Sumankumar Dilipkumar Jha vs Punjab National Bank, Surat Main ...
2021 Latest Caselaw 7537 Guj

     C/SCA/9223/2021                              ORDER DATED: 02/07/2021




           IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

           R/SPECIAL CIVIL APPLICATION NO. 9223 of 2021
                                With
            R/SPECIAL CIVIL APPLICATION NO. 9224 of 2021
==========================================================

SUMANKUMAR DILIPKUMAR JHA Versus PUNJAB NATIONAL BANK, SURAT MAIN BRANCH ========================================================== Appearance:

MR. SANDIP C BHATT(6324) for the Petitioner(s) No. 1,2,3,4 for the Respondent(s) No. 1,2 ==========================================================

CORAM:HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI

Date : 02/07/2021

ORAL COMMON ORDER

1. Both these petitions under Article 226 of the Constitution of India are filed basically for for seeking the same following reliefs. Since common question of law and facts have arisen in the present proceedings and upon request of the learned advocate, both the mattes are taken up for hearing and by present common order, are being decided by treating Special Civil Application No. 9223 of 2021 as a lead matter.

"9(A) Be pleased to direct the respondent no.1 herein to comply the order dated 22.06.2017 passed by the learned DRT-II, Ahmedabad in SA No. 47 of 2015 and restore the possession of the property to the petitioners immediately and forthwith in a as it is condition and/or direct to make the payment in the form of compensation equivalent to the loss occurred to the petitioners herein.

Alternatively

(B) Be pleased to direct the respondent no.2 to decide the MA No. 62 of 2019 filed by the petitioners for compensation under Section 19 of the SARFAESI Act, 2002 within a period of four weeks.

(C ) Pending, admission, hearing and final disposal of this petition

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be pleased to restrain the respondent - Bank from doing any further act or taking any action in the context of properties as mentioned in the letter dated 14.09.2020 issued by respondent no.1 Bank of nay nature whatsoever, and further be pleased to pass an order of status-quo to be maintained with regard to the possession of the property.

(D) Pending, admission, hearing and final disposal of this petition, be pleased to direct the respondent Bank to make the payment of Rs.20.00 crores to the petitioners as an interim arrangement to restart the business of the petitioner herein.

(E) Ex-parte ad-interim relief in terms of para 9(C ) and (D).

(F) ......

(G) ......."

2. The case of the petitioners of this lead matter being Special Civil Application No. 9223 of 2021 is that respondent no. 1 had given various financial assistance to M/s. Mithilanchal Industries Pvt. Ltd., - borrower company, wherein the petitioners stood as guarantors/mortgagors against which the security interest was created by the petitioners on movable and immovable property belonging to the petitioners and in the name of the company as well.

2.1. On account of non-payment, account of M/s. Mithilanchal Industries Pvt. Ltd., was classified as NPA on 27.12.2014 and consequently, notice under Section13 (2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (herein after referred to as "SARFAESI Act, 2002") was issued on 29.12.2014. Since the payment was not possible to be made by the petitioners, notice for taking possession was issued by respondent no. 1 - Bank on 19.03.2015. The said action of respondent no. 1 - Bank was challenged by way of S.A. No. 47 of 2015 filed on 07.04.2015. During the pendency of the said S.A., before Debts Revenue Tribunal II,

C/SCA/9223/2021 ORDER DATED: 02/07/2021

Ahmedabad, respondent no.1 - Bank took symbolic possession of the property in question on 22.07.2015 and later on physical possession of the property was taken over on 13.01.2017 and seal was applied over it. It is the case of the petitioners that at the time when the possession was taken, the company was running with its 100% capacity and seal was applied by force. There were more than 100 workers working in the factory and without considering any circumstances and keeping personal vengeance, the Bank officials acted in a ruthless manner. It is because of the fact that the petitioner who had filed a case against Mr. Jagmohan Mittal - Assistant General Manager of the respondent no. 1 - Bank. S.A. No. 47 of 2015 which was filed was allowed by Debts Recovery Tribunal II, Ahmedabad whereby after hearing both the sides by a detailed judgment and order on 22.06.2017, the entire action of respondent no. 1 - Bank taken under Section 13 of the Act, 2002 came to be quashed and set aside and as a consequence of it, directed to restore the physical possession of the property of the petitioners, but somehow, the possession has not been restored to the petitioners under one reason or the other so much so that respondent no.1 - Bank filed Appeal No. 130 of 2017 before the Debts Recovery Appellate Tribunal, Mumbai under Section 18 of the SARFAESI Act, 2002 and though interim stay was not granted in favour of respondent no. 1 - Bank, the Bank was under an obligation to comply with the order passed by the Debts Recovery Tribunal II, Ahmedabad.

2.2. Since the same was not complied with, the petitioners were constrained to file M.A. No. 44 of 2017 for execution and implementation of the order in which a direction was given to an authorized officer to remain present as to why the order is not complied with. Resultantly, the respondent - Bank filed Special Civil Application No. 14741 of 2017 in which vide order dated 21.08.2017, the proceedings pending before the Debts Recovery Tribunal and Debts Recovery Appellate Tribunal came

C/SCA/9223/2021 ORDER DATED: 02/07/2021

to be stayed. After the said order passed by the Honourable Court, the Bank remained silent and suddenly according to the petitioners around February, 2019, filed Insolvency Application against Mithilanchal Industries Pvt. Ltd., under Section 7 of the Insolvency and Bankruptcy Code, 2016. This is clearly indicating the intent of the Bank and the petitioners were dragged from pillar to post in different Courts/Tribunal under various provisions of law and though the Bank Officials were aware about the fact that physical possession which was taken was deteriorating and the condition of the property in question practically became scrap, but the intent of the Bank was just to drag on the proceedings. Later on, the aforesaid Special Civil Application No. 14741 of 2107 came to be disposed of vide order dated 24.06.2019 directing Debts Recovery Appellate Tribunal, Mumbai to decide Appeal No. 130 of 2017 on or before 31.10.2019 and in response thereto, the said Appeal No. 130 of 2017 came to be disposed of vide order dated 23.08.2019, whereby the appeal filed by the Bank came to be dismissed. Being aggrieved by the said order, the respondent - Bank filed Special Civil Application No. 19920 of 2019 before this Court, whereby upholding the order passed by the Debts Recovery Tribunal and Debts Recovery Appellate Tribunal, Mumbai, this Court was pleased to dismiss the said petition vide order dated 14.11.2019. In view of this situation, the borrower company was constrained to file application under Section 19 of the SARFAESI Act, 2002 on 04.12.2019 for seeking the compensation, whereupon the Debts Recovery Tribunal II, Ahmedabad issued notice upon the Bank which was served upon the Bank on 17.12.2019, but till date according to the petitioners, the respondent - Bank chose not to file any reply and the said application which was registered as MA No. 62 of 2019 is being delayed and the same is pending till date before the Debts Recovery Tribunal II, Ahmedabd.

2.3. It is the case of the petitioners that against the dismissal of the

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aforesaid writ petition, respondent no. 1- Bank preferred Letters Patent Appeal No. 159 of 2020 in respect of Special Civil Application No. 19920 of 2019 and after hearing both the parties, the Division Bench of this Court vide judgment and order dated 17.08.2020 was pleased to dismiss the Letters Patent Appeal filed by the Bank with costs of Rs.5 lakhs. To review or recall the said order of costs, the Bank also filed MCA before the Division Bench of this Court, but the said MCA also came to be dismissed vide order dated 07.10.2020.

2.4. Pursuant to the disposal of the proceedings as indicated above, the respondent - Bank physically handed over the possession vide letter dated 14.09.2020, but the property in question was not kept in proper condition and the same became practically scrap and the value became zero and, therefore, in true letter and spirit, respondent no. 1 - Bank has not retained the possession in proper manner and pursuant to such handing over, after having valuation from the Government approved valuer, an amendment application was moved in MA No. 62 of 2019. So practically the Bank had dragged on the petitioners in the litigation thereby to see that the value becomes zero even upon returning. On the other hand, the proceedings of Insolvency and Bankruptcy Code, 2016 before the NCLT, Bench Ahmedabad, came to be admitted vide order dated 15.04.2021/20.04.2021 and a such, now the company is under CIRP process and the petitioner being suspended management, perusing the remedy available under the Insolvency and Bankruptcy Code, 2016 separately in accordance with the said provisions.

2.5. In view of the aforesaid chronology of events since the petitioners have become practically remediless, lost entire lifetime earnings on account of adamant attitude of the officials of respondent no. 1 - Bank, the property became practically of zero value and as against that pursuant to the admission of the insolvency proceedings against the petitioner -

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company, the Resolution Professional had proceeded further in terms of provisions of Insolvency and Bankruptcy Code, 2016 and also insisted for taking the physical possession of the property in question and in process of said step, the Resolution Professional may call for the interest of bidder for submitting the resolution plan, which ultimately, would cause more damage to the petitioners as well as the claim of the petitioners in the form of damage under Section 19 of the SARFAESI Act, 2002 which proceedings are pending before the Debts Recovery Tribunal-II, Ahmedabad right from 2019 and as such, according to the petitioners, if the Resolution Professional will continue the process again the property will be dispossessed and will be disposed of, will suffer irreparable loss and as such, in this set of circumstances, left with no other alternatives, the petitioners are constrained to approach this Court by way of present petition to seek the aforesaid reliefs.

3. Learned advocate Mr. Sandip C. Bhatt appearing on behalf of the petitioners has submitted that even after succeeding in the proceedings and even after analyzing the Bank's action under Section 13 of the SARFAESI Act, 2002 is bad in law and the subsequent events have led the situation for the petitioners that they will suffer serious loss of irreparable in nature and as such, respondent no. 1 - Bank is required to comply with the order dated 22.06.2017 passed in S.A. No. 47 of 2017 and alternatively has prayed to at least direct respondent no. 2 to decide MA No. 62 of 2017 within some reasonable period of time and pending this petition, the order of status-quo be maintained with regard to possession of the property in question and in the meantime, direct the respondent - Bank to pay an amount of Rs.20 crores as an interim arrangement to restart the business of the petitioners. With the aforesaid stand, substantially, the grievance which has been raised is with regard to the alleged harsh action of the respondent - Bank.

        C/SCA/9223/2021                                ORDER DATED: 02/07/2021




3.1     Learned advocate Mr. Bhatt after arguing for some time has

submitted that the possession has been handed over only in the month of September, 2020, reflecting on page 89A by by which the property in question has practically became scrap and, hence when such is the case at the instance of the officers of the Bank, it is desirable in the interest of justice in this peculiar background of facts grant the relief as prayed for in the petition. No other submissions have been made.

4. Having heard the learned advocate appearing for the petitioners and having gone through the material on record, it seems that the prayer in the present form is not possible to be considered by the Court in view of the fact that pursuant to the order passed by this Court, the Bank had handed over the possession by a specific letter dated 14.09.2020 and in compliance with the earlier order, the costs which has been awarded is also deposited. Further, by efflux of time, the proceedings were initiated under Insolvency and Bankruptcy Code, 2016, which after hearing both the sides have been entertained by NCLT, Ahmedabad, which competent forum admitted the same. Hence, necessary consequences may follow of the Insolvency and Bankruptcy Code 2016, which is a special statute. Now, in this process, when the Resolution Professional is proceeding ahead, it would not be just and proper for this Court to intercept the said process by directing the Bank to implement earlier order which has been prayed for in relief clause 9(A) since the Resolution Professional under the special statute has to act within the time frame schedule prescribed under the Act, any interference at this stage would derail such process, which this Court is not inclined and as such, this is not a fit case to exercise any equitable jurisdiction extra ordinary in nature.

4.1. One another circumstance which is not possible to be unnoticed is that on account of alleged high handed action of the Bank what kind of damage is caused to the petitioner and the property in question, what

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quantum is to be determined and to what extent the damage has taken place. All these issues cannot be gone into as the same are in the realm of disputed questions of fact and have to be analyzed by appropriate forum and as such, at the best, it would be open for the petitioners to make a request to Debts Recovery Tribunal II, Ahmedabad to decide MA 62 of 2019 at the earliest, in accordance with law and no other reliefs deserve to be considered at this stage of the proceedings since under the special statute of Insolvency and Bankruptcy Code, 2016, as per the petitioners assertion itself, the proceedings are already in contemplation. Hence, if the petitioners are already aggrieved by such action, independent remedy is available to the petitioners which may be availed of, but this is not a fit case in which extra ordinary jurisdiction deserves to be exercised. Hence, the petition being meritliess, stands dismissed hereby. However, dismissal of this petition would not come in the way of the petitioners to make a request to get MCA No. 62 of 2019 be decided at the earliest, strictly in accordance with law, on the basis of the prevailing circumstances.

5. With the aforesaid observations, the present petition stands dismissed.

6. Since other Special Civil Application No. 9224 of 2020 is exactly on a similar circumstance, the same is also accordingly dismissed for the reasons which are stated herein-above.

(ASHUTOSH J. SHASTRI, J) phalguni