Choice Precitech India Private Limited vs Recovery Officer

Heard Mr. C.V.Narasimhan, learned counsel representing Mr. Benjaram Srinivasa Reddy, learned counsel for the petitioners; Mr. M.Narender Reddy, learned Senior Counsel appearing for Mr. Chithari Prabhakar, learned counsel for respondent No.2- State Bank of India; and Mr. N.Manohar, learned counsel for respondents No.3 and 4.

With consent of the parties, the matter is heard finally.

In this petition, the petitioners have assailed the validity of the order dated 10.05.2023, passed by respondent No.1-Recovery Officer, Debts Recovery Tribunal-II, Hyderabad (briefly ‘the Recovery Officer’ hereinafter) in M.P.Nos.53 to 55 of 2023 in R.P.No.229 of 2018 in O.A.No.3298 of 2017, under the provisions of the Recovery of Debts and Bankruptcy Act, 1993 (briefly ‘the 1993 Act’ hereinafter).

Facts giving rise to filing of this writ petition briefly stated are that the petitioners, admittedly, had availed of financial assistance to the tune of Rs.9 crores from respondent No.2-Bank. The petitioners did not repay the amount. Thereupon, the Bank initiated the proceedings for recovery of the amount under the 1993 Act. Recovery certificate dated 15.02.2018 was issued for an amount of Rs.9,14,39,539/-.

Thereupon, the proceedings before the Recovery Officer were initiated. A proclamation of sale was issued on 10.02.2023. In pursuance of the aforesaid proclamation of sale, Schedule I property has been sold on 28.03.2023 for an amount of Rs.1.47 lakhs to respondents No.3 and 4. Thereafter, the petitioners filed an objection before the Recovery Officer, who, by an order dated 10.05.2023, has rejected the objection of the petitioners.

Learned counsel for the petitioners submits that the Recovery Officer has assailed the order on the following grounds:

A wrong address was furnished by the Bank which resulted in an ex parte order against the petitioners.

Even though out of the total amount of Rs.9 crores, an amount of Rs.7 crores was recovered, yet in the proclamation of sale, the amount of Rs.9,94,63,095/- has been mentioned.

That the property has not been valued properly and no description of the building in the sale certificate has been mentioned.

In support of the aforesaid submissions, reliance has been placed on the decisions of the Supreme Court in B.A.Sriramaiah v. Income Tax officer, Kolar and another 1963 SCC Online Kar 172, Collector of North Arcot, Vellore v. V.K.Kannan and another 1966 SCC Online Mad 154 and Kishan Chand v. Union of India and others 1974 SCC Online P&H 260 as well as a decision of the combined High Court of Andhra Pradesh in Kwality Agro Products v. Canara Bank, Madikonda Branch and others MANU/HY/0347/2018.

Learned counsel for respondent No.2- Bank, on the other hand, has stated that the amount due as on today from the petitioner is Rs.2,49,24,284/-.

The Supreme Court in United Bank of India v. Satyawati Tondon (2010) 8 Supreme Court Cases 110 has deprecated the practice of the High Courts in entertaining the writ petitions despite availability of an alternative remedy. The aforesaid view has also been reiterated by the Supreme Court in Varimadugu Obi Reddy v. B.Sreenivasulu (2023) 2 Supreme Court Cases 168. The relevant extract of para 36 reads as under:

“36. In the instant case, although the respondent borrowers initially approached the Debts Recovery Tribunal by filing an application under Section 17 of the SARFAESI Act, 2002, but the order of the Tribunal indeed was appealable under Section 18 of the Act subject to the compliance of condition of pre-deposit and without exhausting the statutory remedy of appeal, the respondent borrowers approached the High Court by filing the writ application under Article 226 of the Constitution. We deprecate such practice of entertaining the writ application by the High Court in exercise of jurisdiction under Article 226 of the Constitution without exhausting the alternative statutory remedy available under the law. This circuitous route appears to have been adopted to avoid the condition of pre-deposit contemplated under 2nd proviso to Section 18 of the 2002 Act”

In Sadashiv Prasad Singh v. Harendar Singh and others (2015) 5 Supreme Court Cases 574, Supreme Court held that proper forum for making challenge to an order passed by the Recovery Officer is under Section 30 of the 1993 Act and not a writ petition.

Section 30 of the 1993 Act reads as under:

Appeal against the order of Recovery Officer.—

(1) Notwithstanding anything contained in section 29, any person aggrieved by an order of the Recovery Officer made under this Act may, within thirty days from the date on which a copy of the order is issued to him, prefer an appeal to the Tribunal.

(2) On receipt of an appeal under sub-section (1), the Tribunal may, after giving an opportunity to the appellant to be heard, and after making such inquiry as it deems fit, confirm, modify or set aside the order made by the Recovery Officer in exercise of his powers under sections 25 to 28 (both inclusive).

Thus, the petitioners have the statutory remedy of filing an appeal against the order of the Recovery Officer under Section 30 of the 1993 Act.

For the aforementioned reasons, we are not inclined to entertain this writ petition.

However, subject to the petitioners depositing 50% of the amount due as on today as per the version of the Bank (Rs.2,49,24,284/-) and on their filing an appeal within a period of thirty days from today, the same shall be entertained by the Debts Recovery Tribunal by extending the petitioners, the benefit contained in Section 14 of the Limitation Act, 1963.

While entertaining the writ petition, a Bench of this Court had granted an ad interim order on 01.06.2023. The same shall continue for a further period of six weeks from today.

Accordingly, the Writ Petition is disposed of. No costs.

As a sequel, miscellaneous petitions, pending if any, stand closed.