IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM WEDNESDAY, THE 23RD DECEMBER 2009 / 2ND POUSHA 1931 WP(C).No. 21200 of 2009(T) -------------------------- PETITIONER(S): --------------- YOUNG MEN'S CHRISTIAN ASSOCIATION, CALICUT REP.BY ITS SECRETARY, NIRMAL, RESIDING AT 1723, WEST AVENUE, KACHERY AMSOM AND DESOM, KOZHIKODE TALUK. BY ADV. SRI.T.KRISHNAN UNNI, SENIOR ADVOCATE SRI.JAMSHEED HAFIZ RESPONDENT(S): --------------- 1. UNITED BANK OF INDIA, REGIONAL OFFICE, SOUTHERN REGION, 118 OLD NO.217, RAMAKRISHNA MATH ROAD, MYLAPORE, CHENNAI. 2. UNITED BANK OF INDIA, KANNUR ROAD BRANCH KOZHIKODE-1. * ADDL.RESPONDENTS: 3. KUNIYIL ASHRAF, S/O. YOUSUF HAJI, AGED 42 YEARS, PERINGATH AMSOM, POOKKOM DESOM, P.O. PANNOOR, THALASSERY. (*ADDL.R3 IMPLEADED AS PER ORDER DT.27.8.09 IN I.A.10927/09) 4. AHAMMED KOYA, S/O.P. KHADIR, AVATHOTTIL HOUSE,PATHIMANGALAM, KUNNAMANGALAM, KOZHIKODE. (*ADDL.R4 IMPLEADED AS PER ORDER DT.12.10.09 IN I.A.12256/09) 5. V.K.SREERAM MADHAVAN, 6/875 J CALICUT-671001, YMCA INTERNATIONAL CULTURAL COMPLEX, YMCA CROSS ROAD, CALICUT-1. (...2/-) WP(C).21200/09 (2) 6. V.K. MANORAM MADHAVAN, 6/875 H, YMCA INTERNATIONAL CULTURAL COMPLEX, YMCA CROSS ROAD, CALICUT-1. 7. P.M.KELUKUTTY,6/875 H, YMCA INTERNATIONAL CULTURAL COMPLEX, YMCA CROSS ROAD, CALICUT-1. 8. P.M. KELUKUTTY & BROTHERS REP.BY MANAGING PARTNER, P.M. KELUKUTTY, 6/875 H, YMCA INTERNATIONAL CULTURAL COMPLEX, YMCA CROSS ROAD, CALICUT-1. 9. ABBACKER HAJI, 6/875 A1,B,C,D & E, YMCA INTERNATIONAL CULTURAL COMPLEX, YMCA CROSS ROAD, CALICUT-1. 10. SHAHINA.P., 6/875 A1,B&C, YMCA INTERNATIONAL CULTURAL COMPLEX, YMCA CROSS ROAD, CALICUT-1. 11. ABDULL N.P., 6/875 A1, B,C,D&E, YMCA INTERNATIONAL CULTURAL COMPLEX, YMCA CROSS ROAD, CALICUT-1. 12. V.K.ABDULLA HAJI, 6/875 C, YMCA INTERNATIONAL CULTURAL COMPLEX, YMCA CROSS ROAD, CALICUT-1. 13. V.KUNHABDULLA, REP BY HIS POWER OF ATTORNEY HOLDER K.M.KUNHABDULLA, 6/875 A1,B,C,C,D&E, YMCA INTERNATIONAL CULTURAL COMPLEX, YMCA CROSS ROAD, CALICUT-1. 14. V.K.MOHAMMED ALI, 6/875 A1&B, YMCA INTERNATIONAL CULTURAL COMPLEX, YMCA CROSS ROAD, CALICUT-1. 15. AMMED HAJI.P., REP BY HIS POWER OF ATTORNEY HOLDER, V.K.MOHAMED ALI,6/875 D&E, YMCA INTERNATIONAL CULTURAL COMPLEX, YMCA CROSS ROAD, CALICUT-1. (...3/-) WP(C).21200/09 (3) 16. RASHID V.K. 6/875 D&E,, YMCA INTERNATIONAL CULTURAL COMPLEX, YMCA CROSS ROAD, CALICUT-1. 17. GOPALAKRISHNAN @ UNNY, 6/875F, YMCA INTERNATIONAL CULTURAL COMPLEX, YMCA CROSS ROAD, CALICUT-1. (* ADDL.R5 TO R17 ARE IMPLEADED AS PER ORDER DT.8.12.09 IN I.A.15170/09) ADV. SRI.M.MOHAMED NAVAZ FOR R1-2 SRI.R.SUDHEESH FOR ADDL.R3 SMT.M.MANJU SRI.O.D.SIVADAS FOR ADDL.R4. SRI.A.SUDHI VASUDEVAN FOR ADDL.R5-13 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 23/12/2009, ALONG WITH WPC NO. 34358 OF 2009 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.K.ABDUL REHIM, J. ------------------------------ W.P.(C).Nos.21200 & 34358 OF 2009 ------------------------------ Dated this the 23rd day of December, 2009 J U D G M E N T ---------------------- 1. WP(C).No:21200/09 is filed by the YMCA, Calicut seeking reliefs against the respondents 1 and 2 therein, interalia, to fix fresh reserve price based on current market value, and to proceed with sale of two portions of the mortgaged properties separately, and for such other reliefs. The writ petition was filed at a stage when sale of immovable properties were published as per Ext.P9 notice, under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). On 17.9.2009 submission was made before this court that tenders received pursuant to Ext.P9 notice was not accepted and that the additional 3rd respondent impleaded had made an offer to purchase one of the buildings covered under Ext.P9 situated in the property having an extent of 37 cents, on the basis of negotiations made with the Bank, provided the Bank takes vacant possession of the building on vacating all the tenants. Based on such an offer permission was sought for to effect private sale, with concurrence of the petitioner. This court by an interim order dt.17.9.2009 observed W.P.(C).21200 & 34358/09 2 that the petitioner as well as the 3rd respondent can approach the Bank in this regard and the Bank is directed to consider possibility of effecting private sale in such case. Proposal was directed to be submitted within a period of one week thereafter, and the Bank was directed to take a decision thereof, if necessary after convening a meeting of all the parties concerned, within two weeks thereafter. Till then confirmation of sale if any conducted pursuant to Ext.P9 or further proclamation of the sale was directed to be kept in abeyance. 2. Thereafter additional 4th respondent was impleaded in the writ petition. On 3.11.2009 submission was made before this court that the private sale in favour of the 3rd respondent could not be materialised as directed by this court in order dt.17.9.2009. Further submission was made that the additional 4th respondent had offered a sum of Rs.9 crores with respect to one of the buildings, which is the new block situated in the property. It was submitted that the respondents 1 and 2 are prepared to confirm the sale in favour of the additional 4th respondent for the said amount, provided the building will be handed over in as is where is condition. Based on the submissions respondents 1 and 2 were permitted to proceed with further steps for confirmation of the sale and for issuance of sale W.P.(C).21200 & 34358/09 3 certificate in the usual terms under the relevant Rules. It is made clear that sale if any conducted pursuant to that order will be treated as a sale conducted pursuant to Ext.P9 notification. 3. Thereafter WP(C).No:34358/09 was filed before this court on 29.11.2009, admittedly after about 3 weeks from date of the order on 3.11.2009. The said writ petition is filed by 13 persons, who claim to be tenants in occupation of the new building, which is sought to be sold to the additional 4th respondent in WP(C).No:21200/09. Prayer in the writ petition is to quash Ext.P1 sale proclamation (Ext.P9 in the other writ petition) and to quash steps in relation to sale of the properties by private treaty. The petitioners, interalia, sought for a direction to prohibit the respondent Bank as well as the YMCA from interfering with any of the rights of the petitioner to redeem the mortgage created by the borrower, by remitting the amounts due to the respondent Bank and to get subrogated into the rights of the mortgagee. The petitioners in WP(C).No:34358/09 have got themselves impleaded as additional respondents 5 to 13 in WP (C).No:21200/09. They have also filed interim applications to vacate the order dt.3.11.2009 issued in WP(C).No:21200/09. 4. In the counter affidavit filed by the respondent Bank in WP(C).No:21200/09 it is mentioned that pursuant to the order W.P.(C).21200 & 34358/09 4 dt.3.11.2009 the sale has been confirmed in favour of additional 4th respondent, with respect to new block. Ext.R1(a) is the letter of confirmation issued in this regard in favour of the additional 4th respondent. It is stated therein that the additional 4th respondent has remitted a sum of Rs.2,25,00,000/- on 2.12.2009 and that the sale has already been confirmed in his favour. He was requested to deposit the balance 75% within 15 days thereof. 5. According to the petitioners in WP(C).No:34358/09 they have got a right to redeem the mortgage since they are tenants in occupation of the building, who had taken respective portion of the building form YMCA for a lease period of 99 years in all the cases except one lease for a period of 51 years. Contention is that their right to redemption of mortgage and subrogation, cannot be curtailed by virtue of proceedings initiated under the provisions of the SARFAESI Act. They are also challenging the private sale, which is proceeded with in view of permission granted by this court based on consent of parties; on the ground that the right of redemption of the mortgage and right of subrogation vested in those petitioners shall not be defeated by way of any such private sale. 6. On the other hand counsel appearing for the W.P.(C).21200 & 34358/09 5 respondent Bank as well as counsel appearing for the additional 4th respondent submitted that the relief sought for in WP(C). No:34358/09 cannot be considered by this court, at this stage. The respondent Bank had proceeded with the sale by virtue of the provisions contained in the SARFAESI Act and the relevant Rules. A private sale with concurrence of the borrower is permissible under the relevant Rules. In the case at hand a private sale has already been entered upon and this court has issued permission to proceed with such sale, on the basis of concession of both parties, namely the creditor as well as the borrower. It is further contended that the sale stands confirmed and the purchaser had already deposited 25% of the sale consideration. Counsel appearing for additional 4th respondent submits that time for payment of balance amount has already been extended till 2.1.2010, which fact is conceded by counsel appearing on behalf of the respondent Bank. 7. The relief sought for in WP(C).No:34358/09 was also opposed based on the contention that petitioners 2, 3 and 13 therein have already approached this court in WP(C). No:29303/08 seeking to interfere with the sale proceedings, which was disposed of through Ext.P18 Judgment. It is revealed from Ext.P18 produced in WP(C).No:34358/09, that the W.P.(C).21200 & 34358/09 6 petitioners therein have not complied with the interim direction issued for remittance of an amount of Rs.1 crore. On that basis the writ petition was dismissed holding that there is no ground to interfere with the proceedings of sale which was impugned therein. Yet another contention raised on behalf of the 4th respondent is that the petitioner has no right of redemption of mortgage or right of subrogation since the lease itself was created after the mortgage came into effect. 8. Having considered facts and circumstances of the case and contentions on both sides, I am of the view that the relief sought for in WP(C).No:21200/09 has become infructuous in view of the private sale which is being proceeded with and in view of the permission granted by this court to proceed with such sale. As far as WP(C).No:34358/09 is concerned, the petitioners are seeking relief based on the alleged right of redemption of mortgage and subrogation. The question whether the petitioners have got any such right and as to whether such rights if any available can be exercised as against the proceedings under the SARFAESI Act, that too at a stage where a private sale is permitted, is a matter which cannot be adjudicated and decided in a proceedings under Article 226. Basically those are civil rights which are to be enforced against W.P.(C).21200 & 34358/09 7 the creditor as well as borrower. An adjudication on the matter needs evaluation of evidence both documentary as well as oral, and consideration of rights and interests based on rival claims. Having confronted with such an opinion, learned counsel appearing for the petitioners in WP(C).No:34358/09 made a limited prayer before this court to permit the petitioners to invoke remedy of appeal available under the provisions of the SARFAESI Act. Therefore the petitioners sought permission to withdraw WP(C).No:34358/09 without prejudice to their rights to approach the Debt Recovery Tribunal under Section 17(1) of the SARFAESI Act. The petitioners further sought for making clarification to the effect that they are at liberty to challenge the private sale effected pursuant to the directions issued by this court in WP(C).No:21200/09, in such appeal to be filed before the Debt Recovery Tribunal. 9. Considering the facts, I am of the opinion that the petitioners in WP(C).No:34358/09 shall be afforded with an opportunity to challenge all the above said matters before the appellate authority, if such contentions are legally sustainable and if an appeal on those grounds is maintainable before that authority. If any validly constituted appeal is filed by the petitioners in WP(C).No:34358/09, they will be at liberty to W.P.(C).21200 & 34358/09 8 challenge the sale which now allegedly stands confirmed in favour of the 4th respondent, notwithstanding the interim orders issued by this court, if such challenge is sustainable under law. 10. With the above observations, WP(C).No:21200/09 is dismissed as infructuous. WP(C).No:34358/09 is permitted to be withdrawn without prejudice to rights if any available to the petitioners to approach the appellate authority, as observed above. 11. Learned counsel appearing for petitioners in WP(C). No:34358/09 further sought indulgence of this court to refrain the respondents 1 and 2 from issuing sale certificate pursuant to sale effected in favour of the additional 4th respondent (in WP(C). No:21200/09) for a short period in order to facilitate them to approach the appellate authority. Considering the facts and circumstances, the respondents 1 and 2 are directed to keep in abeyance issuance of sale certificate for a period of two weeks from today. C.K.ABDUL REHIM, JUDGE. okb