum of Rs.75 lakh was paid. As the petitioner failed to repay the entire debt, the Bank issued possession notice dated 29.01.2008 under Section 13(4) of the Act. The mortgaged properties were taken possession and notified for auction sale on 31.03.2008. 4. Against the same, the petitioner filed W.P.No.6228 of 2008 before this Court, and this Court disposed of the same at the admission stage on 25.03.2008 directing the petitioner to deposit a sum of Rs.30 lakh on or before 19.05.2008 and to submit proposal to the Bank for liquidating the balance outstanding liability within a further period of four months thereafter. The petitioner filed Crl.P.No.2281 of 2008 before this Court to direct the first respondent to handover the petitioner unit to its earlier Managing Director. The said Criminal Petition was disposed of on 1.05.2008 directing the Bank to restore the possession of the secured asset to the petitioner after expiry of the time granted by this Court in W.P.No.6228 of 2008. Then, the possession was delivered to the petitioner on 8.05.2008. Thereafter, the petitioner deposited Rs.30 lakh on 16.05.2008 but failed to liquidate the balance outstanding liability in four months. As there was no compliance of the order in W.P.No.6228 of 2008, the Bank filed W.A.No.1108 of 2008, which was disposed of on 5.03.2009 holding that the bank may proceed to recover the dues. 5. In pursuance of the order dated 6.01.2009 made in Crl.M.P.No.264 of 2008 by the Chief Judicial Magistrate-cum-Principal Assistant Sessions Judge, Guntur directing delivery of possession of the secured assets to the Bank, the Bank took possession of the secured assets on 7.02.2009 and issued notice prior to sale on 23.02.2009, which was published in Hindu and Eenadu on 24.03.2009. Accordingly, the auction was conducted on 27.04.2009. In the said auction, the second respondent-auction purchaser, who filed W.P.No.24630 of 2009, was declared as highest bidder. Accordingly the Bank issued sale certificate to the auction purchaser on 12.05.2009 and delivered the original title deeds of the said unit. The auction purchaser requested the Bank to register the sale certificate and deliver physical possession of the property. 6. At this stage, the petitioner approached this Court by filing W.P.No.10010 of 2009. This Court granted interim stay on 13.05.2009 on condition of the petitioner depositing Rs.40,00,000/- within a period of four weeks from the date of that order. Accordingly, the petitioner deposited the amount on 9.06.2009 with the Bank. 7. The vacate stay petition is filed by the Bank along with counter affidavit, and W.P.No.10010 of 2009 were disposed of by this Court on 28.07.2009, and the relevant portion of the order reads as under. In view of the fact that the sale was completed even before this Court admitted the writ petition and passed the interim orders, the further adjudication of the grievance of the petitioner under Article 226 of the Constitution of India, therefore, would not arise and it is appropriate to relegate the petitioner to alternative remedy of approaching the Debt Recovery Tribunal under Section 17 of the SARFAESI Act, 2002, if so advised. It is needless to point out that the period, during which the writ petition is pending before this Court, shall stand excluded for the purpose of computing limitation under Section 17 of the Act. The writ petition is disposed of with the above direction. The amount deposited by the petitioner shall abide by the result of the orders to be passed by the Debt Recovery Tribunal under Section 17 of the Act.” Thereafter, by order dated 13.08.2009 in WPMP No.20843 of 2009 in W.P.No.10010 of 2009, this Court extended the time granted for filing of the application, by two weeks. Accordingly the petitioner filed application before the DRT, Visakhapatnam, which was transferred to the DRT, Hyderabad and numbered as SA No.277 of 2009. The petitioner filed I.A.No.1048 of 2009 in the said SA and obtained status quo with regard to the possession of the property. He also obtained interim injunction in I.A.No.1049 of 2009, on 25.09.2009. On filing of vacate stay petition in I.A.No.226 of 2010 by the auction purchaser seeking to vacate the status quo order, the DRT Hyderabad through common order in I.A.Nos.1048 of 2009 and I.A.Nos.226 & 257 of 2010 dated 12.03.2010 modified the order passed in I.A.No.1048 of 2009 holding that the bank shall lease out the property to the auction purchaser on monthly basis by fixing the lease rent; the lease rent shall be fixed by the Bank in consultation with technical experts in the said field; the lease rents shall be deposited with the respondent Bank in ‘interest earning no-lien account’; and if the SA is dismissed, the auction purchaser would be entitled to the said lease rentals including interest thereon. 8. Aggrieved by the same, the auction purchaser, namely, M/s. Velagapudi Cold Storage, filed W.P.No.24630 of 2009 contending that though it has paid the entire sale consideration and complied with all the terms and conditions in letter and spirit, the Bank is delaying the process of delivering the vacant possession and registering the sale deed. Hence the bank has to refund Rs.3,49,50,000/- received by it towards sale price. 9. M/s. Janata Seva and Cold Storage Private Limited., filed W.P.No.8482 of 2010 contending that there is privity of contract between the Bank and the borrower. Though the market value of the property is more than Rs.9 crore, the first respondent-Bank in collusion with the auction purchaser and other bidders, has disposed of the property at a throw-away price. The authorized officer of the first respondent-Bank has not obtained the valuation report of the secured asset as stipulated under Rule 8(5) of the Rules made under the SARFAESI Act, prior to conducting of the auction of the property. 10. Sri B. Vijaysen Reddy, learned counsel for the petitioner- borrower company vehemently contended that since there is privity of contract between the borrower and the Bank, the property ought not to have been leased out to the auction purchaser as the auction purchaser sought for return of amount by filing a writ petition challenging the inaction on the part of the Bank in not registering the property. 11. Learned counsel for the auction purchaser contended that though the auction purchaser has bona fidely participated in the auction conducted by the Bank and deposited the entire amount, he is not able to get the fruits of the property. Therefore, the Tribunal rightly safe-guarded the interest of the auction purchaser by directing the Bank to lease out the property to the auction purchaser, so as to compensate him. 12. We have considered the rival submissions and have also gone through the material on record. 13. It is seen from the record that the petitioner in W.P.No.8482 of 2010 was relegated to avail the remedy of approaching the Debt Recovery Tribunl under Section 17 of the SARFAESI Act, 2002, and the petitioner had availed remedy by filing S.A., which is stated to be pending. Therefoe, we are not inclined to adjudicate the matter on merits. 14. Having regard to the fact that the S.A.No.277 of 2009 is pending and the other circumstances of the case, and in order to protect the interest of the bank, borrower and auction purchaser, we deem it appropriate to direct the Debt Recovery Tribunal, Hyderabad to dispose of SA No.277 of 2009, on merits including the question whether the sale was conducted properly in accordance with the provisions of the Act or not, uninfluenced by any of the findings made hereinabove or in the earlier interlocutory orders, within a period of two months from the date of receipt of a copy of this order. In the mean time, status quo obtaining as on today shall be maintained by the parties. 15 Subject to above, the Writ Petitions are disposed of. There shall be no order as to costs. ________________________ (GHULAM MOHAMMED, J.) ___________________ (G.CHANDRAIAH, J.) 28th June, 2010 Js.