- (1.) THIS petition under Articles 14, 16, 19 and 226 of the Constitution of India has been filed to quash and set aside the illegal and arbitrary action of the respondent Nos.1 and 2 of disposing of the property of the petitioner No.1 Company situated at Uttarsanda Village bearing Block No.1583 in favour of the respondent No.3 and his associates at a throw away price.
(2.) THE facts in short are that the petitioner No.1, a Company registered under the Companies Act, purchased a land and started a resort in the name and style of "Triumph Resort" and a restaurant in the name and style of "Angithi" at Uttarsanda by taking necessary permission and obtaining license from the competent authorities. THE petitioner No.1 applied for a loan of Rs.45,00,000/- to the respondent No.1 bank. However, an amount of Rs.41,90,000/- was sanctioned of which, Rs.29,21,000/- were only disbursed and hence, petitioner No.1 Company had to manage balance funds for the project on its own. THEreafter, as the loan amount was not repaid, the respondent No.1 filed a Lavad Case No.416 of 2000 before the Board of Nominees, Anand, for recovery of dues. However, the Board of Nominees under Sec.96 of Co-Operative Societies Act, 1961 (hereinafter referred to as 'the Act' for the purpose of convenience) passed an award on 27-3-2001 for recovery of Rs.33,80,160/- with running interest @ 21% from 8-3-2000 against the petitioner No.1 Company and sureties including the petitioner No.2. Hence, an appeal was filed by the sureties of the petitioners being Appeal No.341 of 2001 before the Gujarat State Co-operative Tribunal. According to the petitioners, in the year 2000, the respondent No.1 was not covered under the Securitization and Reconstruction of the Financial Assets and Enforcement of Security Interest Act, 2002 and the award passed by the Board of Nominees was subject to appeal. It was however required for the Registrar to issue certificate for recovery under Sec.103 of the Act and thereafter only, the respondent No.2 gets power for recovery as per the provisions of Bombay Land Revenue Code, 1869 (hereinafter referred to as 'the Code' for convenience. However, abruptly, office bearers of the respondent No.1 Bank forcefully took possession of the property of petitioner No.1 Company without issuing any notice and without following any process of law. THE respondent No.2, thereafter, without any public notice or inviting tenders, in presence of Chairman and Managing Director of the respondent No.1 bank, auctioned the property and entrusted it to the respondent No.3 and other unknown persons and the property has been sold away at a throw away price of Rs.17,80,000/- while the mortgage deed clearly indicated value of the property worth Rs.23,00,000/- lakhs and the market value about Rs.1,25,00,000/- and it has been entered in the record of rights without any notice under Sec.135(d) of the Code. On approaching the respondent No.1, the petitioners did not get any reply and hence, a notice was issued to the respondent No.1 bank on 16-12-2008 and a willingness was shown by the petitioner No.1 Company to pay the entire amount. However, it was not responded. THE respondent No.2 issued another notice to the petitioners on 1-3-2004 for recovery of Rs.24,00,000/- approx. THE petitioners again approached the respondent No.1 bank but they did not get any response. THEy then submitted an application to the respondent No.2 to supply copy of the proceedings dated 30-4-2002 which was also not supplied. Hence, the present petition has been filed by the petitioners. Heard learned advocates, Mr.Shalin Mehta for Mr.Hemant M.Shah for the petitioners, Mr.Yatin Soni for the respondent No.1, learned AGP, Mr.L.R.Pujari for the respondent No.2 and Mr.H.M.Parikh for the respondent No.3. It is submitted by learned advocate, Mr.Shalin Mehta for Mr.Hemant M.Shah for the petitioners that the respondent No.1 bank has no authority to take possession of the property without obtaining certificate under Sec.103 of the Act and only after issuance of certificate under Sec.103 of the Act has the Recovery Officer or the Civil Court the powers and hence, auction of the property of the petitioner No.1 Company by the respondent No.2 is without authority and jurisdiction. According to him, no notice was issued by the respondent No.2 to the petitioners nor any possession of the property of petitioner No.1 was taken by the respondent No.1 and hence, the respondent No.2 cannot dispose of the property without inviting tenders by public notice and without fixing upset price. It is further submitted that the respondent No.2 being the authority appointed by the State Government exercising powers of Collector under the Act cannot be permitted to dispose of the property especially when the petitioners were ready and willing to repay the amount. It is further submitted that the respondent No.2 in collusion with Directors of the bank and the purchasers auctioned property without following due process of law and without mentioning the upset price in the advertisement thereby committed fraud with the bank as well as the petitioners by selling the property at a price much lower than the bid price. It is therefore prayed that said arbitrary action of the respondent Nos.1 and 2 of disposing of the property of the petitioner No.1 in favour of respondent No.3 be quashed and set aside. He has relied on the following reported cases: i)(2004)8 SCC p. 671 in the case of Anil Kumar Srivastava Vs. State of U.P. and another; and ii)(2010)8 SCC p. 263 in the case of Rakesh Kumar Goel and Others Vs. Uttar Pradesh State Industrial Development Corporation Ltd. and Others.
(3.) IT is, however, submitted by learned advocate, Mr.H.M.Parikh for the respondent No.3 that possession of the property of the petitioner No.1 has been taken over by drawing panchnama on 17-8-2011 in presence of employees of petitioner No.1 Company. IT is also submitted that thereafter on 19-8-2001 the District Registrar, Co-operative Societies, Nadiad, issued recovery certificates favouring Special Recovery Officer and in pursuance of which, the Special Recovery Officer of Vaso Co-Op. Bank started recovery proceedings. IT is further submitted that although notice was issued by the Deputy Mamlatdar and Executive Magistrate of Vaso Co.Op. Bank i.e. the Special Recovery Officer by Registered Post A/D on the petitioner No.1 Company and its Directors and guarantors on 27-8-2001 under Secs.152 and 200 of the Code, it was returned back with the endorsement as 'left' and thereafter, a proclamation was published on 11-9-2001 under Sec.165 of the Code by issuing a copy thereof to the petitioner No.1 Company and its directors and certificate in this regard was also issued. Thereafter, an advertisement was published in Sandesh, a daily newspaper, on 14-10-2011 with regard to the sale of property of the petitioner No.1 Company by fixing the auction on 29-10-2001 and only thereafter, the auction proceedings were started as per the terms and conditions in which Shri Ashok Chandubhai Patel only offered price. Thereafter, tender was published on the notice board and other persons, who participated in the auction, were intimated and six persons submitted their offers. All the bidders were called for negotiations on 27-3-2002 on which date, bid of Shri Ashok Chandubhai Patel was the highest one, who offered Rs.17,80,000/- which was accepted by the Special Recovery Officer and which was approved in the board meeting of the respondent No.1 by way of resolution No.635 dated 28-3-2002. On payment having made, property was sold to Shri Ashok Chandubhai Patel by registered sale deed on 30-4-2002. In view of the above, it is submitted that due process of law under the Code was followed by the respondent No.2 before selling the property to respondent No.3 and hence, it could not be said that the auction by the respondent No.2 was without the authority and jurisdiction. IT is also submitted that order dated 11-2-2005 passed by this Court in Civil Application No.251 of 2005 in Special Civil Application No .4206 of 2004 with Special Civil Application No.4206 of 2004 has not been complied with by the petitioners and till date, no undertaking has been filed nor any amount has been paid and, therefore, the petitioners are not entitled to get any relief as prayed for. According to him, a huge amount is due and outstanding at present from the petitioner No.1 to the respondent No.1 bank. In view of the above, it is submitted that the present petition be dismissed. According to him, remedy is available to the petitioner to challenge the order of auction or any order passed under Sec.203 of the Bombay Land Revenue Code by way of appeal and therefore also, this petition is not maintainable. He has placed reliance on the case of Union of India Vs. Ambalal Sarabhai Enterprises Ltd. and Ors. reported in 2010(3) GLR 2531. This Court has considered the submissions made on behalf of the parties and also the documents on record. This Court has also gone through the annexures attached with the further affidavit filed by the respondent No.1 Vaso Co.Op.Bank Ltd. It is to be noted that before holding auction, show cause notice under Secs.152 and 200 of the Bombay Land Revenue Code were issued and thereafter order of auction was passed. Therefore, this Court (Coram: K.M.Mehta,J., as he then was) after hearing the learned advocates appearing for the respective parties passed an order on 11-2-2005 in Civil Application No.251 of 2005 in Special Civil Application No.4206 of 2004 with Special Civil Application No.4206 of 2004 part of which reads as under: "The petitioner has filed this petition in which it has been stated that the applicant company will pay the entire dues of the Bank within six months. The total amount due and payable by the Company to the Bank is Rs.60,27,800/- (Rupees Sixty Lakhs Twenty Seven Thousand and Eight Hundred only) as on 27th January, 2005. The petitioner further agreed and undertake before this Court that they will pay Rs.10.00 lakhs (Rupees Ten Lacs only) per month and the said amount will be paid within six months. The petitioner company through his Managing Director shall file an undertaking (along with resolution of Board of Directors of Company) to this effect that they will pay the amount accordingly and the said undertaking is to be filed by 21st February, 2005. The first instalment starts from 18th March, 2005, and all monthly instalments to be paid on 18th and 20th of every month till the final payment to be made in this behalf. On this condition, the interim relief granted in the main matter is continued till further orders. This civil application is accordingly disposed of with no order as to costs." ;