Recovery of Debts Due to Banks and Financial Institutions Act,1993 (for short 'the DRT Act') - subsequent purchaser even though bonafide purchasers can not challenge the proceedings of DRT Act under writ proceedings with out exhausting the alternative proceedings available under the Act = Smt.K.Leelavathi and another... PETITIONER Debts Recovery Tribunal, Visakhapatnam, rep., by its Recovery Officer, 31-31- 21, Narayana Bhavanam, Sai Baba Street, Daba Gardens, Visakhapatnam and two others..RESPONDENTS = 2014 (Feb.Part) judis.nic.in/judis_andhra/filename=10879

 Recovery of Debts Due to Banks and Financial Institutions Act,1993 (for short 'the DRT Act')  - subsequent purchaser even though bonafide purchasers can not challenge the proceedings of DRT Act under writ proceedings with out exhausting the alternative proceedings available under the Act =

The writ petitioners K. Leevalathi and Mohd. Rafi filed this writ petition
challenging the proceedings initiated by the 2nd respondent - Bank under the
provisions of the Recovery of Debts Due to Banks and Financial Institutions Act,
1993 (for short 'the DRT Act') to conduct auction proposed to be held on 13-02-
2014 by issuing notice under Rule 52 (2) of Second Schedule of Income tax Act as
arbitrary and illegal.=
In a recent judgment of the Apex Court in Commissioner of Income Tax and others
Vs. Chhabil Dass Agarwal2, it was held as follows:
"Non-entertainment of petitions under writ jurisdiction by the High Court when
an efficacious alternative remedy is available is a rule of self-imposed
limitation.  It is essentially a rule of policy, convenience and discretion
rather than a rule of law.  It is within the discretion of the High Court to
grant relief under Article 226 despite the existence of an alternative remedy,
however, the High Court must not interfere if there is an adequate efficacious
alternative remedy available to the petitioner and he has approached the High
Court without availing the same unless he has made out an exceptional case
warranting such interference or there exist sufficient grounds to invoke the
extraordinary jurisdiction under Article 226.  However, when a statutory forum
is created by law for redressal of grievances, a Writ Petition should not be
entertained ignoring the statutory dispensation. =

No doubt, the petitioners are purchasers of schedule property under two
different sale deeds dated 25-09-2009 and 04-04-2013 respectively referred to in
the petition.  
By the date of purchase, O.A was filed before the Debts Recovery
Tribunal and certificate for recovery of debt was issued by the Debts Recovery
Tribunal.  
When the property was purchased subsequent to the mortgage created in
favour of the 2nd respondent by the vendors of the petitioners, the purchase is
always subject to charge over the property i.e., mortgage and they are not
entitled to any protection though they are bona fide purchasers for a valuable
consideration.  
Therefore, the petitioners are not entitled to any indulgence of
this Court by exercising extraordinary jurisdiction under Article 226 of the
Constitution of India in view of the peculiar facts and circumstances of the
case.
        In view of our foregoing discussion, the writ petition is devoid of merits
and deserves to be dismissed.
        In the result, the writ petition is dismissed. Miscellaneous petitions, if
any, pending consideration in the writ petition shall stand closed.  No order as
to costs.



2014 (Feb.Part) judis.nic.in/judis_andhra/filename=10879

HONOURABLE SRI JUSTICE ASHUTOSH MOHUNTA AND HONOURABLE SRI JUSTICE  M.SATYANARAYANA MURTHY                  

WRIT PETITION No.3428 OF 2014  

12-02-2014

Smt.K.Leelavathi and another... PETITIONER

Debts Recovery Tribunal, Visakhapatnam, rep., by its Recovery Officer, 31-31-
21, Narayana Bhavanam, Sai Baba Street, Daba Gardens, Visakhapatnam and two    
others..RESPONDENTS    

Counsel for Petitioner:Sri Challa Ajay Kumar

Counsel for the Respondents: Sri B.S. Prasad
                              Sri Hari Prasad Podina

<GIST:

>HEAD NOTE:  

?Cases referred

1) (MANU/TN/3572/2010)
2) MANU/SC/0802/2013  
3) AIR 2008 SC 1339
4) MANU/SC/1229/2009  

HONOURABLE SRI JUSTICE ASHUTOSH MOHUNTA            
AND
HONOURABLE SRI JUSTICE M.SATYANARAYANA MURTHY              

WRIT PETITION No. 3428 OF 2014  

ORDER: (per the Hon'ble Sri Justice M. Satyanarayana Murthy)
       
        The writ petitioners K. Leevalathi and Mohd. Rafi filed this writ petition
challenging the proceedings initiated by the 2nd respondent - Bank under the
provisions of the Recovery of Debts Due to Banks and Financial Institutions Act,
1993 (for short 'the DRT Act') to conduct auction proposed to be held on 13-02-
2014 by issuing notice under Rule 52 (2) of Second Schedule of Income tax Act as
arbitrary and illegal.
        It is alleged in the writ petition that
the 1st petitioner purchased 35
cents out of 70 cents in the total area of Acs.11.46 cents with D.No.26 of
Etukuru Village of Guntur Sub Division in Guntur District from one Shaik Quaisar
Khan, W/o Shaik Ibrahim Khan of Lakshmipuram, Guntur on 25-09-2009 for a total
consideration of Rs.64,00,000/- and since then she is in possession and
enjoyment of the property.
The 2nd petitioner purchased 35 cents out of 70
cents in D.No.26 from Shaik Mumtaj Shareef, W/o Shaik Mahaboob Sharif, resident
of Cherukupally Village and Mandal, Guntur on 04-04-2013 for a sale
consideration of Rs.71,15,000/-.
        Shaik Quaisar Khan stood as a guarantor to Shaik Mahin, Proprietor of M/s.
Rubbin Contton Industry, the 3rd respondent herein who obtained loan from the
2nd respondent - Bank and committed default in payment of debt due to the bank.
        The 2nd respondent - Bank filed O.A No. 229 of 2002 on the file of the 1st
respondent and obtained a certificate and initiated execution proceedings in R.P
No. 15 of 2007 for recovery of Rs.1,31,24,777.64 ps and called for tenders by
online e-auction scheduled to be conducted on 13-02-2014.
        The main contention of the writ petitioners is that they are not aware of
the factum of securing the debt by the 3rd respondent offering the schedule
property to the 2nd respondent - Bank for the loan obtained by him.  It is
further contended that under the One Time Settlement (OTS) proposal, the debt
was settled for Rs.1,10,00,000/- out of which the 3rd respondent paid a sum of
Rs.82,50,000/-, but failed to pay the balance of amount.  When the petitioners
approached the 2nd respondent - Bank for payment of the balance amount, the 2nd
respondent - Bank insisted payment of Rs.4,73,64,188.64 ps which is inclusive of
certificate amount of Rs.1,31,24,777.64 plus accrued interest at the rate of
18.25% per annum with quarterly rests which comes to Rs.3,42,39,411/- from 09-
12-2006 to 13-02-2014.
        One of the contentions of the petitioners is that as per the Reserve Bank
of India (RBI) guidelines when the account of the 3rd respondent was declared as
Non-Performing Asset (NPA), interest is chargeable only at the rate of 6% per
annum but not at 18.25% per annum.  Therefore, claim of interest at 18.25% per
annum which comes to Rs.3,42,39,411/- is arbitrary.
        The petitioners are only bona fide purchasers for a valuable consideration
and they are entitled to protect their rights.  Therefore, having no other
alternative, the petitioners approached this Court seeking indulgence of this
Court exercising extraordinary powers of judicial review under Article 226 of
the Constitution of India. Hence, prayed to declare that the action of the 2nd
respondent - Bank for the proposed sale of the schedule property on 13-02-2014
in pursuance of the orders in R.P No.15 of 2007 in O.A No. 229 of 2002 as
illegal and arbitrary.
        The 2nd respondent - Bank filed counter before admission denying the
allegations while admitting the claim made by it and initiation of execution
proceedings to recover total amount of
Rs. 4,73,64,188.64 ps which is inclusive of certificate amount and subsequent
interest accrued thereon and contended that when the auction is likely to be
held on 13-02-2014, the petitioners cannot straightaway approach this Court
without availing statutory remedy i.e., filing an application before the Debts
Recovery Tribunal and that the RBI guidelines regarding charge of interest at 6%
per annum is incorrect and that the interest claimed on the amount is as per the
rules.  Therefore, the writ petition is not maintainable and prayed for
dismissal of the writ petition.
        During the course of arguments, learned counsel for the petitioners mainly
contended that the writ petitioners are bona fide purchasers and fairly conceded
that on account of urgency, the petitioners approached this Court without
exhausting the statutory remedy available under the provisions of the DRT Act
and seek indulgence of this Court to pass appropriate orders declaring the
proceedings for realisatioin of debt due to the bank in R.P No. 15 of 2007 as
arbitrary.
Per contra, learned counsel for the 2nd respondent - Bank vehemently contended
that since the petitioners have approached this Court without exhausting
efficacious and alternative adequate remedy available under the DRT Act, this
Court cannot exercise its extraordinary power of judicial review as in appeal
and on this simple ground, the writ petition is liable to be dismissed.  Apart
from that, interest is calculated only based on the certificate issued by the
Debt Recovery Trtibunal in O.A No. 229 of 2002, but not otherwise.  The
petitioners purchased the property after obtaining certificate from Debts
Recovery Appellate Tribunal and thereby they are not bona fide purchasers for
valuable consideration and their rights are only subject to mortgage over the
existing property as on the date of their purchase.  Therefore, the petitioners
are not entitled to claim any protection as bona fide purchasers for valuable
consideration and prayed for dismissal of the writ petition.
Considering rival contentions and perusing the material available on record, the
points that arise for consideration are as follows:
(1) Whether the writ petition is maintainable under Article 226 of the
Constitution of India when alternative and efficacious remedy is available under
the DRT Act?
(2) Whether the claim of interest at 18.25% per annum from the date of
certificate issued by the Debts Recovery Tribunal is against the RBI guidelines.
If so, whether the claim of interest is in accordance with law?
(3) Whether the petitioners are entitled to claim any relief in view of One Time
Settlement arrived between the 2nd respondent - Bank and the 3rd respondent and
on failure to pay the amount in terms of OTS, the petitioners being the
subsequent purchasers are entitled to claim any relief in the writ petition?
Point No.1:
        The first and foremost contention raised by the counsel for the 2nd
respondent - Bank is that the writ petition is not maintainable when proceedings
were taken under Rule 52 (2) of Second Schedule of Income Tax Act read with
Section 31 (3) of the DRT Act, an alternative, effective and efficacious remedy
is available.  However, the counsel for the writ petitioners fairly conceded
that due to lack of time and in view of urgency in the matter, the petitioners
approached this Court seeking the relief under Article 226 of the Constitution
of India.
        Admittedly, auction is proposed to be held on 13-02-2014 by issuing notice
under Rule 52(2) of Second Schedule of Income Tax Act in execution of
certificate under the DRT Act by e-auction of the schedule property.
One of the main contentions of the
respondents is that when an effective, efficacious statutory alternative remedy
is available to the petitioners by filing a petition before Recovery Officer,
the petitioners cannot invoke the jurisdiction of this Court under Article 226
of Constitution of India.

According to Section 29 of the Act of 1993, provisions of Income Tax Act are
applicable to the proceedings and it reads as follows:
"Section 29: Application of certain provisions of Income Tax Act - The
provisions of the Second and Third Schedules to the Income Tax Act, 1961 (43 of
1961), and the Income Tax (Certificate Proceedings) Rules, 1961, as in force
time to time shall, as far as possible, apply with necessary modifications as if
the said provisions and the rules referred to the amount of debt due under this
Act instead of to the Income Tax Act:
Provided that any reference under the said provisions and the rules to the
'assessee' shall be construed as a reference to the defendant under this Act.
The provisions of 2nd and 3rd Schedules of Income Tax Act and the Income Tax
(Certificate Proceedings) Rules, as in force from time to time are made
applicable for enquiries in claims made by third parties.  At the same time,
Section 25 of the Act of 1993 prescribes modes of recovery of debt by the
recovery officer on receipt of copy of the certificate under sub-section (7) of
Section 19.  Section 28 prescribes other modes of recovery by issuance of notice
under Form Nos. 16 and 17 and if third party objects to the above recovery
proceedings, he can move the recovery officer under the provisions of Income Tax
Act and Certificate of Proceedings Rules."

Therefore, the petitioners in this matter, being the third parties to the
recovery proceedings, can move the recovery officer under Rule 11 of 2nd
Schedule of Income Tax Act  and it is useful to refer relevant Clauses of the
Rule for better appreciation of facts with reference to law.
"Investigation by Tax Recovery Officer:
(1)     Where any claim is preferred to, or any objection is made to the
attachment or sale of, any property in execution of a certificate, on the ground
that such property is not liable to such attachment or sale, the Tax Recovery
Officer shall proceed to investigate the claim or objection:
        Provided that no such investigation shall be made where the Tax Recovery
Officer considers that the claim or objection was designedly or unnecessarily
delayed.
(2) Where the property to which the claim or objection applies has been
advertised for sale, the Tax Recovery Officer ordering the sale may postpone it
pending the investigation of the claim or objection, upon such terms as to
security or otherwise, as the Tax Recovery Officer shall deem fit.
(3) ................................
(4) .................................
(5) Where the Tax Recovery Officer is satisfied that the property was, at the
said date, in the possession of the defaulter as his own property and not on
account of any other person, or was in the possession of some other person in
trust for him, or in the occupancy of a tenant or other person paying rent to
him, the Tax Recovery Officer shall disallow the claim.
(6) Where a claim or an objection is preferred, the party against whom an order
is made may institute a suit in a civil Court to establish the right which he
claims to the property in dispute; but, subject to the result of such suit (if
any), the order of the Tax Recovery Officer shall be conclusive."
In view of the provisions referred above, the third parties, the petitioners
herein, who are claiming rights over the property which was attached for
recovery of debt under the certificate of recovery and where the recovery
officer issued sale-cum-e-auction sale notice calling for "bid forms" online and
for fixing date, can file objections to the attachment or sale of the property
in execution of certificate of recovery.  If any order is passed by the recovery
officer under Rule 11 of Schedule-II of Income Tax Act, an appeal would lie
under Section 30 of the Act.  In the instance case on hand, the petitioners did
not file any objections before the recovery officer as contemplated under Rule
11 of Schedule-II of Income Tax Act.  Thus, without exhausting the effective,
efficacious and alternative statutory remedy provided under the Act, the
petitioners directly approached the Court.  When an alternative remedy is
available, this Court cannot exercise its jurisdiction under Article 226 of
Constitution of India.

In Machine Tools and Accessories Private Limited, Represented by its Director
Balaji Vs. The Debts Recovery Appellate Tribunal, Represented by its Chairman
and others1, Division Bench of Madras High Court in the similar situation held
as follows:
"When a remedy under Section 29 of the Act of 1993 read with Rule 11 of 2nd
Schedule under Income Tax Act, 1961, which is an alternative and effective
remedy to question the auction sale, without exhausting such remedy, it is not
open to the petitioner to project the present Writ Petition after a gap of more
than 3 years and 3 months from the date of conduct of auction.  Thereby, the
Writ Petition is not per se maintainable and dismissed the petition."

In a recent judgment of the Apex Court in Commissioner of Income Tax and others
Vs. Chhabil Dass Agarwal2, it was held as follows:
"Non-entertainment of petitions under writ jurisdiction by the High Court when
an efficacious alternative remedy is available is a rule of self-imposed
limitation.  It is essentially a rule of policy, convenience and discretion
rather than a rule of law.  It is within the discretion of the High Court to
grant relief under Article 226 despite the existence of an alternative remedy,
however, the High Court must not interfere if there is an adequate efficacious
alternative remedy available to the petitioner and he has approached the High
Court without availing the same unless he has made out an exceptional case
warranting such interference or there exist sufficient grounds to invoke the
extraordinary jurisdiction under Article 226.  However, when a statutory forum
is created by law for redressal of grievances, a Writ Petition should not be
entertained ignoring the statutory dispensation.
In the instant case, the Act
provides complete machinery for the assessment/re-assessment of tax, imposition
of penalty and for obtaining relief in respect of any improper orders passed by
the Revenue Authorities, and the assessee could not be permitted to invoke the
writ jurisdiction when he had adequate remedy open to him by an appeal to the
Commissioner of Income Tax (Appeals).  Assessee in the instance case neither
described the available alternative remedy under the Act as ineffectual and non-
efficacious nor has the High Court ascribed cogent and satisfactory reasons to
have exercised its jurisdiction in the facts of instant case.  Writ Court
accordingly, as held, should not have entertained the Writ Petition."

In view of the principle laid down in the above judgment, if alternative remedy
by way of claim before recovery officer is ineffective or non-efficacious, this
Court can exercise its power under Article 226 of Constitution of India.  Still,
the person, who is claiming the property attached or proposed to be sold, can
approach the civil Court under sub-Rule (6) of Rule 11 of Schedule-II of Income
Tax Act against the order passed by Recovery Officer but without exhausting
those remedies, the petitioners approached this Court.

Similar question of availability of alternative remedy under the Act of 1993
came up for consideration before the Allahabad High Court in M/s. Oswal Agencies
and another Vs. Recovery Officer, Debt Recovery Tribunal and others, the
Allahabad High Court held as follows:
"When a Writ Petition is filed impugning the recovery certificate, since
objection that recovery certificate amounted to order within the meaning of
Section 13(1) of the Act of 1993 for which an appeal was provided under Section
20 of the Act of 1993 to the appellate tribunal, the petitioner had a statutory
alternative remedy, the Writ Petition was not maintainable.  The contention of
the petitioner was that the amount sought to be recovered was not debt and order
of the Debts Recovery Tribunal was illegal."

The Allahabad High Court is of the view that the points raised in the writ
petition could be raised before the appellate tribunal also and the petitioner
could satisfy the appellate tribunal that since the amount sought to be
recovered was not a debt and that it could not be saddled with liability as a
condition precedent for entertaining and adjudicating the appeal and finally,
the Writ Petition was dismissed.

In view of the principles laid down in the above judgments though not binding
but persuaded by those principles and the provisions contained in the Act, we
are of firm view that the third party claimants to the recovery proceedings, the
petitioners herein, can file the claim under Section 29 of the Act 1993 read
with Rule 11 under Schedule-II of Income Tax Act which is more effective and
efficacious remedy.  In case the recovery officer did not accept the claim, the
claimants can approach the civil Court under sub-Rule (6) of Rule 11 of
Schedule-II of Income Tax Act where all claims after making necessary enquiry be
decided by the civil Court.  Thus, the remedy before the enquiry officer and
civil Court are more effective and efficacious than the remedy available under
Article 226 of Constitution of India.

Undisputedly, when equally effective and efficacious statutory remedy is
available under the Act of 1993, the petitioners are not entitled to claim any
relief in a petition filed under Article 226 of Constitution of India.  Time and
again, the Apex Court held that when alternative remedy in a different forum
under the statute is available, without exhausting the statutory remedy, the
petitioners cannot invoke the jurisdiction of this Court under Article 226 of
Constitution of India.  In case the petitioners are affected parties on account
of proposed sale, they can file a petition before Recovery Officer of Debts
Recovery Tribunal and if any adverse order is passed, they can approach Civil
Court or file an appeal under Section 30 of Act 1993, but without exhausting
such statutory remedies, the petitioners cannot straightaway approach this Court
invoking the extraordinary jurisdiction of this Court under Article 226 of
Constitution of India.

In view of aforementioned reasons, this Court cannot exercise its extraordinary
power of judicial review under Article 226 of Constitution of India as
statutory, effective and efficacious remedy is available to the petitioners.
Accordingly, the point is held against the petitioners and in favour of the
respondents.

Point No.2:
        One of the contentions raised by the counsel for the petitioners is that
as per the RBI guidelines when the loan account of the 3rd respondent is
declared as NPA, charging of interest at 18.25% per annum is illegal and
arbitrary and at best, interest can be charged only at 6% per annum.  All these
contentions based on factual aspects and guidelines issued by the Reserve Bank
of India cannot be looked into while exercising power under Article 226 of the
Constitution of India.  Even otherwise, in a judgment in Oriental Bank of
Commerce v. Sunder Lal Jain and another3, the Supreme Court held as follows:
        "6.  A perusal of the aforesaid revised guidelines issued by the Reserve
Bank of India on January 29, 2003 for compromise settlement of chronic Non-
Performing Assets (NPAs) of public sector banks will show that the same will be
applicable and will cover NPAs classified as sub-standard as on 31st March, 2000
which have subsequently become doubtful or loss.  The revised guidelines have no
application where the NPAs have not been classified as sub-standard as on 31st
March, 2000.  It is not in dispute that the account of the respondents was a
performing account between 1-4-2000 and 31-2-2001.  According to the records of
the bank, the account was consigned to Protest Bill Account on 15-10-2001 and
was declared as NPA as per prudential norms of RBI on 31-2-2001.  The
respondents contested the case before the DRT and did not admit their liability.
No such plea was raised that their account had become NPA as on 31-3-2000 before
DRT.  Therefore, the revised guidelines issued by Reserve Bank of India on
January 29, 2003 for compromise settlement of chronic Non-Performing Assets
(NPAs) of public sector banks were not at all applicable to the facts and
circumstances of the case and no direction could be issued to declare the
respondents account as NPA from 31st March, 2000.  The guidelines further
provide that in case where borrowers are unable to pay the entire amount in lump
sum, at least 25% of the amount of settlement should be paid unfront and the
balance amount of 75% should be recovered in instalments within a period of one
year together with interest.  The High Court, in the impugned order, has
directed that the amount should be recovered by the appellant bank in quarterly
instalments over a period of two years.  This is again contrary to the revised
guidelines, which provide a period of one year only for recovery of the entire
amount.
        9.  These very principles have been adopted in our country.  In Bihar
Eastern Gangetic Fishermen Cooperative Society Ltd. v. Sipahi Singh and others,
AIR 1977 SC 2149, after referring to the earlier decisions in Lekhraj Satramdas
Lalvani v. Deputy Custodian-cum-Managing Officer, AIR 1966 SC 334; Dr. Rai
Shivendra Bahadur v. The Governing Body of the Nalanda College, AIR 1962 SC 1210
and Dr. Umakant Saran v. State of Bihar, AIR 1973 SC 964, this Court observed as
follows in paragraph 15 of the reports:
        "............There is abundant authority in favour of the proposition that
a writ of mandamus can be granted only in a case where there is a statutory
obligation. The chief function of a writ is to compel performance of public
duties prescribed by statute and to keep subordinate Tribunals and officers
exercising public functions within the limit of their jurisdiction.  It follows,
therefore, that in order that mandamus may issue to compel the authorities to do
something, it must be shown that there is a statute which imposes a legal duty
and the aggrieved party has a legal right under the statute to enforce its
performance..........In the instant case, it has not been shown by respondent
No.1 that there is any statute or rule having the force of law which casts a
duty on respondents 2 to 4 which they failed to perform.  All that is sought to
be enforced is an obligation flowing from a contract which, as already
indicated, is also not binding and enforceable.  Accordingly, we are clearly of
the opinion that respondent No.1 was not entitled to apply for grant of a writ
of mandamus under Article 226 of the Constitution and the High Court was not
competent to issue the same."
        Therefore, in order that a writ of mandamus may be issued, there must be a
legal right with the party asking for the writ to compel the performance of some
statutory duty cast upon the authorities.  The respondents have not been able to
show that there is any statute or rule having the force of law which casts a
duty on the appellant bank to declare their account as NPA from 31st March, 2000
and apply R.B.I. guidelines to their case.
10.  The High Court, therefore, erred in issuing a writ of mandamus directing
the appellant bank to declare the respondents' account as NPA from 31st March,
2000 and to apply the RBI Guidelines to their case and communicate the
outstanding which shall be recoverable by quarterly instalments over a period of
two years.  The later part of the order passed by the High Court wherein a
direction has been issued to stay the recovery proceedings and the recovery
certificate issued against the respondents has been cancelled is also wholly
illegal as the decree passed by the DRT had attained finality and proceedings
for execution of decree could not be stayed in an independent writ petition when
the respondents had not chosen to assail the decree by filing an appeal, which
is a statutory remedy provided under Section 20 of Recovery of Debts Due to
Banks and Financial Institutions Act, 1993."

In a petition filed under Article 226 of the Constitution of India for issue of
mandamus seeking a direction to the bank to declare their account as NPA and to
apply revised guidelines issued by the Reserve Bank of India to their case,
since the said guidelines are purely executive instructions having no statutory
force in creating any right, issuance of mandamus by the High Court directing
the bank to declare the respondents account as NPA and to apply the said RBI
guidelines is not proper.
In the same judgment, the Supreme Court further held that a decree for
recoverable amount passed against the respondent borrower by Debts Recovery
Tribunal which attained finality could not be stayed in an independent writ
petition when the respondents had not chosen to assail the decree by filing an
appeal availing the statutory remedy.  The present facts of the case are
squarely covered by the judgment of the Supreme Court.  Applying the principle
laid down in the above judgment to the present case, the RBI guidelines to
charge 6% interest is only an executive instruction having no statutory force
and apart from that in the certificate issued by Debts Recovery Appellate
Tribunal interest at 18.25% per annum was awarded.  The judicial order is
binding, whereas the executive instructions without any statutory force is only
instructive in nature.  The Courts cannot compel the banks to charge interest at
6% per annum.  In any view of the matter, it is a question to be decided by the
appellate tribunal in an appeal filed against the order of the tribunal under
Section 20 of the DRT Act and all these aspects cannot be looked into in a
petition filed under Article 226 of the Constitution of India.
In view of the principles laid down by the apex Court, the writ petition is not
maintainable.  Therefore point No.2 is also held against the petitioners and in
favour of the 2nd respondent - Bank.
Point No.3:
        The contention raised by the petitioners is that that the petitioners have
already paid Rs.82,50,000/- in terms of OTS and the balance amount is meager.
In such a case, the entire property cannot be sold in auction.  But, this
contention would not stand to any legal reasoning in view of the principle laid
down by the Supreme Court in Union Bank of India and Anr vs. Panchanan Subudhi4
wherein the Supreme Court held that when the borrower failed to abide by the
terms of OTS, there was no justification for the High Court to entertain the
writ petition and that too by ignoring the fact that statutory alternative
remedy is available to the borrower under Section 17 of the SARFAESI Act and set
aside the order passed by the High Court.
        Here also, according to the allegations made in the affidavit annexed to
the writ petition, OTS was arrived and out of the settled amount Rs.82,50,000/-
was already deposited and the balance is only meager amount.  The allegation
itself indicates that the 3rd respondent - borrower violated the terms and
conditions of OTS and in such case, writ petition is not maintainable under
Article 226 of the Constitution of India.  Hence on this count also, the writ
petition is not maintainable.  This point is also held against the petitioners
and in favour of the 2nd respondent - Bank.
        The main endeavour of the counsel for the petitioners is to convince this
Court that the petitioners are only bona fide purchasers for a valuable
consideration and they are entitled to protection of the property purchased by
them.  No doubt, the petitioners are purchasers of schedule property under two
different sale deeds dated 25-09-2009 and 04-04-2013 respectively referred to in
the petition.  By the date of purchase, O.A was filed before the Debts Recovery
Tribunal and certificate for recovery of debt was issued by the Debts Recovery
Tribunal.  When the property was purchased subsequent to the mortgage created in
favour of the 2nd respondent by the vendors of the petitioners, the purchase is
always subject to charge over the property i.e., mortgage and they are not
entitled to any protection though they are bona fide purchasers for a valuable
consideration.  Therefore, the petitioners are not entitled to any indulgence of
this Court by exercising extraordinary jurisdiction under Article 226 of the
Constitution of India in view of the peculiar facts and circumstances of the
case.
        In view of our foregoing discussion, the writ petition is devoid of merits
and deserves to be dismissed.
        In the result, the writ petition is dismissed. Miscellaneous petitions, if
any, pending consideration in the writ petition shall stand closed.  No order as
to costs.



ASHUTOSH MOHUNTA, J      
----------------------
M.SATYANARAYANA MURTHY, J        
Dated: 12th February, 2014

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