IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE TWENTY FIFTH DAY OF JUNE TWO THOUSAND AND NINE PRESENT THE HON'BLE MR JUSTICE GHULAM MOHAMMED and THE HON'BLE MR JUSTICE VILAS V. AFZULPURKAR WRIT PETITION NO : 17381 of 2008 Between: Illa Murali Krishna S/o.late Rama Rao R/o. "Sri Sai Nest", 8-3-966/22/A, Nagarjuna Nagar, Ameerpet, Hyderabad. ..... PETITIONER AND 1 The Union of India, rep. by its Secretary, Finance, Central Secretariat Buildings, Sastry Bhawan, New Delhi. 2 The Andhra Bank, Main Branch, Town Kotha Road, Visakhapatnam, Rep. by its Chief Manager. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue a writ, order or direction particularly one in the nature of writ of Mandamus declaring the action of the 2nd respondent in issuing auction notice dt. 4.7.2008 issued under SARFAESI Act including the petitioner's property Ac.1.92 1/2 cents (Ac.1.68 cents + Ac.0.24 1/2 cents) in Sy.No. 88/8 and 88/9 of Dharmavaram Village, S.Rayavaram Mandal, Visakhapatnam District, as illegal, arbitrary and contrary to principles of natural justice and consequently set aside the same only with regard to Ac.1.92 1/2 cents in Sy.No. 88/8 and 88/9 of Dharmavaram Village, S.Rayavaram Mandal, Visakhapatnam District belonging to the petitioner. Counsel for the Petitioner:MR.POLISETTY RADHA KRISHNA Counsel for Respondent No.1: MR.A.RAJASHEKAR REDDY (ASST SOLICITOR GEN) Counsel for Respondent No.2: MR. V. RAGHU. The Court made the following : ORDER: (Per GM, J) This writ petition is filed seeking a writ of mandamus to declare the action of the second respondent in issuing auction notice dated 04.07.2008 under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘the Act’) including the petitioner’s land to an extent of Ac.01.92½ cents (Ac.01.68 cents + Ac.0.24½ cents) in Sy.Nos.88/8 and 88/9 situated at Dharmavaram Village, S. Rayavaram Mandal, Visakhapatnam District, as illegal and arbitrary. 2. The petitioner states that he purchased the land to an extent of Ac.01.92 ½ cents in Sy.Nos.88/8 and 88/89 from M/s. Gajula Exim Private Limited, Visakhapatnam, represented by its director, Smt Gajula Kamala, w/o. Nageswara Rao, who in turn executed a registered agreement of sale-cum-General Power of Attorney, on 28.05.2005. At that time, there were no encumbrances i.e., hypothecation or mortgage, in favour of any Nationalized Bank, as per the Encumbrance Certificate. From 28.05.2005, the petitioner is in peaceful possession and enjoyment of the said property and the same was reflected in the Encumbrance Certificate for the year 2007. While so, the second respondent Bank issued the auction notice impugned including the said land of the petitioner. The grievance of the petitioner is that though his name is mentioned in the Encumbrance Certificate as owner of the land in question, the second respondent, without issuing any notice to him, included the said land in the auction notice impugned, which is illegal and arbitrary. Hence, he filed the present writ petition. 3. The second respondent filed counter-affidavit stating that M/s. Gajula Exim Private Limited, Visakhapatnam, has availed credit facilities from its branch by mortgaging the title deeds of the land, building and machinery along with other properties by executing necessary documents to secure repayment of the dues. Due to the default committed by it, the second respondent got issued a notice under Section 13(2) of the Act, but it neither replied to the notice nor repaid the amount to the Bank. Therefore, the second respondent Bank took possession of all the properties belonging to M/s.Gajula Exim Private Limited as provided U/s.13(4) of the Act. The said Company filed several appeals, but in vain. Finally, the second respondent Bank took possession of all the properties under Section 14 of the Act. It is stated that the petitioner without verifying the original title deeds in respect of the land in question, which were deposited with the Bank, had purchased the property and therefore, he is not a bonafide purchaser of the land in question. 4. Learned counsel for the petitioner submitted that the petitioner is a bonafide purchaser of the land in question since at the time of purchase, there were no encumbrances existing as per the Encumbrance Certificate obtained by him. He further submitted that without issuing any notice to the petitioner, the second respondent Bank issued the auction notice impugned including the land of the petitioner in violation of principles of natural justice and that if the petitioner’s land is put to auction, he would suffer irreparable loss. Therefore, he prays to set aside the auction notice impugned. 5. The learned Standing Counsel for the second respondent contended that the original title deeds in respect of the land in question were deposited with the Bank and that the petitioner without verifying the original title deeds had purchased the same and therefore, he is not a bonafide purchaser of the land in question. He further contended that since M/s.Gajula Exim Private Limited has committed default in payment of dues to the second respondent Bank, the authorities took possession of all the properties including the land of the petitioner, under the Act for auction. 6. Heard the learned counsel for the petitioner and the learned Standing Counsel for the second respondent Bank. 7. The petitioner claims to be the bonafide purchaser of land to an extent of Ac.0.92½ cents in Sy.Nos.88/8 and 88/9 of Dharmavaram Village, S. Rayavaram Mandal, Visakhapatnam District from M/s. Gajula Exim Private Limited, Visakhapatnam. According to him, at the time of purchase, there is no mortgage in favour of the Bank in respect of the land in question. But, as contended by the learned counsel for the second respondent Bank, the land in question is a mortgaged one and its original title deeds were deposited it by M/s. Gajula Exim Private Limited. The question whether the petitioner is a bonafide purchaser or not is a disputed question of fact, which cannot be decided by this Court under Article 226 of the Constitution of India. However, without going into the merits of the matter, we deem it appropriate to dispose of the writ petition giving liberty to the petitioner to submit a representation before the second respondent Bank ventilating his grievance by placing the relevant material so as to release the land in question, which he has purchased under the registered agreement of sale and offering the amount of valuation as valued by the Bank, within a period of two weeks from the date of receipt of a copy of this order. On filing such representation, the second respondent Bank shall consider the same and pass appropriate orders in accordance with law, within a period of four weeks, and communicate the same to the petitioner. 8. The writ petition is accordingly disposed of. No costs. ______________________ GHULAM MOHAMMED, J _______________________ VILAS V. AFZULPURKAR, J Date:25.06.2009 Note: Issue CC by two days. (Bo) sj