Renganathan .P vs. The Authorized Officer

Facts

The petitioner, a partner in an IT firm, borrowed a loan of Rs. 700.00 lakhs from Canara Bank (respondent 2) in 2013, mortgaging his properties. Due to financial difficulties, allegedly exacerbated by demonetization and GST, the petitioner defaulted on the loan. The bank classified the account as NPA and issued a demand notice under SARFAESI Act for Rs. 25,82,24,208.18. The petitioner challenged subsequent auction sale notices and orders of status quo/interim stay multiple times in previous writ petitions (W.P.(MD)No.17624 of 2022, W.P.(MD)No.23983 of 2022, W.P.(MD)No.2786 of 2023). Despite conditional orders to pay amounts, the petitioner failed to comply. The bank proceeded with the sale of secured assets, issuing a sale certificate dated 03.10.2022 to the third respondent (auction purchaser). The current writ petition challenges this sale certificate and seeks to have the property handed over to the petitioner upon payment of the auction price of Rs. 17,20,10,000/-.

Held

The Court held that the petitioner's prayer in the present writ petition had already been considered by this Court in previous litigation. Specifically, in W.P.(MD)No.17624 of 2022, the Court had noted that the petitioner failed to comply with conditional orders of stay, even after extensions. Furthermore, the Court had observed that a sale certificate had been issued and registered, creating third-party rights, and that the petitioner could not invoke Article 226 by raising disputed facts regarding property valuation without exhausting remedies before the Debts Recovery Tribunal. The Court also noted that liberty was granted in a previous writ petition for the petitioner to approach the Debts Recovery Tribunal if aggrieved. Therefore, re-adjudicating the same issues which had reached finality before this Court was not permissible. The petitioner was not entitled to the relief sought in the present writ petition.

Key Issues

1. Whether the petitioner can invoke Article 226 of the Constitution to challenge the valuation of the property and the sale process when a third-party right has been created and the sale certificate has been registered, especially after failing to comply with conditional orders of this Court and previous writ petitions? 2. Whether the issues raised by the petitioner in the present writ petition have already been decided or reached finality in previous proceedings before this Court, thereby precluding re-adjudication? Petitioner's arguments: The respondent bank grossly undervalued the secured assets without proper valuation, selling them for a sum of Rs. 17 crores when their worth was over Rs. 80 crores. The sale notice was not published properly to prevent outside bidders, suggesting collusion. The petitioner is ready to pay the entire sale amount and redeem the property. Respondents' arguments: The petitioner has repeatedly challenged the actions of the respondent banks in various ways and has not allowed the auction to proceed. The petitioner failed to repay loan dues and did not comply with conditional orders of interim stay, even after extensions. Consequently, the respondent banks sold the secured assets. The previous writ petition (W.P.(MD)No.17624 of 2022) already addressed similar issues, including the creation of third-party rights.