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Bhagwan Cotton Ginners Private Ltd., Represented by its Director, Vikas, Raichur v/s The Assistant General Manager, Asset recovery branch, Bank of Maharashtra

    Writ Appeal No. 200064 of 2019 (GM-RES)

    Decided On, 12 March 2021

    At, High Court of Karnataka Circuit Bench OF Kalaburagi


    For the Appellant: M. Sachin Mahajan, Advocate, For the Respondent: Anitha Kulkarani, Advocate.

Judgment Text

(Prayer: This writ Appeal is filed under Section 4 of the Karnataka High Courts Act. Praying to call for records and set aside the order dated 01.04.2019 in writ petition No.201729/2019 (GM-RES) passed by the learned Single Judge and allow the writ petition by allowing the writ appeal.)

B.M. Shyam Prasad, J.

1. The unsuccessful petitioner in W.P.No.201729/2019 (GM-RES) has preferred this intra-court appeal challenging the disposal of the writ petition by the order dated 01.04.2019 with the observation that the appellant could avail alternative statutory remedy under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, “the SARPAESI Act”).

2. Sri Sachin M.Mahajan, the learned counsel for the appellant submits that the appellant’s grievance is within a narrow canvas. The respondent extended One-Time Settlement [OTS] under ‘Mahariyayat Scheme’ which required the appellant to pay a total sum of Rs.6,05,26,242/- with an initial deposit of 10% and the remaining amount on or before 28.02.2019. The appellant deposited the 10% of Rs.6,05,26,242/- after entering into an agreement with a third party for sale of the mortgaged property. The appellant was awaiting communication from the respondent to pay the balance amount but did not receive any communication in that regard from the respondent. Therefore, the appellant submitted the representation on 25.03.2019 for extension of time, and this representation was rejected on the same day calling upon the appellant to pay the balance 90% on or before 31.03.2019. The respondent’s failure to issue appropriate communication within time and the rejection of the request for extension of time is arbitrary and unreasonable. The appellant’s grievance in this regard would be outside the scope of enquiry contemplated under Section 17 of the SARFAESI Act and therefore, the impugned order cannot be justified.

3. However, certain material subsequent events cannot be controverted. During the pendency of this appeal, the time for payment of the balance amount under Mahariyayat Scheme was extended until 30.06.2019. Thereafter, another OTS Scheme known as the Mahariyayat – 2019-2020 is issued and the amount payable under this Scheme had to be paid before 30.09.2019, and even this period is extended till 31.03.2020. The appellant has not paid any amount either during the first extension under the Mahariyayat Scheme or the later OTS scheme, Mahariyayat – 2019-2020 as aforesaid.

4. Further, one of the directors of the appellant has filed the Writ Petition No.1267/2021 describing himself as guarantor/mortgagor responsible for the loans availed by the appellant. In compliance with the interim order granted in such writ petition, a sum of Rs.1,00,00,000/- is deposited and his subsequent representation for extension of time to pay a certain amount proposed on behalf of the appellant is rejected by the respondent. The Writ Petition in W.P.No.1267/2021 is disposed of by order dated 25.02.2021. A copy of the order dated 25.02.2021 in Writ Petition No.1267/2021 is placed on record by the learned counsel for the respondent. The subsequent events and the conduct of the parties as borne out by the contents of a certain e-mail are referred to. It is also observed that the petitioner therein had tried to stall the proceedings, and this ground alone should suffice for disposal of the writ petition.

5. The learned counsel for the respondent also submits that the respondent has not only taken over possession of the mortgaged property under Section 14 of the SARFAESI Act, but after compliance with the provisions under Sections 13 thereof, the mortgaged property I also put to auction on 25.02.2021. The successful bidder in such auction has paid a substantial amount for the property.

6. These subsequent events, more specifically the fact that there was extension of time till June 2019 and later until 31.03.2020 [though under another OTS scheme] but the appellant did not pay the entire amount, destroys the petitioner’s grievance that its request for extension of time on 25.03.2019 is rejected allowing only four days for payment for payment of 90% of Rs.6,05,26,242/-. Even if the appellant could contend that the writ petition should not have been disposed of on the ground that the appellant has an alternative statutory remedy, in the light of these subsequent events the appellant cannot succeed in this appeal. But, if the appellant could make out a cause for action under Section 17 of the SARFAESI Act against any action initiated by the respondent, the appellant notwithstanding the disposal of this writ appeal, must have liberty to invoke such jurisdiction.

7. At this stage, Sri Sachin M.Mahajan, the learned counsel for the appellant, submits that in any event the appellant would be entitled to refund of the 10% amount paid in terms of the letter dated 24.12.2018 as this amount was mobilized from a third party to deposit in a no-lien account subject to the acceptance of the OTS scheme. The appropriation of this amount further prejudices the appellant and creates a liability towards a third party as well. However, Sri. Sachin M.Mahajan is unable to point out from the records, including the intimation letter dated 24.12.2018, any term which could rel

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ied upon by the appellant to insist on repayment on the amount deposited. Therefore, this submission cannot accepted. For the foregoing reasons, the writ appeal is disposed of with the observation that, if the appellant could make out a cause for action under Section 17 of the SARFAESI Act against any action initiated by the respondent, the appellant shall have the liberty to invoke such jurisdiction notwithstanding the disposal of this writ appeal. In view of the disposal of the main appeal the pending IAs does not survive for consideration, hence, they are disposed of.