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CHEQUE BOUNS CASE

The third part of the prayer is to forbear the first respondent Tribunal from proceeding with O.A.No.76 of 2006, which was filed by the second respondent Bank pursuant to the notice dated 22.04.2008 issued by them. Having failed to honouor their commitment in spite of sufficient reasonable opportunities granted to them, the petitioners cannot be permitted to put stumbling blocks to the legally enforceable right of the secured creditor/Bank. Therefore, we are not inclined to grant the said prayer in view of the glaring default in payment committed by the petitioners.

IN THE HIGH COURT OF JUDICATURE AT MADRAS

English: coimbatore railway junction front vie...

English: coimbatore railway junction front view, coimbatore, taminadu தமிழ்: கோயம்புத்தூர் ரயில் நிலைய முன்புறத் தோற்றம் (Photo credit: Wikipedia)

DATED: 18.11.2010

CORAM

THE HONOURABLE MR. JUSTICE ELIPE DHARMA RAO
and
THE HONOURABLE MR. JUSTICE D.HARIPARANTHAMAN

Writ Petition Nos.11854, 12455 and 12978 of 2008
and
M.P.Nos.1+1+1 of 2008 and 1 of 2010

Mr.S.Venkatachalam … Petitioner in
W.P.No.11854 of 2008
Mr.V.Vignesh … Petitioner in W.P.No.12455 of 2008
Vamadev Exports rep. by its
Partner, Mr.V.Manikandan. … Petitioner in W.P.No.12978 of 2008
vs
1. The Registrar,
Debts Recovery Tribunal, Coimbatore.

2. Indusland Bank Ltd.,
Coimbatore Branch,
652-656, Tristar Towers,
Avanashi Road,
Coimbatore-641 037.

3. M/s.Pegasus Asset Reconstruction Pvt. Ltd.,
46, 4th Street, Free Press House,
Nariman Point, Mumbai-400 021. … Respondents 1 to 3 (R-3 impleaded as per order all the W.Ps.
dated 16.09.2010)
Prayer:- W.P.No.11854 of 2008 is filed under Article 226 of the Constitution of India praying for the issuance of Writ of Certiorarified Mandamus, to call for the records of the 2nd respondent in its notice dated 22.04.2008 and quash the same and to further direct the 2nd respondent to implement the OTS dated 17.04.2006 for liquidating the liabilities.
W.P.No.12455 of 2008 is filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Mandamus forbearing the respondents from overlooking the 2nd respondent OTS sanction letter dated 17.04.2006 read with letter dated 02.05.2006 whilst attempting to proceed with the recovery of the dues of M/s.Vamadev Exports in excess of Rs.181 lakhs.
W.P.No.12978 of 2008 is filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Mandamus forbearing the 1st respondent from proceeding with O.A.No.76 of 2006 adjourned from 02.05.2008 to 20.06.2008 or any subsequent date pursuant to the 2nd respondent’s notice dated 22.04.2008 threatening to take possession on 12.05.2008 or subsequently.

For Petitioner : Mr.A.L.Somayaji, S.C. for
M/s.P.J.Rishikesh.
M/s.Aiyar and Dolia.

For Respondents : Mr.E.Om Prakash for
M/s.S.Ramalingam Associates
for R2.
Mr.Yashodvarthan, S.C., for
M/s.Mohamed Farooq for R3

C O M M O N O R D E R

(Order of the Court was made by ELIPE DHARMA RAO,J.)

Challenging the notice dated 22.04.2008 issued by the second respondent Bank for taking possession of the securities, mortgaged to the Bank, under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (hereinafter will be referred to as “SARFAESI ACT”), W.P.No.11854 of 2008 is filed by the petitioner, who stood as one of the guarantors to the loans availed by the partnership firm, M/s.Vamadev Exports from the second respondent Bank, seeking a direction to the Bank to implement the One Time Settlement as per their order dated 17.04.2006 for liquidating the liabilities.

2. W.P.No.12455 of 2008 is filed by one of the Partners of M/s.Vamadev Exports to forbear the respondents from overlooking the One Time Settlement sanction letter dated 17.04.2006 which was modified as per letter dated 02.05.2006 by the second respondent Bank while attempting to proceed with the recovery of the dues of the firm in excess of Rs.181 lakhs.

3. W.P.No.12978 of 2008 is filed by the partnership firm, M/s.Vamadev Exports, to forbear the first respondent from proceeding with O.A.No.76 of 2006 which was filed by the second respondent Bank for recovery of dues pursuant to the 2nd respondent’s notice dated 22.04.2008.

4. It is the case of the petitioners that in the year 1997, the second respondent Bank sanctioned various credit facilities to the partnership firm, M/s.Vamadev Exports, for which necessary loan documents have been executed by the partners and six persons stood as guarantors. In the year 2004, the credit facilities were modified by the Bank on various occasions at the request of the said partnership firm. On 09.10.2004, the Bank issued a demand notice under Section 13(2) of the SARFAESI Act to the petitioners calling upon them to pay the amount of Rs.2,80,44,552.63 being principal and interest due to the Bank, for which, the petitioners have sent their objection through their Advocate as per letter dated 6.12. 2004. The Bank sent a reply on 18.12.2004 rejecting the objections of the petitioners and granted time to pay the amount within a period of 15 days. Thereafter, the petitioners, as per letter dated 31.12.2004, sought further time of three weeks and pursuant to the same, the Bank sent a reply dated 25.02.2005 to the petitioners stating that they are going to proceed further in the matter as per Section 13(4) of the SARFAESI Act. Subsequently, on 17.02.2006, the second respondent Bank filed O.A.No.76 of 2006 before the Debt Recovery Tribunal, Coimbatore, against ten persons, including the petitioners, for recovery of a sum of Rs.3,48,51,128.01 with further interest and costs.

5. It is the further case of the petitioners that, as per letter dated 20.07.2005, they proposed One Time Settlement and pursuant to the oral discussion with the Bank on 17.03.2006, the petitioners, as per letter dated 20.03.2006, informed the Bank that they are agreeable to the terms of settlement, subject to certain conditions. Accordingly, One Time Settlement was approved by the Bank vide communication dated 17.04.2006, for a sum of Rs.277.29 lakhs. The Bank, as per letter dated 17.04.2006, sanctioned the compromise settlement of dues with a condition to the petitioners to pay a sum of Rs.90.00 lakhs on receipt of the said sanction letter and to pay the balance amount of Rs.187.29 lakhs within a period of two months or 62 days from the date of receipt of the sanction letter or on or before 31.05.2006 with a further condition to pay Rs.3.71 lakhs towards the claim of the Provident Fund Commissioner. On receipt of the said agreement, the petitioners, as per letter dated 28.04.2006, requested the Bank to make certain modifications in the One Time Settlement and accordingly, the Bank made some modifications vide letter dated 02.05.2006. On 17.05.2006, the petitioners fulfilled the first condition by paying Rs.90.00 lakhs to the Bank, which in turn, released the property at Nallur village. Thereafter, as per reminder dated 22.05.2006, the Bank required the petitioners to pay the Provident Fund dues and to send an undertaking to the effect that any further claim raised by the Provident Fund Authorities would be honoured by the petitioners directly. The petitioners, as per letter dated 15.06.2006, made an offer to the Bank for deposit of a sum of Rs.2.00 Crores from a third party with a request to release the property to the said third party without any court cases, liens and charges.

6. Meanwhile, the time granted by the Bank for settlement of the amount expired on 17.06.2006 and the petitioners failed to comply with the conditions stipulated in the One Time Settlement. Hence, the Bank, as per letter dated 07.08.2006, cancelled the Compromise settlement, due to non compliance of the terms of One Time Settlement by the petitioners. Thereafter, on 22.04.2008, the second respondent Bank issued a notice under Section 13(4) of the SARFAESI Act to the petitioners for taking possession of the securities charged to the Bank, which is impugned in W.P.No.11854 of 2008, wherein the petitioner obtained an order of interim injunction restraining the Bank from taking possession of the securities pursuant to the notice issued by them. One of the partners of the partnership firm filed W.P.No.12455 of 2008 to forbear the respondents from overlooking the 2nd respondent One Time Settlement sanction letter dated 17.04.2006. The partnership firm also filed W.P.No.12978 of 2008 and obtained an order of interim stay of further proceedings in the O.A. pending before the Debts Recovery Tribunal, Coimbatore.

7. After filing the writ petitions, the petitioners sent a letter dated 04.05.2009 to the Bank enclosing a letter dated 26.04.2009 from a third party offering to pay the Bank a sum of Rs.2.5 Crores on confirmation that the property mortgaged with the Bank be transferred by way of sale. However, the Bank assigned the land and secured assets in favour of M/s. Pegasus Asset Reconstruction Private Limited and as per Communication dated 14.06.2010, informed about the assignment to the petitioners. In such circumstances, the petitioners sought to implead M/s.Pegasus Asset Reconstruction Private Limited as a party respondent to the writ petitions by filing impleading petitions and they were ordered, as per order dated 16.09.2010.

8. The second respondent Bank filed a counter affidavit wherein it is stated that the Bank allowed One Time Settlement of the dues of the petitioners at Rs.277.29 lakhs, out of which, a sum of Rs.90.00 lakhs was paid by them. It is also stated that since no further amounts were paid by the petitioners and they dishonoured the commitment, the Bank has terminated the One Time Settlement vide letters dated 07.08.2006 and 24.05.2007. It is finally stated in the counter affidavit that if the writ petition is allowed to be proceeded, irreparable loss and hardship would be caused to the Bank and in such circumstances, the second respondent has prayed for dismissal of the writ petitions, as the same have been filed misrepresenting that they have no alternate remedy.

9. Heard the learned Senior Counsel for the petitioners and the learned counsel for the second respondent Bank.

10. The prayers in the writ petitions are three-fold. The first part is to grant the relief of quashing the Notice issued under Section 13(4) of the SARFAESI Act. As it is settled principle of law that if proceedings are initiated under Section 13(4) of the SARFAESI Act, the remedy available to the aggrieved party is to approach the Debt Recovery Tribunal under Section 17 of the Act, after passing of the order. If they are still aggrieved, they are also having further appeal remedy before the Debt Recovery Appellate Tribunal. Therefore, the writ petition in W.P.No.11854 of 2008 which has been filed, bypassing the alternate remedies available under the Act, that too without offering any tangible reason for the same, is not maintainable and therefore, that part of the relief cannot be granted.

11. As regards the second part of the relief is concerned, the petitioners have sought for a direction to implement the One time Settlement and to consider whether they are entitled for One Time Settlement or not. It is seen from the letter addressed to the petitioners by the Bank that pursuant to the oral discussion made on 17.03.2006 between them, the petitioners have expressed their willingness to pay the debt in instalments, which was endorsed by the second respondent Bank in their letter by imposing two conditions. First, the petitioners have to pay at least a sum of Rs.90.00 lakhs on receipt of the sanction letter and to pay the balance amount of Rs.187.29 lakhs within a period of two months or 62 days from the date of receipt of the sanction letter or on or before 31.05.2006 with a further condition to pay Rs.3.71 lakhs towards the claim of the Provident Fund Commissioner and the total amount to be paid to the bank by the petitioners was arrived at Rs.277.29 Crores. However, instead of honouring the conditions, as agreed, the petitioners are going on addressing letters to the Bank with regard to payment of the Provident Fund amount and other incidental amounts till 22.04.2008, the date on which Notice under Section 13(4) of the SARFAESI Act was issued by the Bank for recovery of the amount. On that date also, the petitioners have not come forward to clear the amount in spite of the time granted by the Bank. Even today, except saying that the petitioners have secured one person to purchase the property and pay the bank loan, no convincing materials are placed before us. From the analysis of the materials on record, we have no hesitation to hold that the petitioners are dragging on the proceedings, besides committing default in paying the amount which is due prior to the One Time Settlement. Hence, we are of the considered opinion that the petitioners are not entitled for the benefits of One Time Settlement arrived at by the Bank and the second part of the prayer is also, thus liable to be rejected.

12. The third part of the prayer is to forbear the first respondent Tribunal from proceeding with O.A.No.76 of 2006, which was filed by the second respondent Bank pursuant to the notice dated 22.04.2008 issued by them. Having failed to honouor their commitment in spite of sufficient reasonable opportunities granted to them, the petitioners cannot be permitted to put stumbling blocks to the legally enforceable right of the secured creditor/Bank. Therefore, we are not inclined to grant the said prayer in view of the glaring default in payment committed by the petitioners.

13. For the foregoing reasons, we have no hesitation to arrive at the irresistible conclusion that the petitioners have not approached this Court with bona fide intention or with clean hands and hence, all these writ petitions, filed by the petitioners with the sole aim of dragging on the recovery proceedings duly instituted by the secured creditor, are liable only to be dismissed with costs.

14. In the result, the writ petitions are dismissed with cost of Rs.10,000/- in each writ petition to be payable by the petitioners to the Chief Justice Relief Fund within a period of one week from the date of receipt of a copy of this order. Connected M.Ps. are closed.
(E.D.R.,J.) (D.H.P.,J.)
Index :Yes 18.11.2010
Website :Yes
bs/
ELIPE DHARMA RAO,J.
And
D.HARIPARANTHAMAN,J.
Bs/

To

1. The Registrar,
Debts Recovery Tribunal, Coimbatore.

2. Indusland Bank Ltd., Coimbatore Branch,
652-656, Tristar Towers,
Avanashi Road, Coimbatore-641 037.

3. M/s.Pegasus Asset Reconstruction Pvt. Ltd.,
46, 4th Street, Free Press House,
Nariman Point, Mumbai-400 021.

W.P.Nos.
11854, 12455 and 12978 of 2008

 

 

 

 

18.11.2010

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