IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM TUESDAY, THE 7TH SEPTEMBER 2010 / 16TH BHADRA 1932 WP(C).No. 16803 of 2010(A) -------------------------- AGAINST THE ORDER IN DRC 2076(IA 1040/10) IN OA.139/2004 of DEBT RECOVERY TRIBUNAL, ERNAKULAM .................... PETITIONER(S): ------------------------- POOTHADY GRAMA PANCHAYATH, REPRESENTED BY SECRETARY, PANCHAYATH OFFICE, KENICHIRA P.O.,WAYANAD. BY ADV. SRI.V.V.SURENDRAN RESPONDENT(S): ---------------------------- 1. SOUTH INDIAN BANK LTD, PULPALLY BRANCH, PULPALLY, WAYANAD DIST. 2. VINEESH M.G., PROPRIETOR, KAVERI TRADERS, RESIDING AT MATHALIYIL HOUSE,KENICHIRA P.O., WAYANAD. 3. BINDHU,W/O.VINEESH.M.G., RESIDING AT MATHALIYIL HOUSE,KENICHIRA P.O., WAYANAD. 4. RECOVERY OFFICER, DEBT RECOVERY TRIBUNAL, ERNAKULAM. R1 BY ADV. SRI.K.K.JOHN,SC,SOUTH INDIAN BANK LTD. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 07/09/2010,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss C.K.ABDUL REHIM, J. -------------------------------------- W.P.(C).No.16803 of 2010 -------------------------------------- Dated this the 7th day of September, 2010 J U D G M E N T ---------------------- Petitioner is a Grama Panchayat, who purchased 75 cents of land from the 2nd respondent for the purpose of constructing a shopping complex cum Bus stand. Subsequent to the purchase, construction was started and it remains partly completed. Meanwhile the 1st respondent Bank proceeded against the property on the premise that there exists a mortgage on the property created by respondents 2 and 3 in favour of the 1st respondent for securing a loan, which they have defaulted repayment. The 1st respondent Bank had approached the Debts Recovery Tribunal by filing O.A.No.139/2004 and obtained a charged decree against the property, for realising the amounts covered under the recovery certificate. Subsequently the 1st respondent Bank approached the 4th respondent Recovery Officer, before whom the W.P.(C).16803/10 -2- Panchayat (petitioner herein) was impleaded as additional respondent. The petitioner thereupon resisted the recovery steps. On an earlier occasion WP(C).No.33228/2006 was filed by the petitioner. This court directed the 4th respondent to proclaim sale of other properties of the defaulters (respondents 2 and 3) at the first instance making it clear that only if the decree amount could not be realised the property in question can be proceeded against. It is further made clear that if the liability is not recovered and if the Panchayat has not cleared the balance liability, the 4th respondent will proceed for sale of the property purchased by the Panchayat, and if any excess amount than the debt is recovered, it will be paid to the Panchayat. The petitioner took up the matter in appeal. In the judgment in W.A.No.756/2008 (Ext.P2) the Division Bench observed that relief has already been granted by the learned Single Judge directing the Recovery Officer to bring the property in question for sale only after exhausting proceedings against other properties belonging to the defaulters. It is clarified that if the 1st respondent Bank W.P.(C).16803/10 -3- decide to proceed against the property purchased by the Panchayat after exhausting the process against other properties belonging to the defaulter, it will be open to the Panchayat to submit its objections against such proposal for sale of the property and in such case it will be open to the Panchayat to contend that it had put up a building in the property and that such building need not be treated as an accretion to the mortgaged property. If any such contention is taken, the Debts Recovery Officer shall refer to the same before proceeding against the property for sale. 2. It is stated in the writ petition that, when the property purchased by the Panchayat was again brought to sale, it was objected by the petitioner by filing Ext.P3 petition before the 4th respondent. But the 4th respondent had dismissed the petition, which according to the petitioner is in violation of the directions contained in the writ appeal judgment. On a perusal of Ext.P3 it is revealed that, subsequent to Ext.P2 judgment the 1st respondent Bank had proceeded against other items of property mortgaged by the defaulters and sale was conducted with W.P.(C).16803/10 -4- respect to those properties. But petitioner pointed out that, all the properties of the defaulters were not exhausted, because it is evident that by virtue of sale deed No.1572/2009 of Kakkodi Sub Registry the 2nd respondent had purchased 7½ cents of land situated in Vengeri Village, within the limits of Kozhikode Corporation. Therefore it was contended that proceedings should have been pursued against the said property, in view of the directions contained in Ext.P2 judgment. 3. The 4th respondent Recovery Officer had considered the above said objections and a detailed order was issued as per Ext.P4 (Order in I.A.No.1040/2010 in DRC.No.2076 in O.A.No.139/2004). It is noticed that on the basis of the objection the 1st respondent Bank had moved a petition before the 4th respondent for attachment and sale of the property alleged to have been acquired by the 2nd respondent. An order of attachment was issued by the 4th respondent directing to maintain status quo and it was communicated to the Village Office and the Sub Registrar Office. But the defaulters have raised objections to the W.P.(C).16803/10 -5- effect that the property which was purchased by the 2nd respondent is mortgaged to M/s. Union Bank of India, Nellikkode branch, for a loan transaction to the tune of Rs.11,25,000/-. The 4th respondent found that the Union Bank of India has got first charge over the property and since the said property is already mortgaged to another financial institution, the same cannot be put to sale. Therefore the objections of the petitioner Grama Panchayat was rejected. However, in Ext.P4 it is stated that a prohibitory order has already been issued with regard to the said property, in order to protect the interest of the certificate holder. 4. The petitioner Grama Panchayat is assailing the findings in Ext.P4 order, on the ground that it is in violation of the direction contained in Ext.P2 judgment. It is contended that this court has specifically directed the Recovery Officer to proceed against other properties of the defaulters before proceeding against the property which is in the possession of the Panchayat. According to the petitioner the refusal to conduct sale of the property which W.P.(C).16803/10 -6- was pointed out, will amount to violation of the directions contained in Ext.P2 judgment. 5. Learned Standing Counsel appearing for the 1st respondent per contra contended that the 4th respondent was fully justified in refusing to proceed against the said property for more than one reasons. It is contended that the said property is subsequently acquired and it does not form part of the secured assets which were mortgaged in favour of the 1st respondent Bank. Further it is evident that there exist a charge created on the said property by virtue of mortgage created in favour of another Bank, and it is a secured asset as far as the said Bank is concerned. Therefore the said property could not be brought to sale for realising amounts due to the 1st respondent, is the contention. 6. Considering the rival contentions, I am of the opinion that Ext.P4 order cannot be challenged as one issued in violation of the directions contained in Ext.P2 judgment. Before entering into merits, I notice that the petitioner has got an effective remedy against Ext.P4, by W.P.(C).16803/10 -7- way of appeal as provided under Section 30 of the RDBFI Act, and the petitioner failed to avail such remedy. Further, I do not find any illegality with respect to the findings of the 4th respondent in refusing to bring for sale the property pointed out. The reasoning mentioned in Ext.P4, which creates hurdle in proceedings against property which is subsequently acquired by the 2nd respondent, seems to be reasonable and justified. The 1st respondent Bank could not be put to prejudice, they being the secured creditor and the property and the property which is now in the possession of the Panchayat being a secured asset with respect to the loan transaction. Admittedly the purchase by the Panchayat was after creating the mortgage. Therefore the right and title now created in favour of the Panchayat can only be subject to the existing charge of mortgage over the property. Under the above circumstances I do not find any reason to interfere with the findings in Ext.P4. 7. This is a case where the petitioner Grama Panchayat had purchased the property from respondents 2 and 3 without making due verification regarding its W.P.(C).16803/10 -8- encumbrances. It is clear and evident that the Panchayat had purchased the property without verifying availability of the originals of the title deeds of the 2nd respondent. Admittedly the deed is in the custody of the 1st respondent Bank. Hence it is evident that those who are responsible for purchase of the property has not taken due care and responsibility in verifying the title and its encumbrances. Under these circumstances, if the petitioner Grama Panchayat is put to any loss, it is always left open for the petitioner to take appropriate legal proceedings for realising such amounts from the 2nd respondent. So also it will be open for them to take steps to recover the loss from those who are responsible for causing such loss, by resorting to methods permissible under law. 8. Hence the writ petition is dismissed without prejudice to rights of the petitioner Grama Panchayat to proceed against the 2nd respondent as well as against any other person responsible for causing loss if any to the Panchayat. 9. It is made clear that if the petitioner Panchayat W.P.(C).16803/10 -9- raises any objection or claim before any appropriate forum with respect to the building which is constructed in the property, in view of the observations contained in Ext.P2 judgment, the same can be adjusted untrammelled by any of the observations contained in this judgment. C.K.ABDUL REHIM, JUDGE. okb