High Court of KeralaSingle Judge2022-11-22Original petition dismissed; no interference wi...

Mohanan K and Rajani T.V. v. Authorized Officer, South Indian Bank

Case / Petition Number:OP(DRT) No.443 of 2022

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: Gopinath P.
Judgment Date: 2022-11-22
Court Decision / Holding: Original petition dismissed; High Court finds no jurisdictional error or abuse of power in the Tribunal’s proceedings and declines to interfere under Article 227. Petitioners retain the right to challenge the sale within the Tribunal or proper legal fora in accordance with law.
Final Disposition: Original petition dismissed; no interference with Tribunal proceedings; petitioners may challenge the sale before the Tribunal or appropriate forum per law.

Parties to the Case

Appellants / Petitioners

Mohanhan K
Rajani T.V

Respondents

Authorized Officer, South Indian Bank
South Indian Bank

Legal Representation & Advocates

Counsels for Petitioners

• Adv. Denu Joseph

Counsels for Respondents

• Sunil Shanker
• Vidya Gangadharan (K/000424/2020)

Case Synopsis & Summary

This is an OP (DRT) challenging a secured asset sale under the SARFAESI Act by the South Indian Bank. The petitioners contend the sale of their property was illegal and undervalued, arguing the bank failed to obtain a proper valuation as mandated by Section 13(5A) of the SARFAESI Act, and Rule 8(5) of the Security Interest (Enforcement) Rules, 2002, to secure maximum value. They claim the market value is about Rs. 1.5 crore, yet the asset was sold for roughly Rs. 65 lakh, prejudice arising from the bank’s alleged failure to preserve and upkeep the property post-possession (Rules 8(3) and 8(4)). They invoke Pochiraju Industries Ltd (M/S) v. Punjab National Bank and others (2019 KHC 2998) to support their contentions. The bank responds that possession was taken in 2018 after several writ petitions, and the sale process proceeded with multiple valuation reports resulting in a final sale of Rs. 65.05 lakh on 12.10.2022 after attempts with reserves at Rs. 1 crore and later Rs. 80 lakhs, with no bidders at critical junctures. The High Court declines to interfere under Article 227, upholding Tribunal jurisdiction, and dismisses the petition, while allowing a challenge before the Tribunal or another lawful forum.

Provisions of Law Cited

Section 13(5A) of the SARFAESI Act, 2002Rule 8(5) of the Security Interest (Enforcement) Rules, 2002Rules 8(3) and 8(4) of the Security Interest (Enforcement) Rules, 2002Constitution of India, Article 227

Legal Doctrines & Maxims

Prima facie

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioners contend that the bank failed to obtain a proper valuation (Section 13(5A)) and to fix an adequate reserve price to maximize realisation, leading to a throwaway sale (Rs. 65 lakh) of a property valued ~Rs. 1.5 crore. They allege non-compliance with Rules 8(3)-(5) of the Security Interest (Enforcement) Rules, 2002 and that upkeep post-possession was neglected. They rely on the Andhra Pradesh Hyderabad Division Bench decision in Pochiraju Industries Ltd v. PNB (2019 KHC 2998) to bolster their position. They seek relief under Article 227 and challenge the sale process before the Tribunal or appropriate authority.

Contentions of Respondents

The bank argues possession was already taken in 2018, with a sequence of valuation reports (Jan 2020, Jan 2021, May 2022) and sale notices. It claims reserve prices of Rs. 1 crore, then Rs. 80 lakhs, and finally Rs. 65.05 lakh after the 2022 valuation, with a sale conducted on 12.10.2022 after multiple attempts and no bidders; it asserts compliance with law and that there was no improper conduct warranting interference. The Respondent submits that the petition under Article 227 is unfounded and that the Tribunal’s jurisdiction should be respected.

Cited Precedents (2)

Case Name	Citation	Treatment	Explanation
Pochiraju Industries Ltd (M/S) v. Punjab National Bank and others	2019 KHC 2998	Mentioned Only	Cited by the petitioners to support arguments on valuation and sale practices but not adopted as a binding ratio in this case.
WP (C) 28621/2022	—	Mentioned Only	Referenced in Exhibit P4 as the judgment in a related writ petition; not treated as binding authority in the present 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 GOPINATH P.** **TUESDAY, THE 22[ND] DAY OF NOVEMBER 2022 / 1ST AGRAHAYANA, 1944** ## **OP (DRT) NO. 443 OF 2022** **AGAINST THE ORDER/JUDGMENTSA 478/2022 OF DEBT RECOVERY TRIBUNAL, ERNAKULAM** ## **PETITIONERS:** 1 MOHANAN K AGED 57 YEARS S/O. KUMARAN, PROPIETOR, M/S. NATIONAL METAL INDUSTRIES, DOOR NO.1/919, POLYTECHNIC ROAD, KOLAKKAPADAM, ERATTAYAL, KODUMBU P.O., PALAKKAD , PIN - 678551 2 MRS.RAJANI T.V AGED 50 YEARS W/O. MOHANAN, MANO BHAVAN, NEAR GOVERNMENT POLY TECHNIC, ERATTAYAL, KODUMBU, PALAKKAD , PIN - 678551 BY ADV DENU JOSEPH ## **RESPONDENTS:** 1 AUTHROISED OFFICER SOUTH INDIAN BANK, DOOR NO.733/2,1ST FLOOR, D&D ARCADE BUILDING, CHITTUR ROAD, MANAPPULLIKAVU, KUNNATHOORMEDU P.O., PALAKKAD, PIN - 678013 2 SOUTH INDIAN BANK DOOR NO.733/2, 1 ST FLOOR, D&D ARCADE BUILDING, CHITTUR ROAD, MANAPPULLIKAVU, KUNNATHOORMEDU P.O. , PALAKKAD, PIN - 678013 BY ADVS. SUNIL SHANKER VIDYA GANGADHARAN(K/000424/2020) THIS OP (DEBT RECOVERY TRIBUNAL) HAVING COME UP FOR ADMISSION ON 22.11.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OP(DRT) No.443 of 2022 2 ## **JUDGMENT** ## **Dated this the 22[nd] day of November, 2022** The petitioners have approached this Court being aggrieved by the fact that the property belonging to the petitioners has been brought to sale in an illegal manner and without properly fixing the reserve price and ensuring that the property fetches the maximum value. 2. It is the case of the petitioners that the property of the petitioners has a market value of approximately Rs.1.5 crores. It is submitted that with reference to the provisions of Section 13(5A) of the SARFAESI Act, 2002 and the provisions of Rule 8(5) of the Security Interest (Enforcement) Rules, 2002, that it is imperative for the respondent bank to obtain a proper valuation before a property is brought to OP(DRT) No.443 of 2022 3 sale. It is also the case of the petitioner that it is a duty cast on the respondent bank to ensure that maximum value is realized for the property which is brought to sale under the SARFAESI Act. It is also pointed out that, since the bank has an option to purchase the property in case it finds that there are no bidders, it is absolutely essential that a proper valuation is obtained by the bank so as to ensure that valuable assets are not obtained by the bank itself by fixing a unreasonably low reserve price. It is submitted that in the facts of the present case the property of the petitioner which is worth nearly Rs.1.5 crores has been sold at a throwaway price of about Rs.65 lakhs. It is submitted that this causes serious prejudice to the petitioner as the liability of the petitioner to the respondent bank is approximately Rs.1.85 crores. The learned counsel appearing for the petitioner also contends with reference to certain OP(DRT) No.443 of 2022 4 photographs relating to the property that the property is not fetching the actual price on account of the fact that the bank has failed to ensure proper upkeep of the property after taking possession of the property in the year 2019. It is pointed out that provisions of Rules 8(3) and 8(4) of the Security Interest (Enforcement) Rules, mandate that the bank should ensure proper upkeep of the property if the possession of the property is taken by the bank. The learned counsel appearing for the petitioner also refers to the judgment of the Division Bench of the High Court of Judicature of Andhra Pradesh at Hyderabad in _**Pochiraju Industries Ltd (M/S) v. Punjab National Bank and others 2019 KHC 2998**_ , in support of his contentions. 3. The learned counsel appearing for the respondent bank submits that the bank had initiated proceedings to take physical possession of the OP(DRT) No.443 of 2022 5 property in the year 2018. It is submitted that in between January 2019 and 14.06.2019, the petitioner challenged the proceedings initiated by the bank resulting in three writ petitions, one writ appeal and one review petition being filed before this Court. It is submitted that after finally obtaining possession of the property, the property of the petitioner was brought to sale in the month of November 2020, on the basis of a valuation report obtained in January 2020, by fixing a reserve price of Rs.1 crore. It is submitted that since there were no bidders, the property was thereafter notified for sale on 22.09.2021 for an amount of Rs.80 lakhs based on a valuation report obtained on 04.01.2021. It is submitted that even on 22.09.2021, the property of the petitioner could not be sold as there were no bidders. It is submitted that the sale was therefore scheduled on 03.03.2022 by fixing the same reserve OP(DRT) No.443 of 2022 6 price of Rs.80 lakhs. It is submitted that on 03.03.2022 also there were no bidders and based on a valuation report of 15.05.2022 which fixed the value at Rs.65 lakhs, the sale was scheduled to 03.6.2022. It is submitted that though there was a bidder in the sale held on 03.06.2022, the said sale was cancelled by the bank owing to fact that there was some defect in the issuance of notice etc. It is submitted that thereafter, the property was scheduled to be sold on 12.10.2022 and on that date the property has been sold for a sum of Rs.65,05,000/-. It is pointed out that the petitioner did not comply with the conditions imposed in Ext.P12 interim order of the Tribunal and has thereafter approached this Court by filing the above original petition raising untenable grounds. It is submitted that on 03.10.2019 and 21.07.2020, the bank had issued letters to the petitioner requiring him to bring buyers OP(DRT) No.443 of 2022 7 for the property. It is submitted that there was no response from the side of the petitioner to those letters and it does not therefore lie in the mouth of the petitioner to suggest that the property of the petitioner is being sold for a throwaway price. 4. Having heard the learned counsel for the petitioners and the learned counsel for the respondent Bank, I am of the view that the petitioner has not made out any case of interference in proceedings under Article 227 of the Constitution of India. The Tribunal has not failed to exercise any jurisdiction vested in it. It has not exceeded the limits of its jurisdiction. The submission of the learned counsel for the respondent Bank, recorded above, indicate that the contention of the petitioners that the property was sold for a throwaway price is not acceptable at least _prima facie_ . The original petition fails and it is accordingly dismissed. OP(DRT) No.443 of 2022 8 Notwithstanding the dismissal of this original petition, it will always be open to the petitioners to challenge the sale before the Tribunal or any other Forum, in accordance with law. If any such challenge is made, the matter shall be decided untrammeled by any observations contained in this judgment. **Sd/-** **GOPINATH P. JUDGE** RMV OP(DRT) No.443 of 2022 9 ## **APPENDIX OF OP (DRT) 443/2022** |PETITIONER EXHIBITS|| |---|---| |Exhibit P1|THE TRUE COPY OF THE NOTICE OF SALE DATED 27.10.2020| ||ISSUED BY THE 1 ST RESPONDENT| |Exhibit P2|THE TRUE COPY OF THE VALUATION REPORT DATED| ||02.01.2020.| |Exhibit P3|THE TRUE COPY OF THE SALE NOTICE DATED 03 .06.2022| ||ISSUED BY THE 1ST RESPONDENT| |Exhibit P4|THE TRUE COPY OF THE JUDGMENT IN WP (C) 28621/2022| ||OF THIS HON'OLE COURT DATED 2.09.2022| |Exhibit P5|THE TRUE COPY OF THE LETTER DATED 02.09.2022 ISSUED| ||BY THE 1ST RESPONDENT| |Exhibit P6|THE TRUE COPY OF THE LETTER DATED 16.09.2022 ISSUED| ||BY THE 1ST RESPONDENT| |Exhibit P7|THE TRUE COPY OF THE SALE NOTICE DATED 20.09.2022| ||ISSUED BY THE 1ST RESPONDENT| |Exhibit P8|THE TRUE COPY OF THE SA NO. 478/2022 DATED| ||03.10.2022 FILED BEFORE DRT-1 ERNAKULAM[WITHOUT| ||ANNEXURE]| |Exhibit P9|THE TRUE COPY OF THE IA NO. 2247/2022 IN EXHIBIT P8| ||SA 478/2022 DATED 03 .10.2022| |Exhibit P10|THE TRUE COPY OF THE COUNTER AFFIDAVIT TO EXHIBIT P9| ||FILED BY THE RESPONDENT BANK DATED 11/10/2022| |Exhibit P11|FEW PHOTOGRAPHS OF THE SECURED ASSET UNDER THE| ||POSSESSION OF THE RESPONDENT BANK.| |Exhibit P12|THE TRUE COPY OF THE ORDER DATED 13.10.2022 PASSED| ||BY DRT-1, ERNAKULAM IA 2247/2022 IN SA 478/2022| ||EXHIBIT P9| |RESPONDENT EXHIBITS|| |EXT.-R2(a)|True copy of the letter dated 3.10.2019 of the 2nd| ||Respondent| |EXT.R2(b)|True copy of the letter of the 2nd Respondent dated| ||21.7.2020| |EXT.R2(c)|True copy of the valuation report dated 4.1.2021| |Ext.R2(d)|true copy of valuation report of the approved valuer| ||dated 15.5.2022 (without the route map)| ## **TRUE COPY** ## **P.A.TO JUDGE**