High Court of KeralaSingle Judge2017-03-14The writ petition is dismissed; the sale to pro...

Bharathy Sreedharan and others v. Catholic Syrian Bank, Zonal Office & Authorised Officer; Catholic Syrian Bank, Thripunithura Branch

Case / Petition Number:WP(C).No. 8562 of 2017 (U)

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: K. Vinod Chandran
Judgment Date: 2017-03-14
Court Decision / Holding: Writ petition under Article 226 dismissed. No order stopping the sale; sale notice remains in force. Contentions regarding valuation/upset price and sale procedure to be pursued before the appropriate forum; no compelling circumstance to interfere in the extraordinary jurisdiction. No costs.
Final Disposition: The writ petition is dismissed; the sale to proceed as scheduled. No costs. The petitioners’ contentions on valuation and sale procedure may be taken up before the Debt Recovery Tribunal or appropriate forum if desired.

Parties to the Case

Appellants / Petitioners

Bharathy Sreedharan
Sajan P.S.
Uma Sajan
M/S Loyal Tech Pile Foundation (represented by its proprietor, Sajan P.S.)

Respondents

The Catholic Syrian Bank, Zonal Office, DJM Building, Market Road, Ernakulam - 682 011, represented by its authorised officer
The Authorised Officer, The Catholic Syrian Bank, Zonal Office, Ernakulam - 682 011
The Catholic Syrian Bank, Thripunithura Branch, Hill Palace Road, Tripunithura - 682 301, represented by its Branch Manager

Legal Representation & Advocates

Counsels for Petitioners

• Sri P.G.Jayashankar
• Sri/Smti Reshma Raju

Counsels for Respondents

• Sri R.S.Kalkura

Case Synopsis & Summary

This writ petition under Article 226 of the Constitution challenges a SARFAESI sale of mortgaged property by The Catholic Syrian Bank. The petitioners contend that the sale, scheduled the next day, is procedurally flawed and that the upset price is unreasonably low in light of independent valuation. They argue that RBI guidelines require cross-collateral treatment across facilities when a default would render all facilities non-performing, and that a portion sale (instead of sale of the entire property) would unjustly diminish the debt recovery. The petitioners point to two loans in the account: a cash credit and a housing loan, and claim there are no defaulted amounts in the housing loan, implying misalignment with NPA declarations. They rely on several Kerala High Court decisions (Anilkumar S. v. Catholic Syrian Bank Ltd.; Augusthy M.D. v. Catholic Syrian Bank Ltd.; Balakrishnan v. Malaiyandi Konar; Thankamma v. Leelamma Abraham; P.K. Kuruvilla v. Corporation Bank) to urge that sale procedures should be fair and that interference is warranted to prevent sale of smaller portions to satisfy a larger debt. The bank maintains that the default in question warrants sale to recover the dues and that the sale process and upset price are within its discretion, citing Ext.P2 directing payment in installments and the buyer’s deposit prior to alleged withdrawal. The court, noting absence of a settlement proposal and the impending sale, dismisses the petition without costs, allowing the sale to proceed and preserving rights to challenge in the appropriate forum.

Provisions of Law Cited

SARFAESI Act, 2002 - Section 17 (recovery proceedings before Tribunal/Bank)**Constitution of India, Article 226 (powers of High Courts to issue writs)Civil Procedure Code (CPC) (in context of sale of property and recovery procedures)

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioners argued that the sale of only a portion of the property would undermine the debt recovery process, that upset prices were arbitrarily fixed (Rs. 78.60 lakh vs valuation up to Rs. 1.32 crore), and that there was no concrete settlement proposal or valid basis for delaying or altering the sale. They relied on RBI guidelines and a line of Kerala HC decisions to plead for procedural fairness in SARFAESI sales, including possibilities of postponing or modifying sale to ensure all dues and two facilities are properly addressed. They contended that the sale should reflect a fair value and that the DRT/Court should be approached for appropriate relief.

Contentions of Respondents

The bank maintained that the sale was being conducted in compliance with SARFAESI and RBI norms. It argued that Ext.P2 directed the borrower to repay Rs. 48,52,567 in installments starting 29.02.2016 and that only Rs. 18 lakhs had been paid. It asserted there were two facilities (cash credit and housing loan) and that default (including interest) necessitated sale to satisfy all dues. The bank highlighted lack of any settlement proposal from petitioners and stated that the sale could not be stalled given the imminent date and the bank’s discretion to fix upset prices and conduct sale, including sale of part of the property when appropriate.

Cited Precedents (5)

Case Name	Citation	Treatment	Explanation
Anilkumar S. v. Catholic Syrian Bank Ltd., Palakkad	2013 (2) KHC 641	Mentioned Only	Cited by petitioners to press for fair sale procedures; the judgment does not detail or apply its holdings in the present case.
Augusthy M.D. v. Catholic Syrian Bank Ltd, Ayiroor Branch	2014 (3) KHC 669	Mentioned Only	Cited for principles on sale fairness; no explicit adoption or distinction in the present judgment.
Balakrishnan v. Malaiyandi Konar	2006 KHC 277	Mentioned Only	Cited in context of sale procedure fairness; no specific treatment discussed.
Thankamma v. Leelamma Abraham	2008 (2) KHC 109	Mentioned Only	Cited as part of the argumentative backdrop; no direct application stated.
P.K. Kuruvilla v. Corporation Bank	2008 (1) KHC 258	Mentioned Only	Cited to support fairness/participatory sale arguments; not expressly followed or distinguished in the decision.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **TUESDAY, THE 14TH DAY OF MARCH 2017/23RD PHALGUNA, 1938** **WP(C).No. 8562 of 2017 (U) --------------------------** **PETITIONERS: ------------** **1. BHARATHY SREEDHARAN, AGED 66, W/O.LATE PS SREEDHARAN, PULIMOOTTIL HOUSE, MLA ROAD, UDAYAMPEROOR P.O., NADAKKAVU, ERNAKULAM - 682 307.** **2. SAJAN P.S., AGED 46, S/O.LATE PS SREEDHARAN, PULIMOOTTIL HOUSE, MLA ROAD, UDAYAMPEROOR P.O., NADAKKAVU, ERNAKULAM - 682 307.** **3. UMA SAJAN, AGED 37, W/O.SRI.SAJAN P.S., RESIDING AT PULIMOOTTIL HOUSE, MLA ROAD, UDAYAMPEROOR P.O., NADAKKAVU, ERNAKULAM - 682 307.** **4. M/S.LOYAL TECH PILE FOUNDATION, IX/193, PULIMOOTTIL HOUSE, MLA ROAD, UDAYAMPEROOR P.O., NADAKKAVU, ERNAKULAM - 682 307, REPRESENTED BY ITS PROPRIETOR, SRI.SAJAN P.S.** **BY ADVS.SRI.P.G.JAYASHANKAR SMT.RESHMA RAJU** **RESPONDENTS:** **------------** **1. THE CATHOLIC SYRIAN BANK, ZONAL OFFICE, DJM BUILDING, MARKET ROAD, ERNAKULAM - 682 011, REPRESENTED BY ITS AUTHORISED OFFICER.** **--2--** **--2--** **WP(C).No. 8562 of 2017 (U) --------------------------** **2. THE AUTHORISED OFFICER, THE CATHOLIC SYRIAN BANK, ZONAL OFFICE, DJM BUILDING, MARKET ROAD, ERNAKULAM - 682 011.** **3. THE CATHOLIC SYRIAN BANK, THRIPUNITHURA BRANCH, 'PINDIS ARCADE', HILL PALACE ROAD, TRIPUNITHURA - 682 301, REPRESENTED BY ITS BRANCH MANAGER.** **BY SRI.R.S.KALKURA** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 14-03-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **mbr/** ## **WP(C).No. 8562 of 2017 (U) --------------------------** ## **APPENDIX** ## **PETITIONERS' EXHIBITS:** **EXHIBIT P1. TRUE COPY OF THE SALE NOTICE DATED 29.12.2015. EXHIBIT P2. TRUE COPY OF THE JUDGMENT DATED 09.02.2016 PASSED BY THIS HON'BLE COURT. EXHIBIT P3. TRUE COPY OF THE NOTICE/ADVERTISEMENT DATED 07.02.2017. EXHIBIT P4. TRUE COPY OF THE SKETCH SHOWING THE NATURE AND LIE OF THE PROPERTY, PREPARED BY A CHARTERED ENGINEER. EXHIBIT P5. TRUE COPY OF THE VALUATION CERTIFICATE ISSUED BY A CHARTERED ENGINEER. EXHIBIT P6. TRUE COPY OF THE STATEMENT OF ACCOUNTS FOR THE TERM LOAN. EXHIBIT P7. TRUE COPY OF THE STATEMENT OF ACCOUNTS FOR THE OD ACCOUNT. EXHIBIT P8. TRUE COPY OF THE REPRESENTATIONS DATED 08.03.2017 MADE BY THE 1ST AND 2ND PETITIONERS. EXHIBIT P9. TRUE COPY OF THE REPRESENTATIONS DATED 08.03.2017 MADE BY THE 1ST AND 2ND PETITIONERS.** **RESPONDENTS' EXHIBITS: NIL. //TRUE COPY//** **P.S. TO JUDGE** **mbr/** ## **K. VINOD CHANDRAN, J.** -----------------------------------------W.P.(C) No. 8562 of 2017 (U) -----------------------------------------Dated: 14[th] March, 2017 ## **J U D G M E N T** The petitioners are aggrieved with the sale proceedings initiated by the respondent Bank against the mortgaged property. The sale is also said to be scheduled tomorrow, for the second time. 2. The learned Counsel for the respondent Bank submits that earlier, when the sale proceedings were at the fag end, the petitioners had approached this Court and obtained Ext.P2 judgment. Therein, the defaulted arrears of Rs.48,52,567/- together with accrued interest was directed to be paid off in twelve equal and successive monthly installments commencing from 29.02.2016. Even according to the petitioners, they have paid only Rs.18 lakhs in compliance with the said directions. ## **W.P.(C) No. 8562/2017** **-2-** 3. The respondent Bank further submits that, subsequently, the petitioners had approached the respondent Bank for sale of a portion of the property, which was consented to by the respondent Bank. The prospective buyer also deposited Rs.30 lakhs in the account of the said buyer, with the respondent Bank. However, the sale did not fructify and it is the contention of the Bank that the prospective purchaser has informed them that the petitioners have withdrawn from the offer. The learned Counsel for the petitioners, however, counters that it is the purchaser who withdrew. Anyway the proposal has fallen through and the dues are mounting due to the accruing interest. 4. Further as of now, there is no proposal put forth to settle the loan amount. The petitioners contention is that there are two loans availed from the respondent Bank: one a cash credit and other a housing ## **W.P.(C) No. 8562/2017** **-3-** loan. There are no defaulted dues in the housing loan, is the contention. The RBI guidelines stipulate that if default is committed in one credit facility, then, all the credit facilities availed by that borrower would be declared as a Non Performing Asset (NPA). In such circumstance, when taking up the recovery proceedings, the Bank would have to proceed against the mortgaged property for satisfaction of the entire credit facilities availed by the borrower from the creditor Bank. In the circumstance of the petitioner not being able to proffer any proposal for settlement, there can be no further directions issued in the above writ petition. 5. The petitioners' further contention is with respect to the upset price being too low, based on a valuation produced by the petitioner from an independent valuer, as is seen at Ext.P5, wherein the ## **W.P.(C) No. 8562/2017** **-4-** distressed value of the property is shown as Rs.1,32,00,000/-. The Bank has shown the upset price as Rs.75 lakhs in Ext.P3; which is lower than that shown in Ext.P1 as Rs.1 crore. 6. The respondent Bank however would argue that there were no bidders at the first instance of sale, by Ext.P1 and, in such circumstance, the value was reduced. The further contention with respect to a portion of the property being sold, is also a decision within the discretion of the Bank which, as of now, cannot be agitated by the petitioner especially for reason of the sale being fixed for tomorrow. 7. The petitioner relies on a series of decisions: **Anilkumar S. v. Catholic Syrian Bank Ltd., Palakkad - 2013 (2) KHC 641** ; **Augusthy M.D. v. Catholic Syrian Bank Ltd, Ayiroor Branch - 2014 (3) KHC 669** ; **Balakrishnan v. Malaiyandi Konar -** ## **W.P.(C) No. 8562/2017** **-5-** **2006 KHC 277** ; **Thankamma v. Leelamma Abraham - 2008 (2) KHC 109** and **P.K. Kuruvilla v. Corporation Bank - 2008 (1) KHC 258** , to urge that the procedure for sale of property in execution of a decree under the Civil Procedure Code; is possible of being imported even to proceedings under the SARFAESI Act to ensure fairness in procedure and also to avoid the entire properties mortgaged from being sold for the satisfaction of a far lesser dues in a loan account. The petitioner urge, on the basis of the decisions, that there should not be an arbitrary fixation of the upset price and, in such circumstance, the same would be liable for interference by a Court of Law. An attempt is made to contend that a sale of lesser extent would satisfy the debt. The debt itself is Rs.64,29,679/as on 31.01.2017 and the upset price now fixed is Rs.78,60,000/-. There could, hence, be no division ## **W.P.(C) No. 8562/2017** **-6-** effected of the 26 cents of property. The ground of low upset price too is feeble since once the Bank attempted sale at Rs.1 crore and there was no bidders 8. Further all these contentions could have been validly taken up under Section 17 of the SARFAESI Act before the Tribunal. It is pertinent that the petitioners had delayed the filing of the writ petition, despite notice having been issued within time. The present sale notice is also issued on 08.02.2017 and the petitioner had ample time to approach the Debt Recovery Tribunal or this Court and the petitioners have chosen to approach this Court on the day prior to the sale. 9. Considering all the above facts, this Court is of the opinion that there can be no orders issued in this writ petition filed under Article 226 of the Constitution of India, especially since no proposal is forthcoming as to the settlement of the dues. The contentions, as to ## **W.P.(C) No. 8562/2017** **-7-** valuation and defective procedure of sale, have to be ideally agitated before the appropriate forum and could be done even after the sale. No compelling circumstance exist as to invoke the extraordinary powers to stop the sale now scheduled. The writ petition would stand dismissed, leaving open the contentions to be agitated before the appropriate forum. No Costs. Sd/K.VINOD CHANDRAN, JUDGE jjj 15/3/17