In The High Court At Calcutta
Constitutional Writ Jurisdiction
Original Side
WP 388 of 2015
Mackeil Company Private Limited
-Vs.-
State Bank of India Ors.
With
WP 416 of 2015
Shri Pranab Chakraborty
-Vs.-
State Bank of India Ors.
Before : The Hon’ble Justice Arijit Banerjee
For the petitioner : Mr. Ritzu Ghosal, Adv.
Ms. Sunita Shaw, Adv.
Mr. Saubhik Chowdhury, Adv.
Ms. Priyata Chakrabarty, Adv.
For the respondents : Mr. S. C. Shrivastava, Adv.
Mr. Pradeep Kumar, Adv.
Mr. Hemant Sharma, Adv.
Mr. Srinibas Mishra, Adv.
For the State : Mrs. Sipra Majumder, Adv.
Mrs. Sumita Biswas Chowdhury, Adv.
Heard On : 07.05.2015, 14.05.2015, 19.06.2015,
16.07.2015,
19.08.2015, 09.09.2015, 16.09.2015,
28.09.2015,
16.10.2015, 18.11.2015, 27.11.2015,
11.12.2015,
17.12.2015, 05.01.2016, 10.03.2016,
07.04.2016,
19.07.2016, 03.01.2017, 31.01.2017,
10.02.2017,
13.04.2017, 28.04.2017, 23.08.2017,
06.09.2017.
CAV On : 03.05.2018
Judgment On : 17.05.2018
Arijit Banerjee, J.:-
(1)Common questions of fact and law are involved in these two writ
petitions. Hence, the two matters have been taken up together
for hearing and disposal.
Contention of the petitioners:-
(2) The main challenge in the two writ petitions is to the possession
notice dated 10 December, 2014 issued by the respondent Bank and
taking over actual physical possession of the property in question under
Sec. 13(3) of the Securitization And Reconstruction of Financial Asset
Enforcement of Security Interest Act, 2002 (in short the ‘SARFAESI
Act’). The case of the petitioner is that Shri Pranab Kumar
Chakraborty, (hereinafter referred to as ‘Pranab’) the petitioner in WP
No. 416 of 2015 was the sole proprietor of Mackeil Co. who availed
of credit facilities from the respondent Bank in the year 1993 and for
that purpose created mortgage in respect of three properties by
deposit of title deeds with the bank. The particulars of the said
properties are as follows:-
(a) Mouza-Baltikuri, J.L. No. 1, Khatian Nos. 1888, 1893, 1895, 1965,
1970 in Dag/Plot No. 1366 (being Deed No. 1179 dated 21st March,
1992).
(b) Mouza-Baltikuri, J.L. No. 1, Khatian Nos. 1888, 1893, 1895, 1965,
1970 in Dag/Plot No. 1366 (being Deed No. 1180 dated 21st March,
1992).
(c) Mouza-Baltikuri, J.L. No. 1, Khatian Nos. 1888, 1893, 1895, 1965,
1970 in Dag/Plot No. 1365 (being Deed No. 2868 dated 11th May, 1983).
The loan obtained was repaid by Pranab in the very same year.
(3) In 1993, Mackeil Co. Private Limited, the petitioner in WP 388
of 2015 was incorporated. In 2005 Mackeil Ispat Forging Limited (in
short ‘Mackeil Ispat’) was incorporated. Pranab is a director in both
the present petitioner company and in Mackeil Ispat. Mackeil Ispat
obtained a term loan aggregating Rs. 94.83 crores from a consortium of
banks with State Bank of India, (in short ‘SBI’) Durgapur Branch, as the
lead Bank in the year 2008. The present petitioner company is the
corporate guarantor in respect of such term loan and executed an
unattested memorandum of hypothecation in favour of SBI, Durgapur
Branch, whereby the plant and machinery of the present petitioner
company located at Mouza Baltikuri, District Howrah were furnished as
collateral security. On 6 March, 2010 the petitioner company executed
a deed of guarantee in favour of the consortium of Banks which
advanced loan to Mackeil Ispat.
(4) Disputes and differences arose between Mackeil Ispat and the
respondent Bank. The consortium of Banks classified the bank
account of Mackeil Ispat as non-performing asset (NPA) sometime in
December, 2013. Mackeil Ispat filed a suit in this Court being CS No.
302 of 2014 claiming damages of Rs. 342.26 crores. However, I do not
wish to go into the same since that is an independent proceeding and
not germane for the purpose of disposing of the present writ petitions.
(5) Learned Counsel submitted that the respondent Bank wrongly
debited diverse amounts to the cash credit account held in the name
of the petitioner company. The petitioner had lodged a First
Information Report. Although, there are prayers in the writ petition
for reversing such debit entry and completion of criminal investigation
expeditiously, such prayers were not pressed at the hearing of the
applications. In any event, I am of the view that the writ court should
not go into the allegation of wrongful or fraudulent debiting of a bank
account and the petitioner is at liberty to agitate such points before
the appropriate forum in an appropriately constituted action.
(6) On or about 9 December, 2014 the respondent bank pasted a
notice under Sec. 13 (4) of the SARFAESI Act at the main entrance of
the premises of Mackeil Ispat. On 10 December, 2014, the Bank took
over possession of the properties belonging to Pranab covered by deed
no. 1179 dated 21 March, 1992, deed no. 1180 dated 21 March, 1992
and deed no. 2868 dated 11 May, 1983.
(7) Learned Counsel submitted that the properties of which the
respondent Bank took possession are owned by Pranab. The
petitioner company is not the owner of such properties. The petitioner
company is a tenant in respect of the said properties and pay rent to
the petitioner. Such relationship does not empower the Bank
authorities to take over possession of the said properties and/or to
initiate proceedings under the SARFAESI Act in respect of the said
properties.
(8) It was next submitted that the said properties were never
mortgaged in favour of consortium of Banks for the credit facilities
advanced to Mackeil Ispat. No Security Agreement within the meaning
of Sec. 2 (zb) of SARFAESI Act was executed in respect of such
properties and as such there are no secured assets within the meaning
of Sec. 2(zc) of the Act. The respondent Bank is not a secured creditor
within the meaning of Sec. 2(zd) of the Act. There is no secured debt
within the meaning of Sec. 2(ze) and there is no security interest
within the meaning of Sec. 2(zf) of the Act. Hence, the pre-
conditions for initiating proceeding under the SARFAESI Act are not
satisfied and no proceeding could be initiated.
(9) It was then submitted that the petitioner company did not make
any default regarding its cash credit account with the Bank. No
proceedings under the SARFAESI Act have been initiated against the
petitioner company or against Pranab. Hence, the respondent Bank
could not take over possession of the said properties.
(10) Learned Counsel then submitted that the SME-8 Forms relied
upon by the Bank to establish mortgage of the said properties have
been brought into existence by the Bank. Pranab had been made to
sign on blank SME-8 Forms in the year 1991 which were subsequently
filled up by the Officers of the respondent Bank without notice to
Pranab. Copies of such Forms were not handed over to the petitioner
company or to Pranab. The said Forms came to the knowledge of the
petitioner and Pranab only in the course of the present hearing when
learned Counsel for the respondent Bank produced copies thereof
before this Court. The petitioner company not being the owner of the
said properties could not have mortgaged the same. Further, it
would appear from the said Forms that Title Deed No. 2668 was
allegedly deposited on 28 March, 1991 when neither the petitioner
company nor Mackeil Ispat was in existence. In some of the said
Forms the petitioner company has been shown as borrower which is
incorrect. Mackeil Ispat was the borrower. The said SME-8 Forms
cannot be relied upon.
(11) Even assuming that the petitioner company created a security
interest in favour of the Bank, the same was compulsorily registrable
under Sec. 125 of the Companies Act, 1956. This was not done.
Hence, no valid charge was created.
(12) Though no security was created, without any notice, the
respondent Bank took over possession of the said properties which
belonged to Pranab treating the same as the properties of the
petitioner company, in purported exercise of powers under Sec. 13(4)
of the SARFAESI Act. By doing so, the respondent Bank has acted
without authority of law. This action of the respondent Bank is
without jurisdiction and hence, the petitioner company or Pranab is
not required to avail of the alternative remedy provided under Sec. 17
of the SARFAESI Act. In this connection learned Counsel relied on the
decision of this Court in the case of Debasree Das-vs.-State of West
Bengal Ors., (2011) 1 CHN 10.
(13) Learned Counsel also relied on the following decisions:-
(i) Standard Chartered Bank-vs.-V. Nobel Kumar Ors., (2013) 9
SCC 620. Learned Counsel referred to paragraph 15 of the reported
judgment wherein it was observed that for the secured creditor to take
possession of the secured assets, there must be a security agreement
which creates the liability of the borrower to the secured creditor of
the secured debt. Learned Counsel submitted that in the present case
there is no security agreement, no secured asset, no secure debt and
no secured creditor and hence, the provisions of the SARFAESI Act do
not apply.
(ii) Calcutta National Bank Ltd. (in Liquidation)-vs.-Rangaroon Tea
Co. Ltd. Ors., AIR 1969 CAL 578. This case was relied upon in
support of the proposition that without registration of a charge sought
to be created in favour of a creditor, the creditor would rank as an
unsecured creditor.
(iii) Official Liquidator, Manasura And Co. (Private) Ltd.-vs.-
Commissioner of Police, Madras, Ors., 38 Company Cases 884 and
Kerala State Financial Enterprises Ltd.-vs.-Official Liquidator, High
Court of Kerala, (2006) 10 SCC 709. Learned counsel relied on these
decisions in support of his submission that if the charges created were
not registered under the Companies Act, they are void.
Contention of the respondents:-
(14) Appearing for the respondent Bank Mr. Shrivastava, learned
Counsel submitted that these writ petitions should not be entertained
since an alternative efficacious remedy is available to the petitioners
under the SARFAESI Act by way of an application before the Debts
Recovery Tribunal under Sec. 17.
(15) Learned Counsel then submitted that several disputed questions
of fact are involved in these writ petitions and the Court should not
decide such questions in exercise of jurisdiction under Art. 226 of the
Constitution of India.
(16) On merits, learned Counsel submitted that Mackeil Ispat was
granted substantial financial accommodation by a consortium of Banks
of which the respondent Bank was the lead Bank. The petitioner
company was a sister concern of Mackeil Ispat and executed corporate
guarantee in respect of the loan given to Mackeil Ispat. The
petitioner also mortgaged its land by depositing title deeds in respect
of 9 kottahs 5 chittacks of land situated at Mouza Baltikuri, Dag No.
1365, 1888, 1893, 1895, 1965 and 1970 at Howrah and the same is
registered with the Registrar of Companies, Calcutta. In this
connection he drew my attention to Annexure R-1 to the affidavit in
opposition filed on behalf of the respondent Bank which is a Xerox copy
of the search report from the Charge register maintained in the office
of Registrar of Companies, Calcutta in respect of the petitioner
company. He submitted that Mackeil Ispat failed and neglected to
repay the loan advanced by the consortium of Banks. The respondent
Bank being the lead Bank issued the notice under Sec. 13(2) of the
SARFAESI Act to Mackeil Ispat, Pranab, Ishita Halder and the petitioner
company. Subsequently, after dealing with the contentions of the
petitioner and others, the respondent Bank issued notice under Sec.
13(4) of the SARFAESI Act and took possession of the secured
properties.
(17) Learned Counsel submitted that the account of the petitioner
company held with the respondent Bank was also declared as non-
performing asset since the petitioner failed to discharge its liability as
corporate guarantor in respect of the loan advanced to Mackeil Ispat.
(18) It was submitted that the fact that the petitioner is the owner of
the properties in question and duly deposited the title deeds in respect
thereof as security is recorded in the memorandum for recording
extension of mortgage by deposit of title deeds covering enhanced
credit limits and/or creation of equitable mortgage on additional
properties for existing limits/enhanced limits and additional facilities
and this was also confirmed by the petitioner by issuing letters. In
this connection learned Counsel drew my attention to letters issued by
the petitioner and the said memorandum.
(19) Mr. Shrivastava relied on the following decisions:-
(i) United Bank of India-vs.-Satyawati Tondon Ors., AIR 2010 SC
3413 and Kanaiyalal Lalchand Sachdev Ors.-vs.-State of
Maharashtra Ors., 2011 AIR SCW 1194. These decisions were relied
upon in support of the submission that in view of the alternative
statutory remedy available to the petitioner, the present writ petitions
should not be entertained.
(ii) M/s. Shivam Trading Co. Anr.-vs.-Allahabad Bank Anr.,
(2015) 3 CLJ (Cal) 341. In this decision a learned Judge of this court
held that the word ‘whatsoever’ in Sec. 2(zf) of the SARFAESI Act
enlarges the ambit of the definition of ‘security interest’. Under the
SARFAESI Act security interest can be created under an arrangement
including the creation of mortgage by deposit of title deeds with the
secured creditor and such mortgage does not require registration.
(iii) CCT Orissa Ors.-vs.-Indian Explosives Ltd., AIR 2008 SC
1631. A three Judge bench of the Apex Court observed that the High
Court seemed to have completely lost sight of the parameters
highlighted by the Apex Court in large number of cases relating to
exhaustion of alternative remedy.
(iv) Authorised Officer, Indian Overseas Bank And Anr.-vs.-M/s.
Ashok Saw Mill, AIR 2009 SC 2420. The Apex Court held that the
legislature by including Sec. 17(3) in the SARFAESI Act has gone to the
extent of vesting the DRT with authority to even set aside a
transaction including sale and to restore possession to the borrower in
appropriate cases. It cannot be said that the DRT has no jurisdiction to
deal with a post-Section 13(4) situation.
(v) Jagdish Singh-vs.-Heeralal and Ors., AIR 2014 SC 371. The
Apex Court held that if any person is aggrieved by any action taken by
the secured creditor under Sec. 13(4) of SARFAESI, the remedy open to
him is to approach the DRT. The Civil Court’s jurisdiction is barred by
Sec. 34 of the SARFAESI.
(vi) M/s. Vision Comptech Integrators Ltd.-vs.-State Bank of India
Ors., AIR 2014 Cal 161. A learned Judge of this Court held that in a
case where the aggrieved person claims to be a bona fide lessee or a
tenant from whom possession is yet to be taken over but a sale notice
has been issued in respect of the property in question, even without
losing possession of the operation of the secured asset under lease or
tenancy, the lessee or the tenant, being a non-borrower, would have
the right to approach the DRT as soon as the sale notice is issued in
terms of the Rule 8 (6) of the DRT Rules.
(vii) Unreported judgment delivered on 10 April, 2015 by me in CO
4268 of 2013 (Gobinda Kumar Nag-vs.-Ranjit Kuma). In that case the
petitioner filed an application under Art. 227 of the Constitution
challenging the order of the State Consumers Disputes Redressal
Commission, West Bengal refusing to condone the delay in filing appeal
against the order of the District Consumer Disputes Redressal Forum,
Siliguri. I referred to various decisions and held that in view of a
statutory alternative remedy being available to the petitioner by way
of an appeal to the National Commission, revisional application should
not be entertained.
(viii) Unreported judgment dated 6 May, 2014 delivered by Dipankar
Datta, J. in WP 353 of 2014 (M/s. Mercury Exporters And
Manufacturing Pvt. Ltd. Anr.-vs.-Punjab National Bank Anr.).
The learned Judge held that Sec. 17(3) of the SARFAESI Act empowers
the DRT to direct restoration of possession of the secured asset in
favour of the borrower if the secured creditor is found to have violated
the provisions of the Act. The Act provides an efficacious alternative
remedy to the aggrieved borrower which he can pursue at the right
time i.e. after physical possession of the secured asset is taken over by
the Bank.
(ix) Unreported judgment of a Division Bench of this Court delivered
on 20 May 2014 in APO No. 177 of 2014 (M/s. Mercury Exporters And
Manufacturing Pvt. Ltd. Anr.-vs.-Punjab National Bank Anr.). In
this appeal which was filed against the order of Dipankar Datta, J.,
referred to in the immediately preceding paragraph, the Division Bench
held that even if a secured creditor wants to proceed against the
assets which are not covered by the SARFAESI Act, the DRT under the
said Act would have the authority to undo any wrong that may have
been committed by the Bank. The appeal was dismissed.
Petitioner in reply:-
(20) In reply, Mr. Ghosal submitted that in the judgments cited on
behalf of the respondent Bank, the borrower had admitted having
executed a security agreement. In the present case, the petitioners’
specific case is that there is no security agreement. The Bank’s case
that title deeds have been deposited to create security interest in the
properties in question is a fraudulent case. The petitioners could not
approach DRT because that would amount to admitting the existence
of a security agreement.
Court’s view:-
(21) Although learned Counsel for both the parties argued at length
over a number of days, the issue involved is a short one, i.e., whether
or not the Bank could proceed under Sec. 13 of the SARFAESI Act
against the properties in question. The answer would depend on
whether or not Pranab offered the said properties as security for the
financial accommodation granted by the Bank in favour of Mackeil
Ispat. It is not in dispute that Pranab is at the helm of affairs of both
the petitioner company and Mackeil Ispat. He is in control of the
affairs of both the companies. Learned Counsel for Pranab argued that
no mortgage was created in favour of Bank in respect of the said
properties. In any event, even assuming a charge was created the
same is bad and ineffective in law for want of registration. On the
other hand, learned Counsel for the Bank contended that an equitable
mortgage was created in respect of the said properties by deposit of
title deeds. The same amounts to creation of security interest in
favour of the Bank within the meaning of Sec. 2(zf) of the SARFAESI
Act. Learned Counsel has relied on documents in respect of creation
of such security interest and also to establish that the charge has been
duly registered. Learned counsel for the petitioner has questioned the
authenticity of such documents and has submitted that the document
showing creation of charge has been brought into existence by the
Bank fraudulently. These are disputed questions of fact which the
writ court is ill-equipped to decide. Prima facie, the said properties
appear to have been mortgaged in favour of the Bank. Undisputedly,
the title deeds in respect of the said properties are with the Bank. It
is also not in dispute that moneys are due and payable from Mackeil
Ispat to the Bank. Whether or not the charge in respect of the said
properties was created as security for the moneys advanced by the
Bank to Mackeil Ispat is a question of fact and is a disputed question.
The dispute can be resolved only by a detailed enquiry into the matter
and if necessary by examining witnesses in an appropriately
constituted action. The writ court is not the proper or convenient
forum for resolving such a dispute. The appropriate remedy for the
petitioners would be to approach the Debts Recovery Tribunal with an
application under Sec. 17 of the SARFAESI Act.
(22) Admittedly, the Bank has taken possession of the properties in
question in exercise of power under Sec. 13(4) of the DRT Act. Sec.
17(1) of the DRT Act provides that any person (including the borrower),
aggrieved by any of the measures referred to in Sec. 13(4) taken by the
secured creditor or his authorised officer may make an application to
the DRT having jurisdiction in the matter within 45 days from the date
on which such measures had been taken. Sec. 17(2) of the DRT Act
provides that the DRT shall consider whether the measure taken by the
secured creditor under Sec. 13(4) for enforcement of security is in
accordance with the provisions of the Act and the Rules made
thereunder. Sec. 17(3) provides that if the DRT, after examining the
facts and circumstances of the case, and evidence produced by the
parties, comes to the conclusion that the measure taken by the
secured creditor under Sec. 13(4) is not in accordance with the
provisions of the SARFAESI Act and the Rules made thereunder, it may
declare the measure taken by the creditor as invalid and restore the
possession of the secured assets to the borrower and pass any other
appropriate order as it may deem necessary. Sec. 17(5) provides that
an application under Sub-Sec. (1) shall be disposed of within 60 days
from the date of such application but such period may be extended
upto 4 months for reasons to be recorded in writing by the DRT. In the
event, the application is not disposed of within 4 months, any party to
the application may apply to the Appellate Tribunal for directing the
DRT to dispose of the application expeditiously and the Appellate
Tribunal may make an order to that effect.
(23) Thus, Sec. 17 of the SARFAESI Act provides a comprehensive and
effective remedy to the petitioners. The disputed questions of fact
which are involved in the present case can be effectively resolved by
the DRT on an application under Sec. 17 of the SARFAESI Act. The
High Court exercising jurisdiction under Art. 226 of the Constitution is
not the appropriate forum for deciding such disputed questions of fact.
(24) The other reason for not entertaining these writ applications is
the existence of an alternative statutory remedy to which the
petitioners can take recourse. The SARFAESI Act is a complete code in
itself. Banks and financial institutions deal with public money and are
accountable to the public for such money. It is of utmost importance
that the moneys lent by the Banks and the financial institutions are
recovered from the borrowers with interest within the agreed time
period. To strengthen the hands of the Banks and financial institutions
in dealing with defaulting borrowers, some of whom are unscrupulous,
the SARFAESI Act was promulgated. It empowers the secured creditor
to take certain measures for recovering the moneys lent by enforcing
the security against which such moneys were lent without recourse to
a Court of Law. However, the Act itself provides for a remedy to a
borrower who is aggrieved by any illegal act on the part of the secured
creditor including an act of the secured creditor in proceeding
wrongfully against an asset of the borrower.
(25) It is true that availability of an efficacious alternative remedy
does not oust the jurisdiction of the High Court under Art. 226 of the
Constitution. However, the law is equally settled that when a statute
itself provides a remedy against any wrongful or illegal act done by the
authorities in exercise of power granted under that statute, such
remedy should first be exhausted before approaching the writ court.
(26) In Satyawati Tondon (supra), at paragraph 17 of the judgement
the Apex Court referred to several of its earlier decisions and
reiterated that the High Court will ordinarily not entertain a writ
petition if an effective alternative 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 the Banks and financial institutions (emphasis is
mine). It was observed that the High Court must keep in mind that
the legislations enacted by Parliament and the State Legislatures for
recovery of such dues are code unto themselves since 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. In all such cases, the High Court
must insist that before availing of the remedy under Art. 226 of the
Constitution, a person must exhaust the remedies available under the
relevant statute. At paragraph 18 of the judgment the Apex Court
observed as follows:-
“18. While expressing the aforesaid view, we are
conscious that the powers conferred upon the High
Court under Article 226 of the Constitution to issue
to any person or authority, including in appropriate
cases, any Government, directions, orders or writs
including the five prerogative writs for the
enforcement of any of the rights conferred by Part
III or for any other purpose are very wide and there
is no express limitation on exercise of that power
but, at the same time, we cannot be oblivious of the
rules of self-imposed restraint evolved by this Court,
which every High Court is bound to keep in view
while exercising power under Article 226 of the
Constitution. It is true that the rule of exhaustion of
alternative remedy is a rule of discretion and not
one of compulsion, but it is difficult to fathom any
reason why the High Court should entertain a
petition filed under Article 226 of the Constitution
and pass interim order ignoring the fact that the
petitioner can avail effective alternative remedy by
filing application, appeal, revision, etc. and the
particular legislation contains a detailed mechanism
for redressal of his grievance. 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 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 AIR 1969 SC 556, Whirlpool Corporation v.
Registrar of Trade Marks, Mumbai (1998) 8 SCC 1
and Harbanslal Sahnia and another v. Indian Oil
Corporation Ltd. and others (2003) 2 SCC 107 and
some other judgments, then the High Court may,
after considering all the relevant parameters and
public interest, pass appropriate interim order.”
At paragraph 27 of the judgment, the Apex Court sounded a note
of caution to the following effect:-
“27. It is a matter of serious concern that despite
repeated pronouncements of this Court, the High
Courts continue to ignore the availability of
statutory remedies under the DRT Act and 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.”
(27) In Authorised Officer, Indian Overseas Bank-vs.-M/s. Ashok Saw
Mill (supra), the Apex Court observed that in order to prevent misuse
of the wide powers granted to the Banks and financial institutions by
the SARFAESI Act and to prevent prejudice being caused to a borrower
on account of error on the part of the banks or financial institutions,
certain checks and balances have been introduced in Sec. 17 of the
SARFAESI Act which allow any person aggrieved by any of the measures
referred to in Sec. 13(4) to make an application to the DRT. The
intention of the legislature is that while the banks and financial
institutions have been vested with stringent powers for recovery of
their dues, safeguards have also been provided for rectifying any error
or wrongful use of such powers by vesting the DRT with authority after
conducting an adjudication in the matter to declare any such action
invalid and also to restore possession of the asset in question even
though possession may have been made over to transferee. The Apex
Court opined that in that case the High Court had rightly dismissed the
writ petition on the ground that an efficacious remedy was available to
the writ petitioners under Sec. 17 of the SARFAESI Act. It was
reiterated that it is well settled that ordinarily relief under Arts. 226
and 227 of the Constitution is not available if an efficacious alternative
remedy is available to any aggrieved person. This case was referred
to and followed in Kanaiyalal Lalchand Sachdev-vs.-State of
Maharashtra (supra).
(28) In GM, Sri Siddeshwara Co-Operative Bank Ltd.-vs.-Sri Ikbal,
(2014) 1 CHN (SC) 94, a Division Bench of the High Court had brushed
aside the argument of alternative remedy by observing that the writ
petitioner had been victimized by fraudulent acts of the respondents
who had deprived the writ petitioner of his property in a manner not
known to law thereby violating Art. 21 of the Constitution of India. It
was observed that when a constitutional right of an individual is
affected by statutory authorities by trampling upon the mandatory
requirements of law, the Court cannot be a silent spectator and
existence of alternative remedy would not stand in the way of
entertaining a writ petition. The Division Bench upheld the judgment
of the Learned Single Judge. The Apex Court reversed the decision of
the Division Bench and referred to its earlier decision in Satyawati
Tondon (supra). The Apex Court went on to observe that although
alternative remedy is not an absolute bar to the exercise of
extraordinary jurisdiction under Art. 226, yet, 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 Art. 226. On
misplaced consideration, statutory procedures cannot be allowed to be
circumvented.
(29) In Punjab National Bank-vs.-OC Krishnan, AIR 2001 SC 3208,
the Apex Court held that the DRT Act has been enacted with a view to
provide a special procedure for recovery of debts due to Banks and the
financial institutions. There is hierarchy of appeal provided in the Act
and this fast track procedure cannot be allowed to be derailed either
by taking recourse to proceedings under Arts. 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 Arts. 226 and 227 of the Constitution, nevertheless,
when there is an alternative remedy available, judicial prudence
demands that the court refrains from exercising its writ jurisdiction.
(30) Even if the secured creditor proceeds against asset not covered
by the SARFAESI Act, the DRT would have the authority to redress any
wrong that may have been committed by the secured creditor. This
was held by a Division Bench of this Court in M/s. Mercury Exporters
And Manufacturing Pvt. Ltd. (supra).
(31) The law is thus absolutely settled. The petitioners should have
approached the DRT having jurisdiction in the matter with an
application under Sec. 17 of the SARFAESI Act for redressal of their
grievances instead of filing the present writ petitions.
(32) In so far as Debarsree Das (supra) relied upon by learned
Counsel for the petitioners is concerned, the Division Bench observed
that no disputed question of fact was involved and on the basis of the
defence made out by the secured creditor, it was clear that it had no
subsisting valid mortgage in respect of the property in question and,
hence, it was a fit case for interference under Art. 226 of the
Constitution. The facts of the said case are completely
distinguishable. In the present case, disputed questions of facts are
involved. Further the earlier judgments of the Apex Court including
the decision in United Bank of India-vs.-Satyawati Tondon (supra)
were not noticed in Debasree Das (supra). I am bound to follow the
principles laid down by the Apex Court in Satyawati Tondon (supra)
and other subsequent decisions which I have discussed above.
(33) For the reasons aforestated, these writ applications fail and are
dismissed, without, however, any order as to costs. The assurance
given on behalf of the respondent Bank not to proceed against the
petitioners during the pendency of these writ applications is
discharged. However, if the writ petitioners approach the Debts
Recovery Tribunal having jurisdiction in the matter within 4 weeks
from date with their grievance which was sought to be ventilated in
the present writ petitions, the learned Tribunal shall decide the same
on merits in accordance with law without going in to the question of
time-bar.
(34) WP No. 388 of 2015 and WP No. 416 of 2015 are accordingly
disposed of.
(35) Urgent certified photocopy of this judgment and order, if applied
for, be given to the parties upon compliance of necessary formalities.
(Arijit Banerjee, J.)
Later:-
After delivery of judgment learned Counsel for the petitioner
prays for stay of operation of the judgment and order. Such prayer is
considered and refused.
(Arijit Banerjee, J.)
