M/S Gupta Tex Prints Pvt. Ltd. ... vs Bank Of Baroda
2021 Latest Caselaw 14759 Guj

     C/SCA/13392/2021                           JUDGMENT DATED: 22/09/2021




             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

               R/SPECIAL CIVIL APPLICATION NO. 13392 of 2021


FOR APPROVAL AND SIGNATURE:


HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI sd/-
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 1 Whether Reporters of Local Papers may be allowed
   to see the judgment ?                                            YES

 2 To be referred to the Reporter or not ?                          YES

 3 Whether their Lordships wish to see the fair copy
   of the judgment ?                                                 NO

 4 Whether this case involves a substantial question                 NO
   of law as to the interpretation of the Constitution
   of India or any order made thereunder ?

==========================================================
    M/S GUPTA TEX PRINTS PVT. LTD. THROUGH ITS AUTHORIZED
       REPRESENTATIVE ANILKUMAR SHYAMSUNDAR SINGHAL
                               Versus
                          BANK OF BARODA
==========================================================
Appearance:
ADITYA A GUPTA(7875) for the Petitioner(s) No. 1
MOHIT A GUPTA(8967) for the Petitioner(s) No. 1
BHASKAR SHARMA(9209) for the Respondent(s) No. 1
JUHI D CHAVDA(8626) for the Respondent(s) No. 1
==========================================================

CORAM:HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI

Date : 22/09/2021

ORAL JUDGMENT

1. RULE. Mr. Bhaskar Sharma, learned advocate waives service of rule on behalf of the respondent. With the consent of the learned advocates appearing for the respective parties, the matter is taken up for hearing final hearing.

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2. By way of this petition under Articles 226 and 227 of the Constitution of India, the petitioner has prayed for the following reliefs :-

"9(A) Be pleased to issue writ, order or direction to direct the respondent - Banks to implement the terms of the One Time Settlement dated 25.09.2019 at annexed at Annexure-A5 collectively to this petition entered into between the Respondent Bank and the petitioner by extending the time for payment of the amount to be paid under the One Time Settlement on such terms and conditions as this Hon'ble Court may deem fit in the interest of justice.

(B) Be pleased to issue any writ, order or direction to direct the respondent Bank to take all necessary steps for withdrawal of the proceedings under the SARFAESI Act, 2002 against the petitioner or to quash the proceedings under the SARFAESI Act, 2002 against the petitioner in the interest of justice.

(C ) Be pleased to stay all further proceedings under the provisions of the SARFAESI Act, 2002 against the petitioner including all coercive steps against the petitioner pending admission, hearing and final disposal of the present petition in the interest of justice.

(D) Your Lordships be pleased to pass such other and further order, which may be deemed fit in the interest of justice."

3. For the purpose of seeking the aforesaid reliefs from the Court, the background of facts which have been projected before the Court is that the petitioner is a Company incorporated under the provisions of the Companies Act, 1956 and the Shareholders and Directors of the Company are citizens and as such, entitled to fundamental rights enshrined under the Constitution of India. The petitioner - Company

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is engaged in the business of dying and printing of grey clothes. The factory was established in the year 1982 and running since then. For the purpose of running the business, financial assistance was obtained by the petitioner from the respondent - Bank in the form of Term Loan of Rs.1.7 crore which was subsequently settled and simultaneously, the petitioner was also having credit facility of 4.25 crores and the said facility was later on enhanced and the limits have been reviewed from time to time and vide sanctioned letter dated 27.02.2012, credit facility to the tune of Rs.16.63 crores was made available by the respondent - Bank to the petitioner.

3.1. It is the case of the petitioner that on account of slump in the industry in the textiles and dying and printing of grey clothes, the respondent - Bank had restructured the finance facility of the petitioner and accordingly, the petitioner started paying regular installments as per the terms of the sanctioned letter. On account of default in the said arrangement, the respondent - Bank issued notice on 02.08.2017, under Section 13(2) of the SARFAESI Act which was replied by the petitioner on 28.09.2017 by way of its representation as well. It is further the case of the petitioner that on 13.10.2017, the respondent - Bank took symbolic possession of the premises of the petitioner and simultaneously, the respondent - Bank filed application under Section 14 of the SARFAESI Act for taking physical possession by submitting application before the learned District Magistrate. To this, the petitioner had no knowledge, but the petitioner received the order dated 20.02.2018 of District Magistrate only on 01.03.2018. Simultaneously, the petitioner challenged the

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securitization action of the respondent - Bank before DRT-II, Ahmedabad by way of Securitization Appeal No. 61 of 2018 and vide order dated 14.03.2018, the DRT-II was pleased to grant interim relief to the petitioner. A copy of the said SA No.61 of 2018 is attached to the petition compilation. It is the case of the petitioner that there is no intention on the part of the petitioner to delay the matter any further and during the subsistence of interim order, the petitioner entered into One Time Settlement (OTS) scheme with the respondent - Bank and the OTS sanction was communicated by virtue of letter dated 25.09.2019. The said sanction was on the basis of the few conditions which are reproduced hereunder :-

"1. Rs.1.30 Crs., deposited in No Lien Account to be appropriated immediately on conveying sanction.

2. Rs.1.30 Crs., to be paid on or before 31.10.2019.

3. Balance Rs.10.92 Crs., to be paid in -5 monthly installments of Rs.2.184 Crs., starting from November to March 2020.

4. Simple Interest @ 12% P.A. to be recovered from 01.10.2019 on balance compromise amount.

5. The compromise shall be valid till 30.04.2020."

3.2. Pursuant to the aforesaid sanction of OTS, the petitioner passed a Board Resolution on 12.10.2019 accepting the said terms of OTS and in respect of that a total sum of Rs.2.6 crores also came to be deposited. On 29.11.2019, the petitioner wrote a letter to the respondent - Bank indicating some defects with their existing investors and as such, was unable to pay installments of Rs.2.184 crores, falling due on 30.11.2019. The respondent - Bank considered

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the said request and communicated vide letter dated 30.11.2019 indicating that the extension prayed for is considered, but failing to comply with the terms and the conditions, the same would lead to cancellation of the compromise settlement. The petitioner vide letter dated 02.12.2019, further repeated the request for extension of some more time to comply with the terms of OTS, and vide communication dated 13.12.2019, the petitioner conveyed the respondent - Bank that it had approached 'Encore Asset Reconstruction Company Private Limited' for arrangement of balance funds for repaying the remaining OTS amount to the respondent - Bank i.e. Bank of Baroda. According to the petitioner, the respondent - Bank mechanically replied indicating and reiterating that failure to comply with the terms and conditions would lead to frustration of compromise. On 31.12.2019, the petitioner indicated the respondent - Bank that the prospective buyer has backed out of the deal, as a result of which, the petitioner was unable to arrange for funds and again it had to approach the 'Encore Assets Reconstructions Company Private Limited' for arrangement for remaining funds and approval process could be carried out by the said company. The petitioner has further asserted that instead of facilitating the petitioner for arrangement of funds, intentionally the respondent - Bank did not gave any reply to the request, but then without application of mind did not consider the request of the petitioner. The consent terms which are not signed was filed before the DRT, which fact is disputed by the petitioner. However, a final order disposing of Original Application No. 1258 of 2017 could not be passed. In fact, the consent terms were not signed and according

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to the petitioner the order sheet of OA No. 1258 of 2017 is indicating that the same is pending before the DRT. It is further the case of the petitioner that from March, 2020, on account of severe pandemic Covid-19 situation, the petitioner could not pursue the matter any further, could not arrange the funds for clearing the remaining OTS amount, despite genuine efforts. Hence, vide letter dated 03.03.2021, a request is made to revive the OTS scheme. Even an E-mail request was also forwarded on 19.03.2021 requesting the respondent - Bank to revive the OTS and condone the delay in payment of the OTS amount. The respondent - Bank did not approve the request vide E-Mail dated 09.03.2021. Again efforts were made to settle the accounts with the respondent - Bank, but in between, on 31.03.2021, the main promoter of the petitioner - Mr. Shyam Gupta was detected with Covid positive and was hospitalized from 01.04.2021 to 10.04.2021. Even his son was also detected Covid positive and was hospitalized along with him. Even the officer of the respondent - Bank Mr. Ratan Rajwania to the reasonable knowledge was also badly affected and account of the aforesaid circumstances, the petitioner wrote a letter on 21.04.2021, offering the Bank to pay remaining OTS amount of Rs.10.92 crores with 50% interest rate of OTS sanction letter dated 25.09.2019. However, the said offer was not accepted. Even a letter was also written on 04.08.2019 agreeing to pay Rs.10.92 crore with interest as per the discussion with officers as a revised OTS offer, but that request came to be rejected since appearing not in line with the discussion which took place. A further offer was also sent vide communication dated 27.08.2019 offering a total amount of

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Rs.16,15,50,602/- including interest amount of Rs.2.6 crores paid earlier to the respondent - Bank in view of the OTS sanction letter dated 25.09.2019, but then the petitioner received a notice dated 23.03.2021 from the Mamlatdar informing that the possession of the property would be taken at any date after expiry of 14 days from the date of the notice. The Mamlatdar telephonically informed the petitioner that the possession would be taken on 28.07.2021. By that time, the DRT-II, Ahmedabad vide order dated 05.08.2021 was pleased to vacate the interim relief without properly appreciating the fact. As a result of which, the respondent - Bank has taken over the physical possession of the premises of the petitioner on 11.08.20201 and simultaneously, issued an auction notice dated 17.08.2021 arranging auction on 28.09.2021. It is in this circumstance, the properties are sought to be auctioned on 28.09.2021, the present petition was brought before the Court for seeking the aforementioned reliefs.

4. This matter was earlier placed before the co-ordinate Bench and pursuant to the order 'Not Before this Court' after proper procedure the same is placed before this Court and with the aforesaid background, the petition is taken up for hearing.

5. Mr. Aditya Gupta, learned advocate appearing on behalf of the petitioner has contended that despite the fact that the petitioner is ready and willing to abide by the terms of OTS scheme as it was sanctioned by this very respondent - Bank, who in arbitrary and capricious manner, has taken a stand to auction the properties. It has

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been vehemently contended that the respondent - Bank is having power to condone the delay by making payment, if there is any default in OTS payment schedule. According to the petitioner, there are several cases in which the respondent - Bank has considered the case and granted the extension though details are not available with the petitioner. It has been contended by learned advocate Mr. Gupta that by virtue of Section 31(j) of the SARFAESI Act, provisions would not be applicable in certain cases and as such, non consideration of the request by the respondent Bank is erroneous. It has been contended that there are cases in which condonation of delay in payment is considered by the High Court as well in case where the financial institution has refused and for that purpose, learned advocate Mr. Gupta has relied upon the following decisions to substantiate and strengthen the contentions

"(1) In the case of Malhan Industries Pvt. Ltd.,& Ors., v. Punjab National Bank and Ors., decided on 26.08.2015 in Civil Writ Petition No. 7381 of 2015 (O&M) delivered by the High Court of Punjab and Haryana at Chandigarh.

(2) In the case of TSR Financial Services Private Limited v. Central Bank of India & Ors., reported in (2018) 16 SCC 717.

5.1. By referring to some of the observations contained in aforementioned decisions a request is reiterated to direct the respondent Bank to consider the request of the petitioner. No other submissions have been made.

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6. As against this, learned advocate Mr. Bhaskar Sharma appearing on behalf of the respondent - Bank as a caveator has vehemently contended that there is no legal right or fundamental right of the petitioner to seek OTS benefit as a matter of right. Here is a case in which consistently the petitioner has applied dilatory tactics and as against huge outstanding, the respondent - bank was persuaded initially to sanction OTS benefit, but then, it has been realized that thereafter after making initial payment, the petitioner has miserably failed in responding to the major terms which are agreed upon in the sanctioned OTS and when that be so, the respondent - Bank is justifiable in withdrawing the said benefit from the petitioner and has rightly refused to continue the OTS scheme to the petitioner. Learned advocate Mr. Sharma has further submitted that this very issue can well be agitated before the proceedings which are going on before the DRT and filing of this petition is a classic example of whiling away the time since the interim relief in one of the proceedings came to be vacated. This fact on the part of the petitioner may not be encouraged by exercising extra ordinary jurisdiction. By referring to consent letter as well as major terms which are accepted by the petitioner, a contention is raised that the petitioner has miserably either deliberately or on account of any circumstance, undisputedly have not been observed and on the basis of such circumstance, the respondent - Bank is thoroughly justified in withdrawn the said benefit which was originally extended. Since the respondent Bank is dealing with the public money and it has got its own discretion to apply took the commercial decision. Hence,

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there is no arbitrariness, or no unreasonable attempt on the part of the respondent - Bank to refuse the request of the petitioner. Accordingly, in absence of any arbitrariness, the decision taken by the respondent - Bank may not be interfered with in the respectful submissions.

6.1. Learned advocate Mr. Sharma has further submitted that in no uncertain terms that the default has taken place by the petitioner. As informed by the Bank, that the moment the terms are not adhered to, the respondent - Bank will not continue the said OTS benefit and as such, there was no question of considering revival of OTS scheme so far as the petitioner is concerned. In the proceedings before the DRT in SA No. 61 of 2018 while issuing order, a categorical conclusion is arrived at on the basis of overall material on record which was brought to the notice of this Court in which the Tribunal found that the inter alia looking to the conduct of the petitioner does not deserves to be extended. As a result of this, by virtue of detailed order, the interim relief came to be vacated. The said order is attached to the petition compilation on page 124. By drawing attention to the overall situation prevailing on record, learned advocate Mr. Sharma has specifically reiterated that this filing of petition is nothing but dilatory tactics, is also not of genuine efforts which is visible from the record and further since the main proceedings are pending before the DRT, the petitioner ought not to have approached this court by invoking equitable jurisdiction. It has been contended that the law on the issue of OTS benefit is by now well settled by catena of decisions and the same cannot be claimed

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as a matter of right and looking to the chronology of events which has taken place in the present case on hand, a request is made to dismiss the petition having no merit. The following are the decisions relied upon by learned advocate Mr Sharma to support his submissions.

"(1) In the case of Union Bank of India & Ors., v. Anil Kumar Wadhera & Ors., decided on 12.05.2017 in Special Appeal Nos. 1752 and 1754 of 2013 by the Allahabad High Court.

(2) In the case of Unnati Inorganics Private Limited v. Union of India & Ors., decided on 22.10.2020 in Special Civil Application No. 10779 of 2020.

(3) In the case of United Bank of India v. Satywati Tondon & Ors., reported in AIR 2010 SC 3413.

(4) In the case of ICICI Bank Ltd., & Ors., v. Umakanta Mohapatra & Ors., reported in (2019) 13 SCC 497."

6.2. By referring to these decisions, and the observations contained therein, a request is made to dismiss the petition as having no merit.

7. Having heard the learned advocates appearing for the respective parties and having gone through the material on record, the following circumstances are not possible to be unnoticed by this Court.

7.1. The petitioner - Company had taken a substantial financial assistance from the respondent - Bank and upon default being committed, the respondent - Bank was constrained to initiate steps

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under the provisions of SARFAESI Act. In between, the petitioner was also extended despite default in paying sanctioned OTS scheme and in due deference the payment relaxation has also been given of certain basic terms as full and final settlement of accounts. The said terms and conditions, deserves to be reproduced hereunder :-

"Payment Terms:

1. Rs.1.30 crs., deposited in No Lien Account to be appropriated immediately on conveying sanction.

2. Rs.1.30 crs., to be paid on or before 31.10.2019.

3. Balance Rs.10.92 crs., to be paid in 5 monthly instalments of Rs.2.184 crs., starting from November to March, 2020.

4. Simple interest @12% P.A., to be recovered from 01.10.2019 on balance compromise amount.

5. The compromise shall be valid till 30.04.2020.

Other terms and conditions :

1. If you have not accepted the compromise sanction within 15 days from the date of sanction of not deposited amounts per schedule, the sanction will be terminated automatically and bank will proceed to recover the due through appropriate legal/recovery action without any notice. Any amount deposited till date time will be adjusted towards the dues and shall not be refunded.

2. You have to submit an undertaking that all present and future statutory liabilities, other dues and claims, if any, shall be settled by you directly and the bank is not under obligation to undertake any liability in this regards and this should be a part of consent terms to be filed in Hon'ble DRT.

3. You have to given unconditional undertaking while accepting the sanction of compromise that you will withdraw all the legal/other cases at various forum (known/ unknown to

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the Bank) against the bank of its any official and you will not file any claim against bank.

4. All the reliefs/concession given under subject compromise shall be withdrawn and entire contractual dues shall become payable. If you fails to honour any of the terms and conditions of compromise whether fully or partially. The decision of the bank in this regards shall be conclusive and binding on the borrower.

5. Any default in compliance of any terms and conditions stipulated herein above will be treated as default which will result in termination and sanction automatically and bank will proceed to recover the dues through appropriate legal/ recovery action without any notice. Any amount deposited till the time will be adjusted towards the dues and shall not be refunded.

6. Consent terms to be filed in the DRT court incorporating therein a condition that in case the borrower fails to honour terms and conditions of the Compromise Sanction, Entire dues as per the OTS shall become payable.

7. The properties charged in the account will be released only after full and final payment of compromise offer along with interest and legal charges.

8. No due certificate will be issued only after receipt of full OTS amount with interest as per agreed terms.

Condition related to NCLT:

1. NCLT related charges and expenses to be paid by you over and above the compromise amount.

2. You have made commitment to deposit money in part and hence we can obtain order amount along with up to date interest as per the OTS.

3. Settlement will not have any bearing whatsoever on CIRP process as the same is dependent on the discretion of NCLT/ NCLAT as per IBC. However, we may inform to NCLT to keep

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the proceedings sine die until full compromise amount along with up to date interest is received by the Bank."

7.2. In view of the aforesaid terms which have been provided the petitioner was under an obligation to comply with the said terms and it was expressly made it clear that the terms shall be valid till 30.04.2020 as a part of condition no. 4, it was expressly made it clear that in default with the compliance with the aforesaid terms, will result in termination of the sanction automatically and the respondent - Bank will proceed to recover the dues through proper legal measure. Now, this having not been specifically accepted by the petitioner, it was obligatory on the part of it to observe in strict sense and in true spirit.

7.3. It appears from the record that despite the fact that petitioner had not adhere to aforesaid terms by making payment, even extension request has also been considered by the respondent - Bank and time had been extended again with a specific indication that in default thereafter, will result into cancellation of the compromise settlement of accounts of the petitioner. This was specifically informed to the petitioner on 30.11.2019, but even then, the petitioner has chosen not to adhere to the terms and on one hand asking the respondent - Bank to go on extending time. The impression which is being generated from this record is that the petitioner has accepted the OTS scheme, got himself entered in the scheme by making first payment and then has again chosen to adopt the very same measure for which the respondent - Bank was constrained to initiate steps against it and as such, the conduct on the

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part of the petitioner is not such which may prompt the Court to exercise extra equitable jurisdiction.

7.4. Additionally, it appears that the consent terms which are sought to be produced on OA No. 1258 of 2017 is also clearly indicating that the concession which has been given by the respondent - Bank will be withdrawn and the entire contractual dues shall become payable. Clause (9) of the same is clearly suggesting, but then, it appears that the signature of the Bank is missing on it and, therefore, it is of no significance on the basis of which, the petitioner can banked upon.

7.5. The request for revival of the OTS scheme on account of such default and the conduct has been specifically withdrawn and by way of page 93 of the petition compilation, the respondent - Bank has in clear terms conveyed to the petitioner that the respondent - Bank is not inclined to accept the offer as made. So the sum and substance is that the problem which is tried to be posed for seeking direction from the Court is self invited, the steps and the circumstances by the petitioner for which no Court can help out with the situation. It may be that there might be a financial crunch for a temporary period, but then the chronology of events and the conduct is suggesting otherwise and the relaxation which is tried to be taken from the respondent - Bank is now made available to the petitioner.

7.6. In addition thereto, the order which has been passed by the DRT in SA application dated 05.08.2021 is also suggesting that the

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conduct of the petitioner has been examined at length by the DRT and vide order dated 05.08.2021, interim relief which was granted earlier came to be vacated. The relevant observations of such fact finding authority before which both the petitioner and the respondent

- Bank were litigating since relevant, the Court deems it proper to reproduce hereunder :-

"20. In the present case also, the borrower has failed to abide by the assurance/undertaking given to the Respondent Bank vide aforesaid OTS proposal dated 29.08.2019. The terms and conditions of the OTS would constitute a valid agreement between the parties. The applicant has failed to perform its obligations under the said agreement. This conduct on the part of the applicant prima facie reveals that the applicant has no intention to pay the dues of the Respondent Bank, which is ultimately public money.

21. In the aforesaid facts and circumstance and taking into account the approach and conduct of the applicants prima facie with an intention to defraud the dues of the Respondent Bank and also keeping in view the observations of the Hon'ble Supreme Court of India in the aforesaid judgment, at this stage, I do not find any reason to interfere in the process of Mamlatdar for taking possession of the property in question who has acted in compliance of order of District Magistrate dated 20.02.2018.

22. Having carefully considered the submissions made by the learned counsel for the parties, staying the notice issued by Executive Magistrate, Surat City would have the effect of defeating the very object of legislation enacted by the Parliament for ensuring that there are no unwarranted impediments in the recovery of debts.

23. In view of the aforesaid discussion, the prayer for interim relief is hereby declined as no prima facie case is made out in favour of the applicant. Interim relief, if any, granted earlier is hereby vacated.

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24. The respondent Bank is directed to proceed in accordance with the provisions of the Act and Rules thereunder.

25. List the matter for final hearing on 13.09.2021."

7.7. In view of the aforesaid observations also, it is quite clear that the fact finding authority has also examined the stand of the petitioner and the matter was kept for further hearing on 13.09.2021 which appears to have not been co-operated by the petitioner. However, be that as it may, the main proceedings are pending before the DRT where everything will be examined. As a result of this, the Court is not inclined to exercise any equitable jurisdiction in such peculiar background of fact where the petitioner appears to be at fault. It is reported to the Court that against vacating of interim relief, no proceedings have been so far launched but if aggrieved, the petitioner may approach the appellate authority, but in peculiar background of this fact, the Court is of the opinion that no equitable relief deserves to be extended.

7.8. After the rejection of revival of OTS scheme, with a view to persuade, a further proposal is also made, but the same appears to be merely an eyewash attempt on the part of the petitioner, just to while away the time and drag on the issue, to which the Court would not like to be a lever. The respondent - Bank has undertaken lawful process and the same deserves to be put to its own logical end and as such, no relief deserves to be granted in favour of the petitioner.

7.9. In the light of aforesaid background of fact, the decisions which have been relied upon by the learned advocate for the petitioner are of no assistance to him as the facts on hand are

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different. So far as the decision related to Malhan Industries Pvt. Ltd. (supra) and para 10 itself is sufficient to indicate that the factual data is altogether different. Now so far as the decision delivered in the case of TSR Financial Services Private Limited (supra) is concerned there also, a contention in peculiar background is noticed by the Court but then, para 6 and 9 are sufficient enough to indicate that the background of facts on hand would not permit the Court to undertake such exercise which the Hon'ble Supreme Court in its wide jurisdiction can exercise. No case is made out to call for interference.

8. The aforesaid decisions once confronted by learned advocate Mr. Sharma, the jurisdiction of High Court to be exercised in a very cautious manner, particularly, when any relaxation in a routine manner would have a serious adverse impact on their right and the Bank and other financial institution to recover the dues, the OTS scheme framed by the respective Bank cannot be sought as a matter of right and once having accepted and committed breach thereof, the legal sanctity of the said OTS scheme and the object would get frustrated. The chronology of events appear on the record is indicating that the benevolent object for which scheme was made available to the petitioner, has been mis-utilized by the petitioner by committing overall breach which is not in dispute. As a result of this, the Court would not like to exercise extra ordinary jurisdiction. The borrowers must understood that their stakes are interwoven with the public exchequer and the financial set up of the Bank cannot be allowed to be distorted by their deliberate or in-deliberate act, the

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Court is of the opinion that the decisions which have been sought and relied upon by the learned advocate are of no assistance and the stand taken by the respondent - Bank appears to be just and proper. The judgment last in line in the case of Unnati Inorganics Private Limited v. Union of India rendered in Special Civil Application No. 10779 of 2020 which is in exhaustive form has considered various decisions of the Hon'ble Apex Court and few paragraphs contained therein from 30 onward are clinching the issue on the basis of which, the Court is of the considered opinion that no jurisdiction deserves to be exercised in favour of the petitioner. The relevant observations contained in para 30, 31, and 32 are reproduced hereunder :-

"30. Furthermore, the Apex Court in the case of Punjab National Bank vs. O.C. Krishnan (supra), in the context of Recovery of Debts Due to Banks and Financial Institutions Act, 1993, has observed in para 6 that even though a provision under an Act cannot expressly oust the jurisdiction of the court under Articles 226 and 227 of the Constitution of India, nevertheless, when there is an alternative remedy available, judicial prudence demands that the court refrains from exercising its jurisdiction under the said constitutional provisions. Para 6 relevant extracts whereof read thus:

"6. The Act has been enacted with a view to provide the special procedure for recovery of debts due to the banks and 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 proceeding 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, the judicial

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prudence demands that the court refrains from exercising its jurisdiction under the said constitutional provisions...."

31. The Apex Court in the case of United Bank of India vs. Satyawati Tondon (supra) in para 43, has observed and held that the Court must keep in mind that the legislation's 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 the 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. The Apex Court in paras 43 and 55 has observed thus:

"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

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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."

32. The Apex Court in the case of Authorised Officer, State Bank of Travancore vs. Mathew K.C. (supra), has observed in para 15 that 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 taxpayer's 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 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 coordinate benches of this Court, while not entertaining the writ petitions under Article 226 of the Constitution of India, have time and again relegated the parties concerned to avail of the alternative remedy."

9. On the aforesaid background of facts what has been emerging clearly is that the petitioner has not made out any distinguished circumstance on merit which may warrant this Court to extend any equitable relief. Some proceedings are pending before the DRT as stated by learned advocate, if any other remedy is available to the petitioner, the same may be availed of and certainly in the background of these facts the writ jurisdiction in the considered opinion of this Court is not possible to be exercised.

C/SCA/13392/2021 JUDGMENT DATED: 22/09/2021

10. Hence, the petition stands dismissed. Rule is discharged with no order as to costs.

sd/ (ASHUTOSH J. SHASTRI, J) phalguni