IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 2700 of 2007(U)
1. T.MANI, S/O.SREEDHARAN,
... Petitioner
2. ABDUL HAKEEM, S/O.ALAVI,
Vs
1. THE KERALA FINANCIAL CORPORATION
... Respondent
2. K.T.CHANDUKUTTY,
3. THE GOVERNMENT OF KERALA,
4. THE SUB REGISTRAR,
For Petitioner :SRI.T.KRISHNAN UNNI (SR.)
For Respondent :SRI.BOBY MATHEW
The Hon'ble MR. Justice S.SIRI JAGAN
Dated :27/07/2009
O R D E R
S. SIRI JAGAN, J
...............................................
W.P(C)No. 2700 of 2007
.................................................
Dated this the 27th day of July, 2009
J U D G M E N T
Petitioners are borrowers of loan amounts from the Kerala
Financial Corporation, the 1st respondent herein. Petitioners
defaulted repayment of the loan amounts. The KFC initiated
recovery proceedings. Petitioners were afforded one time
settlement facility to pay off the entire amounts by Ext.P3. As
per Ext.P3, the petitioners were to pay an amount of Rs.25 lakhs
with belated interest and RR charges on or before 30.6.2005.
The petitioners did not avail of that opportunity to settle the loan
account. In the meanwhile, the KFC initiated and completed
proceedings for sale of the mortgaged properties which was
purchased by the 2nd respondent herein. Petitioners challenged
the sale in W.P(C) No. 34808/05. By Ext.P4 judgment, this court
disposed of the writ petition by the following judgment:
“Heard counsel for the petitioner and Standing
Counsel for KFC. Even though petitioner was granted
OTS benefit for settlement at a reasonable amount of
Rs.25.50 lakhs in the year 2002, the petitioner did not
make payment and consequently forfeited the benefit. On
account of chronic default the property is now proposed to
be sold and the highest offer is said to be Rs.66.5 lakhs.W.P(C)No. 2700 of 2007 -2-
Standing Counsel for the KFC submitted that the higher
price offered is more than the upset price and is sufficient
to absorb most of the loan amount because the
outstanding as on 30.6.2005 is Rs.69,62,000/-.
Considering the request of the petitioner, I feel one more
opportunity can be granted but without cancelling the
present offer received against tender notified by the KFC.
The W.P. is therefore disposed of directing the respondent
to inform the highest bidder that if he is interested, he
should wait till 1.3.2006 without any conditions and
without collecting any further amount from him. The
petitioner is given time to settle liability even by entering
into agreement for sale of the mortgaged property till
28.2.2006. If liability is not settled by the petitioner by
28.2.2006, the Corporation will sell the property to the
highest bidder who has made offer now if he is still
interested to purchase the property. However, if the
highest offerer backs out, the Corporation will after
28.2.2006 proceed for sale of the property if petitioner
does not settle liability by then. The respondent is also
directed to grant OTS benefit to the petitioner but with
reference to the current liability based on current norms
treating the previous OTS as cancelled, provided
petitioner makes full payment under the said OTS before
28.2.2006.”2. That judgment was challenged by the petitioner in a writ
appeal before the Division Bench and in an SLP before the
Supreme Court in which the Supreme Court ultimately upheld
the sale in favour of the 2nd respondent. Again, petitioners
approached this court by filing W.P(C) No. 10189/06. In that
writ petition I passed Ext.P6 judgment which reads as follows:
“A defaulter in repayment of loan amounts to Kerala
Financial Corporation, has come up with this writ petition
challenging the sale proceedings initiated by the KFC for
sale of the mortgaged properties for realisation of the
balance amount due under the loan account. The present
contention of the petitioner is that he is prepared to payW.P(C)No. 2700 of 2007 -3-
the entire amounts due within a short time and the sale
may be kept in abeyance.2. The learned standing counsel for the KFC submits
that the sale was long over and the property was
purchased by the 3rd respondent by paying the entire
amounts and the sale has been confirmed. The only thing
now remains to be done is to execute the formal sale deed.
The 3rd respondent also strongly opposes the claim of the
petitioner.3. I have considered the rival arguments in detail.
The petitioner has raised a claim of equity. According to
him, the property worth Rs.1 crore or more, is knocked
down for only Rs.66,50,000/-. However, he could not point
out any material irregularity in the same. In the absence of
any material irregularity in the sale itself, I cannot interfere
with the same, especially since a third party has obtained
valuable rights in respect of the properties paying the
entire sale price. Further, I find that the petitioner had
sufficient opportunity to redeem the mortgage. In fact, by
Ext.P5 judgment, this Court granted another opportunity to
the petitioner to pay the amount without cancelling the
present offer received against tender notified by the KFC.
This Court disposed of the said writ petition as follows:“……. The W.P. is therefore disposed of
directing the respondent to inform the highest bidder
that if he is interested, he should wait till 1.3.2006
without any conditions and without collecting any
further amount from him. The petitioner is given time
to settle liability even by entering into agreement for
sale of the mortgaged property till 28.2.2006. If
liability is not settled by the petitioner by 28.2.2006,
the Corporation will sell the property to the highest
bidder who has made offer now if he is still interested
to purchase the property. However, if the highest
offerer backs out, the Corporation will after
28.2.2006 proceed for sale of the property if
petitioner does not settle liability by then. The
respondent is also directed to grant OTS benefit to
the petitioner but with reference to the current
liability based on current norms treating the previous
OTS as cancelled, provided petitioner makes full
payment under the said OTS before 28.2.2006.”
4. The petitioner could not avail of that opportunity
W.P(C)No. 2700 of 2007 -4-
also. In the above circumstances, I am of opinion that the
petitioner is not entitled to even equitable consideration to
seek another opportunity to pay the same overlooking the
third party rights of the 3rd respondent, who has parted
with quite a large sum of money in proceedings against
which the petitioner could not point out any irregularity
whatsoever. Therefore, I do not find any merit in this writ
petition and accordingly, the same is dismissed.”
3. Subsequently, the KFC confirmed the sale in favour of
the 2nd respondent. It is thereafter, the petitioner has filed this
writ petition again challenging the confirmation of the sale in
favour of the 2nd respondent, on the ground that the sale is
vitiated by fraud. In this writ petition the 2nd respondent filed
I.A. No. 5110 of 2007 complaining that the KFC is not executing
the sale deed in their favour. In that I.A., I passed the following
order on 4.4.2007.
” This is an application filed by the second respondent
in the O.P. who is the purchaser of the mortgaged property
sold by the Kerala Financial Corporation for realisation of
the loan amounts secured by the said mortgage. The
validity of the sale was the subject matter of challenge
before this Court in which I had upheld the sale in favour of
the second respondent. A Division Bench of this Court in
Writ Appeal No. 1546/2006 confirmed that judgment.
Thereafter this writ petition has been filed by the
petitioners alleging fraud in the same. In this writ petition,
there was originally an interim order dated 23.1.2007
where the Sub Registrar, West Hill, Kozhikode was directed
not to register the sale certificate granted to the second
respondent in pursuance of Ext.P5 sale. The matter was
again taken up for extension of stay and by Ext.R2(i) order
dated 26.2.2007, a learned Single Judge directed the
petitioners to deposit the amount covered by the order
dated 23.1.2007 in a nationalised bank to accrue the
maximum possible interest within one week. TheW.P(C)No. 2700 of 2007 -5-
petitioners moved the learned Single Judge for modification
of the said order and by order dated 28.3.2007, the learned
Judge refused to modify that order. As such, it is clear that
the petitioners had not proved their bonafides by complying
with the directions of the learned Single Judge. It is under
the above circumstances that the second respondent has
filed this I.A. seeking a direction to respondents 3 and 4 to
complete the execution and registration of Ext.R2(a) sale
deed within a stipulated time to be fixed by this Court.
2. The learned counsel for the petitioners in the writ
petition would vehementally argue that in spite of the
earlier judgments of this Court, the petitioner is not entitled
to reliefs because of fraud in conducting the same. The
learned counsel for the KFC submits that they are unable to
execute the sale deed and get the same registered only
because of the order dated 26/2/2007 in which the interim
order has been extended until further orders.
3. I am, prima facie, of the opinion that when this
Court and the Supreme Court had confirmed the sale in
favour of the second respondent who is the petitioner in the
I.A. and when the petitioners have not proved their
bonafides by complying with the directions of this Court by
depositing the amount in a nationalised bank accruing
interest, it would be improper on the part of this Court to
ask the petitioner herein to wait further pursuant to the
sale confirmed in his favour. In the above circumstances, I
direct respondents 3 and 4 to complete the execution and
registration of Ext.R2(e) sale deed within one month from
today. This would be subject to final orders in the writ
petition.”
4. Even, prior to that, this court had passed another
interim order dated 26.2.2007 as follows:
“Learned counsel for the petitioners submits that
following the interim order dated 23.01.07, 2nd petitioner is
permitted to deposit the entire amount. The learned
counsel for the contesting respondent submits that sale has
been confirmed and document has to be executed. The plea
of the writ petitioners is that there is fraud in the matter of
conducting sale under Section 29 of the SARFEASI Act. No
alternate and effective remedy is available under the
SARFEASI Act or otherwise. Accordingly, he has to work
out his remedies in this writ petition. To show theW.P(C)No. 2700 of 2007 -6-
bonafides, the petitioners will ensure that the amount
covered by order dated 23.01.07 is deposited in a
nationalised bank to accrue the maximum possible interest,
within a period of one week.
Interim order will stand extended until further
orders.
List this writ petition, in the usual course, for
hearing.”
That also the petitioner had not complied with.
5. The petitioner now contends that the property is worth
more than Rs.1 crore, as is evident from Ext.P1 valuation report.
The said property has been knocked down for Rs.66.5 lakhs,
which according to the petitioner is the result of collusion
between the KFC and 2nd respondent. The contention is that
although the Supreme Court had upheld the sale in favour of the
2nd respondent, that does not operate as res judicata for the
petitioner to challenge the sale on the ground of fraud.
6. I have considered the rival contentions in detail.
7. All throughout, the petitioner has been challenging the
sale on one ground or other. It was perfectly open to them to
challenge the sale on the ground of fraud also. They did not.
Of course they would contend that the fraud was found out
subsequently which contention lacks conviction. In fact in
Ext.P6 judgment which was not challenged by the petitioner, the
very same contention regarding under sale did not find favour
W.P(C)No. 2700 of 2007 -7-
with me. Now also the sale is challenged on the same ground
that property worth over Rs.1 crore is sold for Rs.66.5 lakhs. It
is common knowledge that a distress sale would not fetch the
market value of a property. I have already held in that judgment
that the petitioners could not point out any material irregularity
in the sale. Now the same contention is raised with the epithet
that it amounts to fraud, without any material to substantiate the
same. If such litigation is permitted there would not be any end
to the litigation.
8. Therefore I am of opinion that even if the petitioner
wants to challenge the sale further on the ground of fraud it can
only be by way of a review petition before the Supreme Court.
In any event I am not satisfied that the petitioners can again rack
up the very same issue the decision on which has already
acquired finality by the Judgment of the Supreme Court.
In the above circumstances, I do not find any merit in the
writ petition and accordingly the same is dismissed.
S. SIRI JAGAN, JUDGE
rhs