IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM WEDNESDAY, THE 13TH OCTOBER 2010 / 21ST ASWINA 1932 WP(C).No. 23624 of 2010(C) -------------------------- PETITIONERS: -------------------- 1. M/S.NANDINI TEXTILES AND GARMENTS MARIAKULATH COMPLEX, AYYAPPANKAVU, ERNAKULAM, KOCHI-18, REP. BY PROPRIETOR M.KUMARASWAMY. 2. K.MUTHUKUMARI, KRISHNA NIVAS, CORRYA ROAD, SCHOOL PADY BUS STOP, WEST VADUTHALA, KOCHI-28. BY ADV. SRI.R.ANILKUMAR RESPONDENT: ---------------------- 1. INDIAN OVERSEAS BANK AUTHORIZED OFFICER, M.G.ROAD, ERNAKULAM, KOCHI-682 035. 2.ASSISTANT GENERAL MANAGER, INDIAN OVERSEAS BANK, M.G.ROAD BRANCH, ERNAKULAM, PIN-682 035. ADDL. R3 IMPLEADED ADDL. R3. G.KESAVAN REDDY, V.B.RESIDENCY, D4 3RD FLOOR, SASTHA TEMPLE ROAD, ERNAKULAM NORTH, KOCHI 18, ADDL. R3 IS IMPLEADED VIDE ORDER DT. 20.9.10 IN IA. NO.12676/10. R1 & R2 ADV. SRI.P.B.SURESH KUMAR, SC, I.O. BANK R3 BY ADV. SRI.SAKIR.K.H. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 13/10/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 23624 of 2010(C) ---------------------------------------- APPENDIX --------------- PETITIONER'S EXHIBIT --------------------------------- EXT.P1. PHOTOCOPY OF THE CREDIT SANCTION ADVICE DT. 20.06.2007. EXT.P2. PHOTOCOPY OF THE STATEMENT OF ACCOUNTS AS ON 11.10.2009. EXT.P3. PHOTOCOPY OF THE REMITTANCE OF THE AMOUNT OF RS.1,10,000/- AS PER CHALAN DT. 31.11.2009. EXT.P3(a). PHOTOCOPY OF THE REMITTANCE OF THE AMOUNT OF RS.10,000/- AS PER CHALAN DT. 29.01.2010. EXT.P3(b). PHOTOCOPY OF THE REMITTANCE OF THE AMOUNT OF RS.10,000/- AS PER CHALAN DT. 11.02.2010. EXT.P3(c). PHOTOCOPY OF THE REMITTANCE OF THE AMOUNT OF RS.50,000/- AS PER CHALAN DT. 24.02.2010. EXT.P3(d). PHOTOCOPY OF THE REMITTANCE OF THE AMOUNT OF RS.15,,000/- AS PER CHALAN DT. 03.03.2010. EXT.P3(e). PHOTOCOPY OF THE REMITTANCE OF THE AMOUNT OF RS.10,000/-- AS PER CHALAN DT. 08.03.10. EXT.P3(f). PHOTOCOPY OF THE REMITTANCE OF THE AMOUNT OF RS.50,000/- - AS PER CHALAN DT. 23.03.2010. EXT.P4. PHOTOCOPY OF THE LETTER DATED 03.02.2010. EXT.P5. PHOTOCOPY OF THE NOTICE DT. 05.05.2010 ISSUED UNDER SEC.13(2) SERFAESI Act. EXT.P6.PHOTOCOPYT OF THE OBJECTION FILED ON 15.05.2010. EXT.P7. COPY OF THE RECEIPT DT. 12.08.2010 EXT.P8. COPY OF THE AGREEMENT EXECUTED ON 28.8.2010 EXT.P9. COPY OF THE NOTICE OF SALE ON 07.10.2010. RESPONDENTS' EXHIBITS. ---------------------------------------- ANNEXURE R1(a). COPY OF THE POSSESSION NOTICE DT. 12.7.2010. ANNEXURE R1 (b).COPY OF THE PUBLICATION IN MATHRUBHOOMI DAILY DT 13.7.2010. ANNEXURE R1(c). COPY OF THE PUBLICATION IN INDIAN EXPRESS DAILY, DATED 13.7.2010. P.A. TO JUDGE / TRUE COPY / VK C.K.ABDUL REHIM, J --------------------------- W.P(C) No.23624 of 2010-C ---------------------------- Dated this the 13th day of October, 2010. J U D G M E N T Consequent to default committed in repayment of a cash credit facility availed by the petitioner from respondents 1 and 2, for the purpose of their business activities, proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) was initiated. After issuing Ext.P5 notice under Section 13(2) of the Act, the Bank proceeded with steps for taking over possession of the property. It is the case of the petitioner that on receipt of Ext.P5 notice they have approached the Bank under Ext.P6 request seeking time for payment of the balance amount. Since such request was not acceded to by respondents 1 and 2, this writ petition is filed. 2. In view of the effective alternative remedy available under the statute, this Court is not justified in interfering with the proceedings, which is only at the stage of Section 13(2). However, as a gesture of indulgence an interim order was issued on 29.7.2010 directing the respondents to maintain status quo, subject W.P(C) No.23624 of 2010-C 2 to condition of the petitioner remitting a sum of Rs.5,00,000/- within two weeks thereafter. Subsequently, the petitioner filed I.A.No.11599 of 2010 seeking extension of time for compliance of the condition, which was allowed on 20.8.2010. In spite, the petitioner had not complied with the stipulations and ultimately this Court on 8.9.2010 had clarified that the interim order will not be in operation unless the petitioner satisfies the condition within a period of one week thereafter. Still the condition stipulated was not complied with. 3. In a statement filed on behalf of respondents 1 and 2, it is mentioned that, after availing the loan the petitioner was not at all vigilant in repayment and in violation of the terms of the loan agreement they were routing business transactions through accounts maintained with other Banks. It is further stated that the loan account in question was not renewed after 31.3.2009. In such circumstances, the loan account was classified as 'Non Performing Asset' and steps under the SARFAESI Act was initiated, is the contention. It is stated that an amount of Rs.25,04,370/- is due as on 5.5.2010. It is further stated that the Bank had already taken over possession of the property and notice in this regard was W.P(C) No.23624 of 2010-C 3 published as per Annexure R1(b) and R1(c). 4. The petitioner had produced a subsequent notice published by the Bank proclaiming sale of the property (Ext.P9). It is revealed that the property now stands proclaimed for sale on 16.11.2010 at 3 pm. 5. Along with I.A.No.12201 of 2010, the petitioner had produced Ext.P8, which is an alleged agreement for sale of the property. The person with whom the said agreement was executed is impleaded as additional third respondent. On receipt of notice issued from this Court he appeared through counsel. Contentions of the petitioner as well as the third respondent is that, they are ready to pay off the entire liability within a reasonable time and that the Bank may be restrained from proceedings with sale of the property. 6. Having considered the facts and circumstances, I am not at all inclined to interfere with the proceedings which is now pursued under the SARFAESI Act. The petitioner has not chosen to avail the effective alternative remedy available under the statute. Eventhough this Court has shown indulgence in directing to keep the proceedings in abeyance, the petitioner had failed to comply W.P(C) No.23624 of 2010-C 4 with the stipulations contained therein, inspite of repeated extensions granted. Going by recitals of Ext.P8, it is contended by the learned counsel appearing for respondents 1 and 2 that, it could not be presumed that there is genuine agreement executed between the petitioner and the additional third respondent. However it is made clear that if the third respondent is a genuine buyer he can very well participate in the auction and bid the property in question. 7. Under the above circumstances, the writ petition deserves no merit and the same is liable to be dismissed. However, based on the submission made by petitioner as well as the third respondent, a direction is issued to the effect that if the petitioner or the third respondent makes deposit a sum of Rs.10,00,000/- on or before 13.11.2010, the Bank shall defer the sale proceedings proclaimed under Ext.P9, provided a concrete offer will be submitted with respect to payment of the balance amount, which is acceptable to the Bank. The writ petition is disposed of with the above observations. C.K.ABDUL REHIM, JUDGE ab