Attempt To Deliberately Pollute Stream Of Justice By Protracting Litigation: Allahabad High Court Imposes ₹25L Cost On Loan Guarantors In Auction Case
The Allahabad High Court dismissed a Writ Petition filed against the Order of the Debt Recovery Appellate Tribunal which set aside the DRT’s Order and affirmed the auction sale.
The Allahabad High Court has imposed a cost of Rs. 25 lakhs on the guarantors of loan in an auction case.
The Lucknow Bench was dealing with a Writ Petition filed against the Order of the Debt Recovery Appellate Tribunal, Allahabad (DRAT), which set aside the DRT’s Order and affirmed the auction sale.
A Single Bench of Justice Sangeeta Chandra remarked, “This Court having gone through the judicial precedents as aforesaid relating to writ jurisdiction being an equitable jurisdiction and the responsibility of the litigant to approach this Court with frank and full disclosure of facts, avoiding any active misrepresentation and suppression of material facts, finds that the petitioners have filed this writ petition in an attempt to deliberately pollute the stream of justice. Not only this Court has found misrepresentation from the pleadings on record and documentary evidence filed by the Bank in its affidavits, this Court has also found deliberate attempt at protracting of litigation to enable the petitioners to continue to occupy House No.88, Sector-13, Indira Nagar Vistar Yojana, Lucknow, despite the property having been auctioned way back on 21.12.2017.”
Advocate Sushil Kumar represented the Petitioners while Advocate Rakesh Pal represented the Respondents.
Factual Background
The State Government launched a scheme called “Kamdhenu Dairy Scheme” with an intention to promote dairy farming in the U.P. State to maintain its status as the highest milk producing State in the country. The brother and brother-in-law of the Petitioner No.1 applied for a term loan of 5 years and was sanctioned Rs. 90 lakhs by the Bank of Baroda under the State Sponsored Scheme. It was alleged that the Petitioners were shown as the guarantors of the said loan fraudulently by the Bank which used the original papers relating to the Petitioner’s jointly owned property which was already mortgaged to the Bank in a housing loan, as surety for the agricultural loan of the borrower. It was further alleged that the Petitioners had taken a housing loan from the HDFC Bank initially for a sum of Rs. 32 lakhs for buying the house. Due to lower rate of interest, the Petitioners got their loan transferred to the Bank of Baroda which granted them loan of Rs. 29.5 lakhs.
The loan account of the borrower was declared NPA (Non-Performing Asset) by the bank and a demand notice was issued under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). It was stated that the Petitioner never received such a demand notice. Thereafter, the Bank issued a possession notice under Section 13(4) of SARFAESI Act and a letter of redemption was sent through speed post. Subsequently, summons were issued by the District Magistrate under Section 14 of the said Act. The house property of the Petitioners was put up for auction. The Petitioners filed a Writ Petition challenging the Auction Sale Notice which was disposed of by the Court, directing the Petitioners to approach the DRT. The Petitioners filed an Application before the DRT which was allowed. The Bank of Baroda approached the DRAT which allowed its Appeal, set aside the DRT’s Order, and affirmed the auction sale and possession notice. Being aggrieved, the Petitioners were before the High Court.
Reasoning
The High Court after hearing the contentions of the counsel, observed, “The counsel for the respondent no. 4 in his written submissions has placed on record the fact that the respondent no. 4 has been living in rented premises and has not been able to enjoy the benefits of the property purchased by her, which makes her entitled to mesne profits as well. It has been stated that the auction purchaser has been paying continuous EMI to Indian Bank for loan taken to purchase the property for the last seven years and has incurred enormous monetary loss and deserves to be compensated for the actual damages so caused.”
The Court noted that the total loss has been calculated of more than Rs. One Crore. It further said that the Court’s precious time which may have been utilized for genuinely suffering litigants has been wasted.
“… the Respondent no.4 has also suffered grievously. … This Court even on merits has not found the arguments raised by the counsel for the petitioners to be sustainable”, it added.
The Court, therefore, directed that the Petitioners are bound to vacate the property within one month.
Accordingly, the High Court dismissed the Writ Petition and imposed a cost of Rs. 25 lakhs on the Petitioners.
Cause Title- Sunita Nishad and Anr. v. Debt Recovery Appellate Tribunal through Registrar and Ors. (Neutral Citation: 2025:AHC-LKO:17786)
Appearance:
Petitioners: Advocates Sushil Kumar, Abhiuday Pratap Singh, Amrendra Nath Tripathi, Meenakshi Singh Parihar, and Rakesh Chandra Tewari.
Respondents: Advocates Rakesh Pal, PC Chauhan, Prashant K. Srivastava, Ramesh Chandra, S.C. Tiwari, Shailendra Singh Rajawat, and Vidya Kant Sharma.
