High Court of KeralaSingle Judge2023-01-19Original Petition dismissed

Lal C George v. IDBI Bank and Autumn Hospitality and Services

Case / Petition Number:OP (DRT) NO. 484 OF 2022

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: GOPINATH P. THURSDAY
Judgment Date: 2023-01-19
Court Decision / Holding: The original petition fails and is accordingly dismissed. The Recovery Officer’s order cannot be questioned under Article 227 of the Constitution of India, and the petitioner has not shown grounds to interfere; the petitioner is not entitled to the requested relief. The matter is left open to pursue any statutory remedy available.
Final Disposition: Original Petition dismissed

Parties to the Case

Appellants / Petitioners

Lal C George

Respondents

IDBI Bank
Autumn Hospitality and Services

Legal Representation & Advocates

Counsels for Petitioners

• J. Julian Xavier
• Firoz K. Robin
• Roy Joseph
• Anies Mathew
• Anjana Ram
• Nirmal Kurien
• Eapen

Counsels for Respondents

• K. P. Sujesh Kumar

Case Synopsis & Summary

This Original Petition challenges a Recovery Officer’s order appointing an Advocate Commissioner to take physical possession of secured assets, including the petitioner’s residential house, in the wake of a loan availed by the 2nd respondent from the 1st respondent IDBI Bank. OA No.550/2014 culminated in a Recovery Certificate on 29.12.2015 for about Rs.5.86 crore, with several properties mortgaged for security. When SARFAESI proceedings were initiated, the petitioner approached this Court; Ext.P3 directed that proceedings under the SARFAESI Act would proceed against the residential property only if the sale of other assets is insufficient to cover the liability. A One Time Settlement (OTS) offers were then made through Exts.P4 and P5, proposing settlement of approximately Rs.11.85 crore for a lump sum of about Rs.3.25 crore (Option I) or Rs.3.44 crore (Option II), with upfront payments due by 31.12.2022 and 31.01.2023. The upfront payments were not made, and the OTS was cancelled. The petitioner sought a further three months to pay or, alternatively, to remain in occupation until sale of assets. The Bank argued that the petition is not maintainable under Article 227 and that Section 30 of the Recovery of Debts and Bankruptcy Act provides an adequate remedy, citing the Supreme Court’s State Bank of India v. Arvindra Electronics to insist that the terms of the OTS cannot be tinkered with. The Court concluded that no relief could be granted, emphasizing the substantial liability, the eight-year lapse since the Recovery Certificate, and the prejudice to the Bank from delaying recovery; the petition was dismissed, with the option to pursue statutory remedies.

Provisions of Law Cited

Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act)Recovery of Debts and Bankruptcy Act, 1993 (Section 30)Constitution of India, Article 227

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner contends that the One Time Settlement (OTS) offered by the first respondent was valid and available, and the upfront payments were substantial but the scheme was cancelled only because the upfront pay deadlines expired. He seeks a three-month extension or permission to remain in occupation of the residential building pending sale, citing Exts P3, P4, and P5 and the directions in W.P. No. 3441/2014 for partial relief. He argues that the Bank’s action to enforce the Recovery Certificate should not prejudice a possible settlement and shelter rights; the remedy under SARFAESI and non-interference under Article 227 should be exercised sparingly while preserving the opportunity to settle the debt.

Contentions of Respondents

The respondent Bank contends that the petition under Article 227 is not maintainable; there is an available remedy under Section 30 of the Recovery of Debts and Bankruptcy Act. It cites the Supreme Court decision in State Bank of India v. Arvindra Electronics Pvt. Ltd. to oppose any modification of the OTS terms, arguing that extending the time would hamper sale and collection. The Bank notes that the liability exceeds Rs. 11.85 crores and the Recovery Certificate was issued in 2015; delaying would prejudice the creditor; thus the original petition should be dismissed.

Cited Precedents (5)

Case Name	Citation	Treatment	Explanation
State Bank of India v. Arvindra Electronics Pvt. Ltd.	Civil Appeal No. 6954 of 2022	Positive	Supreme Court held that terms of an approved One Time Settlement cannot be tinkered with; the High Court cited it to deny extending the OTS terms in the present case.
W.P. (C) No. 3441/2014	W.P. (C) No. 3441/2014	Mentioned Only	Cited as a prior judgment with operative facts referenced in Ext.P3 context but not used as binding authority in the decision.
W.P. No. 21007/2013	W.P. No. 21007/2013	Mentioned Only	Exhibit R1(e); referenced for background rather than binding authority.
W.P. No. 1437/2014	W.P. No. 1437/2014	Mentioned Only	Exhibit R1(f); background reference in the record.
W.P. No. 6582/2014	W.P. No. 6582/2014	Mentioned Only	Exhibit R1(h); background reference in the record.

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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 GOPINATH P. THURSDAY, THE 19[TH] DAY OF JANUARY 2023 / 29TH POUSHA, 1944 OP (DRT) NO. 484 OF 2022 DRC NO.4220 IN OA NO.550/2014 ON THE FILES OF HON'BLE DEBT RECOVERY TRIBUNAL – 1, ERNAKULAM** ## **PETITIONER/3RD RESPONDENT IN OA:** LAL C GEORGE, AGED 58 YEARS, S/O GEEVARGHESE, CHABAKOTTUKUDIYIL (H), AYAKKAD, THRIKKARIYOOR P.O, KOTHAMANGALAM, ERNAKULAM – 686 692. BY ADVS. J.JULIAN XAVIER FIROZ K.ROBIN ROY JOSEPH ANIES MATHEW ANJANA RAM NIRMAL KURIEN EAPEN ## **RESPONDENTS:** 1 IDBI BANK, MAIN BRANCH, IDBI BUILDING, PANAMPILLY NAGAR, ERNAKULAM - 682036, REP. BY ITS DEPUTY GENERAL MANAGER. 2 M/S AUTUMN HOSPITALITY AND SERVICES, 89/XI, AUTUMN TREES, OPP. FOREST RANGE OFFICE, NH 49, DEVIKULAM P.O, IDUKKI. BY ADV K.P.SUJESH KUMAR THIS OP (DEBT RECOVERY TRIBUNAL) HAVING COME UP FOR ADMISSION ON 19.01.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OP (DRT) NO. 484 OF 2022 2 ## **JUDGMENT** The petitioner is one of the partners of the 2[nd] respondent firm. The 2[nd] respondent availed credit facilities from the 1[st] respondent. Certain properties of the petitioner are mortgaged to secure the repayment of loan availed by the 2[nd] respondent. One of the items of properties mortgaged is the residential house of the petitioner, which is mentioned as item No.(c) in paragraph 2 of the original petition. The Bank filed O.A.No.550/2014, which was not contested by the petitioner and the 2[nd] respondent and that original application was allowed as early as on 29.10.2015 allowing the Bank to recover a sum of Rs.5,86,41,308/- along with interest. Ext.P1 is the Recovery Certificate issued in favour of the 1[st] respondent Bank. 2. When proceedings were initiated against the petitioner under the provisions of the SARFAESI Act, the petitioner had approached this Court and this Court through Ext.P3 judgment had directed that the proceedings under the SARFAESI Act will be continued against the residential property only if the sale of the other items of property are not sufficient OP (DRT) NO. 484 OF 2022 3 to cover the entire liability. The judgment in W.P. (C)No.3441/2014 was on 04.02.2014. 3. The record of the case shows that the petitioner was offered with a One Time Settlement through Ext.P5 on 03.11.2022. This was preceded by another offer for One Time Settlement as is evident from Ext.P4. Under Ext.P5, the present liability is approximately Rs.11.85 Crores was permitted to be settled by paying a total amount of Rs.325.80 lakhs. The petitioner was also given another option to settle the liability by paying Rs.344.20 lakhs. Under the I[st] option, the entire amount had to be paid by 31.12.2022, while in the II[nd] option, the entire amount had to be paid by 31.01.2023. The petitioner is not in a position to comply with either of the offers given to the petitioner. The terms of the One Time Settlement are no longer available as the upfront payment to be paid by the petitioner under the option No.I and option No.II given to the petitioner, were to be paid either on 31.12.2022 or on 31.01.2023. Since the petitioner has not paid those upfront payments, the One Time Settlement stands cancelled. Presently, it is the case of the petitioner that the petitioner may be permitted a further time of three months to pay the amount under the One Time Settlement scheme. The alternate prayer is to permit the OP (DRT) NO. 484 OF 2022 4 petitioner to continue in occupation of the residential building till the properties are actually sold in auction in proceedings before the Recovery Officer or under the provisions of the SARFAESI Act. 4. The learned counsel appearing for the respondent Bank would firstly submit that the Original Petition is not maintainable as the order under challenge is an order of the Recovery Officer appointing an Advocate Commissioner to take physical possession of the secured assets. It is submitted that the petitioner has an effective alternate remedy of appeal under Section 30 of the Recovery of Debts and Bankruptcy Act and therefore, the order cannot be interfered with in exercise of jurisdiction under Article 227 of the Constitution of India. Secondly, it is pointed out that going by the judgment of the Supreme Court in _**State Bank of India v. Arvindra Electronics Pvt. Ltd.**_ [judgment dated 04.11.2022 in Civil Appeal No. 6954 of 2022], this Court cannot tinker with or modify the terms of a One Time Settlement and therefore, the present prayer of the petitioner to extend the time for payment under One Time Settlement cannot be accepted. It is submitted that the prayer of the petitioner to permit the petitioner to continue in occupation of the residential building also cannot be OP (DRT) NO. 484 OF 2022 5 accepted as the Bank will find it extremely difficult to find buyers if the petitioner is permitted to continue in occupation of the residential premises. Since the present liability is in excess of Rs.11.85 Crores, none of the properties can be excluded from the proceedings and even if all the properties are proceeded against, the Bank will find it difficult to recover the entire amount due to it. It is also pointed out that despite the petitioner being given a substantial waiver and being permitted to settle the liability under the One Time Settlement, the petitioner did not comply with the terms of One Time Settlement and therefore, the petitioner is not entitled to any further relief. 5. Having heard the learned counsel for the petitioner and the learned counsel appearing for the respondent Bank, I am of the opinion that no relief can be granted to the petitioner in the present Original Petition. The relief sought for by the petitioner in a petition filed against an order of the Recovery Officer appointing an Advocate Commissioner to take physical possession of the mortgaged properties cannot be entertained to grant the relief sought for in the petition. The liabilities of the petitioner are huge and if the recovery proceedings are further delayed, the Bank will be put to serious prejudice, injury and OP (DRT) NO. 484 OF 2022 6 hardship. The petitioner was offered a substantial waiver and was permitted to clear the liability under the One Time Settlement scheme. The liability of nearly Rs.11.85 Crores was permitted to be settled by paying approximately Rs.3.25 Crores under option I or approximately Rs.3.44 Crores under option II. The petitioner did not availed either of the options. The order of the Recovery Officer can be challenged by filing an appeal under Section 30 of the Recovery of Debts and Bankruptcy Act. The petitioner has not chosen to do so. The order of the Recovery Officer cannot therefore be questioned under Article 227 of the Constitution of India. In the facts and circumstances of the case, I also do not think that there is any reason to direct the 1[st] respondent Bank to keep the proceedings against the residential property in abeyance for the time being. I cannot lose sight of the fact that a final Recovery Certificate was issued in the matter as early as in the year 2015, almost eight years after the issuance of the Recovery Certificate, the Bank has not been able to recover any amount from the petitioner or the 2[nd] respondent except the upfront payment made pursuant to Ext.P4 offer for One Time Settlement. I am therefore of the view that the petitioner has not made out any case for interference under Article 227 of the 7 OP (DRT) NO. 484 OF 2022 Constitution of India. The original petition fails and it is accordingly dismissed. The dismissal of this Original Petition will not prevent the petitioner from availing any statutory remedy that may be available to him. Sd/- **GOPINATH P. JUDGE** DK OP (DRT) NO. 484 OF 2022 8 ## **APPENDIX OF OP (DRT) 484/2022** PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE RECOVERY CERTIFICATE NO.D.R.C.4420 IN OA NO.550/2014 DATED 22.12.2015 ISSUED BY THE DEBTS RECOVERY TRIBUNAL, ERNAKULAM Exhibit P2 TRUE COPY OF THE VALUATION REPORT PREPARED BY R.V MOHAN THAMPURAN, CHARTED ENGINEER (INDIA) GOVT. APPROVED REGISTERED VALUER CUM LOSS ASSESSOR DATED 19.03.2013 Exhibit P3 TRUE COPY OF THE JUDGMENT DATED 04.02.2014 IN W.P (C) NO.3441/2014 Exhibit P4 TRUE COPY OF THE COVERING LETTER DATED 08.04.2021 SUBMITTED ALONG WITH DD Exhibit P5 TRUE COPY OF THE LETTER DATED 03.11.2022 ISSUED BY THE 1ST RESPONDENT Exhibit P6 TYPED COPY OF THE ORDER DATED 09.07.2021 IN IA NO.175/2019 IN DRC NO.4420 IN OA NO.550/2014 Exhibit P7 TRUE COPY OF THE JUDGMENT DATED 10.10.2022 IN OP (DRT) NO.276/2022 Exhibit P8 TRUE COPY OF THE DISCHARGE SUMMERY ISSUED FROM RAJAGIRI HOSPITAL, ALUVA Exhibit P9 TRUE COPY OF THE NOTICE DATED 25.11.2022 ISSUED BY THE ADVOCATE COMMISSIONER TO THE PETITIONER Exhibit P10 TRUE COPY OF THE LETTER DATED 28.12.2022 ISSUED BY SRI. SHANTO T KURIAN OP (DRT) NO. 484 OF 2022 9 RESPONDENT EXHIBITS - Exhibit R1(a) True copy of the final order in O.A No.550/2014 on the file of the Debts Recovery Tribunal, Ernakulam, dated 29/10/2015 - Exhibit R1(b) True copy of the order of the Recovery Officer in DRC No.4420 in OA No.550/2014 on the file of the Debts Recovery Tribunal, dated 3/09/2018 - Exhibit R1(c) True copy of I.A No.175/2019 in DRC No.4420 in O.A No.550/2014 on the file of the Debts Recovery Tribunal-1, Ernakulam, dated 19/01/2019 - Exhibit R1(d) True copy of the order passed by the Recovery Officer in I.A No.175/2019 in DRC No.4420 in O.A No.550/2014 on the file of the Debts Recovery Tribunal-1, Ernakulam, dated 19/07/2021 - Exhibit R1(e) True copy of the judgment in WPC No.21007/2013, dated 3/09/2013 - Exhibit R1(f) True copy of the judgment in WPC No.1437/2014 of this Honourable Court, dated 17/01/2014 - Exhibit R1(g) True copy of the judgment in WPC No.3441/2014, dated 4/02/2014 - Exhibit R1(h) True copy of the judgment in WPC No.6582/2014, dated 12/03/2014 - Exhibit R1(i) True copy of the judgment in OP(DRT) No.276/2022 on the file of this Honourable Court, dated 10/10/2022