Kk Importers Private Limited And ... vs Debts Recovery Tribunal-Iii
2023 Latest Caselaw 5007 Cal

AD-12
Ct No.09
14.08.2023
TN
                            WPA No. 10529 of 2022
                             IA No: CAN 1 of 2023

                   KK Importers Private Limited and others
                                    Vs.
                Debts Recovery Tribunal-III, Kolkata and others


             Mr. Sakya Sen,
             Mr. Arindam Chandra,
             Mr. Atish Ghosh,
             Ms. Antara Dey
                                                  .... for the petitioners

             Ms. Amrita Panja Moulick
                                              .... for the respondent

nos. 3 & 4 Mr. Jayanta Sengupta, Ms. Shebatee Datta .... for the applicant/ respondent no. 5

On consent of parties, the writ petition itself is

taken up for hearing, along with the application for

vacating the interim order passed herein, since the

adjudication on the vacating application would

virtually involve taking up the writ petition itself on

merits.

The writ petition was preferred at a juncture

when the regular Presiding Officer was absent in the

concerned Debts Recovery Tribunal, that is, the Debts

Recovery Tribunal, 3rd Bench, and was entertained on

such score.

Vide order dated June 27, 2022, the learned

Single Judge taking up the matter had observed that

since the matter was fixed before the DRT-III on the

same day, that is, on June 27, 2022 and the writ

petition had not been considered on merits, the

respondents shall take leave of the court before

initiating any action against the petitioners. The writ

petition was directed to be listed after three weeks. In

the event the interim application or any other

proceeding is decided by the DRT-III, parties were

given liberty to mention the matter before this court.

Learned counsel for the parties point out that on

the said date, that is, on June 27, 2022, the matter

was taken up for hearing and ultimately on July 12,

2022, the IA of the writ petitioners, filed against the

order passed by the concerned District Magistrate

under Section 14 of the SARFAESI Act, 2002, was

decided by the DRT-III. The said order dated July 12,

2022 has been annexed by the parties respectively to

their vacating application and supplementary

affidavit.

It transpires from the said order that the

Tribunal took into consideration the order dated

June 27, 2022 passed by the coordinate Bench in the

connected writ petition.

Thereafter, the Tribunal proceeded to decide on

the petitioners' application, ultimately coming to the

conclusion that the Tribunal did not find prima facie

any defect in the order of the District Magistrate. It is

seen from the said order that the Tribunal elaborately

considered several aspects of the matter, including the

fact that the District Magistrate had passed a

reasoned and speaking order which reflected his

consideration and satisfaction on the affidavit

declaring nine clauses as laid down in Section 14(1)(b)

of the SARFAESI Act, 2002.

However, it is contended by the writ petitioners

that the District Magistrate did not consider the most

important facet of the challenge taken out by the

petitioners, to the effect that patent fraud had been

practised on the District Magistrate insofar as the

affidavit filed before the Magistrate did not disclose

that the property was fully tenanted, which is evident

from the notice of possession as well as the demand

notice issued in the present case against the

petitioners/borrowers by the financial institution.

In the absence of such consideration, it is

submitted that the adjudication dated July 12, 2022

is palpably vitiated.

As such, the petitioners have taken out an

application for recall of the said order, primarily on

the ground that the facet of the allegations regarding

fraud was not considered by the Tribunal at all.

Learned counsel appearing for the respondent-

financial institution/applicant in the vacating

application contends that the writ petitioners sat tight

over the recall application for over a year without

moving the same. As such, it is clearly seen that the

attempt of the writ petitioners is to stall the

proceeding and is not bona fide. It is submitted that

in the absence of an independent challenge against

the order dated July 12, 2022 before the appropriate

forum designated in law, that is, the Debts Recovery

Appellate Tribunal, this court ought not, within the

limited scope of the writ petition, to entertain the

dispute raised regarding the said order.

That apart, learned counsel for the respondent-

financial institution argues that the writ petition is not

maintainable as of today. It is argued that the same

was entertained simply because the DRT-III was not

functioning regularly at the relevant juncture.

However, as of today, it is evident that the said

Tribunal is fully functional, which is also exemplified

by the order dated July 12, 2022 passed by the said

forum. As such, the writ petition ought to be

dismissed on the ground of maintainability alone, if

not on other grounds. Learned counsel for the

respondent-financial institution places reliance on the

judgment of Phoenix ARC Private Limited vs. Vishwa

Bharati Vidya Mandir and others, reported at (2022) 5

SCC 345 and argues that a writ petition against a

private party is, under normal circumstances, not

maintainable. It is only maintainable when a public

function/public duty is carried out by the authority.

However, it was also held by the Supreme Court,

it is contended, that if proceedings are initiated under

the SARFAESI Act and/or any proposed action is to be

taken and the borrower is aggrieved by any of the

actions of the private bank/bank/ARC, the borrower

has to avail the remedy under the SARFAESI Act and

no writ petition would lie and/or is maintainable

and/or entertainable under Article 226 of the

Constitution of India.

Heard learned counsel for the parties.

The peculiar predicament in the present case is

that the respondent-financial institution argues that

the writ petition is not maintainable at the present

juncture due to availability of the DRT-III, although it

might have been justified for the court to entertain the

same at the relevant point of time, when the DRT-III

was not functioning regularly. However, the said

objection has to be taken with a pinch of salt.

Even on June 27, 2022, when the writ petition

was moved for the first time, it is evident that the

DRT-III was functioning, albeit to a limited extent,

since the order itself recorded that the matter was

fixed before the DRT-III on the said date. In fact, the

application of the writ petitioners was duly heard by

the DRT-III and an order passed therein on July 12,

2022, contemporaneously with the writ petition being

entertained.

Having not taken the point of maintainability

and the same being not kept open at that juncture,

the respondents have fully participated in the present

writ petition and cannot now resile and take an

objection regarding the maintainability of the same.

Such an exercise, if given premium to, would permit

the litigants to take opportunities and liberties before

the court, de hors the law.

Thus, the point of maintainability, taken at this

belated juncture, is turned down.

Learned counsel appearing for the respondent

no. 5, at this juncture, rightly points out that the said

respondent was not represented on June 27, 2022

when the order-in-question was passed and, as such,

there was no scope of taking any objection as to

maintainability of the writ petition.

However, it is recorded in the said order that the

affidavit-of-service filed on that date was kept on

record, indicating and implying that due service has

been effected on all the respondents. Thus, the

respondent no. 5 chose to lose its opportunity to

challenge the maintainability of the writ petition at the

earliest possible opportunity.

Moreover, no subsequent complaint has been

raised by the respondent no. 5 to the effect that no

copy of the writ petition was served on the said

respondent.

In fact, the respondent no. 5 waited for quite a

long time to file the application for modification, not

taking the point of maintainability specifically at any

point of time.

Since the order-in-question was passed by the

coordinate Bench on June 27, 2022, it cannot be said

that the respondent no. 5 had no opportunity

thereafter, to challenge the maintainability of the writ

petition. Rather, the said respondent has submitted

to the jurisdiction of the court by taking out an

application for vacating the interim order passed

therein.

Such belated challenge to the maintainability,

as such, cannot be entertained.

That apart, the point of maintainability loses

relevance on another aspect of the matter as well. It

is well-settled that fraud vitiates all and can be set up

as a ground of challenge before all forums.

The writ petitioners clearly canvassed the point

of fraud, insofar as the demand notice as well as the

notice of possession issued by the respondent no. 5

clearly mentioned the property being fully tenanted,

which was clearly suppressed in the affidavit filed by

the District Magistrate. Nothing in the order of the

District Magistrate, challenged in the writ petition,

discloses any consideration of such fraud at all. The

District Magistrate's order does not indicate anything

to show that it was pointed out to the District

Magistrate that the property was fully tenanted, which

would and should have prompted the District

Magistrate to enter into at least a preliminary enquiry

as to whether the tenancy was prior to the loan being

taken.

In any event, since the Debts Recovery Tribunal,

despite the said point having been taken by the writ

petitioners, also did not advert to the issue of fraud at

all, the exercise carried out by the Debts Recovery

Tribunal by its order dated July 12, 2022 has rightly

been challenged by way of a recall application by the

writ petitioners.

However, for the sake of propriety, although the

District Magistrate's order actually does not reflect

any consideration on the property being fully

tenanted, since the writ petitioners have chosen to

take out a recall application before the Debts Recovery

Tribunal, which is the designated forum in law to take

into consideration such aspect as well, this court is

not interfering in the present writ petition.

However, for all practical purposes, the recall

application of the writ petitioners ought to be

adjudicated first by the Debts Recovery Tribunal

before allowing the possession of the property to be

taken within the contemplation of Section 14 of the

SARFAESI Act, 2002, pursuant to the order impugned

in the present writ petition.

Accordingly, WPA No. 10529 of 2022 is disposed

of by restraining the respondents from taking any

coercive or other action in terms of the impugned

order passed by the District Magistrate under

Section 14 of the SARFAESI Act, 2002, prior to

disposal of the recall application filed by the writ

petitioners before the DRT-III for recall of the order

dated July 12, 2022.

The Tribunal shall dispose of the said recall

application in accordance with law upon hearing

learned counsel for the parties, without being unduly

influenced by any of the observations made herein on

merits, by the end of September, 2023. Such time-

limit is, however, peremptory and mandatory.

IA No: CAN 1 of 2023 is, accordingly, disposed

of.

It is, however, made clear that the restraint

order passed herein shall continue till the disposal of

the recall application filed by the writ petitioners, as

indicated above, and shall be subject to the final order

passed on the said recall application by the Tribunal.

There will be no order as to costs.

Urgent photostat certified copies of this order, if

applied for, be made available to the parties upon

compliance with the requisite formalities.

(Sabyasachi Bhattacharyya, J.)