Excerpt
The Bench of Justice Sabyasachi Bhattacharyya of the Calcutta High Court on 22nd January 2021, ruled that the recovery of public money cannot wait indefinitely to suit the convenience of a particular borrower by rejecting the plea of the petitioner, Brahm (Alloys) Ltd. who failed to repay the loan taken from the West Bengal Financial Corporation, a financial institution.
Facts of the Case
The Petitioner borrowed a loan from the West Bengal Financial Corporation and failed to repay it. Thus, a sale notice was issued on 30th January 2018 to the Petitioners and they filed a writ petition, which was dismissed on 12th February 2018.
However, the order was challenged before a Division Bench which disposed of the appeal by restructuring the schedule of repayment and granted a further opportunity to the Petitioners to repay the debt, vide order dated February 13, 2018.
But the Petitioners failed to make the payments contemplated in the Appellate Court’s order and therefore, a second sale notice was published on 25th June 2018 and in connection with the second sale notice, the Petitioners again preferred a writ petition but did not move it. During the pendency of the said writ petition, the financial institution issued a third sale notice.
Petitioner’s Arguments
The Counsel for the Petitioners pleaded that they are already in touch with an Asset Reconstruction Company (ARC) regarding the loan being taken over by the said ARC. Moreover, a notice to this effect was already communicated to the Respondent no.1.
But the Respondent took a plea that there had been the previous non-fulfilment by the Petitioners of the liberty granted to the Petitioners to repay the loan. Also, there was no provision in the State Financial Corporation Act, for transferring such loan to an ARC.
The Petitioner relied on Section 5 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and on the case of Kerala Financial Corp. vs Vincent Paul [2011 (4) SCC 171], wherein directions have been made by the Supreme Court, in the absence of any rules or guidelines framed by the State for sale of properties owned by the financial institution.
Further, the Petitioners contended that they ought to be given some time to finalize the arrangements with the ARC for repayment of the loan advanced by ‘West Bengal Financial Corporation’ (financial institution).
Respondent’s Arguments
The counsel for the Respondent authorities pleaded that even after three due sale notices, whereby liberty was granted to the Petitioners to repay the loan in question by the Court, they failed to repay the loan and it is evident that they are in the habit of trying to stop the process of the sale, whenever a sale notice is put up.
Moreover, it was also contended that the offer given by the ARC was conditional, leaving scope for further negotiation and therefore, the ARC’s negotiations cannot form a relevant basis for staying the process of sale which has now been undertaken because public money was involved in the same. Furthermore, the Petitioners may be given a chance to meet the highest price once the offers come in concerning the latest auction sale
Court’s Observations
The Court observed that in the instant case, even the latest offer given by the concerned ARC, with whom the Petitioners are negotiating, is patently conditional. As such, there is no final proposal, even at this stage, coming from the ARC at the behest of the petitioners for repayment of such loan.
The Court remarked that in such circumstances, Respondent no.1 was fully justified in proceeding with the sale of the assets of the borrower, particularly because of the previous conduct of the Petitioners and a fresh lease of life cannot now be granted to the Petitioners, since such opportunity was previously given to them but the Petitioners miserably failed to avail of the same as the recovery of public money cannot wait indefinitely.
Judgement
The Hon’ble Court dismissed the writ petition on contest without any order as to costs. Further, Respondent no.1 was directed to give a reasonable opportunity to the Petitioners to meet the highest offer, after receiving adequate offers on the latest sale notice from prospective buyers.
Furthermore, it was ordered that if the Petitioners can give a concrete counter offer equal to or more than the highest offer, it will be open to the Respondent no.1 to permit the Petitioners to purchase back the property but on the failure of the petitioners to do so, the Respondents shall proceed with the sale in favour of the highest bidder.
Click here to view the Judgement.
Libertatem.in is now on Telegram. Follow us for regular legal updates and judgment from courts. Follow us on Google News, Instagram, LinkedIn, Facebook & Twitter. You can subscribe to our Weekly Email Updates. You can also contribute stories like this and help us spread awareness for a better society. Submit Your Post Now.
