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2012 (9) TMI 1118 - HC - Indian LawsApplication of the petitioners for selling the mortgaged property under Section 13 (13) of SARFAESI Act - No writ would lie against a private Bank. However, where the Bank is a Scheduled Bank under Reserve Bank of India Act, 1934 and is governed by the provisions of Banking Regulation Act, 1949, it shall be amenable to writ jurisdiction of this Court where the Scheduled Bank takes recourse to the provisions of SARFAESI Act. In the present facts and circumstances after condoning the delay in depositing the amount, while allowing the writ petition, it is directed that in case, the petitioners deposit another sum of ₹ 50 lakhs in terms of the statement made by their counsel on 25.7.2012 within two months of receipt of a certified copy of this order, the OTS shall be implemented. It is further directed that the drafts deposited in pursuance to the order of this Court dated 10.2.2012 shall be returned to the petitioners, who after getting them revalidated, shall deposit the same with the bank within the aforesaid period for getting the OTS implemented.
Issues Involved:
1. Maintainability of writ petition against the respondent-Bank. 2. Delay and laches in filing the writ petition. 3. Entitlement of petitioners to relief based on their bonafides. Issue-wise Detailed Analysis: 1. Maintainability of Writ Petition Against the Respondent-Bank: The court examined whether a writ petition under Article 226 of the Constitution of India is competent against the respondent-Bank, which is a private entity. The court referred to various statutory provisions and precedents, including the Reserve Bank of India Act, 1934, and the Banking Regulation Act, 1949. It was noted that the Reserve Bank of India, a statutory authority, exercises supervisory power over Scheduled Banks, including the respondent-Bank. The court also analyzed the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (DRT Act), and the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), which provide mechanisms for the enforcement of security interests and recovery of debts. The court cited several judgments, including *The Praga Tools Corporation vs. Shri C.V. Imanual* and *Shri Anadi Mukta Sadguru Shree Muktajee Vandasjiswami Survarna Jayanti Mahotsav Smarak Trust and others v. V.R.Rudani and others*, to establish that writ petitions can be maintained against private bodies performing public duties. The court concluded that while ordinarily no writ would lie against a private bank, a Scheduled Bank under the Reserve Bank of India Act, 1934, governed by the Banking Regulation Act, 1949, is amenable to writ jurisdiction when it takes recourse to the provisions of the SARFAESI Act. 2. Delay and Laches in Filing the Writ Petition: The court addressed whether the writ petition suffers from delay and laches, warranting dismissal on that ground alone. The petitioners had submitted a One Time Settlement (OTS) proposal to the respondent-Bank, which was accepted with a requirement to liquidate the outstanding liability by 22.3.2011, later extended to 18.4.2011. The petitioners deposited Rs. 50,00,000 but failed to deposit the remaining Rs. 2 crores due to personal difficulties, including the death of the father of petitioners No. 2 and 3. The petitioners sought further extension, which the Bank declined. The court noted that the petitioners presented drafts for Rs. 2 crores on 26.7.2011 and produced revalidated demand drafts in court, showing their bonafides. The court found that the delay was due to unfortunate exigencies and that the petitioners had no other remedy against the rejection of the extension for the OTS proposal. The court cited *Sat Kartar Ice and General Mills v. Punjab Financial Corporation* and *State Bank of India v. Vijay Kumar* to support condoning the delay in depositing the OTS amount. 3. Entitlement of Petitioners to Relief Based on Their Bonafides: The court examined whether the petitioners acted bonafide and were entitled to the relief claimed. The petitioners had shown their willingness to pay an additional Rs. 50,00,000 besides the Rs. 2 crores already deposited. The court found that the petitioners' inability to adhere to the OTS terms was due to circumstances beyond their control, including the death of a key family member. The court concluded that the Bank's rejection of the OTS was harsh and unjust. The court directed that if the petitioners deposit another Rs. 50 lakhs within two months of receiving a certified copy of the order, the OTS shall be implemented. The drafts deposited in court were to be returned to the petitioners for revalidation and subsequent deposit with the Bank. Conclusion: The writ petition was allowed, and the court directed the implementation of the OTS upon the petitioners depositing an additional Rs. 50 lakhs within the specified period. The drafts deposited in court were to be returned for revalidation and deposit with the Bank. The court found that the petitioners acted bonafide and that the Bank's rejection of the OTS was harsh and unjust.
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