Madras HC dismisses Challenge against DRAT order Allowing Sale of 42.24 acres by Indian Bank citing Non sale of whole property [Read Order]

In a recent case, the Madras High Court dismissed a challenge against the Deb Recovery Appellate Tribunal [DRAT] order allowing the sale of 42.24 acres by Indian Bank on finding that the bank had not sold the entire extent of 42.24 acres.

K.Chandrasekar, the petitioner, challenged an order dated 27.3.2003 passed by the Debt Recovery Appellate Tribunal [DRAT]. Petitioner, a partner in a partnership firm by name Rama Naidu Gardens, along with the said partnership firm and its other partners, availed a term loan of Rs.5,10,000/- on 4.3.1983 from second respondent/bank. On 6.9.1986, the loan was enhanced to Rs.5,52,700/-.

Borrowers executed promissory note, agreement of hypothecation, term loan agreement, etc., on 17.9.1986. Borrowers also deposited the title deeds in respect of property to an extent of 42.24 acres in Survey No.9421 situated at Melmaligaipattu Village, Oothukottai Taluk, Tiruvallur District, as security. As borrowers defaulted in repayment of loan, second respondent/bank filed O.A.No.1739 of 1998 before the Debts Recovery Tribunal, Chennai [DRT], for recovery of a sum of Rs.22,70,893.60. The DRT issued a recovery certificate for the said sum with simple interest at 12% from the date of the said application till realisation.

While the recovery proceedings were pending, borrowers, through their power agent, Maxworth Orchards (India) Limited, had sold a portion of the mortgaged property, namely 14 acres, with the consent of second respondent/bank. After the recovery certificate was issued, the purchasers of the said 14 acres, who are now shown as respondent Nos.3 to 16, had filed Miscellaneous Application Nos.151 and 152 of 2002 before the Debts Recovery Tribunal-I, Chennai, stating that their property must be excluded from the sale pursuant to the recovery certificate. The Debts Recovery Tribunal-I passed an order on 6.9.2002 to the effect that the Recovery Officer shall first attempt to sell the remaining unsold portion of the mortgaged property before proceeding against the property purchased by respondent Nos.3 to 16.

The bank had sold the entire extent of 42.24 acres to respondent Nos.3 to 16. He would also state that the value of the property had increased and if the property had been sold at the market value, excess amount would have been realised and the same ought to have been paid to petitioner.

Mr.Jayesh Dolia, Senior Counsel appearing for second respondent, on instructions, submitted that the bank had not sold the entire extent and the compromise pertained only to the extent of 14 acres which was sold to respondent Nos.3 to 16 pending the recovery proceedings. The statement of learned Senior Counsel for second respondent is recorded. Counsel for petitioner submitted that, in view of the said submission made by Senior Counsel for second respondent/bank, he would approach the bank for settlement.

Since the writ petition was filed on the premise that second respondent/bank had sold the entire extent of 42.24 acres, which is now found not to be correct, the division bench of K.R.Shriram, Chief Justice and Justice Sunder Mohan dismissed the writ petition.

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