O. Sainulabdeen v. Kerala Financial Corporation

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: A.M. Shaffique
Judgment Date: 2012-07-10
Court Decision / Holding: Writ petition dismissed; sale upheld; no interference with the sale; no mala fides found; the court notes that Supreme Court auction guidelines were issued after the sale and were not applicable to this case.
Final Disposition: Dismissed

Parties to the Case

Appellants / Petitioners

O. Sainulabdeen

Respondents

Kerala Financial Corporation
District Manager, Kerala Financial Corporation, Kollam
Deputy Tahsildar (RR), Kerala Financial Corporation, Kollam
Sajida Bindumir Sahib
Vigilance Officer, Kerala Financial Corporation, Head Office

Legal Representation & Advocates

Counsels for Petitioners

• Sri. T.M. Abdul Latheef

Counsels for Respondents

• Sri A.A. Abdul Hassan, SC
• Government Pleader Sri P.K. Abdul Rahman
• Sri R. Sunil Kumar
• Smt. A. Salini Lal

Case Synopsis & Summary

This writ petition challenges a sale of the petitioner's property by the Kerala Financial Corporation under Section 29 of the State Financial Corporation Act following the petitioner's default. The petitioner contends that the sale process was defective: there was no proper publication, no reasonable price fixed, and the sale was conducted without a public auction, which was allegedly required by Supreme Court guidelines. He relies on K.F.C v. Vincent Paul & Another (2011) to argue that auction norms must be strictly followed, and points to Ext. P4 showing the notification ostensibly mandating a public auction. The respondents counter that this was the eleventh sale proclamation; the property had already been taken over by KFC, with tenders invited on several occasions. Only one bid of Rs. 3,00,000 was received, later negotiated to Rs. 3,90,000, and no other bidders appeared, suggesting a market-conform outcome. They contend the price represented the maximum recoverable amount, that fair value for the land was low (Rs. 20,000 per ares) and that the Supreme Court guidelines cited were issued after the sale. The court, after considering the circumstances, found no mala fides or illegality, and dismissed the petition, upholding the sale."

Provisions of Law Cited

Section 29 of the State Financial Corporation Act

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner contends that sale of his property by the Kerala Financial Corporation under Section 29 is vitiated by irregularities. He argues there was no proper publication and no reasonable price fixed, resulting in a distress sale of valuable property for a meager amount. Ext. P4 suggests a public auction was required in addition to tenders, and he relies on K.F.C v. Vincent Paul & Another to urge strict tender/auction norms. He cites Ext. P15 showing another sale where publication defects led to set-aside. He seeks setting aside of the sale and, if possible, a vigilance inquiry.

Contentions of Respondents

The respondents argue that the sale followed due process after the property was taken over under Section 29. Ext. P4 shows tenders called and a possible public auction; however, given eleven proclamations, only one bid (Rs. 3,00,000) was received, later raised to Rs. 3,90,000, with no other bidders. They contend the amount was the maximum obtainable and that the fair value (Rs. 20,000 per are) was a different benchmark. They emphasize that the Supreme Court guidelines were issued after the sale and thus not retroactively applicable. The 4th respondent’s counsel adds there was no mala fides. Overall, they submit there was no illegality and no interference warranted.

Cited Precedents (2)

Case Name	Citation	Treatment	Explanation
K.F.C v. Vincent Paul & Another	2011(4) SCC 171	Mentioned Only	Cited by petitioner to argue for stricter auction norms; court notes guidelines were issued after the sale and did not treat Vincent Paul as controlling in this case.
Punjab Financial Corporation v. Surya Auto Industries	(2010) 1 SCC 297	Positive	Cited to illustrate creditor–debtor relationship and to justify caution against interference with recovery proceedings.

Extracted Judgment Text

Exact text extracted from official judgment records.

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE TUESDAY, THE 10TH DAY OF JULY 2012/19TH ASHADHA 1934 WP(C).No. 30242 of 2009 (A) --------------------------- PETITIONER : ------------ O.SAINULABDEEN, AGED 54 YEARS, S/O.USMAN RAWTHER, KUNJUMARAKKAR VEEDU, MACHALLOOR MURI, PATHANAPURAM. BY ADV. SRI.T.M.ABDUL LATHEEF RESPONDENT(S): -------------- 1. KERALA FINANCIAL CORPORATION, REPRESENTED BY ITS MANAGING DIRECTOR, THIRUVANANTHAPURAM. 2. DISTRICT MANAGER, KERALA FINANCIAL CORPORATION, KOLLAM. 3. DEPUTY TAHSILDAR (RR), KERALA FINANCIAL CORPORATION, KOLLAM. 4. SAJIDA BINDUMIR SAHIB, D/O.R.MEERA SAHIB, "DARUSSALAM", HOUSE NO.PP.XII/264, MANCHALLOOR MURI, KUNDAYAM P.O., PATHANAPURAM-689 695. 5. THE VIGILANCE OFFICER, KERALA FINANCIAL CORPORATION, HEAD OFFICE, THIRUVANANTHAPURAM. R1, R2 & R5 BY ADV. SRI.A.A.ABUL HASSAN,SC, KFC R3 BY GOVERNMENT PLEADER SRI.P.K.ABDUL RAHMAN BY ADV. SRI.MILLU DANDAPANI R4 BY ADVS. SRI. R.SUNIL KUMAR SMT.A.SALINI LAL WP(C).No. 30242 of 2009 (A) THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 10-07-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: DSV/- ## WP(C).No. 30242 of 2009 (A) ## APPENDIX ## PETITIONER'S EXHIBITS: - P1 COPY OF THE ENCUMBRANCE CERTIFICATE DATED 11.3.1987 - P2 COPY OF THE ENCUMBRANCE CERTIFICATE DATED 31.12.1990 - P3 COPY OF THE LETTER NO.RTI/0394/315/09 DATED 17.6.2008 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER - P4 COPY OF THE NOTIFICATION APPEARED IN MATHRUBHUMI DAILY DATED 7/12/2008. - P5 COPY OF THE LETTER NO.KFC/KLM/299/2008 DATED 22.12.2008 ISSUED TO THE PETITIONER BY THE CHIEF MANAGER, K.F.C., KOLLAM - P6 COPY OF THE LETTER NO.REC/10003941/266/2009 DATED 5.6.2009 ISSUED TO THE PETITIONER BY THE CHIEF MANAGER, K.F.C., KOLLAM. - P7 COPY OF THE PETITION DATED 5.1.2009 SUBMITTED BY THE PETITIONER BEFORE THE CHIEF MANAGER, K.F.C., KOLLAM. - P8 COPY OF THE PETITION DATED 13/1/2009 SUBMITTED BY THE FIRST RESPONDENT, WITH THE ENDORSEMENT OF THE FIRST RESPONDENT. - P9 COPY OF THE STATEMENT PREPARED BY THE 4TH RESPONDENT DATED NIL. - P10 COPY OF THE PETITION DATED 17.5.2009 SUBMITTED BY THE PETITIONER BEFORE THE HON'BLE CHIEF MINISTER OF KERALA. - P11 COPY OF THE DOCUMENT NO.292 OF 2009 DATED 26.2.2009. - P12 COPY OF THE NOTICE NO.VO/KFC/44/09/2661/09 DATED 4.8.2009 ISSUED BY THE 5TH RESPONDENT TO THE PETITIONER. - P13 COPY OF THE PETITION DATED 9.6.2009 SUBMITTED BY THE PETITIONER BEFORE THE HON'BLE HOME MINISTER OF KERALA. - P14 COPY OF THE JUDGMENT DATED 11.7.2007 PASSED BY THE SUB COURT, KOTTARAKKARA IN CMA.28/2003. WP(C).No. 30242 of 2009 (A) ## RESPONDENTS' EXHIBITS: R4(A) COPY OF THE LETTER ISSUED BY THE 1ST RESPONDENT DATED 3.1.2009 R4(B) COPY OF THE GAZETTE NOTIFICATION OF FAIR VALUE DATED 10.3.2010 R4(C) COPY OF THE TAX RECEIPT /TRUE COPY/ P.A.TO JUDGE DSV/- ## **A.M.SHAFFIQUE, J. * * * * * * * * * * * * *** W.P.C.No.30242 of 2009 ---------------------------------------Dated this the 10[th] day of July 2012 ## **J U D G M E N T** The petitioner is admittedly a defaulter whose property was taken over by Kerala Financial Corporation (KFC) under Section 29 of the State Financial Corporation Act and the property was proclaimed for sale. It is submitted that the property has been purchased by way of tender by the 4[th] respondent. .2. Petitioner challenges the sale mainly on the ground that there was no proper publication and no reasonable price was fixed in respect of the property. According to him, a highly valuable property has been sold for a meager amount and that too, without conducting a public auction which has to be done as per the guidelines issued by the Supreme Court. Learned counsel also referred to the judgment of the Supreme Court in **K.F.C v. Vincent Paul & Another [2011(4) SCC 171]** to contend that none of the guidelines prescribed by the Supreme Court in paragraph 20 and 21 of the judgment has been applied by KFC in conducting the sale. It is argued by the learned counsel for the petitioner relying upon Ext.P4 notification that no 2 W.P.C.No.30242/09 public auction was conducted in pursuance of the said notification. In fact, as per Ext.P4, in addition to calling for tenders, a public auction was also required to be conducted. 3. The learned counsel also refers to Ext.P15 to indicate that in respect of sale of another property, revenue recovery authorities themselves had set aside the sale when it was found that there was no proper publication. 4. KFC as well as 4[th] respondent have filed separate counter affidavits. It is contended by the learned counsel for KFC that this was the eleventh time that the property was proclaimed for sale which could be seen from Ext.P5. The property was taken over by KFC long back and according to KFC, the property was valued at Rs.4,45,000/- and tenders were invited on several occasions. As per Ext.P4 notification, only one tender was received which was submitted by the 4[th] respondent for an amount of Rs.3,00,000/-. This was later on negotiated and the amount was arrived at Rs.3,90,000/-. It is contended that in so far as there were no other bidders at that time, a public auction was not possible. It is therefore contended by KFC that the amount offered by the 4[th] respondent was the maximum W.P.C.No.30242/09 3 amount that could be made available as far as this property is concerned. Therefore, according to them, there is no reason to set aside the sale as contended by learned counsel for the petitioner. 5. Learned counsel for the 4[th] respondent further contended that as far as the property is concerned, the maximum value has been paid. It is also stated that the fair value fixed for 1 are of property at the relevant time was Rs.20,000/-. He has already paid almost three times the fair value fixed by the Government. The counsel also referred to the judgment of the Supreme Court in **Punjab Financial Corporation v. Surya Auto Industries [(2010) 1 SCC 297]** in order to contend that the relationship between the Corporation and borrower is that of creditor and debtor. In a case where the Corporation had granted loan to the petitioner and when recovery proceedings are taken the court should be slow in preventing such recovery unless the circumstances so warranted. 6. Taking into consideration the aforesaid facts, I feel that the request for setting aside the sale on the ground of irregularity or foul play or corruption is not justified under the W.P.C.No.30242/09 4 facts and circumstances of the case. The petitioner has a further request for referring the matter for Vigilance enquiry. I do not think that there is any material to indicate any mala fides in the writ petition. The property had been proclaimed for sale on several occasions and it is at a very late stage as seen from Exts.P4 and P5 that the property could be sold and at least one buyer was available for purchase of the said property. Public auction was not conducted as there were no bidders. It is seen that Ext.P4 advertisement was the eleventh time the property was advertised for sale. If there is only one bidder, KFC cannot be faulted with, especially in respect of a distress sale. The guidelines of the Supreme Court came to be published only after the sale in this case. Such being the position, I do not find any illegality in the conduct of sale. 7. In that view of the matter, I do not think that any interference is required as far as the sale of the property is concerned. Accordingly the writ petition is dismissed. (sd/-) ## **(A.M.SHAFFIQUE, JUDGE)** jsr W.P.C.No.30242/09 5 W.P.C.No.30242/09 6 W.P.C.No.30242/09 7