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Judgment
DEBANGSU BASAK, J.
Three writ petitions are taken up for analogous hearing. For the sake of convenience, W.P. No. 379 (W) of 2015 is referred to as the first writ
petition, W.P. No. 22396 (W) of 2016 as the second writ petition and W.P. No. 25614 (W) of 2016 as the third writ petition. The three writ petitions
emanate out of actions taken by State Bank of India (SBI) under the provisions of the Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002, in respect of its secured assets. SBI lent and advanced money to M/s. Swastyayan Agro Industries
(hereinafter referred to as the borrower for the sake of convenience). The borrower having defaulted, the Authorised Officer of SBI issued a notice
under Section 13(2) of the Act of 2002 on November 21, 2011. It took symbolic possession of the secured assets on January 21, 2012. The secured
assets include the Rice Mill and the Oil Mill of the borrower.
It applied before the District Magistrate, Bankura (D.M.) under whose jurisdiction the secured assets were lying, for assistance under Section 14 of
the Act of 2002 for the purpose of taking physical possession thereof. The Additional District Magistrate (A.D.M.), Bankura passed an Order dated
December 19, 2012 directing physical possession to be given to SBI. The borrower filed the first writ petition challenging the order of the A.D.M.,
Bankura in January 2013. On May 8, 2013, SBI took over physical possession of the Rice Mill and the Oil Mill with Police help in presence of the
borrower. SBI published a sale notice in respect of the secured assets on September 15, 2013. The borrower filed a writ petition being W.P. No.
33121 (W) of 2013 challenging the sale notice which was disposed of on October 30, 2013 by permitting the borrower to file an application under
Section 17 of the Act of 2002 before the Debts Recovery Tribunal (DRT). SBI sold the secured assets.
It sold the Rice Mill to the writ petitioner of the second writ petition (hereinafter referred to as the Rice Mill Purchaser for the sake of convenience)
on as is where is basis and made over possession thereof on January 6, 2014. The Oil Mill was sold to the writ petitioner of the third writ petition
(hereinafter referred to as the Oil Mill Purchaser for the sake of convenience) on March 3, 2014 and possession thereof was made over to the
purchaser. A sale certificate was issued for both the sales to the respective purchasers. Subsequently, SBI entered into an agreement for assignment
of the loan granted to the borrower, with an asset reconstruction company namely, ARCIL on March 26, 2014. SBI intimated the borrowers of the
assignment of the loan to ARCIL on April 7, 2014. It is thereafter that, the first writ petition in respect of the order of the A.D.M., Bankura was
served on SBI on May 2, 2014. The borrower filed another writ petition being W.P. No. 15809 (W) of 2014 on June 5, 2014 challenging the
assignment of loan to ARCIL. In such writ petition, the borrowers claimed that SBI did not take possession of the secured assets. W.P. No. 15809
(W) of 2015 was disposed of on June 13, 2014 by giving liberty to ARCIL to take possession in accordance with law. The first writ petition came up
for hearing on July 15, 2014 before the Court.
The fact that, SBI had taken possession of the secured assets pursuant to such orders of the D.M. and A.D.M. was not brought to the notice of the
Court either by the borrower or by SBI. Both of them were heard on July 15 and July 24, 2014. An Order dated July 24, 2014 was passed in the first
writ petition setting aside the order of the District Magistrate dated December 31, 2012 and the A.D.M. dated December 19, 2012. An appeal being
M.A.T. No. 1797 of 2014 was filed by SBI against the Order dated July 24, 2014 passed in the first writ petition. Factum of sale was mentioned in the
appeal. The borrower was served with the copy of the appeal papers. A contempt petition being CPAN 2573 of 2014 was filed by the borrower
against D.M., Bankura for not complying with the Order dated July 24, 2014 passed in the first writ petition. SBI was not a party in such contempt
petition. The appeal filed by SBI against the Order dated July 24, 2014 was dismissed for default on May 13, 2015. It was restored on December 14,
2015 on the application of SBI. On August 12, 2016, the D.M., Bankura passed an order for taking physical possession of the secured assets in terms
of the Order dated July 24, 2014 passed in the first writ petition. Pursuant to such order of the D.M., the writ petitioner of the second writ petition was
dispossessed by the D.M., Bankura on September 12, 2016.
The Rice Mill purchaser filed the second writ petition on September 20, 2016 challenging the order of the D.M., Bankura dated August 12, 2016, as
also the order dated July 24, 2014 passed in the first writ petition. An order dated September 28, 2016 was passed in the second writ petition directing
the D.M. to take back possession of the Rice Mill from the borrower as the Receiver. The Rice Mill Purchasers were granted liberty to remove the
goods from the Rice Mill. Between the period October 23 and October 26, 2016, rice and paddy were removed by the Rice Mill purchasers from the
Rice Mill in terms of the Order dated September 28, 2016. On October 8, 2016, the Oil Mill owner filed the third writ petition challenging the order of
the D.M., Bankura dated August 12, 2016 as also Order dated July 24, 2014 passed in the first writ petition. The Order dated July 24, 2014 passed in
the first writ petition was set aside in the Appeal being F.M.A. No. 2818 of 2015 on November 2, 2016. The Rice Mill purchaser applied by way of
C.A.N. No. 11233 of 2016 for taking possession of the Rice Mill and for damages. Such application was made on November 21, 2016. In such
application an Order dated November 25, 2016 was passed directing the D.M., Bankura to make over possession of the Rice Mill to the Rice Mill
purchaser. The prayer for damages survives and requires consideration.
The grievances of the parties revolve around steps taken by a secured creditor being SBI in relation to its secured assets. SBI put up for sale the
secured assets. The assets can be broadly divided into the Rice Mill and the Oil Mill. In point of time, the first writ petition was filed by the borrower
claiming that the Additional District Magistrate exercising jurisdiction under Section 14 of the Act of 2002 had no jurisdiction to do so. On the strength
of such contention, the action taken by the A.D.M., Bankura was set aside by a judgment and order dated July 24, 2014. SBI was present in such
hearing. Neither the borrower nor SBI brought to the notice of the Court the essential fact that, SBI had taken possession of both the secured assets
namely, the Rice Mill and the Oil Mill on May 8, 2013, in presence of the borrower. The secured assets were put up for sale subsequent to the notice
of sale published in the Bartaman and Business Standard on September 15, 2013. A notice of sale was given to the borrower on September 16, 2013.
The sale was challenged at the instance of the borrower by W.P. No. 33121 (W) of 2013. Such writ petition was disposed of by permitting the
borrower to challenge the sale notice before the Debts Recovery Tribunal. These facts were conveniently not pleaded in the writ petition nor did the
borrower and SBI bring them to the notice of the Court during the hearing of the first writ petition resulting in the judgment and order dated July 24,
2014. The stand taken by the borrower was that, A.D.M. had no jurisdiction to pass the order under Section 14 of the Act of 2002. Significantly, after
the judgment and order dated July 24, 2014 passed in the first writ petition being set aside by the Appeal Court on November 2, 2016, directions for
affidavits were given. SBI in its affidavit stated in paragraph 6 that, the borrower was present at the proceedings before the A.D.M. as well as at the
time of taking possession of the secured assets. The borrower did not raise any objection with regard to the order of the A.D.M. The borrower never
redeemed its mortgage. SBI was, therefore, within its rights to take steps under the Act of 2002.
The borrower in its affidavit-in-reply filed in the first writ petition subsequent to the Appeal Court’s order dated November 2, 2016, does not deny
that, possession of the secured assets was taken by SBI in its presence. The irresistible inference from the facts narrated above is that, the borrower
deliberately, willfully, mala fide and with the ulterior motive of obtaining reliefs, suppressed the factum of SBI taking possession of the secured assets
and the secured assets being sold thereby creating party rights prior to the judgment and order dated July 24, 2014. The justification, if at all, of the
conduct of the borrower is sought to be clothed with the description that, an action of an authority without jurisdiction is a nullity for all times to come.
In support of such contention, learned Advocate for the borrower relies upon All India Reporter 2012 Supreme Court page 364 (State of Punjab v.
Davinder Pal Singh Bhullar & Anr.).
Rice Mill purchaser seeks compensation for being dispossessed of a property legitimately owned by it, at the behest of and the actions taken by the
borrower and SBI. As noted above, the Rice Mill was sold to the Rice Mill owner by SBI on January 6, 2014. The Rice Mill owner was put in
possession of the Rice Mill by SBI on January 6, 2014. It was, thereafter, dispossessed from the Rice Mill on September 12, 2016 pursuant to the
Order dated August 12, 2016 passed in a contempt petition alleging violation of the judgment and order dated July 24, 2014 passed in the first writ
petition. It was put back in possession on November 25, 2016. It is seeking compensation for the period from September 12, 2016 to November 25,
2016.
Learned Senior Advocate appearing for the Rice Mill owner submits that, actions of the Court cannot prejudice any party to the lis. Rice Mill owner
was deliberately not made a party to the first writ petition by the borrower knowing fully well that the Rice Mill owner was in possession of the Rice
Mill pursuant to sale proceedings taken by SBI in respect of the Rice Mill. Borrower suppressed the factum of sale of the Rice Mill and the ownership
thereof by the Rice Mill owner when it obtained the orders on July 24, 2014 and August 12, 2014.
Learned Senior Advocate for SBI submits that, the claim for compensation against SBI cannot be entertained. The second writ petition does not seek
relief of compensation. The Act of 2002 says that, the Authorised Officer of a secured creditor acting in good faith is not liable for any action taken
under the Act of 2002. The Rice Mill owner does not allege bad faith against SBI or its officers. SBI and the Rice Mill owner have no subsisting
contract between them. The Rice Mill owner has no action in tort against SBI. SBI was not acting as a trustee of the Rice Mill owner. SBI by its
action did not violate any of the rights of the Rice Mill owner. SBI did not suppress any material fact from the Court. He submits that, the sale of the
Rice Mill was on as is where is basis. The Rice Mill owner was put on enquiry about the state of affairs of the Rice Mill put up for sale. It is the
burden of the Rice Mill owner to prove that SBI told the Advocate not to make the necessary statements. The claim for damages cannot be sustained
as, the claim for damages are not quantified. Moreover, such claims are not supported by any document. There are no particulars of the claims. The
prayers of the second writ petition stands worked out. The Rice Mill owner cannot receive any remedy beyond the prayers of the main writ petition.
Compensation can be granted when there is a damage caused.
In the present case, SBI did not cause any damages to the Rice Mill owner. In support of his contentions, learned Senior Advocate for SBI relies upon
2004 Volume 3 Supreme Court Cases page 553 (ABL International Limited & Anr. v. Export Credit Guarantee Corporation of India Ltd. & Ors.), All
India Reporter 1952 page 12 (The State of Orissa v. Madan Gopal Rungta), 1961 Volume 2 The Weekly Law Reports page 126 (Overseas Tankship
(UK) Ltd. v. Morts Dock and Engineering Co. Ltd.), 2007 Volume 11 Supreme Court Cases page 407 (Assistant Commissioner Anti-Evasion
Commercial Taxes, Bharatpur v. Amtek India Ltd.), 2004 Volume 6 Supreme Court Cases page 213 (Hindustan Paper Corpn. Ltd. v. Ananta
Bhattacharjee & Ors.). and All India Reporter 2012 Supreme Court page 100 (Municipal Corporation of Delhi v. Association of Victims of Uphaar
Tragedy & Ors.) Davinder Pal Singh Bhullar (supra) is a case which deals with the provisions of Sections 362 and 482 of the Criminal Procedure
Code, 1974. It is of the view that, a Court becomes functus officio the moment order for disposing of a case is signed. Such an order cannot be altered
except for correcting a clerical or arithmetical error. It is also of the view that, if the initial action is not in consonance with law, all subsequent actions
are also bad. The facts of the present case are absolutely different.
Madan Gopal Rungta (supra) is of the view that, existence of a right is the foundation of exercise of jurisdiction of the Court under Article 226 of the
Constitution of India. It goes on to say that, the Court is entitled to decide the rights amongst the parties. But when the Court declines to decide on the
rights of the parties and expressly holds that they should be investigated more properly in a civil suit, it could not, for the purpose of facilitating the
institution of such suit, issue directions in the nature of temporary injunctions, under Article 226 of the Constitution. In the present case, the rice mill
owner as also the oil mill owner are claiming a right to be compensated by reason of the steps taken by the borrower and SBI in relation to the
properties purchased by them.
Overseas Tankship (UK) Ltd. (supra) is of the view that, in an action for damages, the test of forcibility must be applied. If it is found that, the
defendant would not reasonably be expected to know that his negligent action will result in damages, he could not be held liable for compensate such
damages. In the present case, both the borrower and SBI are reasonably expected to know that, the suppression of the material fact that, the Oil Mill
and the Rice Mill stood sold and third party rights created in respect thereof before the first order of the Court, would result in damages to the Oil and
Rice Mill owners.
Amtek India Ltd. (supra) considers what action should qualify as an action taken under good faith. It is of the view that, whether an act has been done
in good faith would depend upon the factual scenario. In order to establish good faith, it has to be established that, what has been imputed concerning
the person claiming it to be so, is true. Anything done with due care and attention, which is not mala fide, is presumed to have been done in good faith.
In the facts of the present case, it cannot be said that, the Authorised Officer of SBI acted in good faith in not bringing the material facts to the
attention of the Court. Apart from the Authorised Officer, SBI by itself cannot shirk its responsibility on the plea of good faith. It owed anticipation to
place before the Court, all relevant facts for the consideration of the Court.
Hindustan Paper Corpn. Ltd. (supra) is of the view that, public law remedy for the purpose of grant of compensation is limited and can be resorted to
only when the fundamental right of a citizen under Article 21 of the Constitution is violated and not otherwise. It is not every violation of the provision
of the Constitution or a statute which would enable the Court to direct grant of compensation. Association of Victims of Uphaar Tragedy & Ors.
(supra) is of the view that, damages against public authority should not be granted mainly on account of some inaction and non-performance of
statutory duty or because action taken is found to be wrong. ABL International Limited (supra) is of the view that, serious disputed questions of facts
which are not matters of record, need not be gone into by a writ court. It is further of the view that, a writ court is competent to decide an issue of
fact. In the present case, the claims of the Rice and Oil Mill owners are fraud on the principle that, no party can be prejudiced by the Act of Court.
In the facts of the present case, the borrower obtained orders from the Court, by suppressing material facts. The borrower suppressed the fact that, it
was not in possession of the rice and oil mills when it obtained the order from the writ court. The borrower through the mechanism of the writ petitions
interfered with valuable rights of the rice and oil mill owners. The borrower interfered with the possession of the rice and oil mill owners. The
borrower also caused the Court to pass orders which were prejudicial to the rice and oil mill owners, knowing fully well, that, valuable rights existed in
their favour when the borrower obtained such orders. By virtue of orders of Court, the borrower ensured that, the rice and oil mill owners were
dispossessed of their respective properties. SBI also had a role to play. It did not bring to the notice of the Court the fact that, it had sold the property,
to the rice and oil mill owners. It also did not bring to the notice of the Court that, it created valuable rights in favour of the rice and oil mill owners.
The justification that, the officers of the SBI informed the Advocate concerned and that, they had no further control over the subject, is unacceptable.
As a litigant, SBI is obliged to ensure that, appropriate facts relevant to the issues raised are bought to the notice of the Court. SBI sold the properties
exercising powers under the SARFAESI Act, 2002. It is obliged to acknowledge the fact that, it sold the properties and put the purchasers in
possession thereof, exercising powers under the Act of 2002, in proceedings in which it is a party, at the very last. The purchasers have sufficient
cause of action against SBI to claim damages for the failure of SBI to apprise the Court of the sale conducted under the Act of 2002 and the
possession bring with the purchasers. There is nothing on record to establish that, the officers of SBI acted diligently in informing the Court about the
sale and the consequent creation of interest in favour of the rice and oil mill owners. SBI has failed to substantiate such contentions. It has not
produced any evidence that, the learned Advocate was made aware of such facts. It has not taken any steps against its Advocate for not informing
the Court, the relevant facts, although it claims that, it had informed such Advocate. SBI is also equally liable as that of the borrower.
Essentially, the rice and oil mill owners are seeking restitution of their rights. Their rights stood affected by reason of orders of Court. They seek
compensation for wrongs done to them by reason of the borrower obtaining orders from the Court. It is a fact that, by reason of orders of Court, their
rights with regard to the rice and oil mills stood affected. The writ petitions are pending. The final order disposing of the first writ petition stands set
aside by the Appeal Court. The first writ petition is on remand. The first writ petition is therefore yet to reach finality. The borrower obtained the
order dated July 24, 2014 and enforced it on August 12, 2016. It was not entitled to those reliefs. It is guilty of suppression of material facts and
coming with unclean hands to the Writ Court to merit any consideration of its grievances. Consequently, the ratio of Davinder Pal Singh Bhullar
(supra) cannot come to its aid. The borrower, by his unclean hands and mala fide conduct has disentitled himself of his petition meriting any
consideration at all. Power of restitution is inherent to a Court. Such inherent power of the Court is recognised in Section 144 of the Code of Civil
Procedure, 1908. The doctrine of restitution requires the Court to put the parties back to the same position as far as practicable, as if the order of
Court was not passed. It is the duty of the Court to ensure that, a party does not stand benefitted out of an order of Court found later on that, the
Court could not have passed such an order had it been adequately apprised of the facts.
Although, provisions of Code of Civil Procedure, 1908 do not supply to a writ petition, its principles can be applied. Moreover, independent of Section
144 of the Code of Civil Procedure, 1908, the Writ Court has inherent power to apply the doctrine of restitution. The principle is that, no one should
suffer by an act of Court and the Court must direct restitution, is not premised upon, the act of the Court being wrongful or the Court committing a
mistake or error. While applying the principle of restitution, the Court must ensure that, the party who had persuaded the Court to pass an order which
is subsequently found to be not sustainable, compensates the party who had suffered by such order. The injury caused by the act of the Court must be
undone. The party obtaining the advantage should be placed in the same position as if the order was not passed. Similarly, the party who has suffered
such an order, should also be placed in such a position as if the order was not passed. If such position cannot be restored, then the party being
affected by the order, should be adequately compensated. The party affected by the order of the Court, should also substantiate the quantum of
compensation that it is entitled to. In the facts of the present case, the rice mill owner has produced documents to claim compensation. However, as
rightly pointed out on behalf of SBI, the person affirming the affidavit needs to be cross-examined on the quantum of claim. Consequently, it would be
appropriate to appoint an Advocate Commissioner for the purpose of taking evidence with regard to the quantum of compensation and the
quantification thereof, that the rice and oil mill owners are entitled to. In the facts of the present case, both the borrower and SBI are liable to pay the
compensation as may be determined, as they had failed to bring to the notice of the Court relevant facts when the initial orders were passed in the writ
petition of the borrower.
In such circumstances, the oil and rice mill owners are at liberty to adduce evidence in support of their respective claims for compensation before the
Advocate Commissioner. SBI and the borrower are at liberty to cross-examine such witness or witnesses that may be examined by the rice and oil
mill owners in support of their claims. SBI and the borrower are also at liberty to produce such evidence as they may be entitled to in law on the issue
of quantum of damages receivable by the rice and oil mill owners. The rice and oil mill owners are also at liberty to cross-examine the witness or
witnesses that may be produced by SBI and the borrower on such issue. Mr. Kaushik Chowdhury, Advocate, Bar Library Club is appointed as the
Advocate Commissioner before whom, the respective parties will adduce their evidence in support of the issue as to the quantum of damages that the
rice and oil mill owners are entitled to from SBI and the borrower. The Advocate Commissioner will quantify the respective quantum of damages that,
the rice mill owner and the oil mill owner would be entitled to.
The remuneration of the Advocate Commissioner is fixed at Rs. 40,000/- to be shared equally by the rice mill owner, oil mill owner, SBI and the
borrower. The Advocate Commissioner will submit his report within eight weeks from the date of communication of this order to him. He will proceed
with the determination, on a day to day basis on all working days of the Court commencing from the day following the receipt of the communication of
this order. He is at liberty to hold the proceedings on any non-working day of the Court, if the parties agree. The proceedings shall commence and
continues during the working hours of the Court. Â The writ petitions and the connected applications will appear 8 weeks hence. Urgent certified
website copies of this judgment and order, if applied for, be made available to the parties upon compliance of the requisite formalities.