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Judgment
Heard learned counsel for the parties. Perused the material available on record.
Through this writ petition under Article 226 of the Constitution of India, the petitioner has approached this Court seeking quashing of the auction notice
published by the respondent Bank (erstwhile SBBJ) for recovery of its loan amount by sale of the secured assets.
Mr. Shridhar Mehta, learned counsel representing the respondent Bank on behalf of Dr. Sachin Acharya has raised a preliminary objection regarding
maintainability of the instant writ petition by relying upon the Supreme Court decision in the case of Authorized Officer, State Bank of Travancore &
Anr. vs. Mathew K.C. (Civil Appeal No.1281/2018) decided on 30.01.2018.
Shri S.L. Jain, learned counsel representing the petitioner countered this preliminary objection, vehemently urging that the remedy of approaching the
Debt Recovery Tribunal is not an efficacious alternative remedy so as to justify relegation of the petitioner to approach the Tribunal against the
patently illegal auction proceedings. However, upon a perusal of the following observations made by Hon’ble the Supreme Court in the case of
Authorized Officer, State Bank of Travancore & Anr. vs. Mathew K.C. (supra) relied upon by Mr. Sridhar Mehta, this Court is duly satisfied that all
permissible objections and defences against the action sought to be taken by the respondents under the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 Act (hereinafter referred to as ‘the Securitisation Act) have to be agitated by invoking the
statutory remedy under Section 17 of the Act of 2002 before the Debt Recovery Tribunal:
“4. The SARFAESI Act is a complete code by itself, providing for expeditious recovery of dues arising out of loans granted by financial institutions,
the remedy of appeal by the aggrieved Under Section 17 before the Debt Recovery Tribunal, followed by a right to appeal before the Appellate
Tribunal Under Section 18. The High Court ought not to have entertained the writ petition in view of the adequate alternate statutory remedies
available to the Respondent. The interim order was passed on the very first date, without an opportunity to the Appellant to file a reply. Reliance was
placed on United Bank of India v. Satyawati Tandon and Ors. MANU/SC/0541/2010 : 2010 (8) SCC 110, and General Manager, Sri Siddeshwara
Cooperative Bank Limited and Anr. v. Ikbal and Ors. MANU/SC/0856/2013 : 2013 (10) SCC 83. The writ petition ought to have been dismissed at
the threshold on the ground of maintainability. The Division Bench erred in declining to interfere with the same.
Shri Roy Abraham, learned Counsel for the Respondent,submitted that it was desirous to repay the loan, and merely sought regularisation of the
loan account. The inability to service the loan was genuine, occasioned due to market fluctuations causing huge loss in business, beyond the control of
the Respondent. The failure of the Bank to consider the request for regularisation of the loan account, the absence of a right to appeal Under Section
17 against the order passed Under Section 13(3A), the Respondent was left with no option but to prefer the writ application as the Respondent
genuinely desired to discharge the loans. The collateral security offered included agricultural lands also, which had to be excluded Under Section 31 of
the SARFAESI Act. There had been violation of the principles of natural justice. A large number of similar writ applications are pending before the
High Court preferred by the concerned borrowers, but the Bank has singled out the present  Respondent  alone  for  a  challenge.
We have considered the submissions on behalf of theparties. Normally this Court in exercise of jurisdiction Under Article 136 of the Constitution is
loathe to interfere with an interim order passed in a pending proceeding before the High Court, except in special circumstances, to prevent manifest
injustice or abuse of the process of the court. In the present case, the facts are not in dispute. The discretionary jurisdiction Under Article 226 is not
absolute but has to be exercised judiciously in the given facts of a case and in accordance with law. The normal Rule is that a writ petition Under
Article 226 of the Constitution ought not to be entertained if alternate statutory remedies are available, except in cases falling within the well defined
exceptions as observed in Commissioner of Income Tax and Ors. v. Chhabil Dass Agarwal, MANU/SC/0802/2013 : 2014 (1) SCC 603, as follows:
Thus, while it can be said that this Court has recognised some exceptions to the Rule of alternative remedy i.e. where the statutory authority has
not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has
resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the
proposition laid down in Thansingh Nathmal case, Titaghur Paper Mills case and other similar judgments that the High Court will not entertain a
petition Under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the
action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field. Therefore, when a statutory forum is
created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation.
The pleadings in the writ petition are very bald andcontain no statement that the grievances fell within any of the well defined exceptions. The
allegation for violation of principles of natural justice is rhetorical, without any details and the prejudice caused thereby. It harps only on a desire for
regularisation of the loan account, even while the Respondent acknowledges its own inability to service the loan account for reasons attributable to it
alone. The writ petition was filed in undue haste in March 2015 immediately after disposal of objections Under Section 13(3A). The legislative
scheme, in order to expedite the recovery proceedings, does not envisage grievance redressal procedure at this stage, by virtue of the explanation
added to Section 17 of the Act, by Amendment Act 30 of 2004, as follows:
Explanation.--For the removal of doubts, it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not
having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower
shall not entitle the person (including the borrower) to make an application to the Debts Recovery Tribunal under this Sub-section.
The Section 13(4) notice along with possession noticeUnder Rule 8 was issued on 21.04.2015. The remedy Under Section 17 of the SARFAESI
Act was now available to the Respondent if aggrieved. These developments were not brought on record or placed before the Court when the
impugned interim order came to be passed on 24.04.2015. The writ petition was clearly not instituted bonafide, but patently to stall further action for
recovery. There is no pleading why the remedy available Under Section 17 of the Act before the Debt Recovery Tribunal was not efficacious and the
compelling reasons for by-passing the same. Unfortunately, the High Court also did not dwell upon the same or record any special reasons for grant of
interim relief by direction to deposit.
The statement of objects and reasons of the SARFAESI Actstates that the banking and financial sector in the country was felt not to have a level
playing field in comparison to other participants in the financial markets in the world. The financial institutions in India did not have the power to take
possession of securities and sell them. The existing legal framework relating to commercial transactions had not kept pace with changing commercial
practices and financial sector reforms resulting in tardy recovery of defaulting loans and mounting non-performing assets of banks and financial
institutions. The Narasimhan Committee I and II as also the Andhyarujina Committee constituted by the Central Government Act had suggested
enactment of new legislation for securitisation and empowering banks and financial institutions to take possession of securities and sell them without
court intervention which would enable them to realise long term assets, manage problems of liquidity, asset liability mismatches and improve recovery.
The proceedings under the Recovery of Debts due to Banks and Financial Institutions Act, 1993, (hereinafter referred to as 'the DRT Act') with
passage of time, had become synonymous with those before regular courts affecting expeditious adjudication. All these aspects have not been kept in
mind and considered before passing the impugned order.
Even prior to the SARFAESI Act, considering the alternateremedy available under the DRT Act it was held in Punjab National Bank v. O.C.
Krishnan and Ors. MANU/SC/0452/2001 : (2001) 6 SCC 569, that:
The Act has been enacted with a view to provide aspecial procedure for recovery of debts due to the banks and the financial institutions. There is a
hierarchy of appeal provided in the Act, namely, filing of an appeal Under Section 20 and this fast-track procedure cannot be allowed to be derailed
either by taking recourse to proceedings Under Articles 226 and 227 of the Constitution or by filing a civil suit, which is expressly barred. Even though
a provision under an Act cannot expressly oust the jurisdiction of the court Under Articles 226 and 227 of the Constitution, nevertheless, when there is
an alternative remedy available, judicial prudence demands that the Court refrains from exercising its jurisdiction under the said constitutional
provisions. This was a case where the High Court should not have entertained the petition Under Article 227 of the Constitution and should have
directed the Respondent to take recourse to the appeal mechanism provided by the Act.
In Satyawati Tandon (supra), the High Court hadrestrained further proceedings Under Section 13(4) of the Act. Upon a detailed consideration of
the statutory scheme under the SARFAESI Act, the availability of remedy to the aggrieved Under Section 17 before the Tribunal and the appellate
remedy Under Section 18 before the Appellate Tribunal, the object and purpose of the legislation, it was observed that a writ petition ought not to be
entertained in view of the alternate statutory remedy available holding:
Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition Under Article 226 of the
Constitution if an effective remedy is available to the aggrieved person and that this Rule applies with greater rigour in matters involving recovery of
taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions
involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by
Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure
for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all
such cases, the High Court must insist that before availing remedy Under Article 226 of the Constitution, a person must exhaust the remedies available
under the relevant statute.
It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory
remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction Under Article 226 for passing orders which have serious adverse
impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their
discretion in such matters with greater caution, care and circumspection.
In Union Bank of India and Anr. v. Panchanan Subudhi,MANU/SC/1229/2009 : 2010 (15) SCC 552, further proceedings Under Section 13(4)
were stayed in the writ jurisdiction subject to deposit of Rs. 10,00,000/- leading this Court to observe as follows:
In our view, the approach adopted by the High Courtwas clearly erroneous. When the Respondent failed to abide by the terms of one-time
settlement, there was no justification for the High Court to entertain the writ petition and that too by ignoring the fact that a statutory alternative
remedy was available to the Respondent Under Section 17 of the Act.
The same view was reiterated in Kanaiyalal LalchandSachdev and Ors. v. State of Maharashtra and Ors. MANU/SC/0103/2011 : 2011 (2) SCC
782 observing:
In our opinion, therefore, the High Court rightly dismissed the petition on the ground that an efficacious remedy was available to the Appellants
Under Section 17 of the Act. It is well settled that ordinarily relief Under Articles 226/227 of the Constitution of India is not available if an efficacious
alternative remedy is available to any aggrieved person. (See Sadhana Lodh v. National Insurance Co. Ltd.; Surya Dev Rai v. Ram Chander Rai and
SBI v. Allied Chemical Laboratories.).
In Ikbal (supra), it was observed that the action of theBank Under Section 13(4) of the 'SARFAESI Act' available to challenge by the aggrieved
Under Section 17 was an efficacious remedy and the institution directly Under Article 226 was not sustainable, relying upon Satyawati Tandon
(Supra), observing:
No doubt an alternative remedy is not an absolute bar to the exercise of extraordinary jurisdiction Under Article 226 but by now it is well settled
that where a statute provides efficacious and adequate remedy, the High Court will do well in not entertaining a petition Under Article 226. On
misplaced considerations, statutory procedures cannot be allowed to be circumvented.
28.......In our view, there was no justification whatsoever for the learned Single Judge to allow the borrower to bypass the efficacious remedy
provided to him Under Section 17 and invoke the extraordinary jurisdiction in his favour when he had disentitled himself for such relief by his conduct.
The Single Judge was clearly in error in invoking his extraordinary jurisdiction Under Article 226 in light of the peculiar facts indicated above. The
Division Bench also erred in affirming the erroneous order of the Single Judge.
A similar view was taken in Punjab National Bank andAnr. v. Imperial Gift House and Ors. MANU/SC/1010/2009 : (2013) 14 SCC 622,
observing:
Upon receipt of notice, the Respondents filedrepresentation Under Section 13(3-A) of the Act, which was rejected. Thereafter, before any further
action could be taken Under Section 13(4) of the Act by the Bank, the writ petition was filed before the High Court.
In our view, the High Court was not justified inentertaining the writ petition against the notice issued Under Section 13(2) of the Act and quashing
the proceedings initiated by the Bank.
It is the solemn duty of the Court to apply the correctlaw without waiting for an objection to be raised by a party, especially when the law stands
well settled. Any departure, if permissible, has to be for reasons discussed, of the case falling under a defined exception, duly discussed after noticing
the relevant law. In financial matters grant of exparte interim orders can have a deleterious effect and it is not sufficient to say that the aggrieved has
the remedy to move for vacating the interim order. Loans by financial institutions are granted from public money generated at the tax payers expense.
Such loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as
entrustment by the public. Timely repayment also ensures liquidity to facilitate loan to another in need, by circulation of the money and cannot be
permitted to be blocked by frivolous litigation by those who can afford the luxury of the same. The caution required, as expressed in Satyawati Tandon
(supra), has also not been kept in mind before passing the impugned interim order:
It must be remembered that stay of an action initiated by the State and/or its agencies/instrumentalities for recovery of taxes, cess, fees, etc.
seriously impedes execution of projects of public importance and disables them from discharging their constitutional and legal obligations towards the
citizens. In cases relating to recovery of the dues of banks, financial institutions and secured creditors, stay granted by the High Court would have
serious adverse impact on the financial health of such bodies/institutions, which (sic will) ultimately prove detrimental to the economy of the nation.
Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters. of course, if the
Petitioner is able to show that its case falls within any of the exceptions carved out in Baburam Prakash Chandra Maheshwari v. Antarim Zila
Parishad, Whirlpool Corporation v. Registrar of Trade Marks and Harbanslal Sahnia v. Indian Oil Corporation Ltd. and some other judgments, then the
High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order.
The writ petition ought not to have been entertained andthe interim order granted for the mere asking without assigning special reasons, and that
too without even granting opportunity to the Appellant to contest the maintainability of the writ petition and failure to notice the subsequent
developments in the interregnum. The opinion of the Division Bench that the counter affidavit having subsequently been filed, stay/modification could
be sought of the interim order cannot be considered sufficient justification to have declined interference.
We cannot help but disapprove the approach of the HighCourt for reasons already noticed in Dwarikesh Sugar Industries Ltd. v. Prem Heavy
Engineering Works (P) Ltd. and Anr. MANU/SC/0639/1997 : 1997 (6) SCC 450, observing:
When a position, in law, is well settled as a result of judicial pronouncement of this Court, it would amount to judicial impropriety to say the least,
for the subordinate courts including the High Courts to ignore the settled decisions and then to pass a judicial order which is clearly contrary to the
settled legal position. Such judicial adventurism cannot be permitted and we strongly deprecate the tendency of the subordinate courts in not applying
the settled principles and in passing whimsical orders which necessarily has the effect of granting wrongful and unwarranted relief to one of the
parties. It is time that this tendency stops.â€
If at all the petitioner is ready to clear off the Bank’s dues then, he would be at liberty to approach the Tribunal by depositing the mandatory per-
depsoit and make a request for quashing of the auction notice by paying the due amount to the Bank.
In view of the discussion made herein above, this Court finds no merit in this writ petition which is hereby rejected. Stay application is also dismissed.
No order as to costs.