A.P. HIGH COURT - M/s. Swetha Exports and M/s. Swetha Exports India Pvt. Ltd have sought a mandamus to declare the action of the respondents, in taking recourse to the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short the SARFAESI Act) to execute the recovery certificate issued by the Debts Recovery Tribunal, Visakhapatnam (DRT for short) in O.A.Nos.46 and 50 of 2013 against the petitioners, as illegal and arbitrary; and to declare the action of the respondents, in issuing letter dated 08.08.2016 rejecting the petitioners representation dated 24.06.2016 and cancelling the One Time Settlement (OTS) granted vide proceedings dated 19.01.2016, as arbitrary and illegal. The petitioners seek a direction to the respondents to adhere to the OTS granted by them to the petitioners vide proceedings dated 19.01.2016, and to co-operate with them by partially releasing the secured assets proportionate to the payment made by them. - their lordships dismissed and held that As noted hereinabove, both the DRT and the respondent bank have been extremely indulgent in extending to the petitioner the benefit of a one time settlement, waiving even a part of the principal apart from the interest thereon in its entirety. It is the petitioners who failed to make payment under the OTS scheme resulting in its cancellation, vide proceedings dated 08.08.2016, by the respondent-bank. = REPEATED EFFORTS OF THE RESPONDENT TO PUT THE SUBJECT PROPERTIES TO SALE AND RECOVER ITS DUES HAVE BEEN THWARTED BY THE PETITIONERS ON ONE PRETEXT OR THE OTHER:

THE HONBLE THE ACTING CHIEF JUSTICE RAMESH RANGANATHAN AND  THE HONBLE MS. JUSTICE J.UMA DEVI                      

Writ Petition Nos.28071 of 2016

22-09-2017

M/s.Swetha Exports rep. by its Prop:Dr.B.Srinivasa Rao .Petitioner

1. Bank of India & Anr. . Respondents

Counsel for Petitioner: Sri P.S.Rajasekhar

Counsel for respondents:  Smt.T.Vidya Rani, Learned Standing  Counsel for Bank of India.


<GIST:

>HEAD NOTE:  

? Citations:

1.(2008) 1 SCC 125
2.(2002) 1 SCC 367
3.(2009) 8 SCC 257

THE HONBLE THE ACTING CHIEF JUSTICE RAMESH RANGANATHAN              
AND
THE HONBLE MS. JUSTICE J.UMA DEVI      
Writ Petition Nos.28071 and 28106 of 2016

COMMON ORDER: (Per the Honble the Acting Chief Justice Ramesh Ranganathan)    
      In these two Writ Petitions, M/s. Swetha Exports and     M/s.
Swetha Exports India Pvt. Ltd have sought a mandamus to declare 
the action of the respondents,  in taking recourse to the provisions
of the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (for short the
SARFAESI Act) to execute the recovery certificate issued by the
Debts Recovery Tribunal, Visakhapatnam (DRT for short) in
O.A.Nos.46 and 50 of 2013 against the petitioners, as illegal and
arbitrary; and to declare the action of the respondents, in issuing
letter dated 08.08.2016 rejecting the petitioners representation
dated 24.06.2016 and cancelling the One Time Settlement (OTS) 
granted vide proceedings dated 19.01.2016, as arbitrary and
illegal.  The petitioners seek a direction to the respondents to
adhere to the OTS granted by them to the petitioners vide
proceedings dated 19.01.2016, and to co-operate with them by
partially releasing the secured assets proportionate to the payment
made by them.  
      The petitioners are carrying on business in the manufacture
and export of buffalo and ox horn button blanks ever since 2001.
The petitioner in W.P.No.28071 of 2016 obtained an Export
Packing Credit and Rupee Advance against bills sent for collection,
from the 1st respondent-bank, through the 2nd respondent for
various limits which stood at Rs.7.10 Crores as on 09.04.2008.
The debt, secured by creating equitable mortgage of 12 items of
immovable property owned by the proprietor of the petitioner and
his family members, was declared a Non-Performing Asset on
31.03.2012.  The 2nd respondent issued a notice, under
Section13(2) of the SARFAESI Act on 07.07.2012, demanding  
payment of Rs.7,27,93,768.64 ps.  Thereafter, the 2nd respondent
issued a demand notice dated 08.01.2013 calling upon the
petitioners to pay the amount due of Rs.7,13,00,000/- as on
31.03.2012.  The 1st respondent initiated recovery proceedings
under Section 19 of the Recovery of Debts Due to Banks and
Financial Institutions Act, 1993 (hereinafter called the RDDB Act)
filing O.A.No.46 of 2013 on the file of the DRT for recovery of
Rs.8,33,10,044.37 ps.  Certificate dated 02.05.2014 was issued for
recovery of Rs.9,17,41,263.37 ps, and was forwarded to the
Recovery Officer, for realisation of the amount due, under Sections
25 to 29 of the RDDB Act.  The Recovery Officer issued notice dated
15.05.2014, in R.P.No.60 of 2014 in O.A.No.46 of 2013,
demanding the amount due, and the petitioner was informed that,
if they failed to make payment, the amount would be recovered
under Sections 25 to 29 of the RDDB Act, the 2nd and 3rd
Schedules to the Income Tax Act, 1961 and the Rules made
thereunder.
      Thereafter the 2nd respondent issued notice dated
15.07.2015, under Section 13(4) of the SARFAESI Act r/w Rules 8
and 9 of the Security Interest (Enforcement) Rules, 2002
(hereinafter referred to as the Rules) with respect to 12 items of
immovable property furnished as security by the petitioners.  The
said notice referred to the amount due as Rs.9,17,41,263.37 ps
which the petitioners claim is exactly the same amount as is
referred to in the recovery certificate issued by the DRT. The 2nd
respondent issued sale notice dated 09.10.2015, under Rule 8(6) of
the Rules, stating that Rs.9,17,41,263.37 ps. was due.  The date of
sale was fixed as 23.11.2015, and the reserve price at Rs.529.39
Lakhs for the 12 items of immovable property.  The petitioner
claims to have informed the 2nd respondent to defer the sale as the
reserve price was very low.  Thereafter, the 2nd respondent issued
another sale notice, under Rule 8(6) of the Rules, dated 26.10.2015
proposing to conduct a sale on 03.12.2015 and 04.12.2015.  In the
sale notice, the 2nd respondent stated that the amount due was as
decreed by the DRT in O.A.No.46 of 2013 which was the subject
matter of recovery in R.P.No.60 of 2014.  The 2nd respondent fixed
the reserve price at Rs.520.09 Lakhs for the 12 items of immovable
property.
      The sale notice dated 26.10.2015 was subjected to challenge
by the petitioner in S.A.No.252 of 2015 filed before the DRT under
Section 17 of the SARFAESI Act.  The petitioner claims to have
made a representation to the 2nd respondent on 04.11.2015
seeking to settle the amounts due, both by it and by its sister
concern, on a one time payment of Rs.1205 Lakhs, and to have
informed that 10% thereof i.e Rs.120 Lakhs would be paid upfront
after receiving consent for the OTS.  The petitioners request was
rejected by the 2nd respondent by their letter dated 06.11.2015 on
the ground that the upfront amount of 10% was not paid along
with the offer letter dated 04.11.2015.
      By its order in S.A.No.252 of 2015 dated 18.11.2015, the
DRT directed the petitioner to deposit Rs.60 Lakhs on or before
03.12.2015 and a further sum of Rs.60 Lakhs on or before
14.12.2015 (totalling to Rs.120 lakhs representing 10% of the OTS
offer).  Upon such deposit, the respondent-bank was directed to
defer the proposed sale, consider the OTS proposal, and convey
their decision on or before 17.12.2015.  As the petitioner had
expressed its willingness to make payment of the entire OTS offer
of Rs.1205 lakhs on or before 31.03.2016, the respondent-bank
was directed to grant them time and consider the OTS proposal.
The DRT made it clear that, in the event of failure of the petitioner
to deposit the upfront amount of Rs.120 Lakhs, the respondents
were at liberty to proceed and take action in accordance with law.
The petitioner complied with the order of the DRT, and deposited
Rs.60 Lakhs on 02.12.2015, and the remaining Rs.60 Lakhs on
13.12.2015, totalling to Rs.120 Lakhs with the 2nd respondent.
The 2nd respondent, vide letter dated 19.01.2016, accepted the
petitioners request for OTS on a one time payment of Rs.12.71
Crores on condition that the properties would be released only after
full and final payment of the OTS amount.
        The petitioner informed the 2nd respondent, by their letter
dated 20.01.2016, that their commitment under the OTS could be
complied with only if their properties were released proportionate
to the payments made; as they had already paid a sum of Rs.120
Lakhs as the upfront amount for OTS and, if the 2nd respondent
released property worth 40% thereof i.e Rs.48 Lakhs, the petitioner
would sell the same for a higher amount than the upset price fixed,
and make payment to the respondents; and, in this manner, they
would be able to liquidate the entire amount of OTS within the
time fixed by the DRT i.e. 31.03.2016.  The petitioner offered two
cheques bearing Nos.092460/005151 dated 25.02.2016 for Rs.700  
Lakhs and 092461/005152 dated 25.03.2016 for Rs.451 Lakhs  
along with their letter dated 28.01.2016 towards full payment of
the OTS amount.  They requested the respondents to release partial
security, at least to the extent of 40% of the amount paid, to enable
them to honour their commitment.  The 2nd respondent, vide letter
dated 25.02.2016, rejected the petitioners request for partial
release of the properties, and again issued a sale notice dated
05.04.2016, and an e-auction sale notice dated 16.04.2016, under
Rule 8(6) of the Rules proposing to conduct sale of the 12 items of
immovable property on 17.05.2016 fixing the reserve price at
Rs.529.39 Lakhs.
      The petitioner challenged the validity of the e-auction sale
notice dated 16.04.2016 in W.P.No.16243 of 2016. They filed
I.A.No.206 of 2016 in S.A.No.252 of 2015 before the DRT for
restoration of the OTS proposal.  The DRT, by its order dated
12.05.2016, directed the respondent-bank to allow inspection of
the original title deeds to the probable buyers brought by the
applicants, and to allow sale of property to the buyers arranged by
the applicants.  The DRT opined that, in this manner, the
respondent-bank would be able to recover its dues directly from the
petitioner which, in turn, would get more value for their properties.
The petitioner was directed to pay Rs.10 Lakhs  within one week
from the date of the order, the respondent-bank was directed to
allow inspection of the original title deeds to the probable buyers
brought by the petitioner, accept the amount paid by the petitioner
or by the probable buyers, and to co-operate with the petitioner in
the sale of the secured assets to the buyers arranged by them.  The
OTS amount of Rs.12.71 Crores was directed to be accepted on
payment of interest thereon upto 30.06.2016.  The petitioners were
directed to arrange buyers, and pay the OTS amount along with
interest upto 30.06.2016. The DRT directed that, on payment of
Rs.10 Lakhs within one week, the respondent-bank should defer
the sale to be held on 18.05.2016, and allow time to the applicants
to clear the dues upto 30.06.2016 by sale of the properties
themselves; and, if the petitioner failed to pay Rs.10 Lakhs within
one week and in case the OTS amount along with interest, even
after showing the original title deeds to the petitioners and their
probable buyers, was not paid, the respondent-bank was at liberty
to proceed with the sale of the properties after 30.06.2016. With
these observations, S.A.No.262 of 2015 was finally disposed of.
      The petitioner paid Rs.10 Lakhs on 15.05.2016 and, on the
ground that the respondents were directed by the DRT to defer the
sale, they withdrew W.P.No.16243 of 2016 on 19.05.2016.  The 2nd
respondent, vide letter dated 31.05.2016, informed the petitioner
that it was not possible to show the original title deeds as the same
had been deposited with the recovery officer in the recovery
proceedings; and the petitioner may arrange for its inspection, by
the prospective purchasers, at the DRT.  By their representation
dated 24.06.2016, the petitioner informed the 2nd respondent that,
as the time fixed by the DRT was due to expire by 30.06.2016, they
may be permitted to sell the properties one by one.  They
undertook to pay at least 50% more than the reserve price fixed for
each property. The 2nd respondent, by its letter dated 08.08.2016,
rejected the petitioners request. The proceedings issued earlier,
accepting their OTS offer, was also cancelled.  The action of the
respondents, in taking recourse to the provisions of the SARFAESI
Act, and in issuing letter dated 08.08.2016, are under challenge in
these Writ Petitions.
      The debt of the petitioner, in W.P. No.28106 of 2016, was
declared a non-performing asset on 29.07.2011.  The second
respondent-bank issued notice dated 02.12.2011 under Section
13(2) of the SARFAESI Act demanding payment of  
Rs.12.86,85,448/-.  A possession notice, under Section 13(4) of the
SARFAESI Act, was issued on 20.10.2012.  Thereafter the second
respondent-bank issued a notice on 08.01.2013 demanding
payment of Rs.12.88 crores due as on 27.07.2011. The first
respondent initiated recovery proceedings under Section 19 of the
RDDB Act filing O.A. No.50 of 2013 for recovery of
Rs.15,98,44,277/-.  The said O.A. was allowed by the DRT on
16.06.2014, and a certificate was issued on 23.07.2013 for
recovery of a sum of Rs.18,59,29,683/-.  The certificate was
forwarded to the Recovery Officer, for realisation of the amount
due, under Sections 25 to 29 of the RDDB Act.  The Recovery
Officer issued notice on 25.08.2014, in R.P. No.107 of 2014 in O.A.
No.50 of 2013, demanding payment of the amount due, failing
which recovery would be made under the provisions of Sections 25
to 29 of the RDDB Act, the II and III Schedules to the Income Tax
Act, 1961, and the Rules made thereunder.
        Thereafter the second respondent-bank issued a notice on
05.11.2015, under Section 13(4) of the SARFAESI Act, read with
Section 8(6) of the Rules in respect of six items of immoveable
property, proposing to conduct a sale on 14.12.2015.  In the sale
notice, the second respondent-bank stated that the amount due
was as decreed by the DRT in O.A. No.50 of 2013 which was the
subject matter of recovery in R.P. No.107 of 2014.  The second
respondent-bank fixed the reserve price as Rs.161.64 lakhs for the
six items of immoveable property.  The second respondent-bank
again issued E-auction sale notice, under Section 8(6) of the Rules,
on 09.11.2015.  The petitioner claims that a representation was
submitted by their sister concern to the second respondent-bank
on 04.11.2015 to settle the amounts due by them, and for a one
time payment of Rs.12.5 crores, and that 10% upfront amount of
Rs.120 lakhs would be paid after receiving consent for OTS.  The
petitioners OTS request was rejected by the second respondent-
bank, by its letter dated 06.11.2015, on the ground that the
upfront amount of 10% had not been paid along with the offer
letter dated 04.11.2015.  The DRT, by order in S.A. No.252 of 2015
dated 18.11.2015, directed the petitioner to deposit Rs.120 lakhs
(Rs.60 lakhs on or before 03.12.2015 and the balance Rs.60 lakhs
on or before 14.12.2015).  On such deposit, the respondents were
directed to defer the proposed sale, consider the one time
settlement proposal, and convey their decision on or before
17.12.2015.  Taking note of the petitioners offer to settle the debt
on or before 31.03.2016, the DRT directed the respondent-bank to
grant them time, and to consider their one time settlement
proposal.  The DRT observed that, in the event of the petitioners
failure to deposit the upfront amount, the respondents were at
liberty to proceed in accordance with law.  The petitioner deposited
the said sum of Rs.120 lakhs within time.  By its proceedings
dated 19.01.2016, the second respondent-bank accepted the
proposal, for a one time settlement, of Rs.1270 lakhs, on condition
that the mortgaged properties would be released after full and final
payment of the OTS amount.  The petitioner submitted its
representation on 20.01.2016 informing the respondent-bank that
the commitment, under OTS, could be complied with only if the
second respondent released the properties proportionate to the
payments made.  They offered two cheques i.e cheque dated
25.02.2016 for Rs.700 lakhs and cheque dated 25.03.2016 for
Rs.451 lakhs, under covering letter dated 28.01.2016, towards full
payment of the OTS.  They requested the respondents to release
partial security to the extent of 40% of the amount paid.  The
second respondent-bank, by its letter dated 25.02.2016, rejected
the petitioners request for partial release of the properties.
        The second respondent-bank again issued E-auction notice
dated 13.04.2016, under Rule 8(6) of the Rules, proposing to
conduct a sale of six items of immoveable property on 18.05.2016,
fixing the reserve price at Rs.161.64 lakhs.  While the petitioner
filed W.P. No.16234 of 2016, its sister concern filed I.A. No.206 of
2016 in S.A. No.252 of 2015 before the DRT for restoration of the
OTS proposal.  By its order dated 12.05.2016, the DRT directed the
respondent bank to allow inspection of the original title deeds to
the probable buyers brought by the petitones, and to allow sale of
the property to the buyers arranged by them.  The DRT observed
that, in this way, the respondent bank would be able to recover its
dues directly from the petitioners, and the applicants would also be
able to get more value for their property.  The DRT directed the
petitioner to pay Rs.10 lakhs within one week from the date of the
order, and directed the respondent bank to allow inspection of the
original title deeds to the probable buyers brought by the
petitioners, and to accept the amount paid by the petitioners or
paid by the probable buyers.  The respondent bank was also
directed to cooperate with the petitioner in the sale of the secured
assets to the buyers arranged by them.  The OTS amount of 1270
lakhs was directed to be accepted on payment of interest thereon
upto 30.06.2016.  The petitioners were directed to arrange buyers,
and to pay the OTS amount along with interest upto 30.06.2016.
On payment of Rs.10 lakhs within one week from the date of the
order, the DRT directed the respondent-bank to defer the sale to be
held on 18.05.2016, and to allow time to the petitioners to clear off
the dues upto 30.06.2016, by sale of property themselves.  The
DRT made it clear that, in case the petitioners failed to pay Rs.10
lakhs within one week and in case the OTS amount along with
interest, was not paid even after showing the original title deeds to
the petitioner and the probable buyers, the respondent bank was
at liberty to proceed with the sale of the said properties after
30.06.2016.  S.A. No.252 of 2014 was, accordingly, disposed of.
      The petitioner paid Rs.10 lakhs on 15.05.2016 in compliance
with the order of the DRT, and thereafter withdrew W.P. No.16234
of 2016 on 19.05.2016.  The second respondent-bank, vide letter
dated 31.05.2016, informed the petitioner that it was not possible
to show the original deeds as they had been deposited with the
Recovery Officer in the recovery proceedings, and the petitioner
may arrange for inspection of the same, by the prospective
purchasers, at the Tribunal.  The petitioner informed the second
respondent, by its letter 24.06.2016, that, as the time fixed by the
DRT was due to expire by 30.06.2016, they may be permitted to
sell the properties one by one.  They undertook to pay 50% more
than the reserve price amount for each property.  The respondent-
bank, by its letter dated 08.08.2016, rejected the petitioners
request, and cancelled the OTS accepted by it earlier vide letter
dated 19.01.2016.  Aggrieved thereby, the petitioner filed W.P.
No.28106 of 2016.
      In the affidavit filed in support of the Writ Petition, the
petitioners stated that the respondent-bank had lost sight of the
fact that no person would be willing to go to the DRT for inspection
of the original documents for fear of buying properties under
litigation; as against the order of the DRT dated 18.11.2015,
directing the second respondent-bank to consider the OTS
proposal made by them within thirty days i.e., on or before
17.12.2015, the second respondent-bank had accepted the OTS  
proposal only on 19.01.2016; and the petitioner had lost valuable
time of more than one month to meet the dead line of 31.03.2016
fixed by the Tribunal.
      In his counter-affidavit, the Chief Manager of the respondent-
bank submits that the petitioner was not entitled to seek plural
remedies in a single Writ Petition; they did not challenge the
specific order passed by the authorised officer of the respondent-
bank; they had only challenged the letter dated 08.08.2016
rejecting their representation dated 24.06.2016, and in cancelling
the OTS acceptance vide letter dated 19.01.2016; the OTS approval
or rejection did not fall within the ambit of the SARFAESI Act; and
since it did not contain a specific prayer and was vague, the Writ
Petition as filed was not maintainable.  The respondents contend
that granting or rejecting OTS fell within the credit decision and
discretionary power of the respondent-bank, for which a writ of
mandamus cannot be issued; the bank cannot be compelled to  
accept the OTS proposal of the petitioner; granting of OTS may fall
within the purview of contractual obligations, and rejection of OTS
may mean breach of the contract; contractual obligations are not,
ordinarily, enforced in proceedings under Article 226 of the
Constitution of India; the petitioners loan account was classified
as an NPA on 29.07.2011 because of non-payment of the dues;
notices under Sections 13(2) and 13(4) were issued; the
respondent-bank had filed O.A.Nos.46 and 50 of 2013, and had
obtained recovery certificates dated 02.05.2014 and 23.07.2014 for
Rs.9,17,41,263.37ps. and Rs.18,59,29,683/- respectively under
Section 19 of the RDDB Act; the process of execution was pending
before the Recovery Officer, DRT, Visakhapatnam; the respondent-
bank was entitled to proceed under the SARFAESI Act without
giving up the O.A or the recovery proceedings under the RDDB Act;
and the Writ Petition, challenging the recovery proceedings
pending before the DRT, was not maintainable.
      It is further stated that, in response to the petitioners
request for grant of OTS for Rs.12.5 Crores, the petitioner was
informed, by the respondent-bank, to deposit the upfront amount
of 10% on the OTS offer for the purpose of processing the OTS
proposal as per the norms prevailing in the Bank.  On the ground
that the upfront fee was not paid by the petitioner, along with their
offer letter dated 04.11.2015, the respondent-bank had rejected the
offer.  Later, the respondent-bank had, by their letter dated
19.01.2016, conveyed its acceptance of OTS for Rs.11.51 Crores,
and had informed the petitioner that the properties would be
released only after full and final payment of the OTS amount, and
filing of full satisfaction memo before the DRT upon receipt of full
OTS amount; as per the OTS terms, the petitioner was liable to pay
the OTS amount, minus upfront amount of Rs.120 Lakhs
deposited as per the order of the DRT dated 18.11.2015, in three
monthly instalments in January, February and March, 2016; the
OTS letter dated 19.01.2016 was acknowledged by the petitioner
on 20.01.2016. They raised an objection, regarding the condition
stipulated by the respondent-bank, that the OTS amount should
be paid, and only thereafter would the properties be released; the
petitioners suggestion for release of the bank documents was not
acceptable to the bank as its rules and procedure did not permit
release the documents/properties in the custody of the DRT unless
and until the recovery certificate was terminated by the Presiding
Officer on a joint memo of compromise being filed under Section 26
of the RDDB Act; the respondents had conveyed their rejection for
partial release of the properties by their letter dated 25.02.2016;
the said letter dated 25.02.2016 reveals that the petitioner was not
agreeable to the terms and conditions of the OTS; thereby the
contractual obligations had ended; and the respondent-bank was
entitled to proceed to recover the amount due in accordance with
law.
      It is also stated in the counter-affidavit that the petitioner
had issued two cheques bearing Nos.581709 dated 25.02.2016 for
Rs.5.00 Crores and 581707 dated 25.03.2016 for Rs.2.79 Crores
drawn on ICICI Bank; when the cheques were presented for
clearance, they bounced for want of funds; the respondent-bank
was constrained to file criminal complaint Nos.816 of 2016 and
2340 of 2016 on 06.04.2016 and 27.05.2016 respectively; the
petitioner had suppressed the fact that the cheques were
dishonoured, only in order to secure an order from this Court; after
issuing letter dated 25.02.2016, the respondent-bank had initiated
proceedings under Rule 8(6) of the Rules to conduct e-auction; the
petitioners had filed W.P. No.16234 of 2016 and W.P.No.16243 of
2016, both of which were dismissed as withdrawn; the petitioner
filed I.A.No.206 of 2016 in S.A.No.252 of 2015 requesting the DRT
to restore the OTS proposal; the DRT passed an order dated
12.05.2016 directing the petitioner to pay Rs.10 Lakhs within one
week, and allow inspection of the title deeds to the probable buyers
brought by the petitioner, without noticing that the original
documents were marked as exhibits during the course of evidence
of the respondent-bank, and were in the custody of the DRT; such
orders were not enforceable against the bank; while deferring the
sale, the DRT directed the petitioner to pay the OTS amount along
with interest upto 30.06.2016; the petitioner never brought any
probable buyers with a request for verification of the title deeds
held in the custody of the DRT; until the recovery certificate is
terminated by the DRT, by way of full and final settlement, the
original documents cannot be parted with by the bank;
consequently, letter dated 31.05.2016 was issued informing the
petitioner that the original documents were in the custody of the
DRT, and could not be withdrawn as the Suits were decreed and
recovery proceedings were pending with the DRT; the petitioner
was informed that they may inspect by paying the inspection fee to
the DRT; for the purpose of inspection of records of the DRT,
necessary application had to be made by any of the parties to the
OA proceedings under Rule 26 of the Debts Recovery Tribunal
Regulations of Practice, 1996; Rule 23 of the Debts Recovery
Tribunal (Procedure) Rules, 1993 empowered the Registrar of the
DRT to grant leave to inspect the DRT records for which an
application, by the parties to the Suit proceedings could be
entertained; as the respondent-bank had no objection, for the DRT
to allow inspection of the records and the same was conveyed to
the petitioner vide letter dated 31.05.2016, nothing prevented them
from requesting the DRT to permit them to inspect the records;
there was no material on record to show that the petitioner had
brought any probable buyers for inspection of the title deeds; the
letter dated 08.08.2016, issued by the respondent-bank, is not a
judicial or a quasi-judicial order; it is only a letter informing the
petitioner of certain facts; the recovery certificate, issued by the
DRT, has not been subjected to challenge; the petitioner did not
bring any purchasers to the DRT for inspection of the documents,
contending that no person would be willing to go to the DRT for
fear of buying a property in litigation; and this clearly showed the
petitioners intention to suppress relevant facts.
      Sri P.S. Rajasekhar, Learned Counsel for the petitioners,
would submit that the respondent-bank had hitherto invoked the
provisions of the SARFAESI Act, issuing a notice under Section
13(2) thereof on 07.07.2012; they had thereafter filed O.A. Nos.46
and 50 of 2013 before the DRT; as the respondent-bank had
invoked the jurisdiction of the DRT under the RDDB Act, after
having invoked the provisions of the SARFAESI Act, the first
proviso to Section 19(1) of the RDDB Act disabled them either from
withdrawing the applications filed in O.A. Nos.46 and 50 of 2013,
or from seeking to recover the very same amount under the
SARFAESI Act; the remedy available to the respondent-bank is only
to pursue their applications under the RDDB Act, and not to
continue with the action initiated by them earlier under the
SARFAESI Act; the directions issued by the RBI, in its circular
dated 21.07.2016, are referable to Section 21 of the Banking
Regulation Act; these guidelines are binding on the respondent-
bank which should have given wide publicity for the One Time
Settlement scheme offered by them; the respondent-bank has not
furnished details, of the OTS scheme prevalent in its bank, even in
the counter-affidavit filed by them before this Court; despite the
directions of the DRT, the respondent-bank has also failed to co-
operate with the petitioners in extending them the benefit of the
OTS scheme; the respondent-bank ought to have permitted the
petitioners to sell the properties by private treaty, and repay the
entire amount due to the bank from the proceeds received on the
sale of these immovable properties; the respondent bank had put
these properties to sale at an abysmally low price as is reflected in
the sale notice; this Court should direct the respondent-bank to
grant the petitioners two months time to pay Rs.10.5 Crores for
being extended the benefit of the OTS scheme, which they had
offered to deposit vide their letter dated 03.05.2017; and, while
agreeing to the petitioners request, the respondent bank had
imposed onerous conditions, vide their letter dated 03.05.2017,
which were incapable of compliance.  Learned Counsel would rely
on Transcore v. Union of India , Central Bank of India v.
Ravindra , and Sardar Associates v. Punjab & Sind Bank ).

I. IS A SECURED CREDITOR DISABLED FROM CONTINUING          
    TO TAKE ACTION UNDER THE SARFAESI ACT MERELY          
    BECAUSE IT HAD LATER FILED AN APPLICATION UNDER        
    SECTION 19(1) OF THE RDDB ACT FOR RECOVERY OF ITS        
    DUES?      

      Before examining the question whether the 2nd respondent-
bank can, after having initiated proceedings under the SARFAESI
Act and thereafter under the RDDB Act, again resort to taking
action under the SARFAESI Act, it is useful to refer to the relevant
provisions of the SARFAESI Act and the RDDB Act.   Section 2 (zc)
of the SARFAESI Act defines secured asset to mean the property on
which a security interest is created.  Section 2(zf) defines security
interest to mean the right, title or interest of any kind, other than
those specified in Section 31, upon property created in favour of
any secured creditor, and includes (i) any mortgage, charge,
hypothecation, assignment or any right, title or interest of any
kind, on tangible asset, retained by the secured creditor as the
owner of the property, given on hire or financial lease or
conditional sale or under any other contract which secures the
obligation to pay any unpaid portion of the purchase price of the
asset or an obligation incurred or credit provided to enable the
borrower to acquire the tangible asset; or (ii) such right, title or
interest in any intangible asset or assignment or licence of such
intangible asset which secures the obligation to pay any unpaid
portion of the purchase price of the intangible asset or the
obligation incurred or any credit provided to enable the borrower to
acquire the intangible asset or licence of intangible asset.
      Chapter III of the SARFAESI Act deals with enforcement of
the security asset by the sale of the secured asset.  Section 13(10)
of the SARFAESI Act stipulates that, where the dues of the secured
creditor are not fully satisfied with the sale proceeds of the secured
assets, the secured creditor may file an application, in the form and
manner as may be prescribed, to the Debts Recovery Tribunal
(DRT for short) having jurisdiction or a competent court, as the
case may be, for recovery of the balance amount from the borrower.
Section 13(11) provides that, without prejudice to the rights
conferred under or by Section 13, the secured creditor shall be
entitled to proceed against the guarantors or sell the pledged assets
without first taking any of the measured specifies in Section 13(4)
in relation to the secured assets under the SARFAESI Act.  Section
37 of the SARFAESI Act stipulates that the provisions of the
SARFAESI Act, and the Rules made thereunder, shall be in
addition and not in derogation of, among others, the RDDB Act.
      The RDDB Act is an Act to provide for the establishment of
Tribunals for expeditious adjudication and recovery of debts due to
banks and financial institutions.  Section 19 of the RDDB Act
relates to the application to be filed before the DRT and, under sub-
section (1) thereof, where a bank or a financial institution has to
recover any debt from any person, it may make an application to
the DRT within the local limits of whose jurisdiction (a) the
defendant voluntarily resides or carries on business or (b) any of
the defendants, where there are more than one, voluntarily reside
or carry on business or (c) the cause of action, wholly or in part,
arises.  Under the first proviso thereto the bank or financial
institution may, with the permission of the DRT, on an application
made by it, withdraw the application, whether made before or after
the enforcement of a security interest, and Recovery of Debts Laws
(Amendment) Act, 2004 for the purpose of taking action under the
SARFAESI Act, if no such action had been taken earlier under that
Act.  Section 24 of the RDDB Act stipulates that the provisions of
the Limitation Act 1963 shall, as far as may be, apply to an
application made to a Tribunal which, under Section 2(o) and
Section 3(1) thereof, refers to the Debt Recovery Tribunal.
      More than one obligation may arise on the same transaction,
namely, to repay the debt or to discharge some other obligation.
While the primary obligation is to repay the debt, the borrower also
undertakes to keep the margin and the value of the securities
hypothecated so that there is no mismatch between the asset-
liability in the books of the bank/financial institution.  It is the
former obligation of the borrower which attracts the provisions of
the SARFAESI Act which seeks to enforce it by the measures
mentioned in Section 13(4) of the said Act, which measures are not
contemplated by the RDDB Act. (Transcore1; Snells Principles of
Equity (31st Edn.) at p. 777).
        While the RDDB Act came into force on 24.06.1993, the
SARFAESI Act came into force nearly nine years thereafter on
21.06.2002.  However the first proviso to Section 19(1) of the
RDDB Act was inserted, by Section 20 of Act 30 of 2004, with
retrospective effect from 11.11.2004 i.e., from a date more than two
years after the SARFAESI Act came into force on 21.06.2002.  The
first proviso to Section 19(1) of the RDDB Act is an enabling
provision, and gives an option to the banks or financial institutions
to seek withdrawal of the application made by them earlier under
Section 19(1) of the said Act.  Permission of the DRT, to withdraw
the application filed by it earlier under the RDDB Act, can be
sought by the bank or financial institution for the purpose of
taking action under the SARFAESI Act, if it had not taken any
such action earlier under the SARFAESI Act.
      In case it desires to take action under the SARFAESI Act, a
bank/financial institution may, instead of prosecuting the
application made by it earlier under Section 19(1) of the RDDB Act,
withdraw the said application.  The words that Act, as used in the
first proviso to Section 19(1) of the RDDB Act, refer to the
SARFAESI Act.  The words such action, used in the first proviso,
mean the action taken earlier under the SARFAESI Act.  In cases
where action was not taken by a bank/financial institution under
the SARFAESI Act, before the first proviso was inserted to Section
19(1) of the RDDB Act with effect from 11.11.2004, and they had
only filed an application under Section 19(1) of the RDDB Act for
recovery of their dues, the first proviso enables them to seek
permission of the DRT to withdraw the application made earlier
under Section 19(1) of the RDDB Act, and take action, for recovery
of its dues, by the sale of the secured assets under the SARFAESI
Act.
         Permission being granted by the DRT to withdraw the
application made under Section 19(1) of the RDDB Act, and to take
action under the SARFAESI Act, would enable the bank/financial
institution, if need be, to invoke the jurisdiction of the DRT, under
Section 19(1) of the RDDB Act, later.  This can be easier explained
by way of an illustration.  If a bank/financial institution has made
an application to the DRT for recovery of its dues of Rs.100 crores
it may, with the permission of the DRT, withdraw the said
application, and take action under the SARFAESI Act for sale of the
secured assets.  If, on such sale, it is able to recover Rs.60 crores, it
is open to the bank/financial institution to again make an
application to the DRT (provided it is within limitation as
stipulated under Section 24 of the RDDB Act) for recovery of the
balance Rs.40 crores from the unsecured assets of the borrower
and others.
      The words if any such action had been taken earlier under that Act,
used in the first proviso to Section 19(1), cannot be so read as to
preclude the bank from taking recourse to Section 19(1) of the
RDDB Act merely because it has initiated action earlier under the
SARFAESI Act.  It is only when the Bank/financial institution has
made an application under Section 19(1) of the RDDB Act, without
having taken recourse to the SARFAESI Act, would the question of
the Bank/Financial Institution exercising its option to withdraw its
application under Section 19(1) of the RDDB Act, and to proceed to
take action under the SARFAESI Act, arise.
      In Transcore1, the Supreme Court held that the object
behind introducing the first and the third provisos to Section 19(1)
of the RDDB Act was to align the provisions of the RDDB Act, the
SARFAESI Act and Order 23 CPC; for instance, after an OA is filed
in the DRT for recovery of an amount on a term loan, on credit
facility and on hypothecation account and the OA is not disposed
of by the tribunal, in case the bank finds that one of the three
accounts has become substandard/loss, it can invoke the
SARFAESI Act with or without the permission of DRT; withdrawal
of the OA, pending before the DRT under the RDDB Act, is not a
pre-condition for taking recourse to the SARFAESI Act; it is for the
bank/financial institution to exercise its discretion as to cases in
which it may apply for leave, and cases where they may not apply
for leave to withdraw; and the first proviso to Section 19(1) is an
enabling provision, which may deal with myriad circumstances.
      It is not as if the bank/financial institution is precluded from
instituting proceedings either under the SARFAESI Act or the
RDDB Act merely because they had invoked the provisions of the
other enactment earlier.  There are three elements to the doctrine of
election, namely, existence of two or more remedies; inconsistencies
between such remedies; and a choice of one of them. If any one of
the three elements does not exist, the doctrine will not apply.  The
doctrine of election of remedies is applicable only when there are
two or more co-existent remedies, available to the litigants at the
time of election, which are repugnant and inconsistent. As there is
neither repugnancy nor inconsistency between the two remedies
under the SARFAESI Act and the RDDB Act, the doctrine of
election has no application. (Transcore1; Snells Principles of
Equity (31st Edn., p. 119).
      The RDDB  and the SARFAESI Acts do not provide parallel
remedies.  The SARFAESI Act is treated as an additional remedy
(Section 37) which is not inconsistent with the RDDB Act.
Together they constitute one remedy and, therefore, the doctrine of
election does not apply.   (Transcore1).   As the remedy under the
SARFAESI Act, in view of Section 37 thereof, is an additional
remedy, it is open to the bank/financial institution to
simultaneously take recourse to both the provisions of the RDDB
and the SARFAESI Act, and it is not obligatory for them to elect
either one of the two remedies.  Further, Section 13(10) of the
SARFAESI Act enables the secured creditor, in cases where the
dues are not fully satisfied with the sale proceeds of the secured
asset, to file an application to the DRT in the form and manner
prescribed.  It is evident therefore that the secured creditor can
invoke either of the two enactments i.e the SARFAESI Act or the
RDDB Act or both.
      The very purpose of seeking permission, to withdraw the
application made earlier under Section 19(1) of the RDDB Act, is to
enable the bank/financial institution, in case its debt is not wholly
satisfied on the sale of the secured asset under the SARFAESI Act,
to again approach the DRT for recovery of the balance amount, by
instituting proceedings again under Section 19(1) of the RDDB Act.
The mere fact the provisions of the SARFAESI Act was invoked
earlier, before an application was filed under Section 19(1) of the
RDDB Act, would not disable the bank/financial institution from
either continuing with the action initiated by it earlier under the
SARFAESI Act, or from simultaneously availing the remedies both
under the SARFAESI Act and the RDDB Act.  
      As permission of the DRT would be sought only for the
purpose of taking action under the SARFAESI Act, Parliament has,
by use of the words if no such action had been taken earlier under the
Securitisation Act, merely stated the obvious for, if the
bank/financial institution had already initiated action under the
SARFAESI Act before it filed an application under Section 19(1) of
the RDDB Act, it would make no sense for it to withdraw its
application under Section 19(1) of the RDDB Act to pursue its
remedy under the SARFAESI Act which it had initiated earlier, as it
can simultaneously pursue both its remedies under the RDDB Act
and the SARFAESI Act.  Nothing prevents a bank/financial
institution from continuing with the proceedings initiated by it
earlier under the SARFAESI Act, even if it has subsequently
invoked the jurisdiction of the DRT under Section 19(1) of the
RDDB Act.  This contention of bar of jurisdiction under the
SARFAESI Act, merely because a secured creditor has instituted
proceedings under the RDDB Act after having initiated proceedings
under the SARFAESI Act earlier, does not merit acceptance.

II. HAS THE RESPONDENT-BANK VIOLATED RBI GUIDELINES          
     REGARDING EXTENSION OF THE ONE-TIME SETTLEMENT          
     SCHEME TO ITS BORROWERS?      

        Section 21 of the Banking Regulation Act, 1949 confers
power on the Reserve Bank of India (RBI for short) to control
advances by banking companies. Under sub-section (1) thereof,
where the RBI is satisfied, that it is necessary or expedient in the
public interest or in the interests of depositors or banking policy so
to do, it may determine the policy in relation to advances to be
followed by banking companies generally, or by any banking
company in particular, and when the policy has been so
determined all banking companies or the banking company
concerned, as the case may be, shall be bound to follow the policy
so determined.
      The RBI is a statutory authority, and exercises supervisory
power over the functioning of the scheduled banks. RBI is entitled
to issue guidelines, from time to time, in matters relating to
supervision of scheduled banks.  (Sardar Associates3).  The
respondent Bank, a State within the meaning of Article 12 of the
Constitution of India, is bound to follow the guidelines issued by
RBI.  The power of the Board of Directors of the bank, to deviate
from the broad policy decisions contained in the RBI guidelines, is
confined only to minor matters which do not touch upon the broad
aspects of the policy decision. (Sardar Associates3).
      In Sardar Associates3, on which reliance is placed on behalf
of the petitioner, the guidelines, which fell for consideration, were
those issued by RBI by its letter dated 3-9-2005 addressed to the
Chairman/Managing Director of all public sector banks.  This
letter, in turn, referred to the Circular dated 19-8-2005 issued by
RBI formulating the One-Time Settlement Scheme for recovery of
NPA below Rs 10 crores. The guidelines were issued to provide a
simplified, non-discretionary and a non-discriminatory mechanism
in the small and medium enterprises sector, and all public sector
banks were directed to uniformly implement these guidelines.  In
Sardar Associates3, the Supreme Court held that the circular
dated 19.08.2005 was binding on the banks.
      As public sector banks are bound by the guidelines issued by
RBI, such guidelines can be enforced, in terms of the provisions of
the SARFAESI Act, by the Debts Recovery Tribunal, and
consequently by the Appellate Tribunal.  (Sardar Associates3).  The
Debt Recovery Tribunal and the Appellate Tribunal have the
requisite jurisdiction to consider the prayer made by a debtor for a
one-time settlement, particularly when it is within the purview of
the One-Time Settlement Scheme of the RBI. (Sardar Associates3).
      While the guidelines/directions issued by RBI would,
undoubtedly, bind the respondent-bank, the question which
necessitates examination is whether any policy guidelines/
directions issued by RBI has been violated by the respondent-bank.
Reliance is placed by Sri P.S. Rajasekhar, Learned Counsel for the
petitioner, on the directions of the RBI with respect to units
governed by the Micro, Small & Medium Enterprises Development
(MSMED) Act, as communicated to all scheduled commercial banks  
by RBI letter dated 21.07.2016.  The petitioner claims to be a
medium enterprise, and contends that the aforesaid directions
issued by RBI are applicable both to them and the respondent-
bank.
      Clause 4.7 of the 2016 RBI directions relates to the debt
restructuring mechanism for MSMEs,  and clause 4.7(ii) refers to
the earlier circular of the RBI dated 04.05.2009 which put in place
loan policies governing extension of credit facilities,
restructuring/rehabilitation policy for revival of potentially viable
sick unit/enterprises, and a non-discretionary One Time
Settlement Scheme for recovery of non-performing loans for the
MSE sector, with the approval of the Board of Directors.  Under
clause 4.7 (iii) banks were advised to give wide publicity to the One
Time Settlement Scheme implemented by them, placing it on the
banks website and through other possible modes of dissemination.
In order to extend the benefits of the scheme to eligible borrowers,
RBI directed the banks to allow reasonable time to the borrowers to
submit the application, and to make payment of the dues.
      Sri P.S. Rajasekhar, Learned Counsel for the petitioner,
would submit that the respondent bank has not given adequate
publicity to its One Time Settlement Scheme.  While Smt.T.Vidya
Rani, Learned Standing Counsel for the respondent bank, would
submit that the petitioner does not fall within the ambit of the
2016 RBI Guidelines as it is not a Micro, Small or a Medium
Enterprise, it is wholly unnecessary for us to delve into this aspect
as the petitioner has not even stated, in its affidavit filed in support
of the Writ Petition, that the respondent bank had not given
publicity to its One Time Settlement Scheme in terms of clause
4.7(iii) of the 2016 directions of the RBI.  On the other hand the
petitioners have taken advantage of the OTS benefit extended to
them by the respondent bank, whereby they were called upon only
to pay Rs.12.71 Crores in full and final settlement of their debt,
with the respondent-bank agreeing to waive a part of the principal
besides interest in its entirety.  This submission, of lack of
information of the OTS scheme, raised for the first time during the
course of hearing of these Writ Petitions, is yet another attempt by
the petitioners to avoid payment of the amounts due to the
respondent-bank. While the DRT has the power to issue directions
to scheduled banks to extend an RBI approved OTS scheme to the
borrowers, the order passed by the DRT in S.A.No.252 of 2015
dated 18.11.2015, directing the 2nd respondent to consider the
petitioners OTS proposal, has not been shown to be based on any
policy directions of the RBI.
      It is no doubt true that if, in terms of the guidelines issued
by RBI, a right is created in a borrower, a writ of mandamus can be
issued. While exercising its power under Article 226 of the
Constitution of India, the High Court may or may not issue such a
direction, but it would not be justified in interfering with an order
passed by the DRT/Appellate Tribunal considering the effect of a
one-time settlement. (Sardar Associates3).
      As they have not been able to show transgression, of the RBI
guidelines relating to OTS scheme, by the respondent-bank, the
petitioners are not entitled to seek a mandamus from this Court
directing the respondent-bank to extend them the OTS benefits,
offered to them earlier, despite their having failed to adhere to the
conditions stipulated therein.  The petitioners have failed to avail
the OTS benefit extended to them by the 2nd respondent-bank in its
proceedings dated 19.01.2016, or to comply with the order of the
DRT in I.A.No.206 of 2016 in S.A.No.252 of 2015 dated 12.05.2016
to pay the OTS amount with interest by 30.06.2016.  It is
unnecessary for us to dwell on this aspect any further as the OTS
benefit, extended to the petitioners vide proceedings dated
19.01.2016, has been withdrawn by the 2nd respondent bank vide
its proceedings dated 08.08.2016.
      On a specific query from this Court regarding the amount
repaid by the petitioners till date, in discharge of their debt to the
2nd respondent-bank, Sri P.S.Rajasekhar, Learned Counsel for the
petitioners, stated that, as against the principal loan amount of
Rs.19.10 Crores, the petitioners have paid Rs.3.8 Crores so far.
This means that Rs.15.3 Crores, representing the principal amount
due, remains unpaid till date.  As against the principal amount
then due of Rs.16.50 Crores, the petitioner made an an OTS offer
for Rs.12.70 crores i.e. they wanted waiver of Rs.3.80 Crores
towards the principal debt itself, besides the entire interest due on
the loan extended to them, by the 2nd respondent-bank in the years
2008-2009, more than 8 years ago.
      The 2nd respondent-bank, by its e-mail dated 19.01.2016,
informed the petitioner that their OTS had been considered under
the terms and conditions specified in the said letter.  While the
manner in which a one-time settlement scheme should be
formulated are all matters for the RBI and the concerned banks to
decide, and this Court would, ordinarily, not interfere therewith as
it lacks expertise, it is disconcerting that the 2nd respondent-bank
was willing to receive only Rs.12.71 Crores towards OTS (Rs.432
lakhs from M/s.Swetha Exports and Rs.839 Lakhs from
M/s.Swetha Exports India Pvt Ltd) though the principal debt then
due, from both of them together, was Rs.16.50 Crores which
means that, even if the petitioners had adhered to the OTS offer,
the second respondent would have foregone around Rs.3.80 Crores
towards the principal amount due plus the interest due thereon,
for the past more than eight years i.e., 2008-09, in its entirety.
      Section 34 of the Civil Procedure Code relates to interest and,
under sub-section (1) thereof, where and in so far as a decree is for
the payment of money, the Court may, in the decree, order interest
at such rate as the Court deems reasonable to be paid on the
principal sum adjudged, from the date of the suit to the date of the
decree, in addition to pay interest adjudged on such principal sum
for any period prior to the institution of the suit, with further
interest at such rate not exceeding six per cent per annum as the
Court deems reasonable on such principal sum, from the date of
the decree to the date of payment, or to such earlier date as the
Court thinks fit.
      The scope of the words the principal sum adjudged and such
principal sum, used in Section 34 CPC and the meaning to be
assigned thereto, fell for consideration in Ravindra2; and it is in
this context that the Supreme Court observed:
        ..Banking is an organised institution and most of the banks press
into service long-running documents wherein the borrowers fill in the blanks, at
times without caring to read what has been provided therein, and bind
themselves by the stipulations articulated by the best of legal brains. Borrowers
other than those belonging to the corporate sector, find themselves having
unwittingly fallen into a trap and rendered themselves liable and obliged to
pay interest the quantum whereof may at the end prove to be ruinous. At
times the interest charged and capitalised is manifold than the amount
actually advanced. Rule of damdupat does not apply. Penal interest, service
charges and other overheads are debited in the account of the borrower and
capitalised of which debits the borrower may not even be aware. If the practice
of charging interest on quarterly rests is upheld and given a judicial
recognition, unscrupulous banks may resort to charging interest even on
monthly rests and capitalising the same. Statements of accounts supplied
by banks to borrowers many a times do not contain particulars or details of
debit entries and when written in hand are worse than medical prescriptions
putting to test the eyes and wits of the borrowers. Instances of
unscrupulous, unfair and unhealthy dealings can be multiplied though they
cannot be generalised. Suffice it to observe that such issues shall have to be
left open to be adjudicated upon in appropriate cases as and when actually
arising for decision and we cannot venture into laying down law on such
issues as do not arise for determination before us. However, we propose to
place on record a few incidental observations, without which, we feel, our
answer will not be complete and that we do as under:
    (1)  
    (2)    
    (3)    
    (4) ..
     (5) The power conferred by Sections 21 and 35-A of the Banking
Regulation Act, 1949 is coupled with duty to act. The Reserve Bank of
India is the prime banking institution of the country entrusted with a
supervisory role over banking and conferred with the authority of
issuing binding directions, having statutory force, in the interest of the
public in general and preventing banking affairs from deterioration and
prejudice as also to secure the proper management of any banking
company generally. The Reserve Bank of India is one of the watchdogs of
finance and economy of the nation. It is, and it ought to be, aware of all
relevant factors, including credit conditions as prevailing, which would invite
its policy decisions. RBI has been issuing directions/circulars from time
to time which, inter alia, deal with the rate of interest which can be
charged and the periods at the end of which rests can be struck down,
interest calculated thereon and charged and capitalised. It should
continue to issue such directives. Its circulars shall bind those who fall
within the net of such directives. For such transaction which are not
squarely governed by such circulars, the RBI directives may be treated
as standards for the purpose of deciding whether the interest charged is
excessive, usurious or opposed to public policy  (emphasis  
supplied).

      As noted hereinabove, while the petitioners herein had
borrowed a total sum of Rs.19.10 crores from the respondent bank
(Rs.7.10 crores in 2008 and Rs.12.00 crores in 2009) they have
repaid, in all till date, only Rs.3.8 crores leaving the balance
principal debt unpaid of Rs.15.3 crores .  The OTS, which the
petitioners sought, is for payment of only Rs.12.70 crores (Rs.4.30
crores towards the loan extended to them in 2008, and Rs.8.40
crores towards the loan extended to them in 2009).  The
respondent-bank had granted them OTS, waiving even a part of the
principal, apart from the interest due from them in its entirety.
Reliance placed by the petitioners, on the observations of the
Supreme Court, in Ravindra2 which were made in the context of
penal interest, service charges and other sums being debited in the
account of the borrower, is misplaced.
      As banks deal with public funds, waiver of even a part of the
principal debt would endanger the financial viability of these
banks.  It would also put to risk the hard earned money of small
depositors who park their life savings in these institutions, to
ensure safety and security of their deposits, even if the interest
offered thereon is far lower than in other forms of investment.  We
wish to say no more, as the petitioners have failed even to adhere to
the OTS offered by the 2nd respondent-bank which is now seeking
to recover the entire amount due to it from the petitioners herein.
III. IS FAILURE OF THE 2ND RESPONDENT-BANK TO SHOW          
      THE TITLE DEEDS TO THE PETITIONER-BORROWER, ON        
      THE GROUND THAT THEY ARE IN THE CUSTODY OF THE          
      RECOVERY OFFICER OF THE DRT, FATAL?      

      It is not in dispute that the title deeds, deposited by the
petitioners with the 2nd respondent-Bank as security for the loan,
are in the custody of the DRT.  Rule 23 of the Debt Recovery
Tribunal (Procedure) Rules, 1993 relates to the additional powers
and duties of the Registrar of the DRT.  It stipulates that, in
addition to the powers conferred elsewhere in the Rules, the
Registrar shall have the powers and duties, subject to any general
or special order of the Presiding Officer,  as are specified in clauses
(i) to (vii)  thereunder which, under clause (vii) and (viii), include
the power to order grant of copies of documents to the parties to
the proceedings; and to grant leave to inspect other records of the
Tribunal.
      Rule 26 of the Debts Recovery Tribunal Regulations of
Practice, 1996 relates to inspection of the records.  Under clause (a)
thereof, subject to the provisions of Rule 17(1) of the D.R.T.
(Procedure) Rules, inspection of the records in Form No.16, on any
working day in a pending or decided case before the Tribunal, shall
be allowed only under the order of the Presiding Officer or the
Registrar as the case may be.  Clause (b) stipulates that inspection
of the records of a pending case shall not, ordinarily, be permitted
on the date fixed for hearing of the case or on the preceding day.
Clause (c) stipulates that, on grant of application for inspection of
the records, the Section Officer or an Officer authorised in that
behalf shall arrange to procure the records of the case, and allow
inspection of such records on the date and time fixed by the
Registrar; and such inspection shall preferably be between 2.30
p.m. and 4.30 p.m, in the presence of an officer authorised in that
behalf by the Registrar.  Clause (d) provides that the person,
inspecting the records, shall not in any manner cause dislocation
to, or mutilate, tamper or damage the records in the course of
inspection; and shall not make any marking on any record or
paper so inspected; and notes, if any of the documents or records
inspected, may be done only in pencil.  Clause (e) provides that the
officer, supervising inspection, may, at any time, prohibit further
inspection if, in his opinion, any of the records are likely to be
damaged in the process of inspection; or the person inspecting the
records is acting against the interest of parties or has violated the
above provision; and shall, immediately, make a report of the
matter to the Registrar, and seek his further orders.
      The DRT, while passing the order in I.A.No.206 of 2016 in
S.A.No.252 of 2015 dated 12.05.2016 (ie in the proceedings under
the SARFAESI Act) appears to have overlooked the fact that the title
deeds were in its custody in O.A.Nos.46 and 50 of 2013 filed by the
2nd respondent-bank under the RDDB Act; and, in R.P.No.60 of
2014, the Recovery Officer was proceeding to recover the amounts
due.  Nothing prevented the petitioners from making an
application, in terms of the aforesaid statutory rules and
regulations, either to the Presiding Officer of the DRT or the
Registrar for permission to inspect the title deeds.  Having chosen
not to do so, the petitioners cannot now be heard to contend that
the 2nd respondent bank has not showed them or the prospective
buyers the title documents.  The petitioners have neither disclosed
the identity of the prospective buyer nor have they furnished his
details in the Writ affidavit.
      The order of the DRT, in I.A.Nos.206 and 207 of 2016 in S.A.
No.252 of 2015 dated 12.05.2016, merely required the respondent-
bank to allow inspection, of the original title deeds, by the probable
buyers brought by the petitioners; and accept the amount paid by
the petitioners or the probable buyers.  By their letter dated
31.05.2016, the respondent-bank informed the petitioner that the
original documents, in both the accounts, were lying with the DRT,
Visakhapatnam in RP Nos.60 and 107 of 2014; the petitioner had
xerox copies of the title deeds, and they could negotiate with the
prospective buyers; the petitioner could arrange for inspection of
the original documents, by the prospective buyers, with the DRT,
Visakhapatnam on payment of the examination fee; and the
original documents could not be withdrawn at this juncture, since
the Suits were decreed and the recovery proceedings were pending
before the DRT.
      The respondent-bank has pointed out, in our opinion
rightly, that, since a decree was passed by the DRT and recovery
proceedings were pending before the Recovery Officer, they could
not withdraw the original documents from the DRT at that
juncture.  The petitioners have not even stated, in their writ
affidavits, why they chose not to submit an application seeking
permission of the DRT to have the title deeds inspected by the
prospective buyers. On the other hand, they have specifically
asserted in the writ affidavits that no person would be willing to go
to the DRT for inspection of the original documents for fear of
buying properties under litigation.   It is evident, therefore, that no
prospective buyer came forward to inspect the title deeds in the
custody of the DRT. The ruse of a prospective buyer coming
forward to purchase the property, and the 2nd respondent being
blamed for not showing the documents, is only to avoid sale, of
their mortgaged immovable properties, by the 2nd respondent-bank
for recovery of its dues.

IV. IS THE RESPONDENT-BANK OBLIGATED TO RELEASE            
THE      MORTGAGED PROPERTIES PROPORTIONATE TO            
     REPAYMENT OF THE DEBT BY THE PETITIONERS?        

      In examining the petitioners claim that the 2nd respondent-
bank should be directed to release their mortgaged properties
proportionate to repayment of the debt, it is necessary to take note
of the periodic changes in the petitioners stand from time to time.
After depositing the upfront amount of Rs.1.20 Crores (ie Rs.60
Lakhs each, in two instalments, as per the DRT order in
S.A.No.252 of 2015 dated 18.11.2015), the petitioners had agreed
to pay the balance OTS amount of Rs.1151 Lakhs by 31st March,
2016. (Rs.372 Lakhs and Rs.779 lakhs respectively i.e Rs.372
lakhs in three equal monthly instalments of Rs.124 Lakhs each
commencing from January, 2016, and Rs.779 Lakhs in two  
monthly instalments of Rs.260 lakhs in January and February,
2016 and the last instalment of Rs.259 lakhs in March, 2016).
The respondent-bank, while sanctioning OTS by its letter dated
19.01.2016, reserved its right to cancel the OTS at any time, if the
petitioner defaulted in the payment schedule, and to proceed
further under the SARFAESI Act to auction the secured assets.
The petitioner was also informed that the mortgaged properties
would be released only after full and final payment of the entire
OTS amount, and on a full satisfaction memo being filed before the
DRT; and, at the time of conveying the banks approval, they
should give post dated cheques for the amounts payable as per the
payment schedule.  The petitioners were asked to confirm having
accepted these terms and conditions.
      By their letter dated 20.01.2016, the petitioners informed the
respondent-bank that they would endeavour to meet the
commitments as per the conditions stipulated therein.  Contending
that there was very little time for mobilisation of the amount
during January, 2016, the petitioners requested the respondent-
bank to permit them to pay Rs.700 lakhs on or before 25.02.2016,
the balance Rs.451 Lakhs on or before 25.03.2016, and assured
that the entire OTS amount would be cleared before 31.03.2016.
They requested the respondent-bank to release the securities, at
least to the extent of 45% of the partial amounts deposited, to
enable them to realise the necessary amounts to facilitate further
payments in the agreed manner.  They requested the respondent-
bank to consider the following: (1) approval for payment of OTS
dues in two instalments i.e. Rs.700 Lakhs by 25.02.2016 and
Rs.451 Lakhs by 25.03.2016; (2) release of securities of
approximately 45% (Rs.305.89 lakhs security) on payment of
Rs.700 Lakhs immediately; and (3) approval for submission of post
dated cheques for Rs.700 Lakhs and Rs.451 Lakhs dated
25.02.2016 and 25.03.2016 respectively.  They informed the
respondent-bank that, upon confirmation, they would submit post
dated cheques to the bank immediately.
      By their letter dated 25.02.2016, the respondent-bank
informed the petitioners that extension of the payment period of
the OTS amount, and partial release of securities as requested by
them by their letters dated 20.01.2016 and 28.01.2016, was
declined by the competent authority; and the petitioners request
for payment of the entire OTS amount, on both the accounts
together, by 25.03.2016, as conveyed by them in their letter dated
25.02.2016, could also not be considered at this juncture.  The
petitioners were called upon to pay Rs.700 Lakhs by 25.02.2016,
and the remaining Rs.451 Lakhs by 25.03.2016, as conveyed by
them in their letters dated 20.01.2016 and 28.01.2016; the total
amount payable, for the two accounts, was Rs.1151 lakhs as per
the OTS; and if the amounts were not paid by 25.02.2016 and
25.03.2016, the respondent-bank would be constrained to present
the two post dated cheques, submitted by the petitioner along with
their letter dated 28.01.2016, for payment. Both the cheques
issued by the petitioner (i.e cheque dated 25.2.2016 for Rs.5.00
crores and cheque dated 25.3.2016 for Rs.2.79 crores) were
dishonoured, on presentation, for insufficient funds.
      As not a single rupee was paid after the OTS was sanctioned
by the 2nd respondent-bank by its letter dated 19.01.2016, and as
both the cheques were dishonoured on presentation, an e-auction
notice dated 16.04.2016, proposing to conduct an auction on
17.05.2016, was issued questioning which one of the petitioners
filed W.P.No.16243 of 2016 before this Court, and the other filed
I.A.No.206 of 2016 in S.A.No.252 of 2015 before the DRT.  In its
order in I.A.No.206 of 2016 dated 12.05.2016, the DRT directed the
petitioner to pay Rs.10 Lakhs, and extended the time for payment
of the OTS amount, with interest, till 30.06.2016. While the
petitioner paid Rs.10 Lakhs on 15.05.2016, they did not pay any
amount thereafter.   It is in such circumstances that the 2nd
respondent-bank, by its letter dated 08.08.2016, cancelled the OTS
offer extended to the petitioners earlier on 19.01.2016.  The
petitioners filed the present Writ Petitions, and an interim order
directing the respondent-bank not to take coercive steps for
recovery of the balance amount due from the petitioners was
passed on 23.08.2016.  Consequently the petitioners have not paid
a single rupee to the 2nd respondent-bank for the past one year and
four months ever since 15.05.2016.
      Even after these Writ Petitions were filed before this Court on
19.08.2016, the petitioners have been in correspondence with the
respondent-bank.  Sri P.S. Rajasekhar, Learned Counsel for the
petitioners, has placed before us copies of the letter addressed by
the petitioners on 03.05.2017, and the reply of the respondent-
bank thereto on the very same day.  In their letter dated
03.05.2017, the petitioners informed the respondent-bank that
they were improving their OTS offer to Rs.10.50 Crores, to close the
NPA accounts, from their present OTS offer of Rs.9.25 Crores.
They requested the respondent-bank to consider and accept
Rs.10.50 Crores as the OTS towards full and final settlement of all
their NPA accounts.  They referred to the terms and conditions of
the OTS as (1) Rs.10.50 Crores being deposited in a no lien third
party account till approval, and to appropriate the deposit on
conveying approval; (2) release of all securities mortgaged in the
bank upon payment of afore-said OTS amount of Rs.10.50 Crores;
(3) withdrawal of cases filed by both the bank and by them; and (4)
the entire amount of Rs.10.50 Crores to be adjusted in all the loan
accounts of their entire group.
      In reply thereto the Chief Manager of the respondent-bank,
by his letter dated 03.05.2017, informed the  petitioners that, with
reference to their compromise offer, they should comply with the
following (1) deposit Rs.10.50 Crores in a third party no lien
account; (2) letter from the third party, in whose account the OTS
amount is to be parked, stating that the amount would be
appropriated towards closure of said accounts under OTS if the
proposal is approved by the competent authority; and, if the
proposal was not accepted by the competent authority, the amount
deposited in the third party account would be returned.  The
petitioners were requested to arrange for deposit of Rs.10.5 crores,
into the third party no lien account, to enable the respondent-bank
to start the process of considering their request for a one-time
settlement.  The petitioners did not take up the 2nd respondents
offer.  Let alone deposit of Rs.10.50 Crores in a third party no lien
account, they have not paid a single rupee to the bank for the past
sixteen months and, under the protection of the unconditional
interim order passed by this Court, have successfully prevented the
2nd respondent-bank from realising its debt on the sale of the
secured assets.
      As neither the SARFAESI Act nor the Rules made thereunder
so obligate the Bank, it is not for this Court, in proceedings under
Article 226 of the Constitution of India, to take upon itself the task
of determining whether the Bank should or should not release the
mortgaged property in proportion to the debt repaid by the
petitioners, for these are all matters for the bank, in its wisdom, to
decide.  The 2nd respondent had earlier, by its letter dated
25.02.2016, declined the petitioners request in this regard, and
this Court, in judicial review proceedings under Article 226 of the
Constitution of India, would neither sit in judgment over such a
decision nor would it substitute its views for that of the bank.
      Even otherwise, the petitioners have chosen not to pursue
this request for, in their letter dated 03.05.2017, they have sought
for release of the mortgaged securities only on payment of the OTS
amount of Rs.10.50 Crores, and have not requested proportionate
release of their properties on part payment of the OTS amount.
Despite the respondent-banks request that they should deposit
Rs.10.50 Crores in a third party no lien account to show their
bonafides, (for the said amount to be appropriated towards their
loan in case their proposal was accepted and, in case the proposal
was not accepted, for return of the said sum of Rs.10.50 Crores to
them), the petitioners have not taken up the offer of the
respondent-bank to pay the said amount; and, under the
protection of the interim order dated 23.08.2016, (which precluded
the respondent-bank from taking coercive steps for recovery of the
balance amount due from the petitioners account), have chosen not
to pay even a single rupee towards the amounts due from them to
the respondent bank.  It is evident, therefore, that there are no
bonafides in these Writ Petitions, and the petitioners are merely
seeking to drag on proceedings and thwart all attempts of the
respondent-bank to recover the amounts due to it.

V. OTHER CONTENTIONS:    
        The contention that the respondent bank had failed to co-
operate with the petitioners in extending them the benefit of the
OTS, despite the directions of the DRT, is only to be noted to be
rejected.  As noted hereinabove, both the DRT and the respondent
bank have been extremely indulgent in extending to the petitioner
the benefit of a one time settlement, waiving even a part of the
principal apart from the interest thereon in its entirety.  It is the
petitioners who failed to make payment under the OTS scheme  
resulting in its cancellation, vide proceedings dated 08.08.2016, by
the respondent-bank.
      With regards the petitioners claim that they should be
permitted to sell the immoveable properties by private treaty, it is
necessary to note that Section 13(8) of the SARFAESI Act, after its
substitution by Act 44 of 2016 with effect from 01.09.2016,
provides that, where the amount of dues, together with all costs,
charges and expenses incurred by him, is tendered to the secured
creditor at any time before the date of publication of the notice for
public auction or inviting quotations or tender from public or
private treaty, for transfer by way of  sale of the secured assets, the
secured asset shall not be transferred for sale by the secured
creditor.    Prior to its substitution by Act 44 of 2016, Section 13(8)
stipulated that if the dues of the secured creditor, together with all
costs, charges and expenses incurred by him, are tendered to the
secured creditor at any time before the date fixed for sale or
transfer, the secured assets shall not be sold or transferred by the
secured creditor, and no further steps shall be taken by him for
transfer or sale of that secured asset.
      After its substitution, Section 13(8) of the SARFAESI Act
recognises the respondent banks right to tender, from public or
private treaty, for the transfer by way of sale of the secured asset.
The decision whether or not to tender the secured asset by way of
private treaty, for its transfer by way of sale, is at the discretion of
the bank/financial institution.  The right conferred on the
borrower is to redeem the property at any time before such an
exercise is undertaken by the bank/financial institution.  Section
13(8) does not obligate the respondent-bank to sell the subject
property by private treaty, even for receipt of the OTS amount
which is far less than the total amount due from the petitioners.
Even otherwise, the petitioners have not been able to show that
any person was willing to purchase the subject immoveable
properties by private treaty, and to pay a price which would enable
the respondent bank to recover its dues, along with interest
thereon, in its entirety.  While Section 13(8) of the SARFAESI Act
acknowledges the power of the bank/financial institution to tender
the secured asset, for sale by private treaty, it does not obligate the
bank to release the property piecemeal as and when proportionate
payment is made by the borrower.  In any event, the petitioners
have not been able to show that they found a buyer, who was
willing to pay a price far higher than the reserve price, for purchase
of the subject properties, which would enable repayment of the
entire amount due to the respondent-bank.
      The contention that the respondent-bank had put the
subject properties to auction for an abysmally low price does not
also merit acceptance.  If, as is contended by the petitioners, the
price at which the subject properties are sought to be sold are so
abysmally low, nothing prevented them for finding a buyer who
would offer a far higher price, than the reserve price fixed by the
respondent bank and thereby repay the entire debt due, or from
finding a person to participate in the auction and submit a bid for
an amount far higher than the reserve price.
      We see no reason to accede to the petitioners request for
grant of two months time to pay the OTS amount of Rs.10.5 crores.
It is because of the petitioners failure to adhere to the repayment
schedule, stipulated by the respondent bank and the DRT, initially
by 31.03.2016 and later by 30.06.2016, was the bank constrained
to cancel the OTS offer, made by them earlier on 19.01.2016, vide
their letter dated 08.08.2016.  As noted hereinabove after the OTS
offer dated 19.01.2016, for payment of 11.51 crores (12.71 crores
minus 1.20 crores paid by them), the petitioners did not pay any
amount apart from Rs.10 lakhs on 15.05.2016 that too only
because the DRT had, by its order in I.A. No. 206 and 207 of 2016
in SA No.252 of 2015 dated 12.05.2016, directed them to do so.
For the past more than 16 months (i.e., from 15.05.2016 till date),
the petitioners have not paid a single rupee in discharge of the debt
due to the respondent-bank, and their request for grant of further
time of two months is only to avoid sale of the secured assets
without having to repay the debt.

VI. REPEATED EFFORTS OF THE RESPONDENT TO PUT THE              
      SUBJECT PROPERTIES TO SALE AND RECOVER ITS DUES            
      HAVE BEEN THWARTED BY THE PETITIONERS ON ONE            
      PRETEXT OR THE OTHER:    

      The petitioners have resorted to every trick in the book to
prevent the 2nd respondent-bank from putting the subject
properties to sale, and at the same time avoid payment of the
amounts due to the bank.  In these Writ Petitions they seek a
direction to the respondent bank to permit them to sell the
mortgaged properties one after the other, and pay 50% more than
the reserve price fixed for each of the mortgaged properties.  A
similar offer made by the petitioner was rejected by the respondent-
bank by its letter dated 25.02.2016 itself.  As noted hereinabove,
the OTS offer made by the respondent-bank, vide its proceedings
dated 19.01.2016, was for payment of Rs.1271 Lakhs (Rs.432
lakhs towards the loan accounts of M/s.Swetha Exports and
Rs.839 lakhs towards the loan accounts of M/s.Swetha Exports
India Pvt. Ltd). As they had already paid Rs.120 Lakhs in
December, 2015, the petitioners were asked to pay the balance
Rs.1151 lakhs (Rs.11.51 Crores) in three monthly instalments in
the months of January, February and March, 2016.
        After the OTS offer was made by the respondent-bank on
19.01.2016, the petitioners have paid only Rs.10 Lakhs on
15.05.2016, in compliance with the order of the DRT in
I.A.Nos.206 and 207 of 2016 in S.A.No.252 of 2015 dated
12.05.2016.  As they have not paid the OTS offer amount of
Rs.12.71 Crores, within the time stipulated i.e., by 31st March,
2016, or even by the extended time granted by the DRT till
30.06.2016, the respondent-bank was justified in cancelling the
OTS offer by its letter dated 08.08.2016.  As against the OTS offer
of Rs.12.71 Crores, the petitioners have paid only Rs.1.30 Crores
and, even in terms of the said OTS offer, they were still due
Rs.11.41 Crores to the respondent-bank.
      The repeated indulgence shown to them by the DRT has,
evidently, emboldened the petitioners to reduce the OTS offer to
Rs.9.35 Crores, and to subsequently marginally increase it to
Rs.10.50 Crores as is evident from their letter dated 03.05.2017,
though the balance amount due, even in terms of the earlier OTS
offer dated 19.01.2016, is Rs.11.41 Crores.  The petitioners have
successfully thwarted all legitimate attempts of the respondent-
bank to recover its dues.  It is not even contended before us, by the
petitioners herein, that they have identifiable buyers ready and
willing to purchase the secured assets, nor have they furnished
any information of the price which the so called prospective buyers
are willing to pay for the mortgaged properties.  The present Writ
Petitions are a last ditch effort to prevent the respondent-bank from
putting the subject properties to sale for recovery of its dues.

VII. CONCLUSION:  

      Viewed from any angle the Writ Petitions, as filed, are devoid
of merits and are, accordingly, dismissed.  As the efforts of the
respondent-bank, to put the subject properties to sale, have been
scuttled by the petitioners, (repeatedly approaching either the DRT
or this Court), on wholly untenable grounds, exemplary costs of
Rs.25,000/- are imposed in each of these Writ Petitions, which the
petitioners shall pay the respondent-bank within four weeks from
today failing which it is open to the 2nd respondent-bank to recover
the same in accordance with law.  Miscellaneous Petitions, if any
pending, shall also stand dismissed.

________________________________    
RAMESH RANGANATHAN, ACJ        
_________________  
J. UMA DEVI, J.
Date:22.09.2017.