Navami Exports and Others v. State of Kerala and Ors.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE N.NAGARESH THURSDAY, THE 14[TH] DAY OF DECEMBER 2023 / 23RD AGRAHAYANA, 1945** ## **WP(C) NO. 31069 OF 2022** ## **PETITIONERS:** - **1 NAVAMI EXPORTS, PEROOR, TKM COLLEGE P.O, KOLLAM REPRESENTED BY ITS MANAGING PARTNER MR. RANJITH V., PIN - 691005** - **2 SUJITH V., AGED 49 YEARS, S/O. VILASIDHARAN, RESIDING AT GAYATHRI, A-69, MANGAD P O, KOLLAM DISTRICT, PIN - 691015** - **3 RANJITH V., AGED 48 YEARS, S/O VILASIDHARAN, RESIDING AT GAYATHRI, A-69, MANGAD P O, KOLLAM DISTRICT, PIN – 691015** **BY ADVS. B.J.JOHN PRAKASH P.PRAMEL ASHIK TOM CELINE JOHN RAMSEENA N.** ## **RESPONDENTS:** - **1 STATE OF KERALA, REPRESENTED BY THE PRINCIPAL SECRETARY, INDUSTRIES DEPARTMENT, MAIN BLOCK, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM, PIN - 695001** - **2 RESERVE BANK OF INDIA, REPRESENTED BY THE DEPUTY GENERAL MANAGER, RBI, BAKERY JUNCTION, SERVICE ROAD, NANDAVANAM, VAZHUTHACAUD, THIRUVANANTHAPURAM, KERALA, PIN - 695033** W.P.(C) No.31069/2022 : 2 : **3 THE FEDERAL BANK LTD., REPRESENTED BY THE CHIEF MANAGER, KURUMPELIL AVENUE, POLAYATHODE, KOLLAM, PIN – 691021** **BY ADVS. SMT.RESMI THOMAS, GOVERNMENT PLEADER SRI.MILLU DANDAPANI,SC,CCB,CENT.COUNSEL MADHU RADHAKRISHNAN MANJUSHA K SREELAKSHMI SABU MOHAN JACOB GEORGE P.V.PARVATHY (P-41) REENA THOMAS NIGI GEORGE** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 14.12.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C) No.31069/2022 : 3 : ## **N. NAGARESH, J.** ````````````````````````````````````````````````````````````` ## W.P.(C) No.31069 of 2022 ````````````````````````````````````````````````````````````` _Dated this the 14[th] day of December, 2023_ ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ The petitioners seek to direct the 3[rd] respondent not to proceed with the sale of the petitioner's property as threatened in Ext.P3 sale notice at a throw away price as stated therein. The petitioners also seek to direct the 3[rd] respondent to renotify the sale of all the secured assets in possession of the respondent-Bank based on a proper valuation report to secure maximum possible sale price for the properties of the petitioner. 2. The 1[st] petitioner is a Partnership Firm engaged in processing and export of cashew nuts. The 2[nd] and 3[rd] petitioners are Partners of the Firm. The petitioners availed various credit facilities from the Federal Bank Limited since W.P.(C) No.31069/2022 : 4 : 2004. However, in the year 2016, their business suffered and the loan accounts were classified as NPA. 3. The petitioners state that in addition to hypothecation of stock, the petitioners had mortgaged nine landed properties valued over ₹1552.44 lakhs to secure the debts. The respondent-Bank took physical possession of those properties in the year 2016 itself. The respondentBank has now issued Ext.P3 sale notice seeking to dispose of two items of property from among the secured assets provided by the petitioner. 4. The petitioners state that the properties now sought to be sold for ₹1,12,50,000/- and ₹1,08,75,000/- were valued at ₹1,65,00,000/- and ₹1,60,00,000/- respectively in Ext.P1 sanction letter. It is therefore evident that the respondent-Bank is trying to sell of the petitioner's property at a throw away price. Hence, the petitioners are before this Court. 5. The petitioners state that the Hon’ble Apex Court in _**Mathew Varghese v. N. Amruthakumar** [(2010) 5 SCC_ W.P.(C) No.31069/2022 : 5 : _610]_ and in _**Ram Kishan v. State of U.P.** [(2012) 11 SCC 511]_ has held that secured assets cannot be disposed of in a light hearted manner. The selective notification of properties would indicate that the sale is at the instance of some interested persons. 6. The petitioners state that the Securitisation Act enables the Banks to take possession of securities and to transfer it by sale. Such exercise of power has to be tested on the touch stone of fairness and justice. The right to property is a constitutional guarantee under Article 300A of the Constitution of India. The 3[rd] respondent is therefore liable to be compelled not to proceed with the sale proposed. 7. The 3[rd] respondent resisted the writ petition filing counter affidavit. The 3[rd] respondent submitted that the Federal Bank Limited is not an authority of the State contemplated under Article 12 of the Constitution of India. It has been so held by the Apex Court in _**Federal Bank Limited v. Sagar Thomas** [2003 (3) KLT 876]_ . The writ petition is therefore not maintainable. W.P.(C) No.31069/2022 : 6 : 8. The Standing Counsel further pointed out that the petitioners have an alternate remedy under Section 17 of the Securitisation Act, before the Debts Recovery Tribunal. Interference under Article 226 of the Constitution of India is not warranted for that reason also. 9. As regards valuation of the property sought to be auctioned, the 3[rd] respondent submitted that the Bank had obtained valuation reports from approved valuers before the sale of the property. The approved valuer has valued the property at ₹1,12,50,000/- and at ₹1,08,75,000/- for the scheduled items 1 and 2 in Ext.P3. Therefore, the properties were brought for sale as per the said market value. 10. I have heard the learned counsel for the petitioner, the learned Government Pleader representing the 1[st] respondent and the respective Standing Counsel appearing for respondents 2 and 3. 11. The grievance of the petitioners is that the property provided by the petitioners as secured assets by way of mortgage while availing financial advances, are being W.P.(C) No.31069/2022 : 7 : put to sale by the Bank at throw away price. According to the petitioners, the two properties which are notified for sale as per Ext.P3 were valued at ₹1,65,00,000/- and ₹1,60,00,000/at the time of sanctioning of loan. These properties are now sought to be sold for ₹1,12,50,000/- and ₹1,08,75,000/-. 12. The counter affidavit filed by the 3[rd] respondent would show that before bringing these two properties for sale, the Bank had obtained valuation report from approved valuer. Exts.R3(b) and R3(c) are the valuation reports furnished by approved valuers. Therefore, I do not find any reason to interfere with the sale on the ground of undervaluation of property. 13. The counsel for the petitioners relied on the judgment of this Court in _**Unnikrishnan K.T. v. Authorised Officer, UCO Bank, Ernakulam and others** [2018 (1) KLT 990]_ to contend that secured asset created by borrower in favour of a Bank cannot be disposed of in a casual or light hearted manner. The judgment in _**Unnikrishnan K.T.**_ (supra) was delivered in a context where the borrower had W.P.(C) No.31069/2022 : 8 : came forward with a purchaser who offered reasonable price which would have been sufficient to wipe off the liabilities to the Bank. Therefore, the said judgment cannot be of any avail to the petitioners. 14. As pointed out by the Standing Counsel for the 3[rd] respondent, the Hon’ble Apex Court has held in the judgment in _**South Indian Bank v. Sagar Thomas** [2003 (3) KLT 876]_ that the 3[rd] respondent-South Indian Bank is not an authority of the State and therefore a writ petition under Article 226 of the Constitution of India is not maintainable. Assuming that a writ is maintainable, even then this Court will not exercise its discretionary powers under Article 226, as the petitioners have an efficacious alternate remedy under the Securitisation Act. In the circumstances of the case, I find that the writ petition is without any merit and the same is therefore dismissed. Sd/- **N. NAGARESH, JUDGE** aks/09.01.2024 W.P.(C) No.31069/2022 : 9 : ## **APPENDIX OF WP(C) 31069/2022** ## **PETITIONER'S EXHIBITS** **Exhibit-P1 TRUE COPY OF THE LATEST SANCTION LETTER DATED 15.10.2014 ISSUED BY THE RESPONDENT BANK Exhibit-P2 TRUE COPY OF THE POSSESSION NOTICE DATED 27.04.2016 ISSUED BY THE RESPONDENT BANK Exhibit-P3 TRUE COPY OF THE SALE NOTICE DATED 22.08.2022 ISSUED BY THE FEDERAL BANK** ## **RESPONDENT'S EXHIBITS** **Ext.R3(a) Copy of letter dated 28.09.2017 of the Petitioner Ext.R3(b) Copy of Valuation Report No.DPV/FB36/2022-23 dated 06.07.2022 Ext.R3( c) Copy of Valuation Report No.DPV/FB37/2022-23 dated 06.07.2022** ## **PETITIONER'S EXHIBITS** **Exhibit-P4 TRUE COPY OF THE SALE DEED NO. 503/2019 OF THE KILIKOLLUR SRO DATED 22.03.2019**