Ghambhirsinh Keshubha Jadeja ... vs India Home Loan Ltd
2023 Latest Caselaw 669 Guj

     C/SCA/1045/2023                             ORDER DATED: 25/01/2023




           IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

             R/SPECIAL CIVIL APPLICATION NO. 1045 of 2023

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        GHAMBHIRSINH KESHUBHA JADEJA PROPRIETOR JADEJA
                           ENTERPRISE
                              Versus
                      INDIA HOME LOAN LTD.
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Appearance:
MR SL VAISHYA(960) for the Petitioner(s) No. 1
for the Respondent(s) No. 1
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 CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA

                            Date : 25/01/2023
                             ORAL ORDER

1. By this petition under Article 226 of

the Constitution of India, the petitioner

has prayed for the following reliefs:

"(A) Your Lordships may be pleased to admit and allow this petition.

(B) Your Lordships may be pleased to pass the order to quash and set aside notice which is given by the Metropolitan Magistrate dtd 2/1/203.

(C) Your Lordships may kindly be pleased to pass order of interim relief the notice dtd 2/1/2023 may kindly be stayed execution, implementation and operation may be stayed.

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(D) Any other and further reliefs may kindly be granted in the interest of justice."

2. Brief facts of the case are as under:

The petitioner approached India Home

Loan Ltd-respondent No.1 herein for

housing loan of Rs. 25,00,000/-. In

order to secure the due repayment of

the aforesaid credit facilities, the

respondent No.1 mortgaged the property

and 2, Sidheshwari CHS Limited, Behind

Sindhwai Temple, Near CTM Cross Road,

Ramol, Ahmedabad. On account of

defaults committed by the petitioner

in repayment of the outstanding dues,

the account of the petitioner has been

classified as NPA.

The respondent issued notice u/s.

C/SCA/1045/2023 ORDER DATED: 25/01/2023

13(2) of the Securitization and

Reconstruction of Financial Assets and

Enforcement of Security Interest Act,

2002 (for short "SARFAESI ACT")on

20/08/2019 calling upon the petitioner

to pay Rs. 25,01,737/- with further

interest and charges. However, the

petitioner has failed to repay the

same.

The respondent approached the Court of

Chief Metropolitan Magistrate. The

Metropolitan Court, Ahmedabad issued

notice dated 02.01.2023 under section

14 of the SARFAESI Act to seize the

property.

The petitioner approached DRT

challenging the said notice by filing

Securitization Application Diary No.

655/2022.

C/SCA/1045/2023 ORDER DATED: 25/01/2023

Since the DRT-I was not available at

that time, the petitioner filed

Special Civil Application No.12614 of

2022 before this Court. This Court

vide order dated 06.07.2022 directed

the respondent-financial institution

not to take any coercive steps.

Thereafter, as the petitioner could

not remove the office objection in

Securitization Application but stay

was continued and petitioner has paid

Rs.9000/- before the Debts Recovery

Tribunal on 28.06.2022.

It is the case of the petitioner that

since he was an illiterate person, he

could not remove the office objection

and therefore, the matter was

C/SCA/1045/2023 ORDER DATED: 25/01/2023

dismissed for default on 20.08.2022.

In the meanwhile, Special Civil

Application No.12614 of 2022 came up

for hearing before this Court and this

Court by order dated 16.11.2022

relegated the petitioner back to DRT

as DRT was available.

The petitioner had in the meanwhile

filed restoration application on

6.01.2023 before the Chamber Judge

being Securitization Application

No.20/2023 in connection with

Securitization Application No.

655/2022 which is pending

adjudication.

It is the case of the petitioner that

fresh notice was issued on 5.01.2023

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to take the possession of the property

in question.

Being aggrieved by such action on part

of the respondents, the petitioner has

preferred this petition.

3. Learned advocate Mr. Vaishya submitted

that the petitioner has already filed

restoration application before the Debts

Recovery Tribunal which is pending. It was

submitted that during pendency of the

application before the DRT, a fresh notice

is given by the respondent for taking the

possession on 05.01.2023. According to

learned advocate Mr. Vaishya, the

petitioner has already paid Rs. 10 lakh to

respondent No.1. It was therefore, prayed

that till the Tribunal hears the

C/SCA/1045/2023 ORDER DATED: 25/01/2023

restoration application, the petitioner

may be protected.

4. In view of the decision of the Apex

Court in case of Phoenix Arc Private

Limited Versus Vishwa Bharati Vidya Mandir

reported in (2022) 5 SCC 345 this petition

cannot be entertained at this stage more

particularly, when the petitioner has

already approached Debts Recovery Tribunal

under the provisions of section 17 of the

Securitisation and Reconstruction of

Financial Assets and Enforcement of

Security Interest Act, 2002.

5. The Hon'ble Supreme Court in case of

Phoenix Arc Private Limited (supra) has

held as under:

"7.2. While considering the issue

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regarding the maintainability of and/or entertainability of the writ petitions by the High Court in the instant case, a few decisions of this Court relied upon by the learned Senior Advocate appearing on behalf of the appellant -ARC are required to be referred to.

7.3. In the case of Satyawati Tondon & Ors. (supra), it was observed and held by this Court that the remedies available to an aggrieved person against the action taken under section 13(4) or Section 14 of the SARFAESI Act, by way of appeal under Section 17, can be said to be both expeditious and effective. On maintainability of or entertainability of a writ petition under Article 226 of the Constitution of India, in a case where the effective remedy is available to the aggrieved person, it is observed and held in the said decision in paragraphs 43 to 46 as under:-

"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

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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.

44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be

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oblivious of the rules of self- imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution.

45. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance.

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

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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 [(1998) 8 SCC 1] and Harbanslal Sahnia v. Indian Oil Corpn. Ltd.[(2003) 2 SCC 107] and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order."

7.4 In the case of City and Industrial Development Corpn. Vs. Dosu Aardeshir Bhiwandiwala, (2009) 1 SCC 168, it was observed by this Court in paragraph 30 that the Court while exercising its jurisdiction under Article 226 is duty bound to consider whether.....(c) the petitioner has any alternative or effective remedy for the resolution of the dispute."

7.5 In the case of Kanaiyalal Lalchand Sachdev and Ors. (supra) after referring to the earlier decisions of

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this Court in the cases of Sadhana Lodh Vs. National insurance Co. Ltd. and Anr., (2003) 3 SCC 524; Surya Dev Rai Vs. Ram Chander Rai and Ors., (2003) 6 SCC 675 and State Bank of India Vs. Allied Chemical Laboratories and Anr., (2006) 9 SCC 252 while upholding the order passed by the High Court dismissing the writ petition on the ground that an efficacious remedy is available under Section 17 of the SARFAESI Act, it was observed that ordinarily relief under Articles 226/227 of the Constitution of India is not available if an efficacious alternative remedy is available to any aggrieved person.

7.6 Similar view has been expressed by this Court in subsequent decisions in the case of General Manager, Sri Siddeshwara Cooperative Bank Limited & Anr. (supra) as well as in the case of Agarwal Tracom Private Limited (supra).

xxxxx

12. Even otherwise, it is required to be noted that a writ petition against the private financial institution - ARC - appellant herein under Article 226 of the Constitution of India against the proposed action/actions under Section 13(4) of the SARFAESI Act can be said to be not maintainable. In the present case, the

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ARC proposed to take action/actions under the SARFAESI Act to recover the borrowed amount as a secured creditor. The ARC as such cannot be said to be performing public functions which are normally expected to be performed by the State authorities. During the course of a commercial transaction and under the contract, the bank/ARC lent the money to the borrowers herein and therefore the said activity of the bank/ARC cannot be said to be as performing a public function which is normally expected to be performed by the State authorities. If proceedings are initiated under the SARFAESI Act and/or any proposed action is to be taken and the borrower is aggrieved by any of the actions of the private bank/bank/ARC, borrower has to avail the remedy under the SARFAESI Act and no writ petition would lie and/or is maintainable and/or entertainable. Therefore, decisions of this Court in the cases of Praga Tools Corporation (supra) and Ramesh Ahluwalia (supra) relied upon by the learned counsel appearing on behalf of the borrowers are not of any assistance to the borrowers.

13. Now, so far as the submission on behalf of the borrowers that in exercise of the powers under Article 226 of the Constitution, this Court may not interfere with the interim / interlocutory orders is concerned, the decision of this Court in the case of

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Mathew K.C. (supra) is required to be referred to.

13.1. In the case of Mathew K.C. (supra) after referring to and/or considering the decision of this Court in the case of Chhabil Dass Agarwal (supra), it was observed and held in paragraph 5 as under:-

                  "5.   We    have     considered   the
                  submissions   on    behalf   of   the

parties. Normally this Court in exercise of jurisdiction under Article 136 of the Constitution is loath to interfere with an interim order passed in a pending proceeding before the High Court, except in special circumstances, to prevent manifest injustice or abuse of the process of the court. In the present case, the facts are not indispute. The discretionary jurisdiction under Article 226 is not absolute but has to be exercised judiciously in the given facts of a case and in accordance with law. The normal rule is that a writ petition under Article 226 of the Constitution ought not to be entertained if alternate statutory remedies are available, except in cases falling within the well- defined exceptions as observed in CIT v. Chhabil Dass Agarwal CIT v. Chhabil Dass Agarwal, (2014) 1 SCC 603], as follows: (SCC p. 611, para

15)

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15. Thus, while it can be said that this Court has recognised 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 [Thansingh Nathmal v.

Supt. of Taxes, AIR 1964 SC 1419] , Titaghur Paper Mills case [Titaghur Paper Mills Co. Ltd. v. State of Orissa, (1983) 2 SCC 433] 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."

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13.2 Applying the law laid down by this Court in the case of Mathew K.C. (supra) to the facts on hand, we are of the opinion that filing of the writ petitions by the borrowers before the High Court under Article 226 of the Constitution of India is an abuse of process of the Court. The writ petitions have been filed against the proposed action to be taken under Section 13(4). As observed hereinabove, even assuming that the communication dated 13.08.2015 was a notice under Section 13(4), in that case also, in view of the statutory, efficacious remedy available by way of appeal under Section 17 of the SARFAESI Act, the High Court ought not to have entertained the writ petitions. Even the impugned orders passed by the High Court directing to maintain the status quo with respect to the possession of the secured properties on payment of Rs.1 crore only (in all Rs.3 crores) is absolutely unjustifiable. The dues are to the extent of approximately Rs.117 crores. The ad-interim relief has been continued since 2015 and the secured creditor is deprived of proceeding further with the action under the SARFAESI Act. Filing of the writ petition by the borrowers before the High Court is nothing but an abuse of process of Court. It appears that the High Court has initially granted an ex- parte ad-interim order mechanically and without assigning any

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reasons. The High Court ought to have appreciated that by passing such an interim order, the rights of the secured creditor to recover the amount due and payable have been seriously prejudiced. The secured creditor and/or its assignor have a right to recover the amount due and payable to it from the borrowers. The stay granted by the High Court would have serious adverse impact on the financial health of the secured creditor/assignor. Therefore, the High Court should have been extremely careful and circumspect in exercising its discretion while granting stay in such matters. In these circumstances, the proceedings before the High Court deserve to be dismissed."

14. In view of the above and for the reasons stated above, present appeals succeed. The Writ Petition Nos. 35564 to 35566 of 2015 before the High Court are dismissed. Consequently, the ex- parte ad- interim order dated 26.08.2015 further extended by orders dated 28.02.2017 and 27.03.2018 stand vacated. Present appeals are accordingly allowed with costs to the appellants to be paid by the original writ petitioners quantified at Rs.1 lakh in both the cases to be directly paid to the appellant within a period of four weeks from today. Pending application(s), if any, also stand disposed of."

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6. In view of the above settled legal

position, the petition is not entertained

and is dismissed.

(BHARGAV D. KARIA, J) JYOTI V. JANI