Calcutta High Court (Appellete Side)
Bansal Enterprises vs Bank Of Baroda & Ors on 14 January, 2021
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IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
APPELLATE SIDE
Before:
The Hon'ble Justice Hiranmay Bhattacharyya
WPA 11360 of 2020
Bansal Enterprises
Vs.
Bank of Baroda & Ors.
For the petitioner : Mr. Suddhasatva Banerjee
Mr. Pushan Kar
Mr. Soumabho Ghose
Mr. Sagnik Majumder
Mr. Teeshan Das......advocates
For the Bank of Baroda : Mr. Avishek Guha
Mr. Rohit Bhattacharjee.....advocates
For the Union of India : Ms. Pronoti Goswami........... advocate
Heard on : 07.01.2021
Judgment on : 14.01.2021
Hiranmay Bhattacharyya, J.:
The writ petitioner claims to be a lessee of an immovable
property which was put up for auction sale in terms of the
provisions of the Securitization and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 (for short
"the SARFAESI Act") and the Security Interest (Enforcement)
Rules, 2002 (for short "the 2002 rules"). The petitioner claims
that he contacted an official of the Bank as the website was not
functional. The said official assured him that a new date for such
auction will be fixed. The writ petitioner claims that he could not
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participate in such auction as the website was not functional.
The writ petitioner alleges that the respondent Bank has
proceeded to finalise such auction by disregarding the
assurances given to the writ petitioner. The writ petitioner says
that the Bank in collusion with the participants finalised the
auction sale. The writ petitioner filed the instant writ petition
praying for a mandamus directing the respondents to set aside,
cancel and withdraw the e-auction sale.
Mr. Banerjee, learned Advocate for the petitioner, has
contended that the respondent Bank acted illegally and arbitrary
by holding such auction when the other intending purchasers
including the petitioner could not participate due to unworkable
website. According to Mr. Banerjee, collusion between the Bank
and the highest bidder is apparent as the property is sought to be
transferred at an abnormally low price. Mr. Banerjee further
contended that the writ petitioner has only challenged the
manner in which such auction was conducted but not the
measures taken by the secured creditor under Subsection 4 of
Section 13 of the SARFAESI Act. He contended that neither the
SARFAESI Act nor the 2002 rules framed thereunder has
provided the manner in which auction is to be conducted. Thus,
according to Mr. Banerjee, the Debts Recovery Tribunal (for short
"the Tribunal") do not have the jurisdiction to decide the instant
dispute. According to Mr. Banerjee before a tribunal can be held
to have jurisdiction to decide a particular matter it must not only
have the jurisciction to try and adjudicate the dispute brought
before it but must also have the authority to pass the order
sought for. In support of such contention, Mr. Banerjee placed
reliance upon a judgment of the Hon'ble Supreme court of India
in the case of Official Trustee, West Bengal and ors. vs. Sachindra
Nath Chatterjee and Anr. reported at AIR 1969 SC 823. Mr.
Banerjee further contended that as the writ petitioner was
deprived of his right to participate in the e-auction, he filed the
instant writ petition.
Mr. Banerjee contended that the object of auction sale is
maximum participation by intending purchasers and to fetch the
best possible market price. Mr. Banerjee contended that any
irregularity in conducting the auction sale can be challenged
under Article 226 of the Constitution of India and in support of
such contention he relied upon the following judgments of the
Hon'ble Supreme Court of India in the case of (i) Gajraj Jain vs.
State of Bihar and Ors. reported at (2004)7 SCC 151, (ii) S.J.S.
Business Enterprises (P) Ltd. vs. State of Bihar and Ors. reported
at (2004)7 SCC 166 and (iii) Karnataka State Industrial
Investment and Development Corporation Limited vs. S.K.K.
Kulkarni and Ors. reported at (2009) 2 SCC 236.
Mr. Guha, learned Advocate for the respondent has
seriously disputed the contentions of Mr. Banerjee. He contended
that Subsection 4 of Section 13 of the SARFAESI Act empowers
the secured creditor to take recourse to sale of an immovable
property i.e. the secured asset for recovery of the secured debt.
He further contended that Section 17 of the SARFAESI Act
provides that if any person including the borrower is aggrieved
against any of the measures taken by the secured creditor, such
aggrieved person has to approach the Tribunal. According to him,
the instant writ petition is not maintainable as an alternative
efficacious remedy is available to the petitioner.
Mr. Guha relied upon the judgments in the case of (i)
Kanaiyalal Lalchand Sachdev and Ors. vs. State of Maharashtra
and Ors. reported at 2011 AIR SCW 1194, (ii) Authorised Officer,
State Bank of Travancore and another vs. Mathew K.C. reported at
(2018) 3 Supreme Court Cases 85, (iii) an unreported judgment of
this Hon'ble Court in the case of Bishnu Bikash Sarkar & Anr. vs.
ICICI Home Finance Company Limited & Ors. passed on February
6, 2019 in CAN 923 of 2019 with CAN 924 of 2019 in MAT 128 of
2019 and (iv) United Bank of India vs. Satyawati Tondon and Ors.
reported at (2010) 8 Supreme Court Cases 110 in support of his
contention that the High Court should not entertain a petition
under Article 226 of the Constitution of India when an effective
alternative remedy is provided under the SARFAESI Act for
redressal of his grievance.
Mr. Guha further contended that sale of secured asset in
public auction under Section 13(4) of SARFAESI Act which ended
in issuance of sale certificate is a complete and absolute sale and
in support of such contention he relied upon a decision of the
Hon'ble Supreme Court of India in the case of Shakeena & anr.
Vs. Bank of India and others reported at 2019 SCC Online SC
1059.
I have heard the learned advocates of the respective parties
and have considered the materials on record.
The main question which falls for determination is whether
the Tribunal would have jurisdiction to consider and adjudicate
any dispute relating to conducting the auction sale under Section
13(4) of the SARFAESI Act.
In order to decide the said issue it will be profitable to
recapitulate some of the provisions of the SARFAESI Act and the
2002 Rules.
Sub section 4 of Section 13 of the SARFAESI Act specifies
various modes which can be adopted by the secured creditor for
recovery of the secured debt. The secured creditor can take
possession of the secured assets of the borrower and transfer the
same by way of sale for realising the secured assets. Section 17
speaks of the remedies available to any person including the
borrower who may feel aggrieved against the action taken by the
secured creditor under Sub section 4 of Section 13 of the Act.
Subsection 2 of Section 17 casts a duty upon the tribunal to
consider whether the measures taken by the secured creditor for
enforcement of the security interest are in accordance with the
provisions of the act and rules framed thereunder. Subsection 3
of Section 17 provides that if the tribunal after examining the
facts and the circumstances of the case and evidence produced
by the parties, comes to the conclusion that the measures taken
by the secured creditor under Sub section 4 of Section 13 of the
said act are not in accordance with the provisions of the act and
the rules framed thereunder, then it can by order direct
restoration of possession of secured assets to the borrower or
such other aggrieved person who may have applied under Section
17(1).
Section 18 of the SARFAESI Act provides a right of appeal to
the Appellate Tribunal.
Thus, the SARFAESI Act contains a detailed mechanism for
redressal of grievances of any person including the borrower who
feels aggrieved against the actions taken by the secured creditor
for recovery of the secured debt.
The 2002 Rules have been framed in exercise of the powers
conferred under Subsection (1) and Clause (b) of Subsection (2) of
Section 38 read with Subsection (4), (10) and (12) of the
SARFAESI. Rule 8 of the 2002 Rules lays down the procedures
for sale of immovable secured assets.
In Authorised Officer , Indian Overseas Bank and another vs.
Ashok Saw Mill, reported at (2009) 8 SCC 366, the Hon'ble
Supreme Court after examination of various provisions of the
SARFAESI Act and the 2002 rules held that the tribunal has
been vested with the power to declare any action taken by the
secured creditor for recovery of its dues as invalid and also to
restore possession even if such possession may have been made
over to the transferee. The Hon'ble Supreme Court held as
under-
"35. In order to prevent misuse of such wide powers and to
prevent prejudice being caused to a borrower on account of an
error on the part of the banks or financial institutions, certain
checks and balances have been introduced in Section 17 which
allow any person, including the borrower, aggrieved by any of the
measures referred to in sub-section (4) of Section 13 taken by the
secured creditor, to make an application to the DRT having
jurisdiction in the matter within 45 days from the date of such
measures having taken for the reliefs indicated in sub-section (3)
thereof.
36. The intention of the legislature is, therefore, clear 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 into the matter to declare any such action invalid and
also to restore possession even though possession may have been
made over to the transferee."
The SARFAESI Act empowers the secured creditor to recover
its secured debt by way of sale of the secured asset. The 2002
Rules, particularly Rule 8 lays down the procedures of
conducting such sale. Any error or wrongful use of powers by the
secured creditor in the process of conducting the e-auction
affects the auction sale. The said act casts an obligation upon
the tribunal to consider as to whether such sale is in accordance
with the provisions of the act and the rules framed thereunder.
Thus, I am of the view that the tribunal is empowered under the
act to decide as to whether there was any error or wrongful use of
powers in conducting the auction sale by the respondent
authority. For the reasons as aforesaid, I am unable to accept the
submission of Mr. Banerjee that the tribunal lacks jurisdiction to
decide the issue raised in the writ petition regarding alleged
irregularity in the process of holding e-auction.
Now the next question arises as to whether the High Court
should entertain an application under Article 226 of the
Constitution of India when alternative remedies are available to
the petitioner under the SARFAESI Act.
The Hon'ble Supreme Court of India after considering
the various provisions of the SARFAESI Act in Satyawati (supra)
held that the remedies available to an aggrieved person are both
expeditious and effective. It was further held therein that the
High Court must insist that before availing remedy under Article
226 of the Constitution a person must exhaust all remedies
available under the relevant statute. The Hon'ble Supreme Court
held as under -
"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 institution.
In or 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 legislation 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.
55. 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. "
The Hon'ble Supreme Court in the case of Mathew K.C.
(supra) deprecated the tendency of the subordinate courts in not
applying the well settled decision that a party must exhaust the
remedies available under the relevant statute before availing the
remedy under Article 226. The Hon'ble Supreme Court in the said
reported case held as under-
"17. We cannot help but disapprove the approach of the High Court
for reasons already noticed in Dwarikesh Sugar Industries Ltd. v.
Prem Heavy Engg. Works (p) Ltd., observing: (SCC p. 463, para 32)
"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 Hon'ble Supreme Court of India in Kanaiyalal (supra)
after noticing the various provisions of the SARFAESI Act and the
2002 Rules held that the High Court was justified in declining to
exercise its jurisdiction under Article 226 and 227 of the
Constitution on the ground that an efficacious statutory remedy
of appeal under Section 17 of the Act was available.
A Division Bench of this Hon'ble Court in the case of Bishnu
Bikash (supra) after taking into consideration the observations
made by the Hon'ble Supreme Court in various judgments held
that the High Court is likely to fall into a grave error if a writ
petition is entertained notwithstanding the fact that the writ
petitioners have an efficacious statutory alternative remedy
available.
Though I am conscious that the powers conferred upon the
High Court under Article 226 of the Constitution of India is very
wide and there is no express limitation on the exercise of that
power but, at the same time, I am not oblivious of the rules of
self- imposed restraint which a High Court is to keep in view
while exercising power under Article 226 of the Constitution of
India. Since an alternative efficacious remedy for redressal of the
grievances of the petitioner is available under Section 17 of the
SARFAESI Act, I am not inclined to entertain the instant writ
petition and the same is liable to be dismissed.
Let me now deal with the decisions cited by Mr. Banerjee.
Though there is no quarrel to the proposition of law laid down by
the Hon'ble Supreme Court in the case of Sachindra Nath
Chatterjee (supra) that the jurisdiction of a court must include
the power to hear and decide the questions at issue, the
authority to hear and decide the particular controversy that has
arisen between the parties, since I have already held that the
tribunal has the jurisdiction to hear and decide the dispute that
have arisen between the parties in relation to the conduct of the
auction sale, the said reported case is not of much assistance to
the petitioner.
In Gajraj Jain (supra) and S.J.S. Business Enterprises
(supra), the Hon'ble Supreme Court of India while considering the
auction sales conducted in terms of the provisions of the State
Financial Corporation Act 1951 held that an auction sale can be
set aside on an application filed under Article 226 of the
Constitution of India in case such sale was not held in
accordance with the statute or that the authorities acted unfairly
or unreasonably. The aforesaid decisions of the Hon'ble Supreme
Court of India is not applicable to the facts of the instant case as
the auction sale by the respondent Bank was done in exercise of
the powers under Section 13(4) of the SARFAESI Act and the said
Act provides a detailed mechanism for ventilating the grievance
by an aggrieved party before the tribunal. Furthermore, the
question as to whether a writ petition can be entertained
notwithstanding the availability of alternative efficacious
remedies under the SARFAESI Act has been well settled by the
Hon'ble Supreme Court.
The issue before the Supreme Court in S.K.K Kulkarni
(supra) was whether a particular court has territorial jurisdiction
to hear the matter in view of the provisions of Section 31 (1) of
the State Financial Corporation Act 1951. The said judgment has
no manner of application to the facts of the instant case.
One of the issues which fell for consideration in the decision
cited by Mr. Guha in Shakeena (supra) was whether a sale under
Section 13(4) becomes complete and absolute upon issuance of a
sale certificate in favour of the successful bidder or the same
requires registration under the provisions of the Registration Act.
The said issue is not germane in the instant case and as such the
judgment rendered in Shakeena (supra) is not applicable to the
facts of the instant case.
For the reasons as aforesaid, WPA 11360 of 2020 is
dismissed without however any order as to costs. The dismissal
of the instant writ petition shall not, however, debar the
petitioner in approaching the appropriate forum in accordance
with law if so advised.
Urgent photostat certified copy of this judgment, if
applied for, be supplied to the parties on priority basis upon
compliance of all formalities.
(Hiranmay Bhattacharyya, J.)
