Calcutta High Court (Appellete Side)

Kanai Charan Panda & Anr vs The State Of West Bengal & Ors on 27 December, 2023

27.12.2023
 Sl No.19
Court No.8
  (rp/gc)

                   MAT 2535 of 2023
                    CAN 1 of 2023

               Kanai Charan Panda & Anr.
                           Vs.
             The State of West Bengal & Ors.


                     Mr. Shuvro Prokash Lahiri,
                     Ms. Tithi Mazumder,
                                       ...for the Appellants.
                     Mr. Tarun Kumar Ghosh,
                     Ms. Suvasree Ghose,
                                            ...for the State.
                     Mr. Om Narayan Rai,
                                             ...for the S.B.I.


               1.

The appeal arises out of an order passed

by a learned Single Judge dated December

21, 2023 in WPA No.28786 of 2023. By

the order impugned, the learned Judge

dismissed the writ petition, inter alia,

holding that no further time could be

granted to the appellants to pay off the

amount borrowed from the bank. The

learned Judge observed that despite the

bank one-time-settlement offered by the

appellants, to which the bank agreed, the

appellants failed to pay the agreed amount

within the prescribed period. Rather, the

appellants adopted a circuitous

methodology of challenging the notice of

the police authorities, to implement the

order passed by the District Magistrate

under Section 14 of the Securitization and

Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002

(in short "SARFAESI Act").

2. Mr. Shuvro Prokash Lahiri, learned

Advocate for the appellants/ writ

petitioners submits that the order

impugned suffers from the following

irregularities:-

a) The learned Judge failed to take into

consideration that the police

authorities were seeking to

implement an order, which was time

barred. On such score, Mr. Lahiri

relies on an unreported decision of

the Bombay High Court in the

matter of L&T Finance Limited Vs.

The State of Maharashtra & Ors.

             passed      in      A.S.Writ         Petition

             No.15285 of 2022.

b) The SARFAESI proceeding sought to

be initiated by the bank, as stated in

the notice cancelling the proposed

one-time-settlement, was also time

barred.

c) The claim of the bank was barred by

limitation as the loan account was

declared NPA in 2009. Although,

notice under Section 13(2) of the

SARFAESI Act was also issued in

2009, thereafter the bank withdrew

from taking any action. Such

conduct, amounted to waiver. The

fact that the bank wanted to re-

initiate SARFAESI proceeding in this

case was evident from the impugned

notice. The learned Judge failed to

take into consideration that the

bank, not having proceeded against

the borrower within the time

prescribed by Section 36 of the

SARFAESI Act, could not be

permitted to go back on the

agreement entered into for a one-

time-settlement.

d) That the learned Judge also failed to

consider the the appellant No.1,

being a cancer patient, was not

intentionally in default, but was

willing to pay off the amount as

settled between the borrower and the

bank, provided the writ

petitioners/appellants were granted

some extra time.

3. On the point of jurisdiction of the writ

court, Mr. Lahiri has submitted that

neither the one time settlement, nor the

notice cancelling the agreement between

the bank and the borrower, nor the notice

issued by the police authorities, are

matters covered by the SARFAESI Act.

Hence, existence of an alternative remedy

before the learned Debts Recovery

Tribunal, would not be a complete bar in

this case.

4. Mr. Lahiri submits that the issue of

jurisdiction and the procedural irregularity

in the order of the District Magistrate and

in all the actions taken by the bank, till

date, would indicate that the writ court has

the jurisdiction to intervene in judicial

review. Not only the decision of the

authorities but also the mode in which

such decisions were taken, were subject to

judicial review.

5. Mr. Om Narayan Rai, learned Advocate for

the bank submits that the writ petition is

not maintainable at the instance of the

writ petitioners/appellants as there is an

existence of an alternative remedy. Mr. Rai

further submits that it has been well-

settled that the order of the District

Magistrate should ordinarily be passed

within 60 days from the bank approaching

the District Magistrate under Section 14 of

the SARFAESI Act, but the said period of

60 days has been held to be directory and

not mandatory. In support of his

contention, he has relied upon C. Bright

Vs. District Collector & Ors. reported in

(2021) 2 SCC 392 (Paragraphs 14 to 21).

6. Next, it is submitted by Mr. Rai that the

order of the District Magistrate was passed

within one and half years from the bank

approaching the District Magistrate. The

one-time-settlement was admittedly agreed

upon between the parties, but the

appellants failed to comply with the terms

and conditions which led the bank to

cancel the one-time-settlement proposal.

The bank was within its authority to cancel

such proposal on the account of failure of

the appellants to honour the same. On

this ground, Mr. Rai has relied on the

decision of the Apex Court in the matter of

Bijnor Urban Cooperative Bank Limited,

Bijnor & Ors. Vs. Meenal Agarwal &

Ors. reported in (2023) 2 SCC 805. It was

held that the borrower, as a matter of

right, could not pray for grant of one-time-

settlement. After availing of the loan, the

borrower could have deliberately not paid

any amount towards instalments, though

he was able to make the payment. He

could have waited for the one-time-

settlement scheme and then prayed for

grant of benefit under the said scheme

under which, always, a lesser amount than

the amount due and payable under the

loan account was required to be paid.

7. For convenience, Paragraphs 12 and 13 of

the said judgment are quoted below:-

"12. Even otherwise, as observed hereinabove, no borrower can, as a matter of right, pray for grant of benefit of One Time Settlement Scheme. In a given case, it may happen that a person would borrow a huge amount, for example Rs. 100 crores. After availing the loan, he may deliberately not pay any amount towards installments, though able to make the payment. He would wait for the OTS Scheme and then pray for grant of benefit under the OTS Scheme under which, always a lesser amount than the amount due and payable under the loan account will have to be paid. This, despite there being all possibility for recovery of the entire loan amount which can be realised by selling the mortgaged/secured properties. If it is held that the borrower can still, as a matter of right, pray for benefit under the OTS Scheme, in that case, it would be giving a premium to a dishonest borrower, who, despite the fact that he is

able to make the payment and the fact that the bank is able to recover the entire loan amount even by selling the mortgaged/secured properties, either from the borrower and/or guarantor. This is because under the OTS Scheme a debtor has to pay a lesser amount than the actual amount due and payable under the loan account. Such cannot be the intention of the bank while offering OTS Scheme and that cannot be purpose of the Scheme which may encourage such a dishonesty.

13.If a prayer is entertained on the part of the defaulting unit/person to compel or direct the financial corporation/bank to enter into a one-time settlement on the terms proposed by it/him, then every defaulting unit/person which/who is capable of paying its/his dues as per the terms of the agreement entered into by it/him would like to get one time settlement in its/his favour. Who would not like to get his liability reduced and pay lesser amount than the amount he/she is liable to pay under the loan account? In the present case, it is noted that the original writ petitioner and her husband are making the payments regularly in two other loan accounts and those accounts are regularised. Meaning thereby, they have the capacity to make the payment even with respect to the present loan account and despite the said fact, not a single amount/installment has been paid in the present loan account for which original

petitioner is praying for the benefit under the OTS Scheme."

8. Mr. Rai also relies upon paragraphs 23

and 24 of the decision of the Hon'ble Apex

Court in the matter of State Bank of

India Vs. Arvindra Electronics Pvt. Ltd.

reported in (2023) 1 SCC 540 which read

as follows:-

"23. It is required to be noted that under the OTS Scheme which was originally sanctioned in the year 2017 the borrower was required to pay Rs.10,53,75,069.74 against the outstanding of Rs.13,99,89,273.99. Therefore, under the original sanctioned OTS Scheme the borrower was getting the substantial relief of approximately 3 crores. The Bank agreed and accepted the OTS offer on the terms and conditions mentioned in the letter dated 21.11.2017. In the sanctioned letter dated 21.11.2017 it was specifically mentioned in Clause (iv) that the entire payment under the OTS Scheme was to be made by 21.05.2018, otherwise OTS would be rendered infructuous. Therefore, borrowers were bound to make the payment as per the sanctioned OTS Scheme. Therefore, the High Court ought not to have granted further extension de hors the sanctioned OTS Scheme while exercising the powers under Article 226 of the Constitution of India.

24. The submissions on behalf of the borrower that in case of some other borrowers the time was extended is concerned, the same is neither here nor there. The Bank mutually can agree to extend the time which is permissible under Section 62 of the Indian Contract Act. The borrower as a matter of right cannot claim that though it has not made the payment as per the sanctioned OTS Scheme still it be granted further extension as a matter of right. There cannot be any negative discrimination claimed. The borrower has to establish any right in their favour to claim the extension as a matter of right."

9. It has been urged before this Court by

relying on a decision of Kanaiyalal

Lalchand Sachdev & Ors. Vs. State of

Maharashtra & Ors. reported in (2011) 2

SCC 782 that an action under Section 14

of the SARFAESI Act, constitutes an action

taken after the stage of Section 13(4) of the

said Act, and therefore, the action and

order passed under Section 14 of the said

Act, were amenable to the jurisdiction of

the learned Debts Recovery Tribunal under

Section 17(1) of the said Act.

10. Finally, the decision of the Hon'ble Apex

Court in the matter of Edukanti

Kistamma (Dead) Through LRS. & Ors.

Vs. Venkatareddy (Dead) Through LRS.

& Ors. reported in (2010) 1 SCC 756, has

been relied upon by Mr. Rai in support of

his contention that the notice issued by the

police authorities was a consequential

action to the order passed by the learned

District Magistrate, under Section 14 of the

said Act. The main order of the District

Magistrate, not having been challenged in

any forum whatsoever, the consequential

notice of the police authorities for

implementation of the order of the District

Magistrate was not available for challenge.

11. Having considered the rival contentions

of the parties, we are conscious of the fact

that this appeal is an intra-court appeal.

12. The learned Judge dealt with the

contentions of the writ

petitioners/appellants, with regard to the

reference to the decision of the Bombay

High Court. His Lordship distinguished the

same. We are in agreement with His

Lordship on that score. It is evident from

paragraph 15 of the judgment in L&T

Finance Ltd. (supra) that the Bombay

High Court was dealing with a situation

where the police authorities were failing to

provide the infrastructural support and

other necessary backup, for

implementation of the orders of the District

Magistrates/ Collectors under Section 14

of the said Act.

13. The learned Single Judge held that the

police authorities should assist in

implementation of the order speedily and

preferably within two weeks from the

passing of the same. The issue decided by

the Bombay High Court has been

paraphrased in paragraph 15 of the said

decision and the directions which were

issued were, inter alia, as follows:-

a) That the District Magistrates/

Collectors in the State of

Maharashtra should dispose of the

applications filed under Section 14 of

the SARFAESI Act, within 30 days.

b) The orders should be implemented

not later than four weeks.

c) Officers entrusted with the

implementation had the option to

appoint Advocates to implement the

order.

d) The Magistrates and the Collectors

should submit a report, giving the

details of the applications to the

Divisinal Commissioner if the

applicants were not disposed of.

e) If the order is not implemented

within 60 days from passing of it, the

applicant was at liberty to approach

the Divisional Commissioner for

implementation thereof, within the

next 15 days. Other directions were

also issued.

14. We notice that such directions were

issued upon considering the fact that the

orders passed under Section 14 of the

SARFAESI Act, were not being

implemented in the State of Maharashtra.

Such directions were issued to the

Divisional Commissioner, District

Magistrate, Collector, police authorities,

etc. within the State of Maharashtra.

15. The judgment is not an authority on

the point of limitation. It is also not an

authority on the issue that the order of the

District Magistrate becomes a nullity, if 60

days expires from the filing of the

application. Secondly, the question of

alternative remedy was not decided in the

said decision.

16. Although Mr. Lahiri contends that His

Lordship has not taken into consideration

the period of limitation, this Court finds

that the 13(2) notice was issued in 2009

after the account was declared as NPA. The

first claim with regard to the money, was

raised by the bank in the 13(2) notice

itself, soon after the account was declared

as NPA. Once the learned Trial Judge has

taken into consideration all the factual

aspects and the law which is in place and

decided that no further extension of time

could be given to the borrower in the writ

petition, this Bench is not inclined to

interfere with such findings for the reasons

as below:-

a) The decisions of the Hon'ble Apex

Court in Bijnor Urban (supra) and

Arvindra Electronics (supra) clearly

laid down that one-time-settlement

cannot be a matter of right. In this

case, the appellants want further

extension in support of the one-time-

settlement, which the bank has

already cancelled.

b) The writ petition cannot be

entertained as there is an alternative

remedy available to the petitioners/

appellants. Even the issue of

limitation, the issue of waiver and

also the allegation of nullity of the

order of the District Magistrate are

available to the appellants to be

availed of before the appropriate

forum.