Rajendra Kumar Agarwal @APPELLANT@Hash Dewan Housing Finance Corporation Limited

Heard learned counsel for the petitioners. Perused the material available on record.

Through this writ petition under Article 226 of the Constitution of India, the petitioners herein have approached this Court with the following prayers:-

“1. The entire proceedings initiated by the respondents under the provisions of the Act of 2002 may kindly be declared illegal and the notice

impugned dated 2011.17 (Annex.5) and notice dated 29.3.18 and 4.4.18 (Annex.8) may kindly be quashed and set aside.

The respondents may kindly be directed to restructure/ reschedule the loan accounts in question strictly in terms of the conditions mentioned in the

loan offer letter dated 30.6.11 issued by the erstwhile finance institution First Blue Home Finance Limited. Further, the respondents may be directed to

reduce the rate of interest so also make the equated monthly installments reduced making it easy for the petitioners to repay the outstanding amount

while enhancing the tenure of the loan from 180 months to that of 360 months as per the assurance/ promise made by Mr. Narendra Kumar Sharma,

Head of Incharge of the respondent bank.â€​

Manifestly, the prayers made by the petitioners in this writ petition are not tenable while exercising the extraordinary writ jurisdiction conferred upon

this Court by Article 226 of the Constitution of India considering the fact that the statutory remedy of approaching the Debt Recovery Tribunal under

Section 17 of the The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to

as “the SARFAESI Actâ€​) is available to the petitioner for assailing the impugned notices issued under Sections 13 and 14 of the Act of 2002.Â

However, Shri Sunil Joshi, learned counsel representing the petitioners vehemently and fervently urged that the respondents should give appropriate

breathing space to the debtor before foreclosing the loan and proceeding for sale of the secured assets. For this purpose, he vehemently and forcefully

tried to persuade the Court to draw an analogy from Section 12 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “the

Code of 2016â€). Manifestly, the said plea of Shri Joshi is far-fetched for the simple reason that as per Section 2 of the Code of 2016, there is a

specific mandate that the provisions of the Code shall apply only to the persons or bodies incorporate in relation to their insolvency, liquidation,

voluntary liquidation or bankruptcy as the case may be. Manifestly, the petitioners are not facing any of these situations and thus, the provisions of the

Code are not applicable by any stretch of imagination at hand and no analogy can be drawn for the situation at hand. The vehement submission of the

petitioners’ counsel Shri Joshi that the petitioners are ready and willing to repay the loan amount and thus, appropriate restructuring should be

directed is also considered untenable and unacceptable considered in light of the following observations made by Hon’ble the Supreme Court in

the case of State of Authorized Officer, State Bank of Travancore & Anr. vs. Mathew K.C. (Civil Appeal No.1281/2018) decided on 30.01.2018:-

“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€​

Hon’ble the Supreme Court has in the above case firmly laid down that the High Court, while exercising powers under Article 226 of the

Constitution of India should not interfere in the notices under Sections 13 and 14 of the SARFESI Act. The appropriate remedy for the aggrieved

person would be to approach the Debt Recovery Tribunal for challenging such notices.

In view of the discussion made herein above, I find no merit in this writ petition which is hereby dismissed summarily. Stay application is also rejected.