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Judgment
Anand Byrareddy, J.—Heard the learned counsel for the petitioners and the learned counsel for the respondents.
The first petitioner is said to be a registered association of allottees of apartments developed in the vicinity, namely Sovereign Unnathi, by the fifth respondent. The members of the petitioner - Association were said to have been offered an apartment each by Respondent No. 5, which was under a Joint Development Agreement with the then owners of land bearing Sy. No. 511 of Kalkere Village, K.R. Puram Hobli, Bangalore South Taluk measuring an extent of 5 acres 16 guntas. It was duly converted for non-agricultural residential purpose as per the order of the competent authority dated 20.01.2010. It was the representation of Respondent No. 5 that the development project was duly sanctioned by the competent authorities with all necessary licences and permissions, and a sum of Rs. 14 lakh was fixed as the base price for each apartment and the price was also said to vary depending on the choice of floor and the apartment chosen. The petitioners claim that they had believed the representations put forth by Respondent No. 5 and had accordingly parted with advance amounts under agreements executed in favour of each of the members of the petitioners association. It is further alleged that Respondent No. 5 however failed to abide by the schedule prescribed in the development project. The apartments which were to be delivered on or before 30.11.2012 was not delivered in time and even as on date, it remains only partially complete. In the meanwhile, Respondent No. 5 raised claims for additional expenditure on various accounts to complete construction and this led to impasse, whereby the construction had come to a standstill. Though the entire cost of construction as stipulated in the agreement had been paid to Respondent No. 5, on the pretext of escalation in expenditure, he had not completed the construction, while making demands for additional amounts. The petitioners were constrained to approach the Consumer Redressal Forum in this regard. The Consumer Redressal Forum ultimately has directed Respondent No. 5 to return the money with interest. However, Respondent No. 5 has remained incommunicado and was out of reach and the order could not be implemented as against Respondent No. 5. It is in this background that Respondent No. 4 - M/s. Karnataka Bank Limited had claimed that the entire land and building which was the subject matter of agreement between the petitioner and Respondent No. 4 was mortgaged as a security for loan obtained by the fifth respondent and that since Respondent No. 5 had defaulted in repayment of the loan and has failed to service the loan, the fourth respondent - Bank had initiated proceedings for recovery of the amount and sought to bring the land and building to sale. It is at this juncture that the present petition is filed.
The learned counsel for the petitioners would point out that the agreement between the petitioners and Respondent No. 5 is silent about any such encumbrance and that the said respondent having created an encumbrance without the knowledge of the petitioners, Respondent No. 4 is seeking to enforce such an agreement in spite of having received a substantial amount of Rs. 190 crore. Respondent No. 4 - Bank has pressurized the financier of the petitioners to deposit a huge amount of Rs. 190 crore in an Escrow Account. Notwithstanding the same, the fourth respondent seeking to proceed post-haste in invoking the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ''the SARFAESI Act'', for brevity), in desperation, the petitioners are before this Court.
It is further stated that Respondent No. 4 - Bank has violated all banking norms and especially, the guidelines set by the Reserve Bank of India in allowing Respondent No. 5 to go scot-free and has not sought to enforce the charge against Respondent No. 5 and though there is a commercial complex included in the development project which stands in the name of the fifth respondent, the Bank has not taken any steps to enforce its security against the said property and is seeking to arm-twist the petitioners into paying more money even though it has managed to collect a large sum of Rs. 190 crore at the cost of the petitioners. Further, a representation having been made to the Reserve Bank of India to take appropriate action in respect of the irregularities and defaults committed by Respondent No. 5, the same has remained in limbo and the Reserve Bank of India has ignored the situation, thereby placing the petitioners at the mercy of Respondent No. 5, which proceeds in a biased manner in seeking to enforce an obligation, which is not binding on the petitioner. Further, it is pointed out that though the Reserve Bank of India on receiving notice of the present petition was represented through counsel, for some unknown reason, the counsel had failed to represent and had filed a memo of retirement. The Reserve Bank of India is thus unrepresented before this Court. The learned counsel would submit that if this Court does not interfere at this stage and protect the interest of the petitioners, they would be put to irreparable loss and their hard-earned money would be lost for ever and since Respondent No. 5 is playing truant, it would be well-nigh impossible for the petitioners to salvage the situation and therefore, in the interest of justice, seeks the intervention of this Court.
While the learned counsel for Respondent No. 4 would take strong exception to allegations made against Respondent No. 4 and it is pointed out that Respondent No. 4 is a banker and is proceeding with all responsibility in accordance with law on the basis of charges that have been created in respect of the land and building. He has taken strong exception to the uncharitable remarks made against the conduct of the Bank and its officers. He would point out that there is no impediment for the Bank to proceed, in accordance with law. And secondly, the very prayer sought for in the present petition is not maintainable and since the petitioners themselves seek that the Respondent No. 4 should proceed against Respondent No. 5 to recover properties, which is exactly what the fourth respondent is about, it is the contradiction in terms for the petitioners to seek a direction to the Reserve Bank of India to take action against the fourth respondent, in spite of the fourth respondent having taken appropriate measures to recover its monies.
In the above background, the remedy of the petitioners if they seek to negate the liability and seek to claim that the petitioners were agreement holders having parted with the entire price reserved under the agreement to be denied their due at this point of time on the basis of a charge created by Respondent No. 5 without the knowledge of the petitioners, results in a miscarriage of justice, is a matter which requires to be established with reference to facts and therefore, to proceed on the basis of affidavits supporting the writ petition would not be advisable for this court to intervene.
It would at best be possible for the petitioners to file an appropriate suit for damages in the meanwhile, to secure their possession of the property, if they are in possession of the same.
Insofar as the inaction on the part of the Reserve Bank of India is concerned, it is indeed inexplicable that the counsel who represented the Reserve Bank of India has withdrawn from the proceedings and there is no move on the part of the Reserve Bank of India to engage any other counsel. This would indicate the sense of irresponsibility on the part of the Reserve Bank of India. It is in that background that the complaint of the petitioners that their representation has not been considered by the RBI and no further steps have been taken, would have to be accepted. It is therefore expected of the Reserve Bank of India to proceed forthwith and to examine the allegations made by the petitioners and to take appropriate action if necessary. This Court has stopped short of issuing a bailable warrant to the person representing the Reserve Bank of India for its conduct before this Court in having engaged counsel and thereafter having withdrawn the authority and not having taken any steps to engage some other counsel. It would be expected of the Reserve Bank of India to take action forthwith on the representation, if it is found to be validly made.
With that observation, the petitions stand disposed of. Since the remedy of the petitioners lies elsewhere, the interim order granted earlier stands vacated.