Babu K. Mathew v. Authorised Officer, Axis Bank & Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR.JUSTICE ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS** **MONDAY, THE 9TH DAY OF JUNE 2014/19TH JYAISHTA, 1936** ## **WP(C).No. 24727 of 2011 (M)** **----------------------------** **PETITIONER(S): --------------------------** **BABU K.MATHEW, S/O.K.M.MATHEW, KADECKAL HOUSE, CHOTTANIKKARA P.O., ERNAKULAM.** **BY ADV. SRI.P.K.RAVISANKAR** **RESPONDENT(S):** - **----------------------------** **1. AUTHORISED OFFICER,AXIS BANK AND OTHERS RETAIL ASSETS CENTRE, RAJAJI ROAD, KOCHI - 682035.** **2. AXIS BANK, CHICAGO PLAZA, RAJAJI ROAD, KOCHI - 682035.** **3. ABDUL BARIK, S/O.MUHAMMED ALI, CHIRAPARAMBIL HOUSE, KIZHUPILLIKARA THANNIYAM VILLAGE/POST, THRISSUR DISTRICT. PIN - 680 704.** **R1-2 BY ADV. SRI.MATHEWS V.JACOB (PARAVUR) R1-2 BY ADV. SRI.JAWAHAR JOSE R3 BY ADV. SRI.AJEESH S.BRITE R3 BY ADV. SRI.SHAJI P.CHALY R3 BY ADV. SMT.K.JASMIN BABY R3 BY ADV. SMT.LIJITTA G.MATHEW** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 09-06-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **W.P.(C).No. 24727/2011** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS** **P1. COPY OF THE SALE DEED DTD.28.1.2005 REGISTERED AS DOCUMENT NO.527/2005 OF SRO MOOVATTUPUZHA.** **P2. COPY OF THE LETTER DTD. NIL. ISSUE BY M/S.UTI BANK, ERNAKULAM, TO THE PETITIONER.** **P3. COPY OF THE COMMON JUDGMENT DTD.9.8.2005 IN W.P.(C).No. 20200/2005 OF THIS COURT.** **P4. COPY OF THE JUDGMENT DTD.22.10.2007 IN O.S.NO.340/2005 BEFORE THE MUNSIFF'S COURT, MUVATTUPUZHA.** - **P5. COPY OF THE CERTIFIED COPY OF THE SALE CERTIFICATE DTD.29.9.2010.** ## **RESPONDENT(S)' EXHIBITS:** **R2** - **A. COPY OF THE NOTICE ISSUED UNDER SECTION 13(2) OF THE SARFAESI ACT.** - **B. COPY OF THE POSSESSION NOTICE TO THE PETITIONER.** - **C. COPY OF THE PUBLICATION IN MANGALAM DTD.22.12.06.** - **D. COPY OF THE PUBLICATION IN INDIAN EXPRESS DTD.22.12.96.** - **E. COPY OF THE VALUATION CERTIFICATE DTD.20.8.07.** - **F. -DO- DTD.5.8.10.** - **G. -DO- 6.8.10.** - **H. COPY OF THE NOTICE DTD.25.2.2010.** - **I. COPY OF THE PUBLICATION IN MATHRUBHUMI DAILY DTD.28.2.10.** - **J. COPY OF THE PUBLICATION DTD.28.2.10 IN INDIAN EXPRESS.** - **K. COPY OF THE PUBLICATION DTD.5.8.10 IN MATHRUBHUMI DAILY.** - **L. COPY OF THE PUBLICATION DTD.5.8.10 IN INDIAN EXPRESS DAILY. M. COPY OF THE PUBLICATION DTD.9.9.10 IN MATHRUBHUMI DAILY.** - **N. COPY OF THE PUBLICATION IN 9.9.10 IN INDIAN EXPRESS.** - **O. COPY OF THE ORDER PASSED BY THE DISTRICT COLLECTOR DTD.22.4.08.** **R3** **(1) COPY OF THE TAX PAID RECEIPT DTD.18.10.11 ISSUED BY THE VELLOKUNNAM VILLAGE OFFICER.** **(2) COPY OF THE SALE DEED NO.2435 OF THE SUB REGISTRAR'S OFFICE, MUVATTPUZHA DTD.30.5.2011.** sdk+ ///True copy/// P.S. to Judge ANTONY DOMINIC & ALEXANDER THOMAS, JJ. ================== W.P.(C).No. 24727 of 2011 ================== Dated this the 9[th] day of June, 2014 J U D G M E N T ## ANTONY DOMINIC, J. The petitioner had mortgaged his property comprised in Sy.No.897/5 of Velloorkunnam Village with the building thereon, which is covered by Ext.P1 title deed, in favour of the 2[nd] respondent bank and availed of a loan of Rs.21,00,000/- on 25.11.2004. Default was committed and as a result, proceedings under the SARFAESI Act were initiated against the secured assets. The property was finally sold in favour of the 3[rd] respondent in the sale that was conducted on 20.9.2010. It was challenging the sale thus conducted, the Writ Petition has been filed. 2. The contention raised by the petitioner is that the sale was conducted in violation of Rule 8(6) of the Security Interest (Enforcement) Rules, 2002. When the Writ Petition came up for consideration before the learned Single Judge, reliance was placed by the learned counsel for the petitioner in the decision in K.R.S.Latex (India) Pvt. Ltd. v. Federal Bank Ltd. [2011 (1) KLT 437) to contend that, individual notice was mandatory and that in the absence of it, the sale is vitiated. However, doubting the correctness W.P.C.24727/11 - : 2 :- of the said judgment relied on by the learned counsel for the petitioner, the learned Judge by his order dated 1[st] August, 2012, referred this matter for consideration of a Division Bench. It is accordingly that the writ petition is coming up before us. 3. We heard the learned counsel for the petitioner, the learned counsel appearing for respondents 1 and 2 and also the learned counsel appearing for the 3[rd] respondent. 4. The admitted facts of this case are that, after proceedings under the SARFAESI Act were initiated, the secured asset was brought to sale and the sale was scheduled on 31.3.2010. That was preceded by individual notice as contemplated under Rule 8(6) of the Rules evidenced by Ext.R2(h) and newspaper publications evidenced by Exts.R2(i) and (j). That sale did not take place and again the sale was scheduled to be conducted on 7.9.2010. On that occasion, individual notice was not given and only newspaper publications were carried out as per Exts.R2(k) and (l). On that occasion also, the sale did not take place and it was rescheduled to 20.9.2010. On that occasion also, individual notice was not given to the defaulter and the bank published only Exts.R2(m) and R2(n) in the newspapers. It was in the sale thus conducted, the property was sold to the 3[rd] respondent. W.P.C.24727/11 - : 3 :- 5. The question that is referred for our consideration is as to whether the sale conducted 20.9.2010, without individual notice as contemplated in Rule 8(6) of the Rules, is valid or not. The parties are in agreement that this issue now stands concluded by the decision of the Apex Court in Mathew Varghese v. M.Amritha Kumar and Others (2014 KHC 2289), where the Apex Court has held thus: “49. We, therefore, hold that unless and until a clear 30 days notice is given to the borrower, no sale or transfer can be resorted to by a SECURED CREDITOR. In the event of any such sale properly notified after giving 30 days clear notice to the borrower did not take place as scheduled for reasons which cannot be solely attributable to the borrower, the SECURED CREDITOR cannot effect the sale or transfer of the SECURED ASSET on any subsequent date by relying upon the notification issued earlier. In other words, once the sale does not take place pursuant to a notice issued under Rules 8 and 9, read along with Section 13(8) for which the entire blame cannot be thrown on the borrower, it is imperative that for effecting the sale, the procedure prescribed above will have to be followed afresh, as the notice issued earlier would lapse. In that respect, the only other provision to be noted in sub-rule (8) of Rule 8 as per which sale by any method other than public auction or public tender can be on such terms as may be settled between the parties in writing. As far as subrule (8) is concerned, the parties referred to can only relate to the SECURED CREDITOR and the borrower. It is, therefore, imperative that for the sale to be effected under Section 13(8), the procedure prescribed under rule 8 read along with 9(1) has to be necessarily followed, inasmuch as that is the prescription of the law for effecting the sale as has been explained in detail by us in the earlier paragraphs by referring to Sections 13(1), 13(8) and 37, read along with Section 29 and Rule 15. In our considered view any other construction will be doing violence to the provisions of the SARFAESI Act, in particular Section 13(1) and (8) of the said Act.” In the light of the above, the only conclusion that is possible is that the sale conducted on 20.9.2010, which admittedly was without individual notice to the defaulter, is illegal. W.P.C.24727/11 - : 4 :- 6. However, the learned counsel for the bank contended that if the defaulter, who is the petitioner herein, was aggrieved by the sale, he had a remedy under Section 17 of the Act before the Debts Recovery Tribunal and that such remedy should be availed of before 45 days. It is stated that the Tribunal does not have any power to condone delay. The learned counsel contended that the petitioner did not seek such a remedy within time and instead, he filed the Writ Petition belatedly only on 12.9.2011. On this basis, the learned counsel contended that once the remedy before the statutory forum has become time barred, it is not open to the defaulter to move this Court under Article 226 of the Constitution of India and to agitate his grievance. In support of this contention, the learned counsel placed reliance on the judgment of this Court in Assistant Commissioner of Central Excise v. Krishna Poduval [2005 (4) KLT 947]. 7. Though the legal position canvassed by the learned counsel for the petitioner does not admit of any doubt, insofar as the facts of this case are concerned, the pleadings of the petitioner show that according to him, he was absolutely unaware of the sale conducted on 20.9.2010. It has been so pleaded by him in paragraph 4 of the Writ Petition, where it is stated thus: W.P.C.24727/11 - : 5 :- “4. It is submitted that the petitioner was absolutely unaware about Ext.P5 sale. To the best of the knowledge of the petitioner, 1[st] respondent did not issue public notice in news papers as provided under the proviso to Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as the Rules). The petitioner was not served with any notice intimating about the proposed sale. The 1[st] respondent did not issue any notice to the petitioner as provided (sic) Rule 8(6) of the Security Interest (Enforcement) Rules 2002.” Nothing has been brought out by the respondents before us to hold that the averment that he was unaware of the sale is factually incorrect. If that be so, it is not open to the bank now to contend that on account of his laches, the remedy available to the petitioner having become barred, he cannot seek his remedies before this Court in a proceeding under Article 226 of the Constitution of India. We are, therefore, unable to accept this contention. 7. In such circumstances, the sale conducted on 20.9.2010 being illegal, it has to be set aside and we do so. All steps taken pursuant to the sale of the property conducted by the bank in favour of the 3[rd] respondent would also stand set aside. The Writ Petition is allowed as above. Sd/- ANTONY DOMINIC, JUDGE Sd/ALEXANDER THOMAS , JUDGE sdk+ ///True copy/// P.S. to Judge W.P.C.24727/11 - : 6 :-