Parthapratim Phukan vs Punjab National Bank And 2 Ors
2022 Latest Caselaw 3390 Gua

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GAHC010121622021




                      THE GAUHATI HIGH COURT
  (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

                         Case No. : WP(C)/3753/2021

         PARTHAPRATIM PHUKAN
         S/O LATE ASHOKANANDA PHUKAN R/O B 104, SPANISH GARDEN, R.B.
         BARUAH ROAD, OPPOSITE ZOO, GUWAHATI 781005



         VERSUS

         PUNJAB NATIONAL BANK AND 2 ORS
         CORPORATE OFFICE/REGISTERED OFFICE AT PLOT NO. 4, SECTOR 10
         DWARKA, NEW DELHI 1100075

         2:PUNJAB NATIONAL BANK

          CIRCLE SASTRA CENTRE
          GUWAHATI CIRCLE OFFICE 1ST FLOOR
          NILGIRI MANSION
          BHANGAGARH
          GUWAHATI-5
          REPRESENTED BY AUTHORIZED OFFICER

         3:THE AUTHORIZED OFFICER

          PUNJAB NATIONAL BANK
          CIRCLE SASTRA CENTER
          GUWAHATI CIRCLE OFFICE
          1ST FLOOR
          NILGIRI MANSION
          BHANGAGARH
          GUWAHATI 5

         4:SINGHANIA UNIVERSITY
          PACHERI BARI
          RAJASTHAN- 333515
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            REPRESENTED BY ITS AUTHORIZED REPRESENTATIVE SHRI MUKESH
            ADUKIA
            PRESIDENT OF SPANISH GARDEN
            R.G. BARUAH ROAD
            GHY- 5

Advocate for the Petitioner   : MR. R DUBEY

Advocate for the Respondent : SC, PNB




                                    BEFORE
                         HONOURABLE THE CHIEF JUSTICE
                     HONOURABLE MR. JUSTICE SOUMITRA SAIKIA

                                           ORDER

Date : 07.09.2022 (R.M. Chhaya, CJ.)

Heard Mr. R. Dubey, learned counsel for the petitioner. Also heard Mr. A. Ganguly, learned standing counsel, Punjab National Bank, appearing for the respondent Nos.1, 2 & 3 and Mr. R. Sarma, learned counsel, appearing for the respondent No.4.

By way of this petition under Article 226 of the Constitution of India, the petitioner has prayed for, the following relief:-

"In the premises aforesaid it is respectfully prayed that Your Lordships would be pleased to issue a notice of show cause to the respondents as to why a writ of certiorari should not be issued to the respondents to forthwith cancel/recall/ rescind the sale notices dated 10.05.2021 and 08.07.2021 issued by the respondent bank so far it relates to petitioner's property and/or a writ of certiorari should not be issued quashing the sale certificate dated 13.08.2021 issued in favour of respondent no.4 in terms of auction notice dated 10.05.2021 and upon cause or causes that may be shown and after hearing the parties may be pleased to make the Rule absolute and/or may pass such further order or orders as your Lordship's may deem fit and proper in the facts and circumstances of the case so as to give full and complete relief to the petitioner.

-AND-

In the interim be pleased to pass an interim order staying the operation of the Page No.# 3/7

impugned sale notices dated 10.05.2021 and 08.07.2021 issued by the respondent bank for sale of the properties of the petitioner and/or direct the respondent bank not give effect to the sale pursuant to the impugned sale notices dated 10.05.2021 and 08.07.2021 till disposal of the instant writ petition."

Several contentions and more particularly contention to the effect that there is a clear cut breach of the process, more particularly under Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the SARFAESI Act") and the relevant Rules.

This Court, by an order dated 12.08.2021, passed the following order:-

"The matter has been taken up today through video conferencing. Heard Mr. R. Dubey, learned counsel for the petitioner. Also heard Mr. A. Ganguly, learned counsel appearing for the respondent bank.

Put up on 16.08.2021.

Till the next date fixed, the auction sale, which has been challenged in this writ petition, may go on but shall not be finalized.

Meanwhile, the petitioner shall come up with a proposal as to how much money he is prepared to deposit against the loan taken by him."

The said interim relief has continued till date.

The parties have exchanged pleadings and the respondents have denied the same and the same has been reiterated by the petitioner.

However, the fact remains that even according to the petitioner, the loan was sanctioned in favour of the petitioner on 07.07.2015 as per the sanction communication at Annexure-1 to the petition and the loan is unpaid. It is a matter of record that what has been challenged in the petition under Article 226 of the Constitution are the proceedings initiated by the respondent Bank under the provisions of the SARFAESI Act and more particularly, the notice issued under Section 13(8) of the SARFAESI Act read with the relevant Rules.

Though the petition has been entertained at the initial stage, the fact Page No.# 4/7

remains that the petitioner has an alternative efficacious remedy by way of filing an appeal under Section 17 of the SARFAESI Act, more particularly, considering the peculiar facts arising out of this petition, we deem it fit not to exercise our extra-ordinary jurisdiction under Article 226 of the Constitution of India when the petitioner has got an alternative remedy. Reference be made to the judgment of the Apex Court in the case of Authorized Officer, State Bank of Travancore & Anr. -Vs- Mathew K.C., reported in AIR 2018 SC 676, wherein it was observed as under:

"9. The statement of objects and reasons of the SARFAESI Act states that the banking and financial sector in the country was felt not to have a level playing field in comparison to other participants in the financial markets in the world. The financial institutions in India did not have the power to take possession of securities and sell them. The existing legal framework relating to commercial transactions had not kept pace with changing commercial practices and financial sector reforms resulting in tardy recovery of defaulting loans and mounting non-performing assets of banks and financial institutions. The Narasimhan Committee I and II as also the Andhyarujina Committee constituted by the Central Government Act had suggested enactment of new legislation for securitisation and empowering banks and financial institutions to take possession of securities and sell them without court intervention which would enable them to realise long-term assets, manage problems of liquidity, asset liability mismatches and improve recovery. The proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as 'the DRT Act') with passage of time, had become synonymous with those before regular courts affecting expeditious adjudication. All these aspects have not been kept in mind and considered before passing the impugned order.

10. Even prior to the SARFAESI Act, considering the alternate remedy available under the DRT Act it was held in Punjab National Bank v. O.C. Krishnan and others, (2001) 6 SCC 569 : (AIR 2001 SC 3208), that:--

"6. The Act has been enacted with a view to provide a special procedure for recovery of debts due to the banks and the financial institutions. There is a hierarchy of appeal provided in the Act, namely, filing of an appeal under Section 20 and this fast-track procedure cannot be allowed to be derailed either by taking recourse to proceedings under Articles 226 and 227 of the Constitution or by filing a civil suit, which is expressly barred. Even though a provision under an Act cannot expressly oust the jurisdiction of the court under Articles 226 and 227 of the Constitution, nevertheless, when there is an alternative remedy available, judicial prudence demands that the Court refrains from exercising its jurisdiction under the said constitutional provisions. This was Page No.# 5/7

a case where the High Court should not have entertained the petition under Article 227 of the Constitution and should have directed the respondent to take recourse to the appeal mechanism provided by the Act."

11. In Satyawati Tandon (AIR 2010 SC 3413)(supra), the High Court had restrained further proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the SARFAESI Act, the availability of remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal, the object and purpose of the legislation, it was observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available holding:

"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.

***

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."

16. 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 departure, 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 tax payers 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 Page No.# 6/7

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 Tandon (AIR 2010 SC 3413, Para 18)(supra), has also not been kept in mind before passing the impugned interim order:-

"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 (AIR 1969 SC 556), Whirlpool Corpn. v. Registrar of Trade Marks (AIR 1999 SC 22) and Harbanslal Sahnia v. Indian Oil Corpn. Ltd. (AIR 2003 SC 2120) and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order."

17. 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."

In light of the aforesaid, the petition is not entertained. The petitioner is relegated to the alternative remedy under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal. The ad-interim relief granted earlier by this Court vide order dated 12.08.2021, as observed hereinabove, shall continue till the petitioner files an appeal under Section 17 of the SARFAESI Act and till the application for stay, if any filed by the petitioner, is decided by the Debts Recovery Tribunal. Such exercise shall be undertaken by the petitioner within a period of 15(fifteen) days from today.

It would be open for the respective parties to request the Debts Recovery Page No.# 7/7

Tribunal to hear the stay application, if filed by the petitioner, as expeditiously as possible.

As far as the contempt application filed by the petitioner being Cont. Case (C) No.No.297/2021 is concerned, it would be open for the petitioner to raise all such issues in the application to be filed before the Debts Recovery Tribunal, which may be examined by the Debts Recovery Tribunal independently.

With the above observation, the writ petition stands disposed of. There shall be no order as to costs.

                      JUDGE               CHIEF JUSTICE




Comparing Assistant