R. Anandakrishnan and Sri C. Jayakumar v. UCO Bank, Hilal and Debts Recovery Tribunal-II, Ernakulam

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE N.NAGARESH** **WEDNESDAY, THE 10[TH] DAY OF JANUARY 2024/20TH POUSHA, 1945** **WP(C) NO. 8093 OF 2023** ## **PETITIONERS:** - **1 R.ANANDAKRISHNAN, AGED 58 YEARS S/O. RAJAPPAN ACHARI,LEKSHMI NIVAS, BHATTERIPARAMBU, THIRUVAMPADY P.O., PAZAVEEDU VILLAGE, ALAPPUZHA DISTRICT, PIN – 673582** - **2 SRI.C.JAYAKUMAR., S/O.M.N.CHIDAMBARAM, RESIDING AT PRANAVAM, PARIYARAM MURI, ELATHOOR VILLAGE, PARIYARAM P.O., PATHANAMTHITTA., PIN – 689643** **BY ADVS. MOHAN JACOB GEORGE P.V.PARVATHY (P-41) REENA THOMAS NIGI GEORGE** ## **RESPONDENTS:** - **1 UCO BANK, MALLAPUZHASSERY BRANCH, NELLIKALA P.O., PATHANAMTHITTA-689643 REPRESENTED BY ITS MANAGER.** - **2 SRI.HILAL., S/O. MOOSA KUNJU,AL ZAMAM, EDAVA, THIRUVANANTHAPURAM., PIN – 695310** W.P.(C) No.8093/2023 : 2 : **3 DEBTS RECOVERY TRIBUNAL - II, ERNAKULAM REP. BY ITS RECOVERY OFFICER, 1ST FLOOR, HOUSING BOARD BUILDING, PANAMPILLY NAGAR, ERNAKULAM, KOCHI, PIN – 682036** **BY ADVS. SRI.DEEPAK JOY K., SC, UCO BANK RAJESH NAIR BIJU HARIHARAN** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 10.01.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C) No.8093/2023 : 3 : ## **N. NAGARESH, J.** ````````````````````````````````````````````````````````````` ## W.P.(C) No.8093 of 2023 ````````````````````````````````````````````````````````````` _Dated this the 10[th] day of January, 2024_ ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ The 2[nd] petitioner availed two Cash Credit facilities and a bill purchase facility from the UCO Bank, Mallapuzhassery Branch. The petitioners state that suppressing the repayments made by the petitioners, the Bank filed OA No.363/2012 in the Debts Recovery Tribunal, Ernakulam. The OA was decreed ex-parte in favour of the Bank as per Ext.P2 order dated 02.12.2013. 2. The petitioners state that since the counsel engaged by them had gone abroad and suffered a stroke while in USA, the OA was not properly defended and consequently, an ex-parte order happened to be passed. The petitioners filed an application to set aside the ex-parte order W.P.(C) No.8093/2023 : 4 : with a petition to condone the delay of 118 days. The DRT dismissed the application. OP(DRT) No.150/2017 and W.A. No.473/2018 filed by the petitioners against the order of the DRT were also dismissed, on the ground that the petitioners have to approach the Debts Recovery Appellate Tribunal. 3. In the meanwhile, the 1[st] respondent proceeded with the recovery and sold the property of the petitioners. The petitioners filed Ext.P3 application IA No.115/2022 to set aside the sale. The IA was dismissed as per Ext.P4 order dated 23.12.2022. Though the petitioners made arrangements to file appeal against Ext.P4, appeal could not be filed along with 50% mandatory pre-deposit. 4. The petitioners state that the property of the 1[st] petitioner was sold by the 2[nd] respondent for an amount of ₹26,50,000/-. The property is having an extent of 5 Cents of land with a residential building, wherein the 1[st] petitioner is residing with his family. The petitioners have no other place to go. The petitioners are willing to pay off the 2[nd] respondent giving the amount of ₹26,50,000/- with reasonable interest. W.P.(C) No.8093/2023 : 5 : The petitioners submit that injustice will be caused to them if they are thrown out of the property, since they were not able to contest the case on merits. The petitioners would also urge that the sale is vitiated by material irregularities. 5. The counsel for the petitioners argued that the liability in respect of Cash Credit Account No.12 made by the Bank stood closed even prior to the filing of the OA and the DRT has erroneously granted the Bank a final order in respect of an account which stood closed even prior to the filing of the OA. It is a fraud committed by the Bank. A fraud vitiates all, contended the counsel for the petitioners. The counsel for the petitioners relied on the judgments of the Apex Court in _**Rani Aloka Dudhoria and others v. Goutam Dudhoria and others** [(2009) 13 SCC 569],_ _**Om Prakash Ram v. State of Bihar and others** [(2019) 14 SCC 281]_ and _**State of A.P. and another v. T. Suryachandra Rao** [(2005) 6 SCC 149]_ and submitted that the proceedings initiated by the respondents are liable to be declared null and void in view of the fraud played by the respondents. W.P.(C) No.8093/2023 : 6 : 6. The counsel for the petitioners further urged that sale proclamation was issued on 19.05.2022 proposing to conduct sale on 25.07.2022 by e-auction. The sale was held within four days of notice. This is contrary to the provisions contained in the 2[nd] schedule to Income Tax Rules. According to Rule 55 of the Income Tax Rules, at least 30 days time is to be provided. As the first sale is not in conformity with Rule 55 of the 2[nd] schedule to the Income Tax Rules, the second sale pursuant to the very same sale proclamation is also illegal, contended the counsel for the petitioners. The petitioners relied on the judgment of this Court in _**Rani K.B. v. Federal Bank Limited and others** [2011 KHC 759]_ to urge the point. 7. Ext.P2 is therefore liable to be declared as vitiated on account of the fraud played by the 1[st] respondent. Ext.P4 is to be set aside. The 3[rd] respondent shall be directed not to proceed with the confirmation of Ext.P2 final order, urged the counsel for the petitioners. W.P.(C) No.8093/2023 : 7 : 8. The 1[st] respondent resisted the writ petition filing counter affidavit. The 1[st] respondent submitted that the sale proceedings are complete and the 2[nd] respondent has already handed over with a copy of the sale certificate with reference to the landed property involved in the case. Delivery has not been carried out due to the interim order in this case. The 1[st] respondent categorically denied the allegation made by the petitioners that the cash credit facility was fully repaid by the petitioners. The petitioners were represented in TDRC 1017/2016 and their contentions were also considered. The sale was effected in compliance of statutory requirements. All these contentions were taken up by the 2[nd] petitioner in OP(DRT) No.150/2017 which was dismissed and the dismissal order was confirmed in W.A. No.473/2018. 9. A reading of Ext.P4 order would show that the Tribunal has considered the entire facts and issues and the petitioners were granted sufficient time to repay the loan amount along with interest. The petitioners are not entitled to any of the reliefs sought for in the writ petition, contended the W.P.(C) No.8093/2023 : 8 : ## counsel for the 1[st] respondent. 10. The 2[nd] respondent entered appearance through counsel and resisted the writ petition. The 2[nd] respondent submitted that he is a _bona fide_ purchaser. The sale was conducted following all the procedural requirements. Sale Certificate has been issued to the 2[nd] respondent. The 2[nd] respondent therefore has a legal right to get the property assigned and registered in his name. 11. I have heard the learned counsel for the petitioners, the learned Standing Counsel representing the 1[st] respondent and the learned counsel appearing for the 2[nd] respondent. 12. The petitioners have availed financial assistance in the nature of Cash Credit facility and Bill Purchase facility from the 1[st] respondent-Bank. The fact that maintenance of the cash credit accounts was not proper, was admitted by the petitioners. For recovery of amounts due, the 1[st] respondentBank filed OA No.363/2012. The OA was decreed ex-parte as per Ext.P2 final order on 02.12.2013. W.P.(C) No.8093/2023 : 9 : 13. Though the petitioners filed application to set aside ex-parte order, the DRT dismissed the application. The dismissal was confirmed by the judgments in OP(DRT) No.150/2017 and W.A. No.473/2018 of this Court. In the meanwhile, the 1[st] respondent sold the secured asset provided by the petitioners to the 2[nd] respondent. The petitioners filed Ext.P3 IA No.115/2022 to set aside the sale. The application was rejected as per Ext.P4 order. Ext.P4 order is under challenge in this writ petition. 14. The prime ground of the petitioners is that one of the cash credit facilities was already closed by the petitioners even before the 1[st] respondent has filed OA before the Tribunal. The petitioners further urged that the sale was effected in gross violation of Rule 15 of the Schedule to the Income Tax Rules, inasmuch as the sale was without giving the mandatory 30 days notice. 15. It is to be noted that the OA No.363/12 was filed on 24.07.2012 and the CC account No.12 was closed only on 08.08.2013. This is evident from Ext.P1 statement of account W.P.(C) No.8093/2023 : 10 : wherein it has been specifically stated that the petitioner's account has been closed on 08.08.2013. Therefore, the allegation of the petitioner that the Bank has committed a fraud is unacceptable. 16. The 1[st] petitioner admittedly stood as a guarantor for the account CC No.137. The 1[st] petitioner has executed a letter of guaranty. The Cash Credit facility was enhanced to ₹8 lakhs on 31.05.2005. The letter of guaranty given by the 1[st] petitioner was marked as Annexure-A51 in the final order of the Debts Recovery Tribunal. The 1[st] petitioner has undertaken to pay and discharge all present and future indebtedness and liabilities. Therefore, the Bank is entitled to proceed against the petitioner's property. 17. The petitioners have a further case that the 1[st] petitioner was not a guarantor for the Bill Purchase facility. The petitioners advanced the said argument before the Debts Recovery Tribunal in SA No.13/2008. The said contention of the petitioners was considered and rejected by the DRT as can be seen from Ext.R1(f). The petitioners have not filed any W.P.(C) No.8093/2023 : 11 : appeal against the said order of the DRT. 18. As regards the argument of the petitioners based on the second schedule to the Income Tax Rules, it is evident from the Rule itself that only 30 days period from the date on which a copy of the proclamation of sale is required. In this case, the proclamation of sale was issued on 19.05.2022 with date of sale 25.07.2022. Paper publication was made on 11.06.2022 and affixture on the property was made on 14.06.2022. The sale was adjourned to 24.08.2022 as there were no bidders on 25.07.2022. In view of the afore facts, I do not find that there is any violation of the provisions contained in the second schedule to the Income Tax Rules. Rule 55 thereof has been satisfied. In the facts of the case, the writ petition filed by the petitioner is without any merit. The writ petition is therefore dismissed. Sd/- **N. NAGARESH, JUDGE** aks/09.01.2024 W.P.(C) No.8093/2023 ## : 12 : ## **APPENDIX OF WP(C) 8093/2023** ## **PETITIONER'S EXHIBITS** **Exhibit P-1 COPY OF THE ACCOUNT STATEMENT ISSUED BY THE 1ST RESPONDENT BANK IN RESPECT OF CASH CREDIT A/C NO.12 Exhibit P-2 COPY OF THE FINAL ORDER DATED 02.12.2013 PASSED BY THE DRT IN OA NO.363/2012 Exhibit P-3 COPY OF IA NO.115/2022 FILED IN DRC NO.462 IN OA 363/2012 Exhibit P-4 COPY OF ORDER DATED 23.12.2022 PASSED IN EXT.P-3 Exhibit P-5 STATEMENT OF ACCOUNTS PRODUCED BY THE 1ST RESPONDENT BEFORE THE DRT IN O.A. NO.363/2012 WITH RESPECT TO CASH CREDIT ACCOUNT NO.137 Exhibit P-6 STATEMENT SHOWING THAT A TOTAL AMOUNT OF 5,60,302.50 HAS BEEN DEBITED INTO THE CASH CREDIT ACCOUNT NO.137 AS INTEREST ON BILL PURCHASE FACILITY Exhibit P-7 COPY OF THE JUDGEMENT DATED 17/12/2021 IN W.P.( C ) NO.21144 OF 2021** ## **RESPONDENT'S EXHIBITS** **Exhibit R1(A) The true copy of the Sale Certificate No 742/2023, Dt 27.02.2023, of Pathanamthitta SRO with typed copy of the same.** ## **PETITIONER'S EXHIBITS** **Exhibit P-8 Copy of letter dated 02.11.2023 of the "The Vakayar Service Co.Operative Bank Limited" stating that the cheques issued from the account of the Petitioner has been encashed by the 1st Respondent Bank** W.P.(C) No.8093/2023 ## : 13 : **Ext.P-9 Copy of statement of accounts of "The Vakayar Service Co.Operative Bank Limited" evidencing the corresponding debit entries** **Ext.P-10 Statement showing the date of cheque, the date of credit in C.C.12 and the amounts credited in the account Ext.P-11 Copy of the letter dated 31.10.2023 containing the endorsement of the Manager of the 1st Respondent Bank** ## **RESPONDENT'S EXHIBITS** **Exhibit R1(b) True copy of the judgement of this Hon'ble Court, dated 11/12/2021 in WP© 21144/21 Exhibit R1(c) True copy of the SA No. 456/2022 filed by the petitioner before the DRT-2, Ernakulam dated 4.9.2022 Exhibit R1(d) True copy of the order dated 07.08.2023 in SA 456/22 before the DRT 2 Ernakulam Exhibit R1(E) THE TRUE COPY OF THE FORM 21 A LETTER OF GUARANTEE DATED 31.05.05, EXECUTED BY ANANTHAKRISHNAN AND CHITHAMBARAM Exhibit R1(F) TRUE COPY OF THE ORDER DATED 12.09.2019, IN TSA 21/2016 (SA 13/2008), PASSED BY DRT-2, ERNAKULAM Exhibit R1(G) TRUE COPY OF THE JUDGMENT IN OP(DRT) 150/2017, DATED 17.01.2018, OF THE HIGH COURT OF KERALA Exhibit R1(H) TRUE COPY OF THE JUDGMENT IN WA 473/2018 DATED 23.02.2018 OF THE HIGH COURT OF KERALA**