W.P.(C).No.13064/2009 (C) and connected cases - A.N. Ponnappan vs Kerala Financial Corporation

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** ## **THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE** **MONDAY, THE 15TH DAY OF JULY 2013/24TH ASHADHA, 1935** ## **WP(C).No. 13064 of 2009 (C)** **----------------------------------------** **PETITIONER:** - **-------------------** **A.N.PONNAPPAN, AGED 55, S/O. NARAYANAN, ANCHAPARAYIL HOUSE, S.N.JUNCTION, KATTAPPANA, IDUKKI DISTRICT.** ## **BY ADV. SRI.C. VARGHESE KURIAKOSE.** **RESPONDENTS:** **------------------------** **1. KERALA FINANCIAL CORPORATION, HEAD OFFICE, VELLAYAMBALAM, TRIVANDRUM, REP.BY ITS MANAGING DIRECTOR.** **2. THE BRANCH MANAGER, KERALA FINANCIAL CORPORATION, KATTAPPANA, IDUKKI DISTRICT.** ## ***ADDL. R3. TO R6 IMPLEADED:** **3. THE DEPUTY TAHASILDAR (RR), O/O. THE DEPUTY TAHASILDAR (RR), KERALA FINANCIAL CORPORATION, KATTAPPANA.** **4. THE DEPUTY COLLECTOR (RR), KERALA FINANCIAL CORPORATION, VELLAYAMBALAM, TRIVANDRUM.** **5. THE DISTRICT COLLECTOR, IDUKKI, CIVIL STATION, PAINAVU, IDUKKI DISTRICT.** **Prv.** ## **W.P.(C).NO.13064/2009-C:** **6. PRINCE JOSEPH, S/O. JOSEPH, MOOLACHALIL HOUSE, KAMAKSHI.P.O., IDUKKI DISTRICT.** ***ADDL. R3 TO R6 ARE IMPLEADED VIDE ORDER DT. 11/03/11 IN I.A. NO.878/2011.** **R1 & R2 BY SRI.M.M.SAYED MUHAMMED, S.C, K.F.C,** **SRI.T.V.GEORGE, S.C, K.F.C,** **R3 TO R5 BY SR. GOVERNMENT PLEADER SRI. RAMPRASAD UNNI, ADDL R6 BY ADV. SRI.GEORGEKUTTY MATHEW.** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 04-02-2013, ALONG WITH W.P.(C).NO.13065/2009 AND CONNECTED CASES, THE COURT ON 15-07-2013 DELIVERED THE FOLLOWING:** **Prv.** ## **W.P.(C).NO.13064/2009-C:** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** - **EXT.P.1: COPY OF THE JUDGEMENT IN W.P.(C).NO.14954/2006 DTD. 16/10/2006 PASSED BY THIS HON'BLE COURT.** - **EXT.P.2: COPY OF THE JUDGMENT IN W.A. NO.206/2007 DTD. 25/05/2007 PASSED BY THIS HON'BLE COURT.** - **EXT.P.3: COPY OF THE COMMON ORDER IN CIVIL APPEAL NOS. 4904/2008 AND 4905/2008.** - **EXT.P.4: COPY OF THE REPRESENTATION REQUEST DTD. 16/08/2008.** - **EXT.P.5: COPY OF THE ACKNOWLEDGMENT CARD SIGNED BY RESPONDENTS 1 AND 2.** - **EXT.P.6: COPY OF THE NOTICE DTD. 10/09/2009 THROUGH THE DEPUTY TAHSILDAR (RR), K.F.C, KATTAPPANA SEEKING TO ATTACH PROPERTY BELONGING TO THE PETITIONER.** - **EXT.P.7: COPY OF THE OBJECTION PREFERRED BY THE PETITIONER TO THE DEPUTY TAHSILDAR.** - **EXT.P.8: COPY OF THE APPLICATION SO PREFERRED BEFORE THE DISTRICT COLLECTOR, IDUKKI.** - **EXT.P.9: COPY OF THE PETITION PREFERRED BY THE PETITIONER BEFORE THE DEPUTY COLLECTOR, REVENUE RECOVERY, KFC.** - **EXT.P.10: COPY OF THE ACKNOWLEDGMENT CARD SIGNED FROM THE COLLECTORATE, IDUKKI.** - **EXT.P.11: COPY OF THE ACKNOWLEDGMENT CARD SIGNED BY THE DEPUTY COLLECTOR, K.F.C. ON 10/01/2011.** - **EXT.P.12: COPY OF THE LETTER DTD. 06/01/2011 ISSUED BY THOMAS, S/O. FRANCIS, KILLIYOOR HOUSE, PULIYANMALA, KATTAPPANA TO THE PETITIONER.** - **EXT.P.13: COPY OF THE ORDER DTD. 24/09/2011 HAS SET ASIDE THE SALE.** - **EXT.P.14: COPY OF THE ORDER DTD. 14/08/2012 BY LAND REVENUE COMMISSIONER.** - **EXT.P.15: COPY OF THE INFORMATION RECEIVED BY THE PETITIONER FROM THE LAND REVENUE DEPARTMENT DTD. 12/10/2012.** ## **RESPONDENTS' EXHIBITS:** **EXT.R1.A: COPY OF THE SALE NOTICE DTD. 19/08/2010 UNDER SECTION 49 (2) OF THE REVENUE RECOVERY ACT WHICH WAS SERVED ON THE PETITIONER.** **Prv.** ## **W.P.(C).NO.13064/2009-C:** |**EXT.R1.B:**|**COPY OF THE NOTICE PUBLISHED IN THE VILLAGE OFFICE,**| |---|---| ||**KATTAPPANA WITH THE ENDORSEMENT OF THE VILLAGE OFFICER.**| |**EXT.R1.C:**|**COPY OF THE NOTICE PUBLISHED IN THE NOTICE BOARD OF THE**| ||**KATTAPPANA GRAMA PANCHAYATH WITH THE ENDORSEMENT OF THE**| ||**PANCHAYATH AUTHORITIES.**| |**EXT.R1.D:**|**COPY OF THE NOTICE PUBLISHED IN THE TALUK OFFICE,**| ||**UDUMBANCHOLA WITH THE ENDORSEMENT OF THE**| ||**DEPUTY TAHSILDAR.**| |**EXT.R1.E:**|**COPY OF THE NOTICE PUBLISHED IN THE SITE WITH THE**| ||**ENDORSEMENT OF THE VILLAGE OFFICER.**| |**EXT.R1.F:**|**COPY OF THE LIST OF PARTICIPANTS IN THE AUCTION HELD**| ||**ON 01/10/2010.**| |**EXT.R1.G:**|**COPY OF THE MAHAZER DTD. 01/10/2010 REGARDING THE**| ||**ADJOURNMENT OF THE SALE.**| |**EXT.R1.H:**|**COPY OF THE NOTICE DTD. 03/11/2010 FOR SALE OF PROPERTY**| ||**ON 25/11/2010 WHICH WAS PERSONALLY SERVED ON THE**| ||**PETITIONER.**| |**EXT.R1.I:**|**COPY OF THE NOTICE DTD. 03/11/2010 FOR SALE OF PROPERTY**| ||**ON 25/11/2010 RECEIVED BY SRI. RINTO JOSEPH ON BEHALF OF SMT.**| ||**CLARAMMA JOSEPH AND MR. JOSEPH.**| |**EXT.R1.J:**|**COPY OF THE NOTICE DTD. 03/11/2010 PUBLISHED IN THE BOARD OF**| ||**THE KATTAPPANA GRAMA PANCHAYAT WITH ENDORSEMENT OF THE**| ||**SECRETARY.**| |**EXT.R1.K:**|**COPY OF THE NOTICE DTD. 03/11/2010 SERVED TO VILLAGE OFFICE.**| |**EXT.R1.L:**|**COPY OF THE NOTICE DTD. 03/11/2010 PUBLISHED IN THE SITE.**| |**EXT.R6.A:**|**COPY OF THE REQUISITION LETTER DTD. 19/11/2003 SENT BY THE**| ||**R.2. TO THE DISTRICT COLLECTOR.**| |**EXT.R6.B:**|**COPY OF THE CERTIFICATE ALONG WITH THE LETTER SENT BY THE**| ||**DISTRICT COLLECTOR TO ADDITIONAL R.3. DTD. 19/12/2003.**| |**EXT.R6.C:**|**COPY OF THE DEMAND NOTICE ISSUED BY THE ADDITIONAL R.3. TO**| ||**THE PETITIONER DTD. 15/01/2004.**| |**EXT.R6.D:**|**COPY OF THE LETTER DTD. 09/09/2009 ISSUED BY THE R.2. TO ADDL.**| ||**R.3.**| |**EXT.R6.E:**|**COPY OF THE NOTICE ISSUED BY THE ADDITIONAL R.3. TO THE**| ||**PETITIONER DTD. 10/09/2009.**| **Prv. W.P.(C).NO.13064/2009-C:** **EXT.R6.F: COPY OF THE SALE NOTICE ISSUED BY THE ADDITIONAL R.3. TO THE PETITIONER DTD. 19/08/2010. EXT.R6.G: COPY OF THE RECEIPT REMITTED BY THE RESPONDENT DTD. 25/11/2010. EXT.R6.H: COPY OF THE RECEIPT REMITTED BY THE RESPONDENT DTD. 22/12/2010. EXT.R6.I: COPY OF THE PURCHASE BILL DTD. 18/11/2010 ISSUED BY KAMACHI TRADERS, THEVARAM, TAMIL NADU. EXT.R6.J: COPY OF THE PURCHASE BILL DTD. 15/12/2010 ISSUED BY KAMACHI TRADERS, THEVARAM, TAMIL NADU. EXT.R6.K: COPY OF THE PRINT OUT TAKEN FROM THE WEB SITE OF THE SPICES BOARD ON 1ST NOVEMBER 2010 TO 31ST JANUARY 2011.** ## **//TRUE COPY//** ## **P.A. TO JUDGE.** **Prv.** ## **A.M.SHAFFIQUE, J** ## *** * * * * * * * * * * * *** W.P.C.Nos.13064 of 2009, 13065 of 2009, 38457 of 2010 and 25911 of 2011 ---------------------------------------Dated this the 15[th] day of July 2013 ## **J U D G M E N T** W.P.C.Nos.13064 of 2009, 38457 of 2010 and 25911 of 2011 relates to property having an extent of 83.20 ares in Sy.No.57/6/3 and 57/7/2 of Kattappana village. 2. W.P.C.No.13065 of 2009 relates to the property having an extent of 15 cents in Sy.No.67/1/2 of Kattappana village along with the residential building bearing Door No.KP 5/284. 3. Smt.Claramma Joseph had taken certain loan from Kerala Financial Corporation (for short KFC). The petitioners in W.P.C.No.13064 of 2009 and 13065 of 2009 were guarantors who mortgaged their properties in favour of KFC as collateral security. The properties were taken over by KFC in exercise of their power under Section 29 of the State Financial Corporation Act, 1951 (hereinafter referred as SFC W.P.C.No.13064 of 2009 & connected cases 2 Act) on 28/03/2002. 15 cents of property was sold by KFC in auction on 05/10/2005 and the 3[rd] respondent in W.P.C.No.13065 of 2009 is the auction purchaser. Registered sale deed was executed in favour of the auction purchaser on 04/01/2006. 4. The guarantors filed writ petitions challenging the action of KFC in invoking Section 29 of the SFC Act in respect of property belonging to the guarantors. Though the writ petition was dismissed by this court and the judgment was confirmed by the Division Bench of this court, when the matter was taken up before the Supreme Court in SLP Nos.2564-2565 of 2008, the Supreme Court allowed the appeal. The judgment of the Supreme Court is reported as **Karnataka State Financial Corporation v. N.Narasimahaiah and Others** in [(2008) 5 SCC 176]. 5. According to the petitioner in WPC No.13065 of 2009, since the Supreme Court had allowed the Special Leave Petition and declared the law with reference to the W.P.C.No.13064 of 2009 & connected cases 3 right of the State Financial Corporation to invoke Section 29 of the SFC Act in respect of the property held by the guarantor, and that principle is applied to the petitioner's case, the invocation of Section 29 had become bad in law and therefore the consequent sale becomes a nullity in the eye of law. 6. As far as W.P.C.No.13064 of 2009 is concerned the property was not sold at the relevant point of time when the Supreme Court had decided the case. 7. The relief sought for in the writ petition filed by the guarantors is to restore possession of the property which according to them has not been done so far. 8. W.P.C No.38457 of 2010 is filed by a person claiming to have right in respect of the property mortgaged by the petitioner in W.P.C No.13064 of 2009. According to her, she had filed a suit for partition of the said property and there was an injunction restraining the respondents including KFC, from conducting the auction of the property, W.P.C.No.13064 of 2009 & connected cases 4 but despite the said order the sale is held. Hence the writ petition is filed to set aside the sale effected by KFC. 9. W.P.C No.25911 of 2011 is filed by the auction purchaser in respect of 83.20 ares of land belonging to the petitioner in W.P.C No.13064 of 2009. The relief sought for is for a direction to the respondent KFC to complete the proceedings of the auction sale of the property. 10. Counter affidavit is filed by respondents 1 to 3 and additional 6[th] respondent in W.P.C No.13064 of 2009. KFC inter alia contended that after the declaration of law by Supreme Court the balance amount due in the concerned loan account as on 01/02/2010 is Rs.111.25 lakhs. On the basis of the judgment of the Supreme Court Section 29 proceedings against the property were withdrawn and proceedings were taken under the Revenue Recovery Act. Property was attached as per notice dated 10/09/2009. The sale was held through the revenue authorities. The property was put for sale on 25/11/2010. Five persons participated W.P.C.No.13064 of 2009 & connected cases 5 in the auction sale and petitioner in W.P.C No.25911 of 2011 was the highest bidder who had quoted Rs.50,35,000/- He had deposited the entire amount. According to them, revenue sale has been conducted after complying with all procedural formalities and is evident from Exts.R1(A) to R1 (L). 11. In the counter affidavit of the 3[rd] respondent in W.P.C.No.13065 of 2009, it is inter alia indicated that after the sale was conducted though the petitioner had an opportunity to seek for setting aside the sale within the time limit, they did not take any action and therefore the sale is required to be confirmed. It is stated that as far as the revenue authorities are concerned, there was no prohibitory order either from the High Court or any other court and therefore the sale proceedings is valid in law. Additional 6[th] respondent is the auction purchaser who supported the action taken by the Government in effecting sale of the property and also has filed a separate writ petition to finalise W.P.C.No.13064 of 2009 & connected cases 6 the proceedings in accordance with law. 12. Counter affidavit is filed by KFC as well as the auction purchaser, 3[rd] respondent in WPC No.13065 of 2009. According to KFC though the Supreme Court had declared the law on the point with reference to the judgment in **Karnataka State Financial Corporation** (Supra), no directions had been issued as prayed for to set aside the sale conducted in favour of the auction purchaser. Therefore, according to KFC, in the absence of any such direction the auction held on 05/10/2005 still holds good. According to them in so far as possession had been handed over to the auction purchaser on the basis of an auction held as early as on October 2005 and sale deed had been executed in accordance with the procedure prescribed and hence possession cannot be restored to the petitioner. This factual difference, in comparison to the other writ petition, was not brought to the notice of the Supreme Court during the relevant time, and the Supreme Court has not given any W.P.C.No.13064 of 2009 & connected cases 7 specific direction in that regard. The contention of KFC is that the relief in the writ petition cannot be granted. 13. The 3[rd] respondent in the counter affidavit while supporting the stand taken by the KFC further contends that the aforesaid 15 cents of land along with other properties belonging to the principal debtor having an extent of 39 cents in Sy.No.67/1-2 was purchased as a single plot and there was no demarcation between the said two items of property. According to them, the property having an extent of 15 cents when identified on the basis of the documents it is clear that the residential building is not situated in the said 15 cents of property. According to the 3[rd] respondent Ext.R3(a) is the sale deed under which Smt.Claramma Joseph purchased the property. She conveyed 10 cents in favour of the petitioner as per sale deed No.307 of 1988 as per Ext.R3(b). The description in the sale deed shows that aforesaid 10 cents is on the south western corner. A further 5 cents was sold in favour of the petitioner as per sale deed W.P.C.No.13064 of 2009 & connected cases 8 dated 2409/1996 as per Ext.R3(c). The description of the property would show that the aforesaid 5 cents is after excluding the 10 cents already sold and from the balance 45 cents on the western side of 45 cents in North-South direction. According to the third respondent the said two items of properties obtained by the petitioner are lying contiguously forming a single plot. They have produced a plan as Ext.R3(d). From the description of the boundaries in Ext.R3(b), western boundary is shown as road and the northern boundary is shown as kochukudiyil purayidam. Apparently the description of property in Ext.R3(d) is the description of the entire property of 55 cents and it is on the south western end. The description of the property n Ext.R3 (c) is stated as, within the boundaries specified therein and the boundaries of the 5 cents in the east is shown as balance property, in the South as Kochukudiyil purayidam, in the West as 10 cents of property and on the North as balance extent of land. Therefore, according to the third W.P.C.No.13064 of 2009 & connected cases 9 respondent, in so far as the 15 cents is on the south western end of the entire 55 cents, and since the building is situated after excluding the said 15 cents, even assuming for the sake argument that he is entitled for restoring possession, the said land alone can be taken possession. 14. A reply affidavit is filed by the petitioner placing reliance on Exts.P8 to P12. The petitioner has produced a plan prepared by the Village Officer to show the 15 cents of property in Sy.No.37/1. He also relies upon Ext.P8 proceedings of the Special Grade Secretary permitting him to construct a building, Ext.P9 is the completion certificate, Ext.P10 is the return submitted for assessment of building tax, Ext.P11 is the site plan of the building, Ext.P12 is the Village Officer's plan and Ext.P13 is the location sketch in respect of 15.75 ares. 15. Heard learned counsel for the petitioners, Learned Government Pleader and the learned counsel appearing for the auction purchasers in both cases. W.P.C.No.13064 of 2009 & connected cases 10 16. It is argued by the learned counsel appearing for KFC relying upon judgments in **Jank Raj v. Gurdial Singh and Another** [AIR 1967 SC 608] and **Mahesh Chandra v. Regional Manager, U.P.Financial Corporation** [AIR 1993 SC 935] that without setting aside the sale, third party rights cannot be interfered. It is relevant to note that the auction purchaser was a party to the proceedings before this Court and he is governed by the judgment of the Supreme Court. Supreme Court has declared the law relating to invocation of power under Section 29 of SFC Act. When the law is declared in a dispute between the parties, the consequences will automatically flow. In fact, KFC was bound to restore possession of the property to the petitioner and take further proceedings immediately. The delay on the part of KFC would further delay recovery of the amount legally due to them. Therefore according to me the judgments relied upon by KFC has no relevance to the factual circumstances involved in the case. W.P.C.No.13064 of 2009 & connected cases 11 17. As far as W.P.C.No.13064 of 2009 is concerned, it is basically connected with W.P.C.Nos.38457 of 2010 and 25911 of 2011. This is a case in which after the judgment of the Supreme Court in SLP No.4904 of 2008, KFC had initiated revenue recovery proceedings as evident from Exts.R1(A) to R1(L). The contention urged by the petitioner is that though applications were filed for setting aside the sale held on 25/11/2010, the same has not been considered so far. Whereas according to the revenue department, no such application is filed within the specified period. Apparently, Ext.P8 application is filed only on 04/01/2011 when the sale is held on 25/11/2010 that is after 30 days from the date of sale. Hence there is no requirement for the revenue authorities to consider the said application. However, it is open for the District Collector who is the authority to confirm sale to consider whether the sale is required to be set aside for any other reason if the sale is not confirmed so far. W.P.C.No.13064 of 2009 & connected cases 12 18. The contention of the petitioner in W.P.C No.35487 of 2010 is totally unsustainable. There was no interim direction against the revenue authorities whereas the injunction order Ext.P5 dated 25/11/2010 is issued only against KFC. It is Relevant to note that sale was held on 25/11/2010. There was no material to indicate that the order has been served on the revenue authorities. Such being the position, I do not find any illegality in the conduct of the sale by the revenue authorities. 19. As far as the auction purchaser is concerned there is no material to show that the sale has been confirmed by the District Collector in terms of Section 54 of the Kerala Revenue Recovery Act. Having regard to the facts and circumstances involved in the case I do not find any reason to delay the matter further. 20. In respect of W.P.C.No.13065 of 2009 when the law is declared by Supreme Court the whole action initiated by KFC invoking Section 29 of the SFC Act becomes a nullity W.P.C.No.13064 of 2009 & connected cases 13 in the eye of law. Consequently the sale held by virtue of invoking such a power by KFC is void. When the sale is void, necessarily the possession of the property in question has to be restored to the guarantors. But that does not mean that the KFC is not in a position to initiate other proceedings as envisaged by law for recovering the amount. 21. As far as the auction purchaser is concerned he has purchased the property as a single plot covered by a single sale deed. When the very invocation of Section 29 of the SFC Act is bad in law as far as the property covered by two sale deeds are concerned, the said items of property has to be properly demarcated and returned to the petitioner. There is dispute between the parties as to whether the property having the extent of 15 cents includes the building also. The petitioner has produced some documents to prove that he has constructed the building. But it is also noticed that the building was reconstructed. The materials on record especially the sale deeds will give a picture that the W.P.C.No.13064 of 2009 & connected cases 14 10 cents covered by Ext.R3(b) sale deed is on the south western end of the 55 cents. The side measurements are not shown in the sale deed whereas it is stated to be in the south western end. If it had covered the full western end the same would have been specifically mentioned. The 5 cents covered by Ext.R3(c) is on the immediate east of what is granted under Ext.R3(b). This however is a matter to be verified by the parties concerned with the help of a Taluk surveyor since there is dispute regarding identity of the property. As far as auction purchaser is concerned, he has purchased the entire 55 cents with building thereon. Now, by virtue of the present declaration of law by Supreme Court and the consequences thereon, 15 cents has to be restored back to the petitioner, of course, without prejudice to the right of the KFC for attaching the property in accordance with the procedure prescribed. 22. Taking into consideration the disputes between the parties though it is argued by the learned counsel that W.P.C.No.13064 of 2009 & connected cases 15 the parties are to be relegated to the civil court to identify the property I do not think that such a course is required as the property could as well be measured and identified as per the sale deed itself. 23. In the aforesaid circumstances, these writ petitions are disposed of as under: i) W.P.C.Nos.13064 of 2009 and 25911 of 2011 are disposed of directing the District Collector to complete the revenue recovery proceedings in accordance with the procedure prescribed as early as possible. If the sale is not confirmed, the District Collector may consider the request to set aside the sale as per the jurisdiction vested in it under the proviso to Section 54 of the Kerala Revenue Recovery Act. ii) W.P.C.No. 38457 of 2010 is dismissed. iii) W.P.C.No.13065 of 2009 is allowed as under: (a) The respondents are directed to surrender possession of 15 cents of land in Sy.No.67/1/2 in favour of W.P.C.No.13064 of 2009 & connected cases 16 the petitioner after identifying the property with the help of the Taluk Surveyor on the basis of the documents produced as Ext.R3(a) (b) and (c). This may be done within a period of three months from the date of receipt of a copy of this judgment. b) It shall be open for the auction purchaser to approach KFC to make necessary corrections in the sale deed executed in his favour and for refund of the proportionate purchase price. c) Restoration of possession of the property in favour of the petitioner shall not preclude KFC from initiating any other proceedings in accordance with law for recovering any amount payable by the petitioner as a guarantor, in accordance with the procedure prescribed. (sd/-) ## **(A.M.SHAFFIQUE, JUDGE)** jsr W.P.C.No.13064 of 2009 & connected cases 17 W.P.C.No.13064 of 2009 & connected cases 18 W.P.C.No.13064 of 2009 & connected cases 19