Housing And Urban Development Corporation Ltd. And Ors. vs Maharaji Educational Trust And Ors.

S.N.H. Zaidi, J

This appeal impugns the order dated 25.1.2012 of the Presiding Officer of Debts Recovery Tribunal-I, Delhi holding additional charge of DRT-II, Delhi passed on application I.A. No. 32/2012 filed in SA No. 81/2011 whereby the appellants have been restrained from proceeding against property Nos. 1 to 5 until the matter relating to property No. 6 is adjudicated. The circumstances of the case indicate that when after issuing the demand notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the SARFAESI Act) to M/s. Maharaji Educational Trust (MET) and its Managing Trustee, the (226) respondents herein, claiming an amount of Rs. 3,49,51,09,993.00, the Housing and Urban Development Corporation Ltd. (HUDCO) had issued notice under Section 13(4) thereof for taking the possession of the mortgaged properties, it was challenged by the respondents by filing S.A. No. 81/2011 before the DRT-II Delhi. An interim relief was also sought in the S.A. inter alia, on the grounds that taking of the possession or sale of properties Nos. 1 to 5 mentioned in the notice, would adversely affect the studies of thousands of students and interest of the employees as there exist a hospital, a medical college, a dental college, a hostel and a residential complex of the employees thereon and the sale proceeds of those five properties would not be sufficient to clear the dues in view of its valuation, but if property No. 6, which is a vacant land admeasuring about (sic)3.45 acres and valuing about Rs. 500 crores, is sold, the liability of the borrower would be fully liquidated. It was also said that the respondents were ready to give symbolic possession of properties Nos. 1 to 5 and actual possession of property No. 6 with the right to sell them if the sale proceeds of property No. 6 would fall short to meet the entire dues.

During the course of hearing on interim relief on 30.11.2011 before the Tribunal below, the Counsel of the parties and the Authorised Officer of HUDCO had agreed that only symbolic possession of properly Nos. 1 to 5 would be taken without disturbing the management of the institutions and the Tribunal was requested by the S.A. applicants to direct HUDCO to sell property No. 6 at the first instance and property Nos. 1 to 5 be proceeded against only in the event of any shortfall. However, since on that day, M/s. S.G.S. Constructions and Developers (P) Ltd., hereinafter referred to as SGS Ltd., had filed an interim application (I.A. No. 894/2011) in the S.A. along with the copy of order dated 22.11.2011 of the Lucknow Bench of Allahabad High Court passed in W.P. No. 11669 (MB) 2011 whereby the proceedings qua property No. 6 were directed to remain in abeyance till the next date of hearing, therefore, the Tribunal below did not make any order on that date qua the interim relief.

On 1.12.2011 the Authorised Officer of HUDCO issued a possession-cum-sale notice, which was published in 'The Times of India, New Delhi' on 7.12.2011, stating that the possession of all the six properties, which were subjected to the charge of HUDCO for an amount of Rs. 349,51,09,993.00 together with interest, had been taken on 1.12.2011 and if the said amount is not paid within 30 days from that date, he would proceed to recover the dues by the sale of property No. 6 first. However, on 10.1.2012, he issued another auction notice, which was published on 12.1.2012, for the sale of property No. 1 to 5 only.

The respondents assailed the aforesaid order dated 22.11.2011 of the Lucknow Bench of Allahabad High Court by filing SLP (C) No. 1587/2012 and the Hon'ble Supreme Court, vide order dated 17.1.2012, stayed the operation of the said order. The appellants also challenged the very same order dated 22.11.2011 in SLP (C) No. 2648/2012 and the Hon'ble Apex Court staying the operation of that order on 24.2.2012 tagged that SLP along with SLP (C) No. 1587/2012.

The S.A. applicants/respondents, thereafter filed an application (I.A. No. 32/2012) seeking direction/interim stay against HUDCO and its Authorised Officer qua the sale of property Nos. 1 to 5 as per the sale notice dated 12.1.2012. SGS Ltd. also filed application (I.A. No. 33/2012) for its impleadment in the S.A claiming its interest in properly No. 6 on the basis of an agreement to sell dated 26.8.2010 entered into with MET, The learned Tribunal below heard all the parties on both the applications and by order dated 25.1.2012 dismissed the impleadment application (I.A. No. 33/2012) and disposed of application (I.A. No. 32/2012) observing that since the matter pertaining to property No. 6 is seized with the Hon'ble Apex Court, it does seem appropriate to allow the HUDCO to proceed in respect of other properties until the matter relating to property No. 6 is adjudicated and HUDCO was directed not to proceed further qua the properties mentioned in the auction notice dated 12.1.2012. Feeling aggrieved with the order passed on I.A. No. 32/2012. HUDCO and its Authorised Officer have assailed the same in this appeal.

Mr. A.K. Singh, the learned Counsel appearing for the appellants, submitted that this appeal is confined to property Nos. 1 to 5 only and does not relate to property No. 6. He pointed out that HUDCO had filed an O.A. No. 100/2002 under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, the RDDBFI Act) which was allowed by the PRT in 2008 and an RC for the recovery of about Rs. 148 Crores together with interest was issued against the respondents and the RC was affirmed by this Tribunal in appeal. He also contended that though the Recovery Officer (R.O.) is seized with the recovery proceedings and he is to decide as to which of the property is to be sold for the recovery of the R.C. amount, but as per the proposition of law laid down by the Supreme Court in Transcore v. Union of India & Ors., VIII (2006) SLT 617 : I (2007) BC 33 (SC) : 135 (2006) DLT (SC) 151 : (2008) 1 SCC 125, HUDCO is well within its rights under the SARFAESI Act to simultaneously initiate measures for the enforcement of its security interest qua the secured assets. It was also pointed out by him that possession of property No. 6 had been given back to the respondents. According to Mr. Singh, the learned Tribunal below had failed to appreciate that besides property No. 6 property Nos. 1 to 5 were also mortgaged with the appellants and as such the said properties could also be proceeded against to recover the out-standing amount of debt, which is now more than Rs. 350 crores. He further pointed out that the Hon'ble Supreme Court had finally disposed of all the SLPs pending before it, vide order dated 15.1.2013, directing that till the matter is disposed of finally by the Allahabad High Court the interim orders passed by it would continue.

Mr. Abhishek Singhvi, the learned Senior Advocate, contended on behalf of the respondents that the object of both the RDDBFI Act as well as the SARFAESI Act is the speedy recovery of the public money given to the borrowers by the Banks/financial institutions and since the respondents are agreeable that property No. 6, which is about Rs. 500 crores in valuation and sufficient to liquidate the respondents' liability, may be proceeded against by the appellants, there is no justification for the appellants to proceed against property Nos. 1 to 5, whereon hospitals, medical and dental colleges are being run and there exist hostels and residential complex, as it would very adversely affect the studies of hundreds of students as well as the livelihood of the staff employed in those institutions. It was also pointed out that the appellants had also agreed before the Tribunal below that it would proceed against property No. 6 at the first instance and if the sale proceeds of property No. 6 would fall short to liquidate the Liability only then property Nos. 1 to 5 would be proceeded against, to which the respondents had also agreed.

I have considered the submissions of the parties' learned Counsel and looking to the facts and circumstances of the case I agree with the appellants' Counsel that in view of the law laid down by the Supreme Court in Transcore v. Union of India (supra) the secured creditor is entitled to proceed under the SARFAESI Act against the secured assets for the enforcement of its security interest, notwithstanding the fact that the R.O. is seized with the recovery of the R.C. amount under the RDDBFI Act and as such the Authorised Officer of appellant No. 1 can proceed against properties Nos. 1 to 5 besides property No. 6 to recover the amount of debt due from the respondents. It is, however, pertinent to note that since the main object of the SARFAESI Act is the speedy recovery of the defaulted loans and if the said object can be achieved by proceeding against one secured asset, it would not be necessary for the secured creditor to proceed against the other assets. It has been said in the supplementary affidavit filed on behalf of the respondents that there exist on property Nos. 1 to 5 a medical college wherein around 500 students for undergraduate courses and 300 students for PG Degree and Diploma courses have been enrolled, a 700-bedded hospital attached to the medical college wherein healthcare services are provided to the patients, a dental college and a dental hospital wherein around 500 students have been enrolled for under-graduate courses and 40 students are being provided with training for PG courses besides hostels and residential complex of the staff, whereas property No. 6 is an open agricultural land. It is also not disputed that property No. 6 is worth more than Rs. 400 crores and its sale alone can liquidate the entire liability of the respondents. The parties' learned Counsel are unanimous on the point that after the final disposal of the SLPs by the order dated 15.1.2013 whereby interim orders passed by the Apex Court have been continued until the final disposal of W.P. No. 11669/2011 by the High Court, there is no legal impediment in proceeding against property No. 6. It has been informed by the respondents through additional affidavit dated 20.5.2013 that the said Writ Petition which was listed before the Lucknow Bench of the Allahabad High Court on 15.5.2013 had been adjourned to 7.8.2013.

In view of above, I am of the view that it would be appropriate that instead of proceeding against property Nos. 1 to 5, the appellants should proceed to sell property No. 6 in the first instance in accordance with the provisions of the SARFAESI Act and the rules made thereunder, for which the respondents are also agreeable as per their supplementary affidavit. As it has been pointed out by the respondents that they have a buyer who is ready to purchase property No. 6 for Rs. 395 crores, which is also acceptable to them, the Authorised Officer of appellant No. 1 may consider to sell property No. 6 by private treaty in accordance with Rule 8(5)(d) of the Security Interest (Enforcement) Rules, 2002, before resorting to other modes of sale under the said Rule 8(5). In case the entire liability of the respondents does not liquidate by the sale of property No. 6, then other secured assets may be proceeded against for the recovery of the remaining amount of debt. The order impugned passed qua I.A. No. 32/2012 is hereby modified to the above extent and the appeal is disposed of accordingly.

Copy of his order be furnished to the parties as per law and be also sent to the DRT concerned.