Raiskhan Firozkhan Pathan vs The Recovery Officer, Debts ...
2023 Latest Caselaw 4039 Guj

    C/SCA/2575/2023                                     CAV JUDGMENT DATED: 05/06/2023




            IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

             R/SPECIAL CIVIL APPLICATION NO. 2575 of 2023


FOR APPROVAL AND SIGNATURE:

HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI
              and
HONOURABLE MR. JUSTICE J. C. DOSHI
=============================================

1 Whether Reporters of Local Papers may be allowed to see the judgment ?

2      To be referred to the Reporter or not ?

3      Whether their Lordships wish to see the fair copy of the
       judgment ?

4      Whether this case involves a substantial question of law as

to the interpretation of the Constitution of India or any order made thereunder ?

============================================= RAISKHAN FIROZKHAN PATHAN Versus THE RECOVERY OFFICER, DEBTS RECOVERY TRIBUNAL II ============================================= Appearance:

VINAY D BAIRAGAR(8360) for the Petitioner(s) No. 1,2

MR JAL UNWALA SR. ADVOCATE with MR DHRUVIN N DOSSANI(10528) for the Respondent(s) No. 8.1,8.2,8.3 MR MASOOM K SHAH(6516) for the Respondent(s) No. 3,4,5 MR VISHWAS K SHAH(5364) for the Respondent(s) No. 6,7,9 MR. VN. SEVAK(3791) for the Respondent(s) No. 2

============================================= CORAM:HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI and HONOURABLE MR. JUSTICE J. C. DOSHI Date : 05/06/2023 CAV JUDGMENT (PER : HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI)

1. By way of this petition, under Articles 226 and 300A of the

C/SCA/2575/2023 CAV JUDGMENT DATED: 05/06/2023

Constitution of India, the petitioners have prayed for the

following reliefs :-

"10(A) Your Lordships may be pleased to issue a writ of certiorari, or any other appropriate writ, order or direction, quashing and setting aside the impugned order dated 06.01.2023 passed by the learned Recovery Officer, Debts Recovery Tribunal-II, Ahmedabad in Recovery Proceeding Nos. 388 to 391 of 2018 (Annexure-A hereto);

(B) Your Lordships may be pleased to issue a writ of mandamus, or a writ in the nature of mandamus, or any other appropriate writ, order or direction, declaring that the public auction dated 06.12.2022 undertaken by Respondent No. 2 Bank is legal and valid in the eyes of law; (Annexure-F)

(C ) Your Lordships may be pleased to issue a writ of mandamus or a writ in the nature of mandamus, or any other appropriate writ, order or direction, directing the Respondent No. 2 Bank to issue sale certificate in favour of the petitioners;

(D) Pending hearing and final disposal of this petition, Your Lordships may be pleased to stay the implementation, operation and execution of the impugned order dated 06.01.2023 passed by the learned Recovery Officer, Debts Recovery Tribunal-II, Ahmedabad in Recovery Proceeding Nos. 388 to 391 of 2018 (Annexure- A);

(E) Your Lordships may be pleased to grant an ex-parte relief in terms of Para 10(D);

(F) Such further relief(s) as deem fit in the facts and circumstances of the case may kindly be granted in the interest of justice."

2. The background of the fact which has given rise to the

C/SCA/2575/2023 CAV JUDGMENT DATED: 05/06/2023

filing of this petition is that respondent no. 1 being the Recovery

Officer, Debts Recovery Tribunal - II, is an officer appointed by

the Central Government for each Tribunal by virtue of Section

7(1) of the Recovery of Debts Due to Banks and Financial

Institutions Act, 1993 (hereinafter referred to as the "RDDB"

Act) and is discharging function under the general

superintendence. Here on the case on hand, respondent no. 1

had passed an order impugned in the petition, inter alia

allowing third party objections and thereby, cancelling the

auction sale. The entire process of recovery for outstanding

dues under the RDDB Act was initiated by respondent no. 2 -

UCO Bank and respondent nos. 3 to 5 are the third party

objectors who have filed interlocutory applications before

respondent no. 1 against the auction sale whereas, respondent

nos. 6 to 9 are the original borrowers of respondent no. 2 Bank.

Since respondent no. 1 in their Recovery Proceeding Nos. 388

to 391 of 2018 passed an order on 06.01.2023 cancelling

auction sale held on 06.12.2022 and thereby directed to refund

amount of Rs.6.82 crores along with accrued interest to the

petitioners and this according to the petitioners is an order in

C/SCA/2575/2023 CAV JUDGMENT DATED: 05/06/2023

conflict with well recognized principle of natural justice and

without jurisdiction and as such, the same is assailed in the

present proceedings.

2.1. It is the assertion of petitioners that in the auction sale

dated 06.12.2022, the petitioners found to be highest bidder

and upon acceptance of their bid in principal an amount of

Rs.6.82 crores were deposited in its entirety before respondent

no .2 and as such, when such is the situation before setting

aside the auction sale, it was obligatory on the part of

respondent no. 1 to extend an opportunity to the petitioners

who are not only necessary but also affected parties as well and

as such, the objections which were filed by the contesting

respondent no. 3 ex-facie were not maintainable and there was

no locus standi and passing of order is nothing but erroneous

exercise of jurisdiction. In fact, according to the petitioners, the

said exercise is also beyond jurisdiction. Based upon such

assertions, the present petition is brought before the Court

under Article 226 of the Constitution of India.

2.2. To substantiate the reliefs sought for, further facts have

C/SCA/2575/2023 CAV JUDGMENT DATED: 05/06/2023

also been pointed out to the effect that respondent nos. 6 to 9

are the original borrowers of respondent no. 2 - Bank and on

account of non payment of dues, recovery proceeding was

initiated by respondent no. 2 for securing outstanding amount,

by filing Original Application nos. 114, 115, 117 and 117 of 2014

before the Debts Recovery Tribunal - II, Ahmedabad for

recovering huge outstanding amount. On the said Original

Applications, an order came to be passed by the Debts Recovery

Tribunal on 28.03.2014 and later on, final order was passed by

the Tribunal in which a categorical observation is made that in

case non-payment of decretal amount, the same shall be

recovered from the properties as described in the schedule

annexed to the Original Applications and since there was no

repayment made by respondent nos. 6 to 9, respondent no. 2

Bank initiated process of recovery by filing Recovery Application

Nos. 388, 389, 390, 391 of 2018 before respondent no. 1. In the

said proceedings, notice came to be issued calling upon the

parties as to why properties in question should not be ordered

to be attached and sold in order to recover the outstanding dues

and since at the relevant point of time, there was no objection,

C/SCA/2575/2023 CAV JUDGMENT DATED: 05/06/2023

proceedings were ordered to be completed. As a result of this,

notice in Form No. 53 came to be issued on 10.08.2021 for

settling the terms of proclamation of sale properties in question

and thereby vide order dated 09.09.2022 as well as 10.10.2022

Form No. 29 was ordered to be issued to join the legal heirs of

respondent no. 8 and the matter was adjourned to 14.10.2022

and after perusing necessary particulars, respondent no. 1

issued auction sale notice for the properties in question and by

way of such notice, auction was fixed on 06.12.2022 by fixing

based price at Rs.5.50 crores. Pursuant to the said auction,

according to the petitioners, their bid was within time as

submitted on 01.12.2022 along with earnest money of Rs.5

lakhs being 10% of the base price and in the said auction

proceedings since the petitioners' bid was found to be highest,

petitioners were declared to be highest bidder for the properties

in question at amount of Rs.6.82 crores and as per the

instructions passed on by petitioners, today, the purchase

amount in its entirety i.e. an amount of Rs.6.82 crores by

17.12.2022 and requested respondent no. 2 Bank to issue sale

certificate in favour of the petitioners and to hand over physical

C/SCA/2575/2023 CAV JUDGMENT DATED: 05/06/2023

possession of the properties in question. It is after that

respondent nos. 3 to 5 filed their interlocutory applications

being Application No. 487 of 2022 as well as the legal heirs of

respondent no. 8 also came forward with an interlocutory

application and both these set of applications are for seeking

cancellation of auction proceedings which were held on

06.12.2022. To these applications, respondent no.2 Bank

submitted its detailed reply and though respondent no. 1 was

quite aware about the fact that the petitioners are the

successful bidders and have paid entire purchase consideration,

without issuing notice and granting any opportunity, an

impugned order came to be passed on 06.01.2023, which is

made the subject mater of present petition by raising multiple

contentions.

3. Pursuant to the notice being issued by the co-ordinate

Bench of this Court on 02.03.2023, and on pleadings being

completed by the contesting respondents, a request is made

jointly to take up the matter for its adjudication and accordingly,

the Court heard the matter on 25.04.2023 and 26.04.2023 and

upon conclusion of the arguments, learned advocates have

C/SCA/2575/2023 CAV JUDGMENT DATED: 05/06/2023

tendered their written submissions as a result of which,

judgment was reserved.

4. Mr. Jal Unwala, learned Senior Advocate appearing with

Mr. Dhruvin Dossani, learned advocate appearing for

respondent nos. 8.1 to 8.3 has raised a preliminary

issue/objection with regard to maintainability of petition by

contending that there is a specific statutory remedy available to

challenge the order dated 06.12.2022 and as such, when that be

so, the petition by invoking extraordinary may not be

entertained in view of the settled position of law and by

referring to Section 30 of the RDDB Act, it has been submitted

that any order which may be passed by the Recovery Officer is

subject to appeal under Section 30 of the RDDB Act and as

such, the petition at the threshold may not be entertained and in

addition thereto has also further pointed out that even

respondent no. 2 Bank has also filed substantive appeal against

the order impugned in the present petition and therefore, it

would be desirable in the interest of justice to dispose of the

petition in view of the alternate remedy which is already

available and every grievance which are tried to be agitated

C/SCA/2575/2023 CAV JUDGMENT DATED: 05/06/2023

including point of violation of principles of natural justice as

well as point of jurisdiction can well be examined by a forum

which is specifically provided under a separate statute. Hence,

requested to dismiss the petition.

5. To this submission, Mr. Unwala, learned Senior Advocate

has tendered a brief written notes along with certain decisions

which are relevant to the issue and by referring to these

decisions, it has been submitted that it is a trite law that in an

exceptional case only writ jurisdiction be exercised. Hence,

requested to dispose of the petition on this preliminary issue

only.

6. As against this, Mr. Vinay Bairagar, learned advocate

appearing for the petitioners has submitted chronology of dates

and events and has also produced certain decisions by way of

brief note in the form of written submissions and thereby has

submitted that there is no specific embargo not to exercise

extraordinary jurisdiction and, therefore, when there is a gross

violation of principles of natural justice as well as lack of

jurisdiction, it is always open for this Court to exercise

C/SCA/2575/2023 CAV JUDGMENT DATED: 05/06/2023

extraordinary jurisdiction and to substantiate his submission, he

has drawn attention of this Court to certain averments made in

the petition and the facts which are stated in chronology of

events and then requested to entertain the petition.

7. Since it is a trite law that when an issue is raised with

regard to maintainability of proceedings itself, the same may be

dealt with at the first instance and as such, in view of the

specific objection which has been raised by one of the

contesting respondent in the present proceedings, we may

examine the said issue as to whether the same is justified or not.

8. For this purpose we have perused the order which has

been passed by the Recovery Officer in which auction sale itself

is cancelled and respondent no. 2 Bank was directed to refund

the amount which has already been deposited pursuant to the

auction proceedings and this order is passed by the Recovery

Officer which is undisputedly subject to statutory appeal under

RDDB Act. The said provision deals with appeal against the

order of Recovery Officer which reads as under :-

"[30. Appeal against the order of Recovery Officer :- (1) Notwithstanding anything contained in section 29, any

C/SCA/2575/2023 CAV JUDGMENT DATED: 05/06/2023

person aggrieved by an order of the Recovery Officer made under this Act may, within thirty days from the date on which a copy of the order is issued to him, prefer an appeal to the Tribunal.

(2) On receipt of an appeal under sub-section (1), the Tribunal may, after giving an opportunity to the appellant to be heard, and after making such inquiry as it deem fit, confirm, modify or set aside the order made by the Recovery Officer in exercise of his powers under Section 25 to 28 (both inclusive).]"

9. Further, undisputedly, respondent no. 2 Bank being

aggrieved by the order passed by the Recovery Officer has also

filed a substantive appeal being Appeal No. 4 of 2023 as pointed

out by the learned counsel appearing for the contesting

respondent. So when that be so, to avoid conflicting decision on

the very same order, since prior to filing of the present petition,

Bank has already availed remedy of appeal, we are of the

opinion that petitioners will also have to approach the appellate

forum as they are not remediless and it is needless to state that

every issue of law may be examined and dealt with by the

appellate forum. In a very recent decision the Hon'ble Apex

Court has clearly propounded to desists from examining the

issue if there is a specific statutory remedy available and more

particularly, in commercial transactions, SARFESI Act or

C/SCA/2575/2023 CAV JUDGMENT DATED: 05/06/2023

related issues, and as such we may deem it proper to quote the

relevant observations made by the Hon'ble Apex Court in the

case of M/s. South Indian Bank Ltd., & Ors., v. Naveen

Mathew Philip & Anr. Etc., reported in 2023 LiveLaw (SC)

320. The said observations read 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 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 quasijudicial 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 oblivious of the

C/SCA/2575/2023 CAV JUDGMENT DATED: 05/06/2023

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.

xxx xxx xxx

55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection."

• State Bank of Travancore v. Mathew K.C., (2018) 3 SCC 85,

"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 in dispute. 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

C/SCA/2575/2023 CAV JUDGMENT DATED: 05/06/2023

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 [(2014) 1 SCC 603], as follows: (SCC p. 611, para 15) 9 "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 v. Supt. of Taxes [AIR 1964 SC 1419], Titaghur Paper Mills Co. Ltd. v. State of Orissa [(1983) 2 SCC 433: 1983 SCC (Tax) 131] 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."

xxx xxx xxx ."

10. Further it is also settled position of law that whenever

there is a statutory remedy as available and the authority is

competent to exercise powers, this Court in extraordinary

jurisdiction normally should not usurp discretion of such

statutory authority and try to substitute itself to appellate

forum. The following are the observations made by the Hon'ble

C/SCA/2575/2023 CAV JUDGMENT DATED: 05/06/2023

Apex Court in the case of D.N. Jeevaraj v. Chief Secretary,

Government of Karnataka & Ors., reported in (2016) 2 SCC

653, and since the same are relevant to the issue, we deem it

proper to quote hereunder :-

"41. This Court has repeatedly held that where discretion is required to be exercised by a statutory authority, it must be permitted to do so. It is not for the courts to take over the discretion available to a statutory authority and render a decision. In the present case, the High Court has virtually taken over the function of the BDA by requiring it to take action against Sadananda Gowda and Jeevaraj. Clause 10 of the lease-cum-sale agreement gives discretion to the BDA to take action against the lessee in the event of a default in payment of rent or committing breach of the conditions of the lease-cum-sale agreement or the provisions of law.[8] This will, of course, require a notice being given to the alleged defaulter followed by a hearing and then a decision in the matter. By taking over the functions of the BDA in this regard, the High Court has given a complete go-bye to the procedural requirements and has mandated a particular course of action to be taken by the BDA. It is quite possible that if the BDA is allowed to exercise its discretion it may not necessarily direct forfeiture of the lease but that was sought to be pre- empted by the direction given by the High Court which, in our opinion, acted beyond its jurisdiction in this regard.

43. To this we may add that if a court is of the opinion that a statutory authority cannot take an independent or impartial decision due to some external or internal pressure, it must give its reasons for coming to that conclusion. The reasons given by the court for disabling the statutory authority from taking a decision can always be tested and if the reasons are found to be inadequate, the decision of the court to by-pass the statutory authority

C/SCA/2575/2023 CAV JUDGMENT DATED: 05/06/2023

can always be set aside. If the reasons are cogent, then in an exceptional case, the court may take a decision without leaving it to the statutory authority to do so. However, we must caution that if the court were to take over the decision taking power of the statutory authority it must only be in exceptional circumstances and not as a routine. Insofar as the present case is concerned, the High Court has not given any reason why it virtually took over the decision taking function of the authorities and for this reason alone the mandamus issued by the High Court deserves to be set aside, apart from the merits of the case which we have already adverted to."

11. In view of the aforesaid discussion, we are satisfied that

the petitioners are not remedies and the very impugned order is

subject to statutory appeal under Section 30 of the RDDB Act as

pointed out, we refrain ourselves from exercising extraordinary

jurisdiction and this is more so in view of the fact that against

this very order, respondent no. 2 bank has already availed the

said remedy and the said appeal proceedings are very much

pending. Hence, petition does not deserve to be entertained in

view of the statutory remedy available to the petitioners.

12. In view of the aforesaid factual details and in view of the

very recent pronouncement as pointed out earlier of Hon'ble

Apex Court in the case of M/s. South Indian Bank Ltd., (supra)

the decisions which are cited by the learned counsel appearing

C/SCA/2575/2023 CAV JUDGMENT DATED: 05/06/2023

for the petitioners are no doubt projecting the proposition of

law, but the same would not be of any assistance to the

petitioners.

13. No doubt the submissions made by the learned counsel

appearing for the petitioners are on facts attractive, but then

extraordinary jurisdiction has its own self imposed limitations

and these factual matrix which are posted before us by way of

written arguments can well be agitated before the appellate

forum and as such, we are of the opinion that these facts which

are tried to be canvassed by the petitioners can be examined in

detailed in appeal proceedings and as such, we desist ourselves

from expressing any opinion on merits with regard to any of the

contentions except on this issue of entertainability of petition in

view of statutory appeal available to the petitioners. Hence, on

this short ground, we deem it proper to dismiss the petition and

we observe that if the appeal would be filed by the petitioners, if

so desired, within a period of two weeks from today, the said

appeal shall be heard and decided on merits in accordance with

law on the basis of the material on record.

C/SCA/2575/2023 CAV JUDGMENT DATED: 05/06/2023

14. In view of the fact that since auction proceedings are of

December, 2022, and in view of the circumstances which are

prevailing on record, we request the appellate authority to

expedite the proceedings of appeal if filed within the aforesaid

period, as early as possible, preferably within a period of three

(3) months from the date of filing of appeal and we observe

while parting with the present order that since we are not

entertaining this petition on the ground of alternate remedy

being available, the authority may not be influenced by the mere

disposal of the present petition and shall decide the proceedings

independently in accordance with law.

15. Accordingly, present petition stands dismissed. Notice is

discharged with no order as to costs.

(ASHUTOSH SHASTRI, J)

(J. C. DOSHI,J)

phalguni