IN THE HIGH COURT OF ANDHRA PRADESH :: AMARAVATI^|^"^^ (Special Original Jurisdiction) > FRIDAY. THE TWENTY FIRST DAY OF MARCH TWO THOUSAND AND TWENTY FIVE PRESENT HONOURABLE THE CHIEF JUSTICE SRI DHIRAJ SINGH THAKUR AND HONOURABLE SRI JUSTICE RAVI CHEEMALAPATI WRIT PETITION NO: 31651 OF 2022 Between: 1. Vinnakota Ganesh, S/o Late Veera Raghavulu, (Died) per LRs petitioners 2 to 6 2. Vinnakota Kavitha, W/o. V. Ganesh, R/o. 1-1-6-39, C-33, 2nd Floor, Kummaripalem Centre, Lotus Legend, Bhavanipuram, Vijayawada, NTR District 3. Rokkam Bhagya Lakshmi Anjani, D/o. V. Ganesh, R/o. 1-1/6-39, Kummaripalem Centre, Lotus Legend, Bhavanipuram, Vijayawada, NTR District 4. Surabhattula Lokeswari Lavanya, D/o. V. Ganesh, R/o. 1-2-9, Kottetikotiah Street, 0pp. DSMC High School, Vidhyadhapuram, Vijayawada, NTR District 5. Vinnakota Bhanu Priya, C/o. V.Ganesh, Block No. 46/5, OLD mig. Old HB Colony, Bhavanipuram, Vijayawada, NTR District. 6. Vinnakota Haritha, D/o. V.Ganesh, R/o. 1-1-6-39, C-33, 2nd Floor, Kummaripalem Centre, Lotus Apartments, Bhavanipuram , Vijayawada , NTR District. (Petitioner Nos.2 to 6 brought on record as LRs for the deceased Sole Petitioner, as per Court order dated 14.08.2023 vide lA No.2 of 2023 in W.P.No.31651 of 2022) ...PETITIONERS AND 1. The Authorized Officer, Bank of Maharashtra, Vijayawada Branch, 11- 25-18, KT Road, Vijayawada - 520 001 2. Chinthalapudi Narsimha Reddy, S/o Late Chinthalapudi Venkateshwara Reddy, Flat No.403, Padmaja Pride Apartments, 0pp. CMR Gardens, Kommadi, Vishakapatnam - 530048 ...RESPONDENTS Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate Writ, Order or more particularly in the nature of a mandamus declaring inaction of the 1st respondent bank in alienating the three storied building bearing D.No.11-60/1-3 constructed in an extent of 23 sq yads situated at Hawaldar Street, Municipal Ward No.11, Revenue Ward No.7, Block No.2, NTS No.256, assessment no.7876 B, One Town, Vijayawada-1 (Subject Property) vide e-auction conducted on 15.02.2022 pursuant to Notice dated 30.12.2021 in contravention of the full and final settlement of the debt vide Award passed in Lok Adalat Case no.148 of 2018 In PLC No.14/18 of Mandal Legal Services Committee, Vijayawada as wholly illegal, arbitrary, unjust, untenable, contrary to provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 and rules framed there under besides being violative of Article 14, 21 and 300-A of Constitution of India and consequently direct the 1st respondent to cancel the e-auction sale conducted on 15.02.2022 and Sale Certificate dated 21.04.2022 issued in favour of the 2"^^ respondents. lA NO: 1 OF 2022 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay all further proceedings pursuant to the auction sale conducted on 15.02.2022. lA NO: 2 OF 2022 Petition under Section 151 GPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to extend the interim order granted vide order dated 13.10.2022 in the main writ petition for a further period of 8 weeks. lA NO: 1 OF 2023 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to extend the interim order granted vide order dated 13-10-2022 in WP.No. 31651 of 2022. lA NO: 1 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to extend the interim order granted vide order dated 13.10.2022 in WP NO.31651 of 2022 pending disposal of above Writ Petition. lA NO: 3 OF 2022 Between: Chinthalapudi Narsimha Reddy, S/o Late Chinthalapudi Venkateshwara Reddy, Flat No.403, Padmaja Pride Apartments, 0pp. CMR Gardens, Kommadi, Vishakapatnam - 530048 ...PETITIONER/RESPONDENT AND 1. Vinnakota Ganesh, S/o Late Veera Raghavulu(Died) per LRs RR 2 to 6 ...RESPONDENTS/WRIT PETITIONER 2. The Authorized Officer, Bank of Maharashtra, Vijayawada Branch, 11- 25-18, KT Road, Vijayawada - 520 001 3. Vinnakota Kavitha, W/o. V. Ganesh, R/o. 1-1-6-39, C-33, 2nd Floor, Kummaripalem Centre, Lotus Legend, Bhavanipuram, Vijayawada, NTR District 4. Rokkam Bhagya Lakshmi Anjani, D/o. V. Ganesh, R/o. 1-1/6-39, Kummaripalem Centre, Lotus Legend, Bhavanipuram, Vijayawada, NTR District 5. Surabhattula Lokeswari Lavanya, D/o. V. Ganesh, R/o. 1-2-9, Kottetikotiah Street, 0pp. DSMC High School, Vidhyadhapuram, Vijayawada, NTR District 6. Vinnakota Bhanu Priya, C/o. V.Ganesh, Block No. 46/5, OLD mig. Old HB Colony, Bhavanipuram, Vijayawada, NTR District. 7. Vinnakota Haritha, D/o. V.Ganesh, R/o. 1-1-6-39, C-33, 2nd Floor, Kummaripalem Centre, Lotus Apartments, Bhavanipuram , Vijayawada , NTR District. (Respondent/Petitioner Nos.2 to 6 brought on record as LRs for the deceased Sole Petitioner, as per Court order dated 14.08.2023 vid6 lA No.2 of 2023 in W.P.No.31651 of 2022) ...RESPONDENTS Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to vacate the interim order dated 13.10.2022 made in W.P No. 31651 of 2022. Counsel for the Petitioners: M/s. JYOTHI RATNA ANUMOLU Counsel for the Respondent No.1: SRI HANUMANTHA RAO BACHINA Counsel for the Respondent No.2: SRI A.K. KISHORE REDDY The Court made the following: ORDER APHC010517282022 Bench Sr.No;-33 [3483] IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI WRIT PETITION NO: 31651 of 2022 ...Petitioner(s) Vinnakota Ganesh and Others Vs. ...Respondent(s) The Authorized Officer and Others ********** Advocate for Petitioner(s): Advocate(s) for Respondent(s); Mrs.JyothiRatna Anumolu Mr. Hanumantha Rao Bachina, Mr.A. K. Kishore Reddy CORAM :THE CHIEF JUSTICE DHIRAJ SINGH THAKUR SRI JUSTICE RAVI CHEEMALAPATI DATE per DHIRAJ SINGH THAKUR. CJ : The present petition was filed by the petitioner Vinnakota Ganesh, who passed away during the currency of the proceedings before this Court pursuant to which petitioner Nos.2 to 6 were incorporated as party petitioners in their capacity as legal representatives of the deceased petitioner. Briefly stated, the material facts are as under: This writ petition has been filed seeking a writ of mandamus declaring 2. the action of the respondent Bank in proceeding with the e-auction of the subject property as illegal, arbitrary and as being in contravention of the Lok 2 HCJ a RC, J W.P. No:31651 of 2022 Adalat award, dated 10.02.2018. The petitioners specifically seek cancellation of the e-auction sale conducted on 15.02.2022 as also the Sale Certificate, dated 21.04.2022, issued in favour of the respondent No.2. The original petitioner Vinnakota Ganesh had sought a loan from the respondent Bank i.e.. Bank of Maharastra from its Vijayawada Branch in the and style of ‘Ganesh Footwear’. The account, however, was declared Non-Performing Asset (NPA) on 10.05.2007. Subsequently, the respondent Bank initiated recovery proceedings under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993, (hereinafter referred to as “the RDB Act”) leading to Original Application (OA) No. 230 of 2010 before the DRT, Visakhapatnam. The DRT issued a Recovery Certificate on 20.05.2013 for a sum of Rs. 14,89,789/- along with interest. 3. name as During the pendency of recovery proceedings, the respondent Bank approached the Lok Adalat, Vijayawada, under Sections 19 and 20 of the Legal Services Authority Act, 1987, to explore an amicable settlement. A Lok Adalat Case No.148 of 2018 in PLC No.14/18 was initiated. On 10.02.2018, in the Lok Adalat, a compromise was arrived at between the respondent Bank and the petitioner. An Award was passed on the same date, settling the total outstanding loan amount at Rs.7,30,000/-. 4. As per the Award, the petitioner was required to pay Rs.7,30,000/- on or before 25.03.2018. It was further stipulated that upon failure to pay within the 5. 3 HCJ a RC, J W.P. No:31651 of 2022 stipulated time, the respondent Bank was entitled to recover the balance amount by executing the Award with interest at 14% per annum from the date of default. The petitioner claims to have paid a sum of Rs. 6,30,000/- towards the 6. settled amount of Rs. 7,30,000/- as per the Lok Adalat Award, leaving a balance of Rs.1,00,000/-. The petitioner contends that due to dire financial circumstances, the balance amount could not be paid. Notwithstanding the Lok Adalat Award, the respondent Bank issued a Sale cum Auction Notice dated 30.12.2021, for e-auction of the subject property, being a three-storied building situated at Hawaldar Street, Vijayawada, for recovery of Rs. 19,31,131/-. The e-auction was conducted on 15.02.2022, and the subject property was sold to the 2"^ respondent, Shri Chinthalapudi Narsimha Reddy. A Sale Certificate was issued on 21.04.2022. Aggrieved by the e-auction and Sale Certificate, the petitioner has filed the present writ petition, contending that the respondent Bank acted illegally 7. and arbitrarily by ignoring the Lok Adalat Award. The petitioner contends that the e-auction conducted by the respondent 8. Bank is in direct contravention of the Lok Adalat Award, which constituted a full and final settlement of the debt at Rs.7,30,000/- and by consenting to the Award, the respondent Bank is estopped from retracting and initiating recovery proceedings under the RDB Act. HCJ a RC, J W.P. No;31651 of 2022 submits that the Lok Adalat Award is binding on executable as a decree of a Civil Court. It is stated that initiated execution proceedings before a amount of Rs.1,00,000/- along with interest of the Award, had there been a default in The petitioner further both parties and is respondent Bank could only have Civil Court to recover the balance at 14% per annum as per the terms payment of the awarded amount within the stipulated time. that the respondent Bank acted settlement terms of the Lok Adalat Award and of the subject property, and the sale auction is The petitioner further submits fraudulently by suppressing the proceeding with the e-auction therefore void ab initio and liable to be set aside. substantial amount of Rs.6,30,000/- settled amount, demonstrating bona fide intention writ of mandamus to declare illegal and to direct the respondent Bank . They also seek interim orders to protect their possession The petitioner further claims that a has been paid towards the the Award. The petitioner prays for a to honour the e-auction and Sale Certificate as to cancel the same of the subject property. The respondent Bank, in its counter, states that the Lok Adalat Award is the stand of the respondent Bank that 9. a sham and fabricated document. It is the Award is not validly executed as it lacks the signature of the petitioner and contains discrepancies in dates and signatures of the Presiding Judge. 5 HCJ a RC. J W.P. No:31651 of 2022 The Counter filed by the Bank further states that the petitioner was in default much before the Lok Adalat proceedings, and recovery proceedings under the RDB Act were initiated in 2010 itself and that the Recovery Certificate was issued in 2013 and that the Bank was well within its rights to proceed to recover the outstanding dues. It is stated that the e-auction was conducted strictly in accordance with the provisions of the SARFAESI Act and Rules and the 2'"'^ respondent is a bona fide purchaser, who participated in the auction and purchased the Subject Property for a valuable consideration of Rs. 24,40,000/- and that the Sale Certificate has been duly registered. 10. The 2'"'^ respondent, in his counter, states that he is a bona fide purchaser for value without notice of any alleged Lok Adalat award, and that his rights as a purchaser must be protected. The 2^"^ respondent, too, doubts the genuineness of the Lok Adalat award. 11. The petitioner in the rejoinder contends that the Lok Adalat award is genuine and that it was passed in the proceedings initiated by the Bank. The petitioner states that the Bank has not denied that the proceedings before the Mandal Legal Services Authority, Vijayawada, had been initiated by the Bank itself, and that the Bank has resorted to technical grounds to contest the existence of the award. The petitioner further states that the certified copies of the Lok Adalat Award have since been furnished to all the parties. 12. \ 6 HCJ a RC, J W.P. No:31651 of 2022 This Court, vide order, dated 13.10.2022, while considering the initial 13. submissions of the petitioner, took note of the grievance regarding the alleged violation of the Lok Adalat Award. Considering the submissions, the Court directed the respondent Bank to maintain status quo with regard to the subject property until further orders. Subsequently, this Court directed the Office to secure the original records of the Lok Adalat Case No. 148 of 2018 to ascertain the genuineness of the Award and to further examine the matter of payments made by the petitioner. On 28.06.2024, after perusing the Lok Adalat award, the Court prima facie observed that the Award appeared to be genuine and directed the respondents to file affidavits regarding the payments claimed to have made by the petitioners. Whereas earlier stand of the respondent Bank was that no amount had been deposited into the account of the Bank as was claimed by the petitioner however, upon directions from this Court to file an affidavit, upon verification, it was stated that as against Rs.7,30,000/-, an amount of Rs.6,30,000/- in fact had been received by the Bank. 14. In our opinion, having agreed to receive an amount of Rs.7,30,000/- as per the Award passed by the Lok Adalat, the respondent Bank could not have proceeded to auction and sell the property to the private respondent, more so. when an amount of Rs.6,30,000/- had already been received by the Bank from the petitioner and that the respondent Bank could only be entitled to receive 7 HCJ a RC, J W.P. No:31651 of 2022 interest calculated at the rate of 14% per annum on the unpaid amount of Rs. 1,00,000/- from the date of default. Be that as it may, we allow the present petition setting aside the action 15. of the respondent Bank in selling the property in question in favour of private respondent, who shall be entitled to receive the entire amount deposited by him along with interest at the rate of 14% per annum from the date the amount was deposited by him as the price of the property in question. In this regard. we direct respondent Bank to calculate the amount, which is due and payable as interest calculated at the rate of 14% p.a. on the unpaid amount of Rs.1,00,000/-. Upon such calculation, the same shall be intimated to the petitioners, who shall be given an opportunity to pay the entire balance amount within one month thereafter. Similarly, the respondent Bank shall refund the amount deposited by the private respondent towards price of the property in question along with interest at the rate of 14% p.a., within one month from today. No costs. Pending miscellaneous applications, if any, shall stand closed. Sd/- M SRiNIVAS ASSISTANT REGISTRAR //TRUE COPY// SECTION OFFICER To, 1. The Authorized Officer, Bank of Maharashtra, Vijayawada Branch, 11- 25-18, KT Road, Vijayawada - 520 001 2. One CC to M/s. Jyothi Ratna Anumolu, Advocate [OPUC] 3. One CC to Sri Hanumantha Rao Bachina, Advocate [OPUC] 4. One CC to Sri A.K. Kishore Reddy, Advocate[OPUC] 5. Three CD Copies. ssb HIGH COURT DATED:21/03/2025 ORDER WP.No.31651 of 2022 * 29 MAR 2025 a C9A ^ . Current Section ALLOWING THE W.P. WITHOUT COSTS