Basant Kumar Jain vs State Bank of India

Alok Aradhe, J.—Heard on the question of admission. In the instant writ petition, the petitioner has challenged the validity of the order dated 25.7.2011 passed by the learned Single Judge by which the writ petition preferred by the appellant has been dismissed. In order to appreciate the appellant''s grievance, few facts need mention, which are stated infra. The appellant had obtained financial assistance from the respondent-Bank to the tune of Rs. 23.25 lacs for establishment of grossery business. In order to secure the loan, the appellant had mortgaged his property consisting land as well as residential house situate at village Bankhedi, District Hoshangabad. It is the case of the appellant that he sustained losses in the business and thereafter, he shifted to Raipur. A notice dated 21.3.2007 was published in the newspaper in exercise of power u/s 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ''the Act''). The appellant thereupon approached this Court by filing a writ petition inter-alia on the ground that neither any notice as envisaged u/s 13(2) of the Act was issued to the appellant nor there was compliance with provisions of Section 13(3-A) of the Act. The writ petition preferred by the appellant was dismissed by the learned Single Judge by placing reliance on the decision of Supreme Court in United Bank of India Vs. Satyawati Tondon and Others, . The learned Single Judge declined to entertain the writ petition in view of availability of alternative remedy u/s 17 of the Act before the Debts Recovery Tribunal. In the aforesaid factual backdrop, the appellant has filed the instant appeal.

Learned counsel for the appellant submitted that the learned Single Judge ought to have appreciated that neither any notice u/s 13(2) of the Act was served on the appellant nor there was compliance with provisions of Section 13 (3-A) of the Act, therefore, the action initiated by the respondent-Bank u/s 13(4) of the Act was abinitio void. It was further submitted that alternative remedy is not a bar in entertaining the writ petition. It was also submitted that writ petition was entertained by the learned Single Judge initially and various interim orders were passed and, therefore, the writ petition should not have been dismissed on the ground of availability of alternative remedy. It was urged that the appellant can raise the ground with regard to the validity of the measure taken u/s 13(4) of the Act only in the appeal u/s 17 of the Act. In support of his submissions, learned counsel for the appellant has placed reliance in the cases of Transcore Vs. Union of India (UOI) and Another, , Bhupinder Singh Vs. The State Bank of Patiala, M/ s. Raja Associates & Ors. Vs. Union of India & Ors., AIR 2008 Kar 136 and Jayant Agencies Vs. Canara Bank and Others,

On the other hand, learned counsel for the respondent-Bank submitted that notice u/s 13(2) of the Act dated 20.3.2006 was sent at the address of the appellant, however, the same could not be served. Eventually, the notice was affixed in the premises of the appellant and the panchnama was prepared. It was further submitted that notice u/s 13(2) of the Act was also sent to the guarantors which was duly served upon them. The action u/s 13(4) of the Act has been taken by the respondent-Bank in accordance with law which does not call for any interference, as the appellant has an efficacious remedy u/s 17 of the Act where he can agitate all his grievances.

We have considered the submissions made on both sides. It is well settled in law that powers conferred on this Court under Article 226 of the Constitution of India are very wide and there is no express limitation on exercise of the power, but at the same time, the rules of self-imposed restraint have been evolved for exercise of powers under Article 226 of the Constitution of India. The doctrine of availability of alternative remedy is a rule of self imposed limitation. It is essentially a rule of policy, convenience and discretion and never a rule of law. Despite existence of an alternative remedy it is within the jurisdiction of discretion of the High Court to grant relief under Article 226 of the Constitution. There are two well recognized exceptions of doctrine of exhaustion of statutory remedies. First is when the proceedings are taken before the forum under a provision of law which is ultra vires and secondly, when the impugned order has been made in violation of the principles of natural justice. See: State of H.P. Vs. Gujarat Ambuja Cement Ltd., (2005), 6 SCC 499 , and Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai and Others, . In Satyawati Tandon, supra, the Supreme Court has held that rules of exhaustion of alternative remedy is a rule of discretion and not of compulsion. It has further been held that ordinarily, a writ petition under Article 226 of the Constitution of India should not be entertained if an effective remedy is available to an aggrieved person and this rule applies with greater rigour in the matters involving recovery of taxes, cess, fees and other types of public money and dues of bank and other financial institution. However, it has not been held by the Supreme Court that in no case, a writ petition can be entertained under Article 226 inspite of availability of alternative remedy.

Section 13 of the Act deals with enforcement of security interest. Section 13 (2) provides that in case of default in repayment of the loan and the account of the borrower in respect of such a loan is classified as nonperforming asset then secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within 60 days from the date of notice, failing which secured creditor shall be entitled to exercise all or any of rights u/s 13 (4) of the Act. Section 13 (3) mandates that notice u/s 13 (2) shall give details of the amount payable by the borrower. Section 13 (3-A) casts a duty on the secured creditor to decide the representation/objection preferred by the borrower on receipt of notice u/s 13 (2) and to communicate the reasons for non-acceptance of the representation/objection within a week. Thereafter the secured creditor can resort to the measures u/s 13(4) of the Act. Thus, before invoking measures u/s 13(4) the secured creditor is required to comply with the provisions of Sections 13 (2), 13 (3) and 13 (3-A) of the Act. There may be cases where the writ petition can be entertained notwithstanding the remedy of appeal under the Act, such as, a case where admittedly there is no compliance of provisions of Section 13(2) and 13 (3-A) of the Act, which is sine qua non for exercise of powers u/s 13(4) of the Act. In such a case, the measure/action taken u/s 13(4) of the Act would be abinitio void and in violation of principles of natural justice as incorporated in the Act. Such a case would be covered by the exception to the doctrine of exhaustion of alternative remedy pointed by the Supreme Court in Whirlpool Corporation (supra) and Gujarat Ambuja Cement (supra) There may also be case where the writ petition is entertained by the High Court and interim orders are passed and in compliance of interim orders substantial amount of loan is repaid to the financial institution, in such a case, the High Court would not be justified in dismissing the writ petition on the ground of availability of alternative remedy. We may hasten to add here that the aforesaid examples are only illustrative and not exhaustive.

On the touchstone of well settled legal position and in the light of decision of the Supreme Court in Satyawati Tandon, supra, the facts of the case may be seen. In the instant case, on one hand the appellant has asserted that no notice u/s 13(2) of the Act was issued whereas learned counsel for respondent-Bank has stated that notice u/s 13(2) of the Act was served by affixture and panchnama was prepared. The question whether or not notice u/s 13(2) of the Act was served on the appellant or not, is a disputed question of fact which cannot be adjudicated in a writ petition. It is well settled in law that this Court would not adjudicate the disputed questions of fact in exercise of power under Article 226 of the Constitution of India. See: Mrs. Sanjana M. Wig Vs. Hindustan Petro Corporation Ltd., . The instant case is not a case where the appellant has paid the substantial amount towards the loan taken by him from the Bank. The contention that in an appeal u/s 17 of the Act, the aggrieved person can only challenge the order passed u/s 13(4) of the Act, also does not deserve acceptance. We have carefully gone through the provisions of Section 17(1) of the Act and we have no manner of doubt that all the grounds with regard to procedural irregularity in taking the measures u/s 13(4) of the Act can very well be agitated and adjudicated in the appeal preferred u/s 17 of the Act. Similarly, the contention that once the writ petition is entertained, this Court cannot dismiss the writ petition on the ground of availability of alternative remedy also cannot be accepted as the ratio of the decision relied upon by learned counsel for the appellant in L. Hirday Narain Vs. Income Tax Officer, Bareilly, has been mellowed down subsequently by the Supreme Court in State of U.P. and Another Vs. U.P. Rajya Khanij Vikas Nigam S.S. and Others, and it has been held - it cannot be laid down as proposition of law that writ petition is admitted it can be dismissed on the ground of availability of alternative remedy. For the aforementioned reasons, we do not find any merit in the appeal.

The same fails and is hereby dismissed.