IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) SATURDAY, THE EIGHTEENTH DAY OF APRIL TWO THOUSAND AND NINE PRESENT THE HON'BLE MR JUSTICE V.ESWARAIAH and THE HON'BLE MR JUSTICE VILAS V. AFZULPURKAR WRIT PETITION No.2118 of 2009 Between: Srighakollapu Satyanrayana, S/o. Jagannadham, R/o. 3-192, Kammireddipalem, Kothapeta, East Godavari District. ..... PETITIONER AND 1 Anhra Bank, Zonal Office, Rep by Deputy General Manager, Eluru, West Godavari District - 234 002. 2 Anhra Bank, Rep by its Branch Manager, Bank Street, Palakol, West Godavari District. 3 M/s. Durga Vijayasree Traders, Rep by its Managing Partner, Kotla Subba Rao, Maruteru, West Godavari District. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court may be pleased to issue an appropriate writ, order or orders, more particularly one in the nature of a writ of mandamus declaring the action of the 2nd respondent in forcibly selling the stock i.e. paddy and rice of the 3rd respondent on 6-11- 99, not finalising and communicating the compromise under OTS scheme for Rs. 8,70,000/- obtaining sale proclamation in respect of the petitioner's property as item No. 4 by calling for bids by 6-1-2009 without there being any notice and not following the orders in SA No. 71/2005 dt. 16-8-2007 as illegal, arbitrary and unconstitutional and consequently direct respondent 1 and 2 implement the compromise effected under the One Time Settlement Scheme in respect of the debt of the 3rd respondent for an amount of Rs. 8,70,000/- by setting aside the sale proclamation and other proceedings, if any, obtained by the 2nd respondent in respect of the petitioner's property. Counsel for the Petitioner:MR.GANESH BHUJANGA RAO VADDURI Counsel for the Respondent No.: DR.K.LAKSHMI NARASIMHA The Court made the following : THE HON'BLE MR JUSTICE V.ESWARAIAH and THE HON'BLE MR JUSTICE VILAS V. AFZULPURKAR WRIT PETITION No.2118 of 2009 ORDER: (per the Hon’ble Sri Justice V.Eshwaraiah) The petitioner is a guarantor in respect of the loan secured by the 3rd respondent from the 2nd respondent Bank. As the 3rd respondent failed to repay the instalments in spite of repeated demands, the loan account of the 3rd respondent was declared as a ‘non-performing asset’. Therefore, the respondent Bank invoked the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “the SARFAESI Act”) and issued notice dated 10-08-2004 under Section 13(2) of the SARFAESI Act calling upon the 3rd respondent as well as the guarantors including the petitioner herein to pay a sum of Rs.18,59,175/-, due as on 30-06-2004, with subsequent interest, within sixty days. As the said amount was not repaid, possession notice dated 15-02- 2005 under Section 13(4) of the SARFAESI Act has been issued to the 3rd respondent as well as the guarantors for taking possession of the terraced house of the 3rd respondent admeasuring 104 sq. yards bearing D.No.11-109 of Penugonda, West Godavari District, and the house of the petitioner admeasuring 450 sq. yards bearing D.No.3-143/A in R.S.No.417/1 situated at Kothapeta, East Godavari District. Questioning the said notice, the petitioner filed S.A.No.71 of 2005 before the Debts Recovery Tribunal, Visakhapatnam and the Tribunal vide its order, dated 16-08-2007, while dismissing the S.A., observed that the petitioner is not a principal debtor and therefore, the Bank shall first proceed against the principal debtor and if the amount realized is not sufficient to discharge the loan amount, then the Bank shall proceed against the property of the petitioner herein. It is stated that prior to the disposal of the said S.A., the 3rd respondent approached the respondent Bank for one time settlement in the year 2004 and the compromise was approved on 18-12-2004 subject to the condition that the Bank would waive a sum of Rs.7,78,373/- and the amount payable under the compromise was fixed at Rs.8,70,000/-, out of which, a sum of Rs.50,000/- shall be paid as advance, an amount of Rs.1,70,000/- shall be paid by 31-12-2004 and the remaining amount of Rs.6,50,000/- shall be paid by 28-03-2005. It is stated that except principal debtor paying the advance amount of Rs.50,000/-, no amount has been paid. It is stated that earlier the Bank had filed O.A.No.454 of 2002 before the Debts Recovery Tribunal, Visakapatnam, and the same was allowed vide order, dated 12-09-2007, ordering recovery of Rs.13,27,821/- minus Rs.50,000/- (which was already paid by the 3rd respondent on 19-10-2004) along with interest at the rate of 16.5% with quarterly rests from the date of the O.A. till the date of realization by way of sale of item Nos.1 and 2 of the schedule mentioned properties. As the said amount was not paid either by the principal debtor or by the guarantor, the Bank has invoked the provisions of the SARFAESI Act. It is stated that as possession was already taken, the sale notice has been issued for sale of the properties in question. It is stated that pursuant to the Recovery Certificate issued for recovery of the amounts covered in O.A.No.454 of 2002, the Recovery Officer issued a demand notice and a sale notice was also published for sale of the properties of the principal debtor as well as the guarantor and the sale proclamation was also made on 28-11-2008. It is stated that pursuant to the sale proclamation, the property of the 3rd respondent, i.e., principal debtor fetched a sum of Rs.3,08,000/- and the property of the petitioner was sold in the auction for a sum of Rs.16.60 lakhs on 30-01-2009. It is stated that in view of the stay granted by this court on 09-02-2009, the sale was not confirmed. The petitioner is not inclined to deposit the auction amount of Rs.16.60 lakhs in respect of his property, but submits that as per the compromise under one time settlement scheme, the respondent bank is entitled to recover Rs.8,70,000/- only and the petitioner is willing to pay Rs.8,70,000/- only and further submits that as per the order in S.A.No.71 of 2005, dated 16-08-2007, the Bank shall first proceed against the property of the 3rd respondent, principal debtor, and if the amount realized is not sufficient for discharging the debt due, then only it is open to the Bank to proceed against the petitioner’s property. Learned counsel for the respondent Bank submits that the property of the principal debtor fetched only Rs.3.08 lakhs and however it is submitted that as per the Recovery Certificate issued by the Debts Recovery Tribunal, the Recovery Officer has proceeded against both the properties of the petitioner as well as the 3rd respondent. As the property of the principal debtor is not sufficient to satisfy the debt amount due, the auction was conducted by the Recovery Officer in respect of the properties of both the principal debtor as well as the guarantor. In view of the aforesaid facts and circumstances of the case, we are of the opinion that admittedly neither the petitioner nor the principal debtor has fulfilled the conditions of one time settlement except paying Rs.50,000/-. Therefore, one time settlement stands frustrated and the respondent Bank has rightly proceeded to execute the order of the Debts Recovery Tribunal made in O.A.No.454 of 2002. The order of the said O.A. has become final, as the same has not been questioned. When the O.A. has become final, it cannot be said that the Recovery Officer is not entitled to execute the said O.A. In view of the aforesaid facts and circumstances of the case, we do not see any merits in the writ petition and the same is liable to be dismissed. Accordingly, the writ petition is dismissed. The interim stay granted on 09-02-2009 stands vacated. There shall be no order as to costs. ________________ V.ESWARAIAH, J ________________________ VILAS V. AFZULPURKAR, J Date: 18-04-2009 Prv ..... REGISTRAR // TRUE COPY // SECTION OFFICER To 1) 2 CD copies Form-NIC-OGS/WP{RLD}