Anita Sahni vs The Baghat Urban Co-Operative ...
2021 Latest Caselaw 3488 HP

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             HIGH COURT OF HIMACHAL PRADESH, SHIMLA

                                                C.W.P. No. 3486 of 2021

                                                Date of decision: 04.08.2021




                                                                                 .

    Anita Sahni                                                          ...Petitioner

                                      Versus





    The Baghat Urban Co-operative Bank Ltd.
    and another                                   ...Respondents
    ____________________________________________________
    Coram:





    The Hon'ble Mr. Justice Ravi Malimath, Acting Chief Justice

    The Hon'ble Ms. Justice Jyotsna Rewal Dua, Judge

    Whether approved for reporting1 :

    For the Petitioner(s):            S/Shri N.K. Bhalla and Dalip K. Sharma,
                                      Advocates.


    For the Respondents:              Mr. Karun Negi, Advocate, for
                                      respondent No.1.

                         Through Video Conference




    ____________________________________________________
    Jyotsna Rewal Dua,J.

By way of instant petition, petitioner has challenged

the proceedings initiated by the respondent-Bank under the

Securitization and Reconstruction of Financial Assets and

Enforcement of Securities Interest Act, 2002 (SARFAESI).

2. Learned counsel for the petitioner contends that the

debt in question is not a secured debt. The property in question is

Whether Reporters of local newspaper are permitted to see the judgment ?

not a secured asset. The respondent-Bank, therefore, cannot

claim any right over the property on the basis of a mortgage at

Annexure P-8 or any other mortgage or equitable mortgage in

.

any manner created prior to 05.12.2018 as according to the

petitioner, all such mortgages stand discharged and redeemed.

The thrust of contention advanced by learned counsel for the

petitioner is that the proceedings under the SARFAESI Act are

not maintainable against the petitioner.

3.

The apex Court in State Bank of Travancore Vs.

Mathew K.C. (2018) 3 SCC 85, strongly deprecated the tendency

of the High Courts in entertaining the writ petitions filed under

Article 226 of the Constitution of India by the aggrieved persons

without availing alternative and efficacious remedy available to

them, more particularly, in the matters which arise under the

SARFAESI Act. Relevant paras of the judgment are as under :-

"3. The SARFAESI Act is a complete code by itself,

providing for expeditious recovery of dues arising out of loans granted by financial institutions, the remedy of

appeal by the aggrieved under Section 17 before the Debt Recovery Tribunal, followed by a right to appeal before the Appellate Tribunal under Section 18. The High Court ought not to have entertained the writ petition in view of the adequate alternate statutory remedies available to the Respondent. The interim order was

passed on the very first date, without an opportunity to the Appellant to file a reply. Reliance was placed on United Bank of India vs. Satyawati Tandon and others, 2010 (8) SCC 110, and General Manager, Sri

.

Siddeshwara Cooperative Bank Limited and another vs. Ikbal and others, 2013 (10) SCC 83. The writ petition ought to have been dismissed at the threshold on the

ground of maintainability. The Division Bench erred in declining to interfere with the same.

4. xxx

5. xxx

6. xxx

7. xxx

8. The statement of objects and reasons of the SARFAESI Act states that the banking and financial

sector in the country was felt not to have a level playing field in comparison to other participants in the financial markets in the world. The financial institutions in India did

not have the power to take possession of securities and

sell them. The existing legal framework relating to commercial transactions had not kept pace with

changing commercial practices and financial sector reforms resulting in tardy recovery of defaulting loans and mounting non-performing assets of banks and financial institutions. The Narasimhan Committee I and II as also theAndhyarujina Committee constituted by the Central Government Act had suggested enactment of new legislation for securitisation and empowering banks

and financial institutions to take possession of securities and sell them without court intervention which would enable them to realise long term assets, manage problems of liquidity, asset liability mismatches and

.

improve recovery. The proceedings under the Recovery of Debts due to Banks and Financial Institutions Act, 1993, (hereinafter referred to as 'the DRT Act') with

passage of time, had become synonymous with those before regular courts affecting expeditious adjudication. All these aspects have not been kept in mind and

considered before passing the impugned order.

9. xxx r

10. In Satyawati Tandon (supra), the High Court had

restrained further proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the SARFAESI Act, the availability of

remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18

before the Appellate Tribunal, the object and purpose of the legislation, it was observed that a writ petition ought

not to be entertained in view of the alternate statutory remedy available holding :-

"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 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."

11. xxx

12. xxx

13. xxx

.

14. xxx

15. It is the solemn duty of the Court to apply the correct law without waiting for an objection to be raised by a

party, especially when the law stands well settled. Any departure, if permissible, has to be for reasons discussed, of the case falling under a defined exception,

duly discussed after noticing the relevant law. 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 tax payers 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 caution required, as expressed in Satyawati Tandon (supra), has also not been kept in mind before passing the impugned interim order:- "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 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, Whirlpool Corpn. v. Registrar of Trade Marks and

Harbanslal Sahnia v. Indian Oil Corpn. Ltd . And some

other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order."

16. The writ petition ought not to have been entertained and the interim order granted for the mere asking without

assigning special reasons, and that too without even granting opportunity to the Appellant to contest the

maintainability of the writ petition and failure to notice the subsequent developments in the interregnum. The

opinion of the Division Bench that the counter affidavit having subsequently been filed, stay/modification could be sought of the interim order cannot be considered sufficient justification to have declined interference.

17. We cannot help but disapprove the approach of the High Court for reasons already noticed in Dwarikesh

Sugar Industries Ltd. vs. Prem Heavy Engineering Works (P) Ltd. and Another , 1997 (6) SCC 450, observing :-

.

" 32. When a position, in law, is well settled as a

result of judicial pronouncement of this Court, it would amount to judicial impropriety to say the

least, for the subordinate courts including the High Courts to ignore the settled decisions and then to pass a judicial order which is clearly

contrary to the settled legal position. Such judicial adventurism cannot be permitted and we strongly deprecate the tendency of the subordinate courts in not applying the settled principles and in

passing whimsical orders which necessarily has

the effect of granting wrongful and unwarranted relief to one of the parties. It is time that this tendency stops."

4. The above legal position was reiterated by the

Hon'ble Supreme Court in ICICI Bank Limited and others Vs.

Umakanta Mohapatra and others, (2019) 13 SCC 497 in the

following manner :-

"2. Despite several judgments of this Court, including a judgment by Hon'ble Mr. Justice Navin Sinha, as recently as on 30.01.2018, in Authorized Officer, State Bank of Travancore and Anr. vs. Mathew K.C ., (2018) 3 SCC 85, the High Courts

continue to entertain matters which arise under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act , 2002 (SARFAESI), and keep granting interim

.

orders in favour of persons who are Non- Performing Assets (NPAs).

3. The writ petition itself was not maintainable, as a result of which, in view of our recent judgment, which has followed earlier judgments of this Court,

held as follows:

" 17. We cannot help but disapprove the approach of the High Court for reasons

already noticed in Dwarikesh Sugar

Industries Ltd. vs. Prem Heavy Engineering Works (P) Ltd. and Another, (1997) 6 SCC 450, observing:-

"32. When a position, in law, is well settled as a result of judicial pronouncement of this

Court, it would amount to judicial impropriety

to say the least, for the subordinate courts including the High Courts to ignore the settled decisions and then to pass a judicial

order which is clearly contrary to the settled legal position. Such judicial adventurism cannot be permitted and we strongly deprecate the tendency of the subordinate courts in not applying the settled principles and in passing whimsical orders which

necessarily has the effect of granting wrongful and unwarranted relief to one of the parties. It is time that this tendency stops.""

.

4. The writ petition, in this case, being not maintainable, obviously, all orders passed must

perish, including the impugned order, which is set aside."

It is for the petitioner to avail statutory remedy and to

take up all her defences there, including alleged in-applicability of

SARFAESI proceedings. In view of above settled legal position

and considering the fact that the petitioner has not exhausted the

alternative remedy under the SARFAESI Act, the present petition

cannot be held as maintainable and is accordingly dismissed. The

petitioner is at liberty to avail alternative remedy as are available

to it in accordance with law. Pending applications, if any, also

stand disposed of.

( Ravi Malimath ) Acting Chief Justice

4th August, 2021 (K) ( Jyotsna Rewal Dua ) Judge