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HIGH COURT OF ANDHRA PRADESH AT AMARAVATHI

WP.NO. OF 2022
Between:
M/s. Kirlampudi Sugar Mills Limited,
Rep. by its Managing Director,
Somajiguda, Hyderabad. ..Petitioner

And:
1. Managing Director & Chief Executive Officer,
Central Bank of India, Bombay.

2. Executive Director (Recover)

Central Bank of India, Bombay.

3. Director,(On Board Central Bank Of India)

Reserve Bank of India,

4. General Manager (Recovery)

Central Bank of India, Bombay.

5. Field General Manager

Central Bank of India, Hyderabad.

6. Regional Manager,
Central Bank of India,
Visakhapatnam.

7. Branch Manager,
Central Bank of India,
Kakinada Branch, Kakinada, East Godavari District.

8. Recovery Officer-II, Debts Recovery Tribunal,

Visakhapatnam.
….Respondents

AFFIDAVIT
I, Gera Mohan Babu, s/o.G.V.Swam, aged 62_years, R/o.
Hyderabad., do hereby solemnly and sincerely affirm and state on oath as
follows:

1. I am the Director of the Petitioner company and the deponent herein

and as such well acquainted with the facts of the case. I am authorize to
file this writ petition challenging the inaction of the respondents in not
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issuing the one-time settlement proceedings and consequently not

delivering the documents to pertaining to the mortgaged property,as
offered vide letter dated 06-01-2021 and sanctioned vide there letter no
KAKINADA/2020-21/RECV/01 dated 02-03-2021.

2. It is submitted that the Petitioner company was incorporated on

14.08.1944 under the Indian Companies Act and the company’s
management changed hands from time to time and finally landed in the
hands of M/s Gannon & Dunkerly Company Limited, Mumbai. However, due
to various reasons, the above Company could not run the petitioner
company and finally declared a lockout in January 2000. At that juncture,
there were many serious contenders to acquire the petitioner company,
due to the fact that it had 77 villages under its zone and was considered to
be one of the largest Sugar Zones in South India. The recovery percentage
has also been well above the normal standards prevailing in and around
that zone. Hence, with a view to establish a co-generation power unit, the
present management acquired a major stake in the Petitioner company and
has taken over its management through Security Exchange Board of India
(SEBI). When matters stood thus, on 14-08-2002, the Government of
India came out with a decision to make it mandatory for nine states,
including Andhra Pradesh, to mix ethanol with petrol to the extent of 5%
with effect from 01-01-2003. The decision of the Govt. of India was to
bring down oil import and resultant cost of it and also to benefit sugarcane
growers. Buoyed and encouraged by the above circumstances prevailing
in the sugar industry and the government policies existing then, the
Petitioner company was made functional with a fond hope of bringing
about positive changes with planned stages of implementation of revival
proposals. In the first stage the company of the Petitioner started the
distillery project for manufacture of Ethanol, ENA and Rectified Spirit within
the present capacity of 10000 LDP. The petitioner company has also taken
effective measures for lifting of the lockout with the cooperation of the
workmen and simultaneously held discussions with the cane growers who
assured uninterrupted supply of sugarcane under the guidance and
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assistance of statutory authorities. It is pertinent to mention here that

when the operations of the petitioner company was closed down in the
year 2000, precautionary measures like cleaning the machinery and
installations were not taken and subsequent to the closure also, no
attempts were made to ‘maintain’ the infrastructure of the petitioner
company. Hence, when the technical consultants of the present
management visited and inspected the infrastructure, they opined that this
omission has damaged the infrastructure extensively and required a
complete overhaul and repair and further opined that it would cost around
Rs. 385 lakhs for the revival of the petitioner company. Accordingly, the
management approached the Respondent bank for term loan and working
capital limits to tide over the crisis. After due process, the Respondent
bank sanctioned and released a loan of Rs.3,55,25,000/- (Rupees Three
Crores and Fifty Five Lakhs and Twenty Five Thousand only) in 2003 and
the break-up is as under :
1. Term Loan I Rs.1,76,25,000/-

2. Term Loan II Rs. 1,17,00,000/-

3. Cash Credit Rs. 62,00,000/-

3. It is submitted that the petitioner company ran successfully for 2 years

wherein salaries were paid promptly for a certain period to the staff as well
as the interest on loan to the bank. However, in 2005 the price of molasses
shot to Rs.6000/- per tonne from Rs.1000/- per tonne in 2003. Aggravating
the problem was the drought situation in the region and also the
interference from the Pollution Board complaining about the unbearable
foul smell emanating from molasses, thereby directing the petitioner
company to comply with the standards specified by the Board with regard
to effluent treatment plant. This involved huge expenditure and the
petitioner company could not obtain additional loan from the bank for the
said purpose which gradually resulted in financial crisis whereby the loan of
the petitioner company became a Non-Performing Asset (NPA).
Consequently the bank initiated recovery proceedings against the petitioner
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company under the RDDB Act.

4. It is submitted that in order to secure the above stated loan, the

petitioner company has hypothecated the plant and machinery of its
factory and created equitable mortgage by depositing title deeds in respect
of lands admeasuring 42.34 acres in survey nos. 565, 566, 629, 630, 631,
633 and 663 situated at Pithapuram of East Godavari District. When the
loan was described as Non-Performing Asset, the bank has filed O.A. no.09
of 2006 in the Debt Recovery Tribunal and the same culminated in
issuance of Recovery Certificate dated 06.01.2009. Though the said O.A.
was set in motion under the RDDB Act, the Recovery Proceedings were
initiated under Schedule II of the Income Tax Act. To execute the same,
the Recovery Officer took steps for realization of the decreed amount.
Though e-auction proceedings were conducted from 19-02-2014 to 18-2-
2018, nothing could materialize. In February, 2018, the bank issued a
proclamation of sale-cum-e-auction notice under Rule 38 and 52 (ii) of the
II Schedule of the Income Tax Act, 1961, whereby the values of the
schedule properties were fixed on the basis of the valuation report
obtained in October 2017. Aggrieved by the same, the Petitioner
approached the Hon’ble High Court by filing W.P. No. 12072 of 2018
contending that the values fixed were not in line with the procedure
envisaged under the Act and also not on the basis of the values specified
by Registration and Stamps Department which was to the tune of
Rs.133,20,00,000/- (Rupees One Hundred and Thirty Three Crores and
Twenty Lakhs only) whereas the rate fixed by the Recovery Officer was
only Rs. 25,00,00,000/- (Rupees Twenty Five Crores only) which shows the
huge difference between the rates fixed by the two institutions. The said
W.P. was admitted and the Hon’ble High Court granted time for filing of
Counter to the Respondent therein. Accordingly, the Recovery Officer
postponed the auction. Subsequently, another Auction Notice was issued
by the bank on 09.05.2018 fixing 14.6.2018 as the date of auction and the
same was challenged by the Petitioner in this Hon’ble High Court vide W.P.
no. 18502 of 2018 on various grounds, highlighting among other issues,
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the difference in the value fixed by the Recovery Officer and the value
fixed by the Registration and Stamps Department. The said W.P. was
admitted and a direction was issued to the Recovery Officer to conduct the
sale but not to finalize the same until further orders from the Court. Finally,
said W.P. was dismissed on 26-10-2018 and the same has become final,
but neither the Recovery Officer nor the Auction Purchaser have taken
measures to conclude the proceedings in R.P. no. 14 of 2009 in O.A. no. 09
of 2006 initiated by the Recovery Officer vide proceedings dated
10.5.2018.

5. We respectfully submit that the Recovery Officer and the Auction

Purchaser have grossly violated the rules and the Orders of the Hon’ble
High Court, by granting the time to the Auction Purchaser for
depositing the amount after expiry of the time under the statute.
The Petitioner questioned the power of the Recovery Officer granting time
beyond the statute which is arbitrary, illegal and violation of the statute.
Pending the above W.P., instead of directing the Auction Purchaser to
deposit 75% of the balance amount, the Recovery Officer has issued
proceedings dated 12.12.2018 to the parties to inform about the status of
the pending W.P. On 23-12-2018, the bank has filed a Memo stating that
the order of this High Court makes it clear that if there is any default in
payment by the Petitioner by 7 th December, 2018, liberty is given to the
Recovery Officer to initiate proceedings as per the statute and further
added that since both the parties are at default in compliance of the
orders, the bank requested the Recovery Officer to ensure forfeiture of the
25% of the amount paid by the Auction Purchaser and cancel the auction
and issue a notice for a fresh auction. Despite the Memo being filed by the
bank, the Recovery Officer did not adhere to the orders of the Hon’ble High
Court. As matters stood thus, the IA in W.P. No.41658 of 2018 was
disposed of on 23-01-2019 with the observation that the order passed by
Hon’ble High Court on 19-11-2018 is self-explanatory and it further clarified
that in default of payment by the Petitioner, the Recovery Officer was at
liberty to issue a Sale Certificate and proceed further. The order dated
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19-11-2019 is comprehensive and takes care of the eventualities arising

there from. Despite the order dated 23-01-2019 of the Hon’ble High Court
being clear and categorical, the Recovery Officer traversed beyond the
scope of the judicial order as well as time prescribed under the Statute and
issued proceedings dated 25.01.2019 by giving an additional 15 days’ time
to the Auction Purchaser to pay the remaining amount which was in gross
violation of the statute. The 15 days’ time for compliance of conditional
order started on 8-12-2018 and ended on 23rd December, 2018. Therefore,
it can be construed that the letter dated 25-01-2019 addressed by the
Recovery Officer is in gross violation of law and the subject proceedings of
the W.P. no.14658 of 2019. It is pertinent to mention here that the judicial
pronouncements state that it is the duty of the Auction Purchaser to pay
75% of the balance consideration even if the Recovery Officer fails in his
duty. The Petitioner filed W. P. No. 1105 of 2019 against proceedings
dated 25.01.2019 and when it was listed for admission, a notice was
ordered directing the respondents to file a counter. Though the
proceedings dated 25.01.2019 is contrary to the statute as well as the
orders of the Hon’ble High Court, the Auction Purchaser did not pay the
remaining 75% of the auction amount and consequently the Recovery
Officer cancelled the auction dated 14.06.2018 vide proceedings dated
12.02.2019. Aggrieved by the same, the Auction Purchaser filed W.P. no.
3007 of 2019 seeking directions to the Recovery Officer to accept the
balance amount by extending the time by another 15 days and along with
the same, Interim Application was filed seeking directions to stay the
proceedings dated 12.02.2019. The Petitioner filed a caveat petition and
contested the matter and at the time of admission, after hearing both the
sides, the Hon’ble High Court did not pass any interim orders as sought by
the Auction Purchaser and directed the Registry to post the said W.P. along
with W.P. nos. 14658 of 2018 and 1105 of 2019.

6. It is respectfully submitted that in consequence of

cancellation of Auction pending writ petition, this petitioner has
received Notice of Offer from Central Bank of India vide
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proceedings dt.09.06.2020 wherein it was informed that the

Central Bank of India came out with a
NDND(Non-Discretionary/Non-Discriminatory) Special OTS
Scheme 2021 for one-time Settlement of Non-performing Assets
and therefore, this petitioner was informed through there offer
letter. Dt.09-06-2020 On receipt of the same, the petitioner has
shown inclination and exercised the option of One-time
settlement vide proceedings dt.09-06-2020 it self. On receipt of
the same, the Central Bank of India vide Proceedings
dt.09.06.2020, asked the willingness of the petitioner by imposing
the conditions as follows:

QUOTE:

(i) Contractual Amount due (as on 09.06.2020):

Rs.13,48,84,287/- (Rs.Thirteen Crore Forty Eight Lakh Eighty Four
Thousand Two Hundred and Eighty Seven Only).

ii) OTS offer amount:Rs.2,51,00,000/- (Rupees Two Crore Fifty

One Lakh Only).

iii) Application for OTS will be processed only on deposit of

minimum 5% of the OTS amount.

iv) The remaining amount has to be paid within 30 days of the

sanction of the OTS.

v) If 10% of the OTS amount (including 5% remitted upfront)

is paid within 30 days from the date of sanction of OTS, the
remaining amount can be paid within 6 months, in monthly
instalments, from the date of sanction of OTS (the validity period)
together with interest @IY MCLR on reducing balance basis
effective from the date of sanction of the OTS, failing which the
OTS sanction will be rendered infructuous.
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vii) Failing to repay the entire amount within the stipulated time
period as above, will render the OTS infructuous and therefore
amount paid under the OTS, if any, will not be refunded.
UNQUOTE

In response to the above proceedings, the petitioner

submitted One-time Settlement Application dt. 12.06.2020 in
consonance with the conditions enumerated as above. After
receipt of the same, the respondent Central Bank of India issued
proceedings vide letter dt.03-09-2020. After lapse of three
months, the Central Bank of India had informed the petitioner ,
Here by we are forwarding the message received from our
competent authority regarding your compromise proposal under
NDND special OTS scheme:   
 '' The OTS proposal for 251.78 lakhs stands REJECTED with an
advise to pursue the customer for submitting combined OTS
proposal of M/s KSMILLS and M/s Cars Trust with Hyderabad
main branch''
It is to submit that the respondent bank’s board has approved
NDND(Non-Discretionary/Non-Discriminatory) Special OTS
Scheme 2020-21 for NPA accounts without standing CIF wise up
to Rs 10 crore, wide Instruction circular no 2333 dt.22 nd May 2020
it is categorically mentioned about processing & Turn Around
Time Authorities do not have authority to decline/reject any
eligible proposal under this scheme to deviate from the norms of
the scheme and negotiate for higher/lower OTS amount. In case
anybody found to have violate the instructions,suitable action will
be initiated against him/her as per rule.
On receipt of the same, the petitioner has made it clear vide letter
dt.05.09.2020 that the CARS Trust account is no way connected
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to M/s.Kirlampudi Sugars and the M/s.Kirlampudi Sugars has no

sister concern and therefore insisting the petitioner to pay the
M/s.CARS Trust Account is unreasonable. On receipt of the same,
the respondent Central Bank of India has conveyed their decision
vide letter dt.24.09.2020 stating that the sanction of OTS is duly
approved by the competent authority and subject to certain
conditions mentioned therein.

7. It is submitted that on receipt of the above proceedings

dt.24.09.2020, the petitioner herein had submitted their
acceptance vide letter dt.25.09.2020 of revised One Time Proposal
forwarded by the respondent Central Bank of India. The
respondent Central Bank of India vide proceedings dt.28.09.2020,
requested the petitioner herein to pay the down payment amount
on or before 30.09.2020 for further process of One Time
Settlement.

Again on 06-01-2021 the respondent bank has issued one more

OTS offer letter to settle petitioners account and same was
accepted and deposited 10%(Rs 26Lacks) as a down payment and
same was transferred to petitioners NPA account on 07-01-2021.

It is submitted that the petitioner herein has made it very clear

that they have deposited the amount as enumerated in the
sanction proceedings and further clarified that the amounts are
deposited in the M.D.”s bank account with necessary funds to
discharge M/s.Kirlampudi Sugars Loan liability and further agreed
to deposit the OTS amount of M/s.CARS Trust in the said personal
account Through various communications. Despite, it is being
clarified to the bank that there is no progress and still the
proceedings are pending with the respondent Central Bank of
India. Therefore, we are constrained file this present writ
petition.
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8. It is respectfully submitted that while things stood thus, the

WP.No.1105/2019 and WP.No.3007/2019 and WP.No.______/2022, were
heard finally by the Hon’ble Division Bench and passed an order on
12.04.2022. On receipt of the orders passed by the Hon’ble High Court,
M/s Kirlampudi Sugars filed a review petition IA no.4 of 2022 stating that
there is an error apparent on the face of the record and the petition is filed
herewith as an Annexure to this writ petition.

9. It is not out of place to mention that the Auction Purchaser has also
filed an IA no.5 of 2022 seeking directions to the Recovery Officer to issue
a Sale Certificate in the name of Auction Purchaser with further direction for
the registration of the property. The workers of M/s Kirlampudi Sugars filed
IA no.123 of 2022 for permission to implead, for recall of the order and for
stay of all further proceedings in view of the orders passed by this Hon’ble
High Court in the writ petition filed against the award passed by the Labour
Court. The Hon’ble High Court has directed the parties, to the WP filed
against award of the Labour Court, not to register the property as directed
by the court below in the endorsement petition filed by the workers.

10. It is submitted that, when the Review Application filed by this

petitioner, Recall Petition filed by M/s. Kirlampudi Workers & Employees
Union and IA filed by Auction Purchaser i.e. M/s.Siddhartha Infratech,
seeking directions to the Recovery Officer for issuance of a Sale Certificate,
the Hon’ble High Court issued notices and permitted the petitioners to take
out personal notice to the parties concerned to the IAs.

11. It is submitted that while things stood thus, Auction Purchaser M/s
Siddartha Infratech and Services Pvt. Ltd filed an application for issuance of
Sale Certificate and the registration of the property. M/s Kirlampudi Sugars
has filed an application before the Recovery Officer seeking directions to
the Bank to release the property in view of the proceedings of the one-time
settlement. M/s Kirlampudi Sugar Mills Staff and Workers Union has also
filed an IA before the Recovery Officer stating that the Hon’ble XII
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Additional District Judge, Pitapuram has issued an attachment proceedings

of the subject land. They further brought to the notice of the Recovery
Officer that the order was confirmed by the Hon’ble High Court in IA No.1
of 2022. It is submitted that the I.A. filed by M/s.Kirlampudi Sugars &
M/s.Kirlampudi Sugars Workers & Employees Union were dismissed by the
Recovery Officer on 03.06.2022 and issued Sale Certificate on ____ vide
Proceedings dated _______ and the same is being challenged in the
present writ petition on the following grounds :

12. It is submitted that the Recovery Officer appears to have an

impression that mere filing of a Review Petition does not restrict further
proceedings unless some stay order is granted by this Hon’ble Court clearly
directing to stay the further proceedings on the basis of its earlier order.
Since there was no specific stay order from the Hon’ble Court, the Recovery
Officer contends that he has issued the Sale Certificate.

13. It is submitted that the Recovery Officer took a decision not to issue
the Sale Certificate to the Auction Purchaser and the Auction Purchaser
then filed an IA no. 5 of 2022 seeking directions from this Hon’ble Court to
the Recovery Officer for issuance of Sale Certificate. Subsequently, when
the IA is still pending and when there is no change in circumstances
whatsoever so far as the parties to the case are concerned and when no
major development has taken place to make him issue the Sale Certificate,
it is surprising how the Recovery Officer has suddenly and surprisingly
taken a decision to issue Sale Certificate to the Auction Purchaser that too
after receipt of the notices in the Review Petition and directions as under :

QUOTE
Issue Notice to Respondents.
Learned Counsel for the Petitioner is permitted to take out personal
notice by way of registered post acknowledgement due and file proof of
the same before the Registry.
List on 17.06.2022.
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UNQUOTE
----
14. It is submitted that issuance of Sale Certificate before culmination of
the case, may lead to jeopardizing the rights of the Review Petitioner and
the situation may go too far which may become difficult/impossible to
retreat or reach the stage where it all began. Therefore, it is in the interest
of the parties to not disturb the scenario before issuance of Sale Certificate
by the Recovery Officer on ______(date).

15. It is submitted that the Recovery Officer issued a notice on 25-01-

2019 to the Auction Purchaser for payment of 75% of the balance amount
of auction within 15 days from the receipt of the order (which would expire
by 08-02-2019) and the Auction Purchaser was also informed in this notice
that in case of default of payment by him by that time, the said sale would
be cancelled. This notice was received by the representative of the Auction
Purchaser on 25-01-2019 itself physically, which is established by the
acknowledgement, and therefore 15 days time granted by the Recovery
Officer would start from 25-01-2019 itself. Subsequently, the Recovery
Officer has passed proceedings on 12-02-2019 cancelling the same and
forfeiting the deposited amount. The Court has arrived at a finding that the
Recovery Officer cancelled the auction sale and forfeited the auction
amount much before the expiry of 15 days time from 25-01-2019. This is
an error apparent on the face of the record as the 15 days time lapsed on
08-02-2019. It was, therefore, the duty of the Recovery Officer, as a
Government Official, to bring this fact to the notice of the Hon’ble Court
but he compounded the matters by issuing the Sale Certificate to the
Auction Purchaser on ……. in contravention of the rules. It is submitted
that the petitioner herein has taken steps to challenge the orders passed
by the Recovery Officer dt.03.06.2022 in a separate writ petition.

16. Under the circumstances stated above the Petitioner herein has no
other alternative for effective or efficacious remedy except to invoke the
special original jurisdiction of the Hon’ble High Court under Article 226 of
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the Constitution of India.

17. The Petitioner submits that no other Writ Petition has been filed nor
any other proceeding initiated in any other forum for the relief sought in
this writ Petition.

It is therefore prayed that the Hon’ble High Court may be pleased to

issue an appropriate Writ, Order of Direction; more particularly one in the
nature of Writ of Mandamus, __________________directing the
respondents to consider the representation and issue appropriate order
considering the situation and circumstances mentioned earlier, in the
interest of justice and to pass such other order or orders as this Hon’ble
Court deems fit and proper in the circumstances of the case..

It is further prayed that the Hon’ble High Court may be pleased to

direct the 1st Respondent to consider the representation dated …… with
regard to dues to the Municipal Corporation, Pithapuram, and to pass such
other order or orders as this Hon’ble Court deems fit and proper in the
circumstances of the case.

DEPONENT
Sworn and signed before me on this the
Day of June 2022 at Hyderabad.

ADVOCATE:HYDERABAD

VERIFICATION
I, ………….S/o……………., Aged about……years, Occupation: Director
of Kirlampudi Sugars, R/o.Hyderabad, do hereby declare that the above
mentioned facts are true to the best of my knowledge, belief and
information. Hence, verified on this the day of June 2022 at Hyderabad.
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DEPONENT
COUNSEL FOR PETITIONER.