IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN MONDAY, THE 27TH JULY 2009 / 5TH SRAVANA 1931 WP(C).No. 2700 of 2007(U) ---------------------------------- PETITIONERS: ---------------------- 1. T.MANI, S/O.SREEDHARAN, THAZHETHAYIL HOUSE, MAKKADA VILLAGE, KOZHIKODE TALUK. 2. ABDUL HAKEEM, S/O.ALAVI, RESIDING AT PORUR, NILAMBUR TALUK, MALAPPURAM DISTRICT. BY ADV. MR.T.KRISHNAN UNNI, SENIOR ADVOCATE MR.M.KRISHNAKUMAR SMT.PRABHA R.MENON RESPONDENTS: ----------------------- 1. THE KERALA FINANCIAL CORPORATION REPRESENTED BY ITS CHIEF MANAGER, KOZHIKODE BRANCH, PAVAMANI ROAD, KOZHIKODE. 2. K.T.CHANDUKUTTY, KOLODITHEKKEYIL HOUSE, ERANHIKKAL P.O., KOZHIKODE. 3. THE GOVERNMENT OF KERALA, REPRESENTED BY THE SECRETARY TO THE GOVERNMENT, DEPARTMENT OF REVENUE, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM. 4. THE SUB REGISTRAR, SUB REGISTRAR OFFICE, WEST HILL, KOZHIKODE. BYGOVERNMENT PLEADER MR. SMITHA SUKUMAR ADV. MR.BOBY MATHEW FOR R2 MR.PUSHPARAJAN KODOTH FOR R2 MR.K.JAYESH MOHANKUMAR FOR R2 MR.K.JAJU BABU,SC,KERALA FINANCIAL COR FOR R1 MR.K.SANKARA PILLAI FOR R1 MR.R.K.MURALEEDHARAN FOR ADDL.R SRI.K.VINOD CHANDRAN FOR ADDL.R5 SRI.BOBY MATHEW FOR R2 SRI.E.T.MATHEW FOR R2 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 27/07/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 2700 of 2007(U) APPENDIX PETITIONERS' EXHIBITS: EXT.P1 - TRUE COPY OF THE VALUATION REPORT DATED 14.3.2005. EXT.P2 - TRUE COPY OF THE AGREEMENT DATED 1.7.2006. EXT.P3 - TRUE COPY OF THE LETTER ISSUED BY THE KFC ON 20.6.2005. EXT.P4 - TRUE COPY OF THE JUDGMENT DATED 23.12.2005 IN WP(C) NO. 34808/05. EXT.P5 - TRUE COPY OF THE CONFIRMATION OF SALE IN FAVOUR OF THE 2ND RESPONDENT ON 1.3.2006. EXT.P6 - TRUE COPY OF THE JUDGMENT IN WP(C) NO. 10189 OF 2006 DATED 14.8.2006. EXT. P7 - TRUE COPY OF THE PUBLIC NOTICE ISSUED BY KFC PUBLISHED IN MATHRUBHOOMI DAILY ON 29.11.2005. EXT.P8 - TRUE COPY OF THE DOCUMENT DATED 7.7.2005 PRODUCED BY THE 2ND RESPONDENT ALONG WITH HIS PLAINT IN THE SUB COURT KOZHIKODE RESPONDENTS' EXHIBITS: EXT.R2(a) - A TRUE PHOTOCOPY OF THE ORDER IN SLOP NO. 21090/2006, DATED 5.1.2007. EXT.R2(b) - A TRUE PHOTOCOPY OF THE JUDGMENT IN WRIT APPEAL NO. 1546/2006 DATED 24.8.2006. EXT.R2(c) - A TRUE PHOTOCOPY OF THE AGREEMENT FOR SALE DATED 23.4.2003. EXT.R2(d) - A TRUE PHOTOCOPY OF THE PLAINT IN OS NO. 339/2005 ON THE FILE OF THE SUB COURT, KOZHIKODE. EXT.R2(e) - A TRUE PHOTOCOPY OF THE SALE DEED WRITTEN ON 23.1.2007. EXT.R2(f) - A TRUE PHOTOCOPY OF THE CAVEAT OP NO. 78/2006 FILED BEFORE THE MUNISFF COURT, KOZHIKODE. EXT.R2(f) IN I.A. NO. 10364 OF 2007 - TRUE COPY OF THE APPLICATION WITH ACKNOWLEDGEMENT OBTAINED ON 4.5.2007. EXT.R2(g) - A TRUE PHOTOCOPY OF THE CAVEAT OP NO. 101/2006 FILED BEFORE THE SUB COURT, KOZHIKODE. EXT.R2(h) - TRUE PHOTOCOPY OF THE INTERIM ORDER DATED 23.1.2007 IN WP(c) NO. 2700/07. EXT.R2(i) - -DO- DATED 26.2.2007 -DO- EXT.R2(j) -DO- DATED 28.3.2007 IN I.A. 4074/07 -DO- WP(C).No. 2700 of 2007(U) EXT.R2(k) - -DO- LETTER ISSUED BY THE 1ST RESPONDENT DATED 29.3.2007 EXT.R1(a) - COPY OF THE NOTICE DATED 24.1.2006. EXT.R1(b) - A TRUE COPY OF THE SAID REPRESENTATION DATED 4.3.2006. // TRUE COPY // PA TO JUDGE rhs S. SIRI JAGAN, J ............................................... W.P(C)No. 2700 of 2007 ................................................. Dated this the 27th day of July, 2009 J U D G M E N T Petitioners are borrowers of loan amounts from the Kerala Financial Corporation, the 1st respondent herein. Petitioners defaulted repayment of the loan amounts. The KFC initiated recovery proceedings. Petitioners were afforded one time settlement facility to pay off the entire amounts by Ext.P3. As per Ext.P3, the petitioners were to pay an amount of Rs.25 lakhs with belated interest and RR charges on or before 30.6.2005. The petitioners did not avail of that opportunity to settle the loan account. In the meanwhile, the KFC initiated and completed proceedings for sale of the mortgaged properties which was purchased by the 2nd respondent herein. Petitioners challenged the sale in W.P(C) No. 34808/05. By Ext.P4 judgment, this court disposed of the writ petition by the following judgment: “Heard counsel for the petitioner and Standing Counsel for KFC. Even though petitioner was granted OTS benefit for settlement at a reasonable amount of Rs.25.50 lakhs in the year 2002, the petitioner did not make payment and consequently forfeited the benefit. On account of chronic default the property is now proposed to be sold and the highest offer is said to be Rs.66.5 lakhs. W.P(C)No. 2700 of 2007 -2- Standing Counsel for the KFC submitted that the higher price offered is more than the upset price and is sufficient to absorb most of the loan amount because the outstanding as on 30.6.2005 is Rs.69,62,000/-. Considering the request of the petitioner, I feel one more opportunity can be granted but without cancelling the present offer received against tender notified by the KFC. The W.P. is therefore disposed of directing the respondent to inform the highest bidder that if he is interested, he should wait till 1.3.2006 without any conditions and without collecting any further amount from him. The petitioner is given time to settle liability even by entering into agreement for sale of the mortgaged property till 28.2.2006. If liability is not settled by the petitioner by 28.2.2006, the Corporation will sell the property to the highest bidder who has made offer now if he is still interested to purchase the property. However, if the highest offerer backs out, the Corporation will after 28.2.2006 proceed for sale of the property if petitioner does not settle liability by then. The respondent is also directed to grant OTS benefit to the petitioner but with reference to the current liability based on current norms treating the previous OTS as cancelled, provided petitioner makes full payment under the said OTS before 28.2.2006.” 2. That judgment was challenged by the petitioner in a writ appeal before the Division Bench and in an SLP before the Supreme Court in which the Supreme Court ultimately upheld the sale in favour of the 2nd respondent. Again, petitioners approached this court by filing W.P(C) No. 10189/06. In that writ petition I passed Ext.P6 judgment which reads as follows: “A defaulter in repayment of loan amounts to Kerala Financial Corporation, has come up with this writ petition challenging the sale proceedings initiated by the KFC for sale of the mortgaged properties for realisation of the balance amount due under the loan account. The present contention of the petitioner is that he is prepared to pay W.P(C)No. 2700 of 2007 -3- the entire amounts due within a short time and the sale may be kept in abeyance. 2. The learned standing counsel for the KFC submits that the sale was long over and the property was purchased by the 3rd respondent by paying the entire amounts and the sale has been confirmed. The only thing now remains to be done is to execute the formal sale deed. The 3rd respondent also strongly opposes the claim of the petitioner. 3. I have considered the rival arguments in detail. The petitioner has raised a claim of equity. According to him, the property worth Rs.1 crore or more, is knocked down for only Rs.66,50,000/-. However, he could not point out any material irregularity in the same. In the absence of any material irregularity in the sale itself, I cannot interfere with the same, especially since a third party has obtained valuable rights in respect of the properties paying the entire sale price. Further, I find that the petitioner had sufficient opportunity to redeem the mortgage. In fact, by Ext.P5 judgment, this Court granted another opportunity to the petitioner to pay the amount without cancelling the present offer received against tender notified by the KFC. This Court disposed of the said writ petition as follows: “....... The W.P. is therefore disposed of directing the respondent to inform the highest bidder that if he is interested, he should wait till 1.3.2006 without any conditions and without collecting any further amount from him. The petitioner is given time to settle liability even by entering into agreement for sale of the mortgaged property till 28.2.2006. If liability is not settled by the petitioner by 28.2.2006, the Corporation will sell the property to the highest bidder who has made offer now if he is still interested to purchase the property. However, if the highest offerer backs out, the Corporation will after 28.2.2006 proceed for sale of the property if petitioner does not settle liability by then. The respondent is also directed to grant OTS benefit to the petitioner but with reference to the current liability based on current norms treating the previous OTS as cancelled, provided petitioner makes full payment under the said OTS before 28.2.2006.” 4. The petitioner could not avail of that opportunity W.P(C)No. 2700 of 2007 -4- also. In the above circumstances, I am of opinion that the petitioner is not entitled to even equitable consideration to seek another opportunity to pay the same overlooking the third party rights of the 3rd respondent, who has parted with quite a large sum of money in proceedings against which the petitioner could not point out any irregularity whatsoever. Therefore, I do not find any merit in this writ petition and accordingly, the same is dismissed.” 3. Subsequently, the KFC confirmed the sale in favour of the 2nd respondent. It is thereafter, the petitioner has filed this writ petition again challenging the confirmation of the sale in favour of the 2nd respondent, on the ground that the sale is vitiated by fraud. In this writ petition the 2nd respondent filed I.A. No. 5110 of 2007 complaining that the KFC is not executing the sale deed in their favour. In that I.A., I passed the following order on 4.4.2007. “ This is an application filed by the second respondent in the O.P. who is the purchaser of the mortgaged property sold by the Kerala Financial Corporation for realisation of the loan amounts secured by the said mortgage. The validity of the sale was the subject matter of challenge before this Court in which I had upheld the sale in favour of the second respondent. A Division Bench of this Court in Writ Appeal No. 1546/2006 confirmed that judgment. Thereafter this writ petition has been filed by the petitioners alleging fraud in the same. In this writ petition, there was originally an interim order dated 23.1.2007 where the Sub Registrar, West Hill, Kozhikode was directed not to register the sale certificate granted to the second respondent in pursuance of Ext.P5 sale. The matter was again taken up for extension of stay and by Ext.R2(i) order dated 26.2.2007, a learned Single Judge directed the petitioners to deposit the amount covered by the order dated 23.1.2007 in a nationalised bank to accrue the maximum possible interest within one week. The W.P(C)No. 2700 of 2007 -5- petitioners moved the learned Single Judge for modification of the said order and by order dated 28.3.2007, the learned Judge refused to modify that order. As such, it is clear that the petitioners had not proved their bonafides by complying with the directions of the learned Single Judge. It is under the above circumstances that the second respondent has filed this I.A. seeking a direction to respondents 3 and 4 to complete the execution and registration of Ext.R2(a) sale deed within a stipulated time to be fixed by this Court. 2. The learned counsel for the petitioners in the writ petition would vehementally argue that in spite of the earlier judgments of this Court, the petitioner is not entitled to reliefs because of fraud in conducting the same. The learned counsel for the KFC submits that they are unable to execute the sale deed and get the same registered only because of the order dated 26/2/2007 in which the interim order has been extended until further orders. 3. I am, prima facie, of the opinion that when this Court and the Supreme Court had confirmed the sale in favour of the second respondent who is the petitioner in the I.A. and when the petitioners have not proved their bonafides by complying with the directions of this Court by depositing the amount in a nationalised bank accruing interest, it would be improper on the part of this Court to ask the petitioner herein to wait further pursuant to the sale confirmed in his favour. In the above circumstances, I direct respondents 3 and 4 to complete the execution and registration of Ext.R2(e) sale deed within one month from today. This would be subject to final orders in the writ petition.” 4. Even, prior to that, this court had passed another interim order dated 26.2.2007 as follows: “Learned counsel for the petitioners submits that following the interim order dated 23.01.07, 2nd petitioner is permitted to deposit the entire amount. The learned counsel for the contesting respondent submits that sale has been confirmed and document has to be executed. The plea of the writ petitioners is that there is fraud in the matter of conducting sale under Section 29 of the SARFEASI Act. No alternate and effective remedy is available under the SARFEASI Act or otherwise. Accordingly, he has to work out his remedies in this writ petition. To show the W.P(C)No. 2700 of 2007 -6- bonafides, the petitioners will ensure that the amount covered by order dated 23.01.07 is deposited in a nationalised bank to accrue the maximum possible interest, within a period of one week. Interim order will stand extended until further orders. List this writ petition, in the usual course, for hearing.” That also the petitioner had not complied with. 5. The petitioner now contends that the property is worth more than Rs.1 crore, as is evident from Ext.P1 valuation report. The said property has been knocked down for Rs.66.5 lakhs, which according to the petitioner is the result of collusion between the KFC and 2nd respondent. The contention is that although the Supreme Court had upheld the sale in favour of the 2nd respondent, that does not operate as res judicata for the petitioner to challenge the sale on the ground of fraud. 6. I have considered the rival contentions in detail. 7. All throughout, the petitioner has been challenging the sale on one ground or other. It was perfectly open to them to challenge the sale on the ground of fraud also. They did not. Of course they would contend that the fraud was found out subsequently which contention lacks conviction. In fact in Ext.P6 judgment which was not challenged by the petitioner, the very same contention regarding under sale did not find favour W.P(C)No. 2700 of 2007 -7- with me. Now also the sale is challenged on the same ground that property worth over Rs.1 crore is sold for Rs.66.5 lakhs. It is common knowledge that a distress sale would not fetch the market value of a property. I have already held in that judgment that the petitioners could not point out any material irregularity in the sale. Now the same contention is raised with the epithet that it amounts to fraud, without any material to substantiate the same. If such litigation is permitted there would not be any end to the litigation. 8. Therefore I am of opinion that even if the petitioner wants to challenge the sale further on the ground of fraud it can only be by way of a review petition before the Supreme Court. In any event I am not satisfied that the petitioners can again rack up the very same issue the decision on which has already acquired finality by the Judgment of the Supreme Court. In the above circumstances, I do not find any merit in the writ petition and accordingly the same is dismissed. S. SIRI JAGAN, JUDGE rhs