Calcutta High Court
Mohan Motor Business Pvt. Ltd. And ... vs Icici Bank Limited And Anr on 18 November, 2022
ORDER OD - 9 & 10
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
ORIGINAL SIDE
APO/92/2021
WPO/89/2021
IA NO: GA/1/2021
MOHAN MOTOR BUSINESS PVT. LTD. AND ANR.
VERSUS
ICICI BANK LIMITED AND ANR.
AND
APO/93/2021
WPO/91/2021
IA NO: GA/1/2021
METRO NIKETAN PVT. LTD. AND ANR.
VERSUS
ICICI BANK LIMITED AND ORS.
BEFORE:
HON'BLE CHIEF JUSTICE PRAKASH SHRIVASTAVA
HON'BLE JUSTICE RAJARSHI BHARADWAJ
Date: 18th November 2022.
APPEARANCE:
Mr. Rajarshi Dutta, Advocate
Mr. Sarbajit Mukherjee, Advocate
Mr. Sayantan Bose, Advocate
Ms. Madhurima Das, Advocate
... for appellants
Mr. Avishek Guha, Advocate
Ms. Akansha Chopra, Advocate
... for respondent bank.
The Court:- These intra-court appeals are at the instance of the writ
petitioners challenging the order of the Learned Single Judge dated
27.04.2021 whereby WPO/89/2021 and WPO/91/2021 were dismissed
with costs.
The appellants-borrowers had committed default in repayment,
hence, proceedings under the provisions of SARFAESI Act were initiated.
Being aggrieved with the classification of the account as NPA and issuance
of notice under Section 13(2) of the SARFAESI Act, the appellants had
approached the Writ Court.
By the impugned order, though the Writ Court had reached to the
conclusion that an ipso facto challenge to the genesis of the bank's action
before the Writ Court by itself is not a justification of maintainability of the
writ petition after measures have already been taken under the SARFAESI
Act, but thereafter, Learned Writ Court has examined two questions, firstly
whether the bank had authority to classify the account in question as NPA
at the relevant juncture and secondly, whether the petitioners were
entitled to the benefit as contemplated in Clause 17.2.2 of the Prudential
Norms of 2015.
Undisputedly, subsequently, the proceedings against the appellants
under Section 13(4) of the SARFAESI Act have also been taken up.
Against the proceedings under the SARFAESI Act, the appellants have
remedy of approaching the DRT. Learned counsel for the respondent bank
has handed over a bunch of judgements, which clearly lay down that
against the action under the SARFAESI Act, the writ normally should not
be maintained.
In the matter of United Bank of India v. Satyawati Tondon : (2010) 8
SCC 110, Hon'ble Supreme Court took the view that:-
"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 pass 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
challenge to the action taken for recovery of the public dues, etc. bnthe
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 statue.
44. 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 High Court is bound to keep in view while exercising power under
article 226 of the Constitution."
In the subsequent judgment, in the matter of Authorised Officer,
State Bank of Travancore And Another v. Mathew K.C. : (2018) 3 SCC 85
the earlier judgments on the point were noted and it was held that:-
"14. A similar view was taken in Punjab National Bank v. Imperial
Gift House, observing : (SCC p. 622, paras 3-4)
"3. Upon receipt of notice, the respondents filed
representation under Section 13(3-A) of the Act, which was
rejected. Thereafter, before any further action could be taken under
Section 13(4) of the Act by the Bank, the writ petition was filed
before the High Court.
4. In our view, the High Court was not justified in entertaining
the writ petition against the notice issued under Section 13(2) of
the Act and quashing the proceedings initiated by the Bank."
15. It is the solemn duty of the court to apply the correct law
without waiting for an objection to be raised by a party, especially when
the law stands well settled. Any department, if permissible, has to be
for reasons discussed, of the case falling under a defined exception,
duly discussed after noticing the relevant law. In financial matters grant
of ex parte interim orders can have a deleterious effect and it is not
sufficient to say that the aggrieved has the remedy to move for vacating
the interim order. Loans by financial institutions are granted from public
money generated at the taxpayer's expense. Such loan does not become
the property of the person taking the loan, but retains its character of
public money given in a fiduciary capacity as entrustment by the public.
Timely repayment also ensures liquidity to facilitate loan to another in
need, by circulation of the money and cannot be permitted to be blocked
by frivolous litigation by those who can afford the luxury of the same.
The caution required, as expressed in Satyawati Tondon, has also not
been kept in mind before passing the impugned interim order : (SCC pp.
123-24, para 46)
"46. It must be remembered that stay of an action initiated
by the State and/or its agencies/instrumentalities for recovery of
taxes, cess, fees, etc. seriously impedes execution of projects of
public importance and disables them from discharging their
constitutional and legal obligations towards the citizens. In cases
relating to recovery of the dues of banks, financial institutions and
secured creditors, stay granted by the High Court would have
serious adverse impact on the financial health of such
bodies/institutions, which (sic will) ultimately prove detrimental to
the economy of the nation. Therefore, the High Court should be
extremely careful and circumspect in exercising its discretion to
grant stay in such matters. Of course, if the petitioner is able to
show that its case falls within any of the exceptions carved out in
Baburam Prakash Chandra Maheshwari v. Antarim Zila Parishad,
Whirlpool Corpn. v. Registrar of Trade Marks and Harbanslal
Sahnia v. Indian Oil Corpn. Ltd. and some other judgments, then
the High Court may, after considering all the relevant parameters
and public interest, pass an appropriate interim order."
16. The writ petition ought not to have been entertained and the
interim order granted for the mere asking without assigning special
reasons, and that too without even granting opportunity to the appellant
to contest the maintainability of the writ petition and failure to notice the
subsequent developments in the interregnum. The opinion of the
Division Bench that the counter-affidavit having subsequently been
filed, stay/modification could be sought of the interim order cannot be
considered sufficient justification to have declined interference.
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."
18. The impugned orders are therefore contrary to the law laid
down by this Court under Article 141 of the Constitution and
unsustainable. They are therefore set aside and the appeal is allowed."
In the above case, in the matter of Authorised Officer, State Bank of
Travancore (supra), in paragraph 15, Hon'ble Supreme Court has taken
the view that it is the solemn duty of the Court to apply the correct law
without waiting for an objection to be raised by a party, especially when
the law stands well settled.
In the judgment in the matter of ICICI Bank Limited And Others v.
Umakanta Mohapatra And Others : (2019) 3 SCC 497, a writ petition
against an action under the SARFAESI Act has been held to be not
maintainable.
In view of the above settled legal position, we find substance in the
objection of maintainability of the petition and we are of the view that the
proper remedy available to the appellants is to approach the DRT under
Section 17 of the SARFAESI Act against the action of the respondent bank.
At this stage, an issue has been raised about the expiry of limitation in
approaching the DRT in filing an application under Section 17 of the
SARFAESI Act. It has been pointed out by learned counsel for the
respondent bank that each action under Section 13 of the Act gives a fresh
cause of action to the appellants to approach the DRT. That apart, the
appellants were bona fide prosecuting the writ petition, therefore, they
have the option to claim the benefit of Section 14 of the Limitation Act.
Counsel for the appellants has also brought to the notice of this Court that
additional limitation will be available in view of the order of the Hon'ble
Supreme Court dated 10th January 2022 in Suo Moto Writ Petition No.3 of
2020.
In view of the above, we dispose of the present appeals permitting the
appellants to approach the DRT for redressal of their grievance. We make
it clear that any observation made by the Learned Single Judge in the
order under challenge will not affect the case of the appellants on merit
before the Tribunal. In the circumstances of the case, we are unable to
sustain the imposition of costs of Rs.50,000/- by Learned Single Judge,
which is accordingly set aside.
Appeal is accordingly disposed of.
[PRAKASH SHRIVASTAVA, C.J.]
[RAJARSHI BHARADWAJ, J.]
s.kumar / sm
