Janak Pramodbhai Patel vs Sepcial Recovery Officer
2021 Latest Caselaw 17659 Guj

     C/LPA/2102/2017                            ORDER DATED: 24/11/2021



      IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

         R/LETTERS PATENT APPEAL NO. 2102 of 2017
       In R/SPECIAL CIVIL APPLICATION NO. 419 of 2016
                              With
         CIVIL APPLICATION (FOR STAY) NO. 1 of 2017
        In R/LETTERS PATENT APPEAL NO. 2102 of 2017
                              With
         R/LETTERS PATENT APPEAL NO. 2103 of 2017
      In R/SPECIAL CIVIL APPLICATION NO. 1081 of 2016
                              With
         CIVIL APPLICATION (FOR STAY) NO. 1 of 2017
        In R/LETTERS PATENT APPEAL NO. 2103 of 2017
                              With
         R/LETTERS PATENT APPEAL NO. 2104 of 2017
      In R/SPECIAL CIVIL APPLICATION NO. 1098 of 2016
                              With
         CIVIL APPLICATION (FOR STAY) NO. 1 of 2017
        In R/LETTERS PATENT APPEAL NO. 2104 of 2017
===================================================
              JANAK PRAMODBHAI PATEL & 1 other(s)
                             Versus
             SPECIAL RECOVERY OFFICER & 1 other(s)
===================================================
Appearance:
MR CHINMAY M GANDHI(3979) for the Appellant(s) No. 1,2
MR MB GANDHI(326) for the Appellant(s) No. 1,2
MR. KUNAL NANAVATI FOR NANAVATI ASSOCIATES for the
Respondent(s) No. 2
NOTICE SERVED(4) for the Respondent(s) No. 1
===================================================
 CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALA
         and
         HONOURABLE MR. JUSTICE NIRAL R. MEHTA
                        Date : 24/11/2021
                    COMMON ORAL ORDER

(PER : HONOURABLE MR. JUSTICE NIRAL R. MEHTA)

1) As all the captioned appeals arise from a common judgment, those were taken up for hearing analogously and are being disposed of by this common judgment.

C/LPA/2102/2017 ORDER DATED: 24/11/2021

2) By way of this Letters Patent Appeal, the appellants-original petitioners have questioned the judgment & order dated 28.09.2017 passed by the learned Single Judge in the Special Civil Application No. 419 of 2016, whereby, the petition came to be dismissed on the ground of alternative remedy.

3) The brief facts giving rise to this appeal are as under;-

3.1 That the Minal Oil and Agro Industrial Limited, a private limited company ("the Company" for short) has obtained loan of Rs.2,50,00,000/- on 25.01.2001 from the Kalupur Commercial Bank by mortgaging its property bearing office No. 802, 8 th Floor, Popular Road, Ahmedabad, admeasuring 2100 square ft. The said loan account was declared NPA on 25.01.2001. The Bank instituted the Lawad Suit No. 1886 of 2000 before the Board of Nominee for recovery of the loan amount with interest.

3.2 The Board of Nominees allowed the suit and passed the decree on 30.06.2003. It appears that the Company is under liquidation and the Liquidator attached to this Court had attached the property in question. However, this Court upon being approached, vide judgment and order dated 30.10.2005 passed in the Company Application No. 167 of 2007 in the Company Petition No.207 of 2001 directed the official liquidator to hand over the possession of the aforesaid property, considering it to be a private and personal property and not of the Company. It appears that the Bank, in the interregnum period, also availed the remedy as envisaged under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('the SERFAESI Act' for short), more particularly,

C/LPA/2102/2017 ORDER DATED: 24/11/2021

under Section 13(2) of the SERFAESI Act, vide notice dated 12.02.2011.

3.3 The said notice was replied by way of objections dated 21.02.2011 under Section 13(3)(A) of the SERFAESI Act and the same were dismissed on 28.02.2011. It appears from the record that the Bank had also canvassed its grievance and thereafter made request before the Company Court in the Company Application No. 167 of 2010 in the Company Petition No. 207 of 2001 requested to handover the said property in view of being secured creditor and decree holder. The Company Court vide in the aforesaid judgment dated 30.10.2015 not accepted the request of handing-over the possession to the Bank, in the application filed by the borrower/ guarantor. Thus, the Bank appears to have issued a fresh notice under Section 13(2) of the SERFAESI Act dated 16.11.2015 calling upon the borrower/guarantor to make the payment of Rs.5,89,31,549/- with interest upto 20.02.2007. The borrower/guarantor raised its objections by way of reply dated 27.11.2015, however, the same appears to have been dismissed by the Bank vide 11.12.2015.

3.4 Being aggrieved by the aforesaid, the borrower/guarantor straightway approached this Court by way of aforesaid writ petition challenging the legality and validity of the notice under Section 13(2) of the SERFAESI Act.

4) The said writ petition was admitted, however, the learned Single Judge vide its judgment dated 28.09.2017 dismissed the writ petition only on the count of availability of the alternative statutory remedy without touching the merits of the petition.

C/LPA/2102/2017 ORDER DATED: 24/11/2021

5) We have heard Mr. M.B.Gandhi, the learned Senior Counsel for Mr. Chinmay Gandhi, the learned counsel appearing for the appellants and Mr. Kunal Nanavati, the learned counsel on behalf of M/s Nanavati Associates for the respondents.

6) Mr. Gandhi, the learned Senior counsel has submitted that the learned Single Judge has erred in dismissing the petition on the ground of alternative remedy, more particularly, when the petition was admitted and Mr. Gandhi, the learned Senior Counsel has also submitted that the learned Single Judge could not have dismissed the petition on the ground of alternative remedy but should have decided on merits.

7) To substantiate the aforesaid contention, the learned Senior Counsel for the appellants has strongly relied upon the judgment passed by this Court in case of Nestle India Limited v. Deputy Commissioner of Commercial Tax, reported in 2015 JX (Guj) 1190.

8) Mr. Gandhi, the learned Senior counsel has submitted that the notice dated 18.11.2015 under Section 13(2) is bad in law for two reasons; first that the earlier notice issued under Section 13(2) dated 12.02.2011 was not acted upon and even the decree dated 30.06.2003 also lived its life beyond the period of limitation of twelve years and is not executable. This contention on merits was canvassed without prejudice to the first contention raised by Mr. Gandhi, the learned Senior Counsel.

9) Per contra, Mr. Kunal Nanavati, the learned counsel has vehemently opposed this appeal and supported the impugned judgment.

10) Mr. Kunal Nanavati, the learned Counsel would submit that the learned Single Judge is absolutely correct in its view in relegating the

C/LPA/2102/2017 ORDER DATED: 24/11/2021

appellants to avail the remedy available under Section 17 of the Act by way of appeal before the Debts Recovery Tribunal (DRT for short). Mr. Nanavati, the learned Counsel would further submit that the SERFAESI Act, is a complete code by itself, providing for expeditious recovery of dues arising out of the loan granted by the Bank. Thus, remedy of appeal under Section 17 of the Act before the DRT followed by a right to appeal before the appellate under Section 18, is only the course available for the aggrieved party. Thus, he has submitted that the learned Single Judge has rightly not entertained the writ petition, in view of adequate, efficacious statutory remedy.

11) To support his argument, Mr. Nanavati, the learned counsel has relied upon the judgment delivered by the Honourable Apex Court in Authorized Officer, State Bank of Travancore & Anr. v. Mathew K.C., reported in (2018) 3 SCC 85.

12) Mr. Nanavati, the learned counsel has further pointed that that notice under Section 13(2) was issued on 16.11.2015, objections under Section 13(3)(A) were filed by the appellants on 27.11.2015 and the same were dismissed by the Bank on 11.12.2015. He further pointed out that the petition was filed on 19.12.2015. Therefore, in view of the aforesaid, Mr. Nanavati, the learned Counsel has submitted that the appellants-original petitioners borrower/ guarantor have approached this Court in a great haste and as such on that day there was no cause of action at all arisen in favour of the appellants. It is further submitted that, therefore, the appellants-original petitioners borrower/guarantor has successfully stalled the recovery proceedings by way of the petition.

13) Mr. Nanavati, the learned counsel has submitted that although, the

C/LPA/2102/2017 ORDER DATED: 24/11/2021

decree has become unexcutable after the period of 12 years, the Bank would be well within its right to avail the remedies envisaged under the SERFAESI Act. He has submitted that the recovery of dues as envisaged under the Cooperative Societies Act as well as the SERFAESI Act are two different and independent Acts, therefore, notice issued under Section 13(2) of the Act is legal, and therefore, lastly, Mr. Nanavati, the learned counsel has requested this Court to dismissed the appeal in the interest of justice.

14) Having heard both the learned counsels for the respective parties, the short question that falls for our consideration is whether a writ petition once having been admitted, could have been rejected on the ground of alternative remedy.

15) To decide the aforesaid, we may refer to Section 17 of the SERFAESI Act.

17. Application against measures to recover secured debts]--1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorized officer under this Chapter,1 [may make an application along with such fee, as may be prescribed,]to the Debts Recovery Tribunal having jurisdiction in the matter within forty five days from the date on which such measure had been taken.

PROVIDED THAT different fees may be prescribed for making the application by the borrower and the person other than the borrower.

4 [(1A) An application under sub-section (1) shall be filed before the Debts Recovery Tribunal within the local limits of whose jurisdiction-

(a) the cause of action, wholly or in part, arises;

(b) where the secured asset is located; or

(c) the branch or any other office of a bank or financial institution is maintaining an account in which debt claimed is outstanding for the time being.]

C/LPA/2102/2017 ORDER DATED: 24/11/2021

(2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder.

(3) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section (4) of section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management or restoration of possession, of the secured assets to the borrower or other aggrieved person, it may, by order,--

(a) declare the recourse to any one or more measures referred to in sub-section (4) of section 13 taken by the secured creditor as invalid; and

(b) restore the possession of secured assets or management of secured assets to the borrower or such other aggrieved person, who has made an application under sub-section (1), as the case may be; and

(c) pass such other direction as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub-

section (4) of section 13.] (4) If, the Debts Recovery Tribunal declares the recourse taken by a secured creditor under sub-section (4) of section 13, is in accordance with the provisions of this Act and the rules made thereunder, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor shall be entitled to take recourse to one or more of the measures specified under sub-section (4) of section 13 to recover his secured debt.

[(4A) Where-- (i) any person, in an application under sub-section (1), claims any tenancy or leasehold rights upon the secured asset, the Debt Recovery Tribunal, after examining the facts of the case and evidence produced by the parties in relation to such claims shall, for the purposes of enforcement of security interest, have the jurisdiction to examine whether lease or tenancy,

(a) has expired or stood determined; or

(b) is contrary to section 65A of the Transfer of Property Act, 1882 (4 of 1882); or

C/LPA/2102/2017 ORDER DATED: 24/11/2021

(c) is contrary to terms of mortgage; or

(d) is created after the issuance of notice of default and demand by the Bank under subsection (2) of section 13 of the Act; and

(ii) the Debt Recovery Tribunal is satisfied that tenancy right or leasehold rights claimed in secured asset falls under the sub-clause (a) or sub-clause (b) or sub-clause

(c) or sub-clause (d) of clause (i), then notwithstanding anything to the contrary contained in any other law for the time being in force, the Debt Recovery Tribunal may pass such order as it deems fit in accordance with the provisions of this Act.] (5) Any application made under sub-section (1) shall be dealt with by the Debts Recovery Tribunal as expeditiously as possible and disposed of within sixty days from the date of such application:

PROVIDED THAT the Debts Recovery Tribunal may, from time to time, extend the said period for reasons to be recorded in writing, so, however, that the total period of pendency of the application with the Debts Recovery Tribunal, shall not exceed four months from the date of making of such application made under sub- section (1).

(6) If the application is not disposed of by the Debts Recovery Tribunal within the period of four months as specified in sub-section (5), any part to the application may make an application, in such form as may be prescribed, to the Appellate Tribunal for directing the Debts Recovery Tribunal for expeditious disposal of the application pending before the Debts Recovery Tribunal and the Appellate Tribunal may, on such application, make an order for expeditious disposal of the pending application by the Debts Recovery Tribunal.

(7) Save as otherwise provided in this Act, the Debts Recovery Tribunal shall, as far as may be, dispose of the application in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and the rules made thereunder.

16) Indisputably, the appellants-original petitioners have approached this Court by way of a writ petition after the objections under Section 13(3) (A) of the Act came to be rejected and before any proceedings and/or

C/LPA/2102/2017 ORDER DATED: 24/11/2021

action was initiated under Section 13(4) of the Act. Thus, in our view, the appellants-original petitioners have approached this Court at the stage when there was no cause of action said to have arisen for filing the writ petition. We say so because, looking to the provisions of Section 17 of the Act, the Legislature has envisaged the grievance redressal procedure only after any order passed under Section 13(4) of the Act.

17) It is pertinent to note that, having regard to the fact, the appellate-

original petitioner could not make well define exception as discussed in the case between CIT v. Chhabilal Das Agrawal reported in (2014) 1 SCC 603 so as to entertained the petition, even though alternative statutory remedy is available.

" 15. Thus, while it can be said that this Court has recognized some exceptions to the rule of alternative remedy, i.e., where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal case, Titagarh Paper Mills case and other similar judgments that the High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation."

18) In our view, it would be worthy to take note of the a judgment rendered by the Honourable Apex Court in the case of State of Uttar Pradesh &

C/LPA/2102/2017 ORDER DATED: 24/11/2021

Anr. v. Uttar Pradesh Rajya Khanij Vikas Nigam Sangharsh Samity and Ors, reported in (2008) 12 SCC 675 in paragraphs No. 37 and 38 extracted herein-below.

37. We have given most anxious and thoughtful consideration to the rival contentions of the parties. So far as preliminary objection raised by the Corporation before the High Court is concerned, in our considered view, the same was well-founded and ought to have been upheld. It was urged before the High Court on behalf of the Corporation and the State Government that the writ petition was premature inasmuch as no retrenchment had been effected. Several disputed questions of fact were involved in the petition. If the contention of the Samiti was that there was illegal closure of Undertaking or there was non- payment of wages by the employer, appropriate proceedings could have been initiated under Industrial Law. In fact, one of the Judges of the Division Bench upheld the contention and observed that the employees could have claimed closure compensation under Section 25 FFF of the Act or could have approached prescribed authority under the Payment of wages Act relying upon Section 33C(2) of the Act or Section 6H(2) of the U.P. Industrial Disputes Act. The other Single Judge of the Division Bench, however, held that the writ petition had been entertained and interim orders were also passed. Relying upon Suresh Chandra Tewari, the learned Judge held that "the petition cannot be dismissed on the ground of alternative remedy if the same has been entertained and interim order has been passed". (emphasis supplied).

38. With respect to the learned Judge, it is neither the legal position nor such a proposition has been laid down in Suresh Chandra Tewari that once a petition is admitted, it cannot be dismissed on the ground of alternative remedy. It is no doubt correct that in the 'head note' of All India Reporter (AIR), it is stated that "petition cannot be rejected on the ground of availability of alternative remedy of filing appeal". But it has not been so held in the actual decision of the Court. The relevant paragraph 2 of the decision reads thus:(Suresh Chandra Tewari case1, AIR p. 331)

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"2. At the time of hearing of this petition a threshold question, as to its maintainability was raised on the ground that the impugned order was an appeal-able one and, therefore, before approaching this Court the petitioner should have approached the appellate authority. Though there is much substance in the above contention, we do not feel inclined to reject this petition on the ground of alternative remedy having regard to the fact that the petition has been entertained and an interim order passed". (Emphasis supplied).

Even otherwise, the learned Judge was not right in law. True it is that issuance of rule nisi or passing of interim orders is a relevant consideration for not dismissing a petition if it appears to the High Court that the matter could be decided by a writ-Court. It has been so held even by this Court in several cases that even if alternative remedy is available, it cannot be held that a writ- petition is not maintainable. In our judgment, however, it cannot be laid down as a proposition of law that once a petition is admitted, it could never be dismissed on the ground of alternative remedy. If such bald contention is upheld, even this Court cannot order dismissal of a writ petition which ought not to have been entertained by the High Court under Article 226 of the Constitution in view of availability of alternative and equally efficacious remedy to the aggrieved party, once the High Court has entertained a writ-petition albeit wrongly and granted the relief to the petitioner."

19) So far as the judgment passed in the case of Nestle India Limited (Supra), relied upon by the learned advocate for the appellants, is concerned, the facts of that case are not applicable to the case on hand because in the said case, the petition was admitted by overruling the preliminary objection as to the availability of alternative remedy. However, in the instance case, the petition was simply admitted. In our view, therefore, the fact of the case on hand and the case relied upon

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by the learned advocate for the appellants are materially different and thereby the said judgment will not be applicable to the facts of the present case. For the reason and discussion recorded herein above, we are in complete agreement with the judgment dated 28.09.207 passed by the learned Single Judge in Special Civil Application No. 419 of 2016 and thus, does not call for any interference by this Court.

20) The Letters Patent Appeals, therefore, are dismissed accordingly. Civil Applications are also rejected. Interim relief, if any granted earlier stands vacated forthwith.

Sd/-

(J. B. PARDIWALA, J)

Sd/-

(NIRAL R. MEHTA,J) VISHAL MISHRA