Jafar Ahamad Khan vs State Of U.P. And 2 Others
2018 Latest Caselaw 4306 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 


 
RESERVED
 

 
Court No. - 39
 

 
Case :- WRIT - C No. - 33616 of 2018
 

 
Petitioner :- Jafar Ahamad Khan
 
Respondent :- State Of U.P. And 2 Others
 
Counsel for Petitioner :- Piyush Shukla,Pratyush Shukla
 
Counsel for Respondent :- C.S.C.,Archana Singh,Satish Chaturvedi,P.P.Srivastava
 

 
Hon'ble B. Amit Sthalekar,J.

Hon'ble Surya Prakash Kesarwani, J.

(Delivered by Hon'ble B. Amit Sthalekar, J.)

Heard Shri Piyush Shukla, learned counsel for the petitioner, Smt. Archana Singh, learned counsel for the respondent-Bank and the learned standing counsel for the respondents no. 1 and 2.

The petitioner is seeking quashing of the order dated 13.9.2018 passed by the Chief Metropolitan Magistrate, Kanpur Nagar whereby in exercise of powers under section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the SARFAESI Act, 2002) it has been directed that the possession of Arazi No. 983, Village Rawatpur Mauja Rawatpur, Ramlala Road, Kanpur be taken and if the possession of the secured asset is not handed over to the applicant Bank (respondent no. 3) then help of the police may be taken in this regard.

Briefly stated the case of the petitioner is that he had taken a term loan (Housing) of Rs.2,00,000/- on 7.2.2003 from the respondent -Bank against which he mortgaged the property in question being Arazi No. 983, Rawatpur Gaon, Mauja Rawatpur, Ramlala Road, Kanpur Nagar. It is also stated that for various reasons his scooter business did not succeed and ultimately failed, therefore, he could not deposit the loan instalment. The respondent Bank filed a suit for recovery against the petitioner being Suit No. 2689 of 2009 (State Bank of India Vs. Jafar Ahmad Khan). It is stated that the said suit is still pending in the court of ACMM, V Kanpur Nagar. It is stated that in addition the respondent Bank filed an application under section 14 of the SARFAESI Act, 2002 being Misc No. 6563 of 2016 (State Bank of India Vs. Jafar Ahmad Khan) before the court of C.M.M. Kanpur Nagar in which the Bank has filed affidavit stating that no other case is pending in respect of the property in question in any court. It is stated that in the proceedings before the C.M.M. Kanpur Nagar under section 14 of the SARFAESI Act, 2002, the impugned order has been passed.

The contention of the petitioner is that the application under section 14 of the SARFAESI Act, 2002 supported by affidavit has been filed on false allegation that no other case in respect of the property is pending when infact the respondent Bank has also filed a suit no. 2689 of 2009 which is still pending. Learned counsel for the petitioner further submitted that against the order of the C.M.M. Kanpur Nagar dated 13.9.2018, the petitioner has no other remedy in law except to file the present writ petition.

What we find from the entire body of the writ petition is that there is not a single averment in the nature of an undertaking on behalf of the petitioner borrower that he is ready and willing to pay the loan amount. The only ground on which this writ petition has been filed is that the application under section 14 is supported by an affidavit in which false averment has been made, therefore, he has no other remedy in law.

A reading of the impugned order discloses that notice under section 13(2) of the SARFAESI Act, 2002 was issued to the petitioner and thereafter a news paper publication was also made in respect of the said property.

Learned counsel for the petitioner also submitted that since the loan amount was only Rs. 2 lakhs. The minimum pecuniary limit of jurisdiction of the Debt Recovery Tribunal is Rs. 10 lakhs under sub section (4) of Section 1 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the Act, 1993). Therefore, even against an order under section 14 of the SARFAESI Act, 2002, the petitioner would not have appropriate remedy under section 17(1) of the SARFAESI Act, 2002.

In our opinion the submission of the learned counsel for the petitioner is wholly misconceived and contrary to the law laid down by the Supreme Court. An identical issue was considered by the Supreme Court in the case of State Bank of Patialia Vs. Mukesh Jain and others reported in (2017) 1 SCC 53. In that case against recovery of Rs. 8 lakhs initiated by the State Bank of India against the borrower, the borrower filed civil suit no. 4 of 2003 in the court of Civil Judge, Delhi. The Bank filed an application under Order VII Rule 11 of the Code of Civil Procedure contending that the suit was not maintainable. The Civil Court rejected the Bank's application on the ground that the amount which was sought to be recovered from the borrower was less than Rs. 10 lakhs, therefore, in view of the provisions of Section 1(4) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (DRT Act), the provisions of DRT Act would not apply. The Bank challenged the order of the civil court in the Delhi High Court which confirmed the view of the trial court. Hence the Civil Appeal No. 210 of 2007 was filed by the Bank before the Supreme Court, in which the Supreme Court has held in paragraphs 18 to 27 as under:

"18. In normal circumstances, there cannot be any action ofany authority which cannot be challenged before a Civil Court unless there is a statutory bar with regard to challenging such an action. Section 34 specifically provides the bar of jurisdiction and therefore, the order passed under Section 13 of the Act could not have been challenged by respondent no.1 debtor before any Civil Court.

19. In the aforestated circumstances, the only remedy

available to respondent no.1 debtor can be to pproach the Tribunal under the provisions of the DRT Act read with the provisions of the Act. But, one would feel that as per Section 1(4) of the DRT Act, provisions of the DRT Act would not apply where the amount of debt is less than Rs.10 lakh.

20. The aforestated provision of Section 1(4) of the DRT Act must be read in a manner which would not adversely affect a debtor, who wants to have some remedy against an action initiated under the provisions of Section 13 of the Act.

21. The DRT Act mainly pertains to institution of proceedings by a bank for recovery of its debt when the debt is not less than Rs.10 lakh. If the debt is less than Rs.10 lakh, no suit can be filed by the creditor bank in the Tribunal under the provisions of the DRT Act. So, when the jurisdiction of the Tribunal has been referred to in Section 1(4) of the DRT Act, which limits the jurisdiction of the Tribunal to Rs.10 lakh, prima facie, the intention of the legislature is to limit the original jurisdiction of the Tribunal. If any claim is to be made before the Tribunal, the amount must be more than Rs.10 lakh and if the amount is less than Rs.10 lakh, the creditor bank will have to file a suit in a Civil Court. So, one can safely interpret the provisions of Section 1(4) of the DRT Act to the effect that it deals with original jurisdiction of the Tribunal

under the provisions of the DRT Act.

22. In the instant case, we are concerned with the challenge to the proceedings initiated under Section 13 of the Act. There is a specific provision in the Act to the effect that the proceedings initiated under the Act cannot be challenged before a Civil Court be cause the Civil Court has no jurisdiction to entertain any matter arising under the Act and in that event, the concerned debtor has to approach the Tribunal under the provisions of Section 17 of the Act.

23. Thus, the Tribunal would be exercising its appellate jurisdiction when the action initiated under the provisions of Section 13 of the Act is challenged before the Tribunal. There is a difference between the Tribunal's original jurisdiction under the provisions of the DRT Act and the appellate jurisdiction under the Act.

24. The issue with regard to availability of a forum for

challenging the action under the provisions of the Act had been dealt with by this Court in the case of Mardia Chemicals Ltd. (supra). This Court, in the said case, unequivocally held that the aggrieved debtor can never be without any remedy and we firmly believe that the legislature would normally not leave a person without any remedy when a harsh action against him is initiated under the provisions of the Act.

25. So as to know the appellate jurisdiction of the Tribunal, one has to look at the provisions of the Act as Section 17 of the Act specifically provides a right to the aggrieved debtor to challenge the validity of an action initiated under Section 13(4) of the Act before the Tribunal. Moreover, the Act was enacted in 2002 and the legislature is presumed to have knowledge about the provisions of Section 1(4) of the DRT Act. So

harmonious reading of both the aforestated Sections would not be contrary to any of the legal provisions.

26. For the aforestated reasons, we are of the view that the application submitted by the appellant bank under Order VII Rule 11 of the CPC should have been granted by the trial Court as, according to Section 34 of the Act, a Civil Court has no jurisdiction to entertain any appeal arising under the Act.

27. Thus, we hold that the Debt Recovery Tribunal constituted under the DRT Act has jurisdiction to entertain an appeal as per Section 17 of the Act even if the amount involved is less than Rs.10 lakh. But, the said appellate jurisdiction need not be misunderstood with the original jurisdiction of the Tribunal."

(emphasis supplied by us)

The Supreme Court in the case of United Bank of India vs. Satyawati Tandon and others, reported in (2010) 8 SCC 110 wherein the Court in paragraph 42 & 43 has held as follows:

"42. There is another reason why the impugned order should be set aside. If Respondent 1 had any tangible grievance against the notice issued under Section 13(4) or action taken under Section 14, then she could have availed remedy by filing an application under Section 17(1). The expression "any person" used in Section 17(1) is of wide import. It takes within its fold, not only the borrower but also the guarantor or any other person who may be affected by the action taken under Section 13(4) or Section 14. Both, the Tribunal and the Appellate Tribunal are empowered to pas interim orders under Sections 17 and 18 and are required to decide the matters within a fixed time schedule. It is thus evident that the remedies available to an aggrieved person under the SARFAESI Act are both expeditious and effective.

43. 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."

In the case of Standard Chartered Bank Vs. V. Noble Kumar and others reported in (2013) 9 SCC 620, the Supreme Court in paragraph 27 has held :-

"27. The "appeal" under section 17 is available to the borrower against any measure taken under section 13(4). Taking possession of the secured asset is only one of the measures that can be taken by the secured creditor. Depending upon the nature of the secured asset and the terms and conditions of the security agreement, measures other than taking the possession of the secured asset are possible under section 13(4). Alienating the asset either by lease or sale, etc. and appointing a person to manage the secured asset are some of those possible measures. On the other hand, section 14 authorises the Magistrate only to take possession of the property and forward the asset along with the connected documents to the borrower (sic the secured creditor). Therefore, the borrower is always entitled to prefer an "appeal" under section 17 after the possession of the secured asset is handed over to the secured creditor. Section 13(4)(a) declares that the secured creditor may take possession of the secured assets. It does not specify whether such a possession is to be obtained directly by the secured creditor or by resorting to the procedure under section 14. We are of the opinion that by whatever manner the secured creditor obtains possession either through the process contemplated under section 14 or without resorting to such a process obtaining of the possession of a secured asset is always a measure against which a remedy under section 17 is available."

In a recent judgement dated 5.10.2018 passed in Civil Appeal No. 10251-10265 of 2018 (ICICI Bank Ltd. Vs. Umakant Mahapatra), the Supreme Court has held as under:-

"Delay Condoned.

Leave granted.

Despite several judgements of this Court, including a judgment by Hon'ble Mr. Justice Navin Sinha, as recently as on 30.01.2018 , in Authorized Officer, State Bank of Travancore and Anr. vs. Mathew K.C., (2018) 3 SCC 85, the High Courts continue to entertain matters which arise under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI), and keep granting interim orders in favour of persons who are Non-Performing Assets (NPAs).

The writ petition itself was not maintainable, as a result of which, in view of our recent judgment, which has followed earlier judgments of this Court, held as follows :

"18. We cannot help but disapprove the approach of the High Court for reasons already noticed in Dwarikesh Sugar Industrict Ltd. vs. Prem Heavy Engineering Works (P) Ltd. and Another, (1997) 6 SCC 450, observing :-

"32. 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."

The writ petition, in this case, being not maintainable, obviously, all orders passed must perish, including the impugned order, which is set aside.

The appeals are allowed in the aforesaid terms.

Pending applications, if any, shall stand disposed of."

Therefore on the facts of the case and the law laid down by the Supreme Court in the case of Mukesh Jain (supra), Satyawati Tandon (supra), Noble Kumar (supra) and Umakant Mohapatra (supra), we find no illegality or infirmity in the impugned order dated 13.9.2018 passed by the Chief Metropolitan Magistrate, Kanpur Nagar. The writ petition lacks merit and is accordingly dismissed.

Dated:14th December, 2018

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