Pradeep Kumar Sinha (Proprietor ... vs The State Of Jharkhand Through The ...
2021 Latest Caselaw 1465 Jhar

             IN THE HIGH COURT OF JHARKHAND AT RANCHI
                        W.P.(C) No. 4619 of 2017
1. Pradeep Kumar Sinha (proprietor of M/s. Trimurti Engg. Works), Adityapur,
District- Seraikella-Kharsawan
2. M/s. Trimurti Engg. Works (proprietor-Pradeep Kumar Sinha), Adtiyapur,
District- Seraikella-Kharsawan                     .....   ... Petitioners
                                Versus
1. The State of Jharkhand through the Principal Secretary, Industry
Department, Government of Jharkhand, Ranchi
2. Director, Industry Department, Ranchi
3. Syndicate Bank having its Head Office at Manipal, District- Udupi (Karnataka)
4. Syndicate Bank, through the Branch Manager, Adityapur, District-
Seraikella-Kharsawan                               .... .... Respondents

CORAM : HON'BLE MR. JUSTICE RAJESH SHANKAR For the Petitioners :- Mr. Manoj Kumar Choubey, Advocate For the Resp. Nos. 1 & 2 :- Mrs. Darshana Poddar Mishra, A.A.G.-I For the Resp. Nos. 3 & 4 :-Mr. Mayank Mohan Sinha, Advocate

Order No. 05 Dated: 23.03.2021

The present case is taken up today through Video conferencing.

2. The present writ petition has been preferred for quashing the order dated 30.06.2017 passed by the Debts Recovery Tribunal (in short "the DRT"), Ranchi in R.P No. 502 of 2016 whereby time was allowed to the respondent-Bank to file reply to the petitioners' objection petition and orders have been passed point wise (total five points) whereby the immovable property attached vide order dated 27.03.2017 has been ordered to be sold through public auction including the order for settling a sale proclamation with respect to movable and immovable properties of the petitioners. The petitioners have also prayed for issuance of direction upon the respondent-State to comply the undertaking given by it to the respondent-Bank with respect to payment of its contribution of 75% of loan amount under the Scheme namely CGTMSE (Credit Guarantee Fund Scheme For Micro and Small Enterprises) (hereinafter to be referred as "the said Scheme") which has not been fulfilled by the respondent-State.

3. During the pendency of the writ petition, the petitioner preferred I.A No. 1665 of 2021 for staying sale notice dated 27.02.2021 issued by the Canara Bank, Adityapur II Branch, District- Seraikella-Kharsawan which, according to the petitioners, was dropped by the Bank on their gate of the work place on 13.03.2021.

4. The factual background of the case is that the petitioners had taken a term loan of Rs.20,00,000/- under the said Scheme vide sanction letter dated 10.12.2012 and executed various loan and security

documents with the respondent no.4. The petitioners defaulted in making payment of dues to the respondent-Bank on agreed terms and as such the respondent no.4 classified the petitioners' account as NPA on 30.09.2013 and sent legal notice to the petitioners calling upon them to pay the outstanding dues failing which legal action was to be taken against them. When the petitioner failed to make the payment, the respondent no. 4 issued notice dated 13.06.2014 calling upon the petitioners to make payment of outstanding dues under One Time Settlement (OTS) scheme followed by another notice dated 14.06.2014 issued by the Chief Manager, Syndicate Bank, Adityapur Branch, Jamshedpur under section 13(2) of the Securitization and Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 [in short to be referred as "the Act, 2002"] directing the petitioners to discharge their liabilities within a period of 60 days from the date of issuance of notice. However, the petitioners instead of discharging the outstanding dues filed an application under Section 17 of the Act, 2002 being S.A No. 20 of 2015 before the DRT, Ranchi against the respondent-Bank which was dismissed for non-prosecution vide order dated 02.07.2015. Thereafter, the respondent-Bank preferred O.A No. 169 of 2016 for recovery of the outstanding dues of Rs.25,23,492.36/- which proceeded ex-parte and vide order dated 16.08.2016, decree was made in favour of respondent-Bank for recovery of an amount of Rs.25,23,492.36/- along with pendent lite and future interest @10% per annum with monthly rests from 10.03.2016 till realization of the entire claim besides cost of Rs.28,000/-. Consequently, a recovery certificate dated 16.08.2016 was issued by the Presiding Officer, DRT, Ranchi for recovery of decretal amount against the petitioners in terms with Section 19(22) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (in short "the Act, 1993"). The respondent-Bank initiated recovery proceedings before the Recovery Officer, DRT Ranchi being R.P No. 502 of 2016 and despite issuance of notice to the petitioners, when they failed to appear and comply the order dated 19.09.2016 passed by the said Recovery Officer whereby the certificate debtors (the petitioners) were issued notice of demand with direction to make payment of the certificate amount, the Recovery Officer, vide order dated 27.03.2017, passed an order for attachment of the movable and immovable properties

of the petitioners. They thereafter filed objection petition on 09.06.2017 whereupon impugned order dated 30.06.2017 was passed by the Recovery Officer, DRT, Ranchi.

5. Learned counsel for the petitioners submits that the petitioners continuously paid the monthly installment till June 2013 however due to recession, they could not repay the loan amount. The petitioners have paid more than 80% of the loan amount including the payment of Rs.70,000/- on 12.02.2014 and Rs.1,75,000/- on 04.03.2014. The respondent no. 4 has classified the account of the petitioners as NPA on 30.09.2013. It is further submitted that the petitioners filed objection under section 13(3-A) of the Act, 2002 vide representation dated 19.08.2014 contending that they had deposited substantial amount in the loan account and hence the account could not have been classified as NPA. It is also submitted that the principles of natural justice has not been followed in the entire proceeding of O.A. No. 169 of 2016 as no notice was served to the petitioners before passing the order dated 16.08.2016. The respondent-Bank had sanctioned the loan as per the scheme of the Industry Department, Government of Jharkhand wherein the amount which was required to be paid to the Bank by the petitioners was only 25% of the loan amount and rest amount of the loan was to be paid by the government under the said Scheme. The petitioners had already paid more amount in the loan account on their part and excess amount received by the Bank is required to be refunded by it, however ignoring the said fact the demand notice was issued against the petitioners.

6. Learned counsel for the respondent-Bank, at the outset, has challenged the maintainability of the present writ petition contending that the petitioners have alternative and efficacious remedy of filing appeal under Section 30 of the Act, 1993 before the Debts Recovery Appellate Tribunal and only to avoid deposit of court fee, they have preferred the present writ petition. It is further submitted that the auction sale notice dated 27.02.2021 issued under the provisions of rules 8(6) and 9 of the Security Interest (Enforcement) Rules, 2002 (in short, "the Rules, 2002") after taking constructive symbolic possession of the assets described in schedule of the sale notice annexed thereto in terms with Section 13(4) of the Act, 2002, which has been challenged by way of I.A No. 1665 of

2021, can also be challenged by filing an application under Section 17 of the Act, 2002 and thus the present writ petition is liable to be dismissed being not maintainable.

7. Heard the learned counsel for the parties and perused the materials available on record. The petitioners, by filing the present writ petition have challenged the order dated 30.06.2017 passed by the Recovery Officer, DRT, Ranchi directing the Bank to file reply to the objection petition of the petitioners and to issue notice for settling a sale proclamation with respect to the movable and immovable properties of the petitioners. The petitioners have also challenged the auction sale notice dated 27.02.2021 issued under the provisions of rules 8(6) and 9 of the Rules, 2002.

8. Section 30 of the Act, 1993 provides as under:-

"30. Appeal against the order of Recovery Officer. - (1) Notwithstanding anything contained in section 29, any 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 enquiry as it deems fit, confirm, modify or set aside the order made by the Recovery Officer in exercise of his powers under sections 25 to 28 (both inclusive).

9. Thus, the petitioners could have preferred appeal before the Debts Recovery Appellate Tribunal against the order of the Recovery Officer, DRT, Ranchi passed under the Act, 1993, within thirty days from the date of receipt of a copy of the said order.

10. The primary question before this Court is as to whether the present writ petition is maintainable particularly in view of the fact that they have alternative efficacious remedy of preferring appeal before the Debt Recovery Appellate Tribunal against the impugned actions of the respondents.

11. The Hon'ble Supreme Court in the case of United Bank of India Vs. Satyawati Tondon & Ors." reported in (2010) 8 SCC 110, has held 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 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.

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 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 BaburamPrakash Chandra Maheshwari v. AntarimZilaParishad [AIR 1969 SC 556] , Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8 SCC 1] and HarbanslalSahnia 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."

12. Further, the Hon'ble Supreme Court in the case of Standard Charted Bank Vs. V. Noble Kumar & Ors. reported in (2013) 9 SCC 620, has held as under:

"27. The "appeal" under Section 17 is available to the borrower against any measure taken under Section 13(4). Taking possession of the secured asset is only one of the measures that can be taken by the secured creditor. Depending upon the nature of the secured asset and the terms and conditions of the security agreement, measures other than taking the possession of the secured asset are possible under Section 13(4). Alienating the asset either by

lease or sale, etc. and appointing a person to manage the secured asset are some of those possible measures. On the other hand, Section 14 authorises the Magistrate only to take possession of the property and forward the asset along with the connected documents to the borrower (sic the secured creditor). Therefore, the borrower is always entitled to prefer an "appeal" under Section 17 after the possession of the secured asset is handed over to the secured creditor. Section 13(4)(a) declares that the secured creditor may take possession of the secured assets. It does not specify whether such a possession is to be obtained directly by the secured creditor or by resorting to the procedure under Section 14. We are of the opinion that by whatever manner the secured creditor obtains possession either through the process contemplated under Section 14 or without resorting to such a process obtaining of the possession of a secured asset is always a measure against which a remedy under Section 17 is available."

13. It is thus a trite law that the High Court should not entertain the writ petitions involving the dues of banks and other financial institutions as the parliament has enacted legislation not only providing the mechanism for recovery of dues but also for redressal of the grievances of the aggrieved persons by the quasi-judicial bodies/forums.

14. In view of the aforesaid factual and legal position, without going into the merit of the claim of the petitioners, the writ petition is dismissed as not maintainable. The petitioners are however at liberty to prefer an appeal along with an application for condonation of delay before the Debts Recovery Appellate Tribunal against the impugned action taken by the Recovery Officer, DRT, Ranchi. On filing such appeal, the Appellate Tribunal shall consider the application for condonation of delay liberally keeping in view that the present writ petition remained pending before this Court for some time and the case could not be listed for about a year due to Covid-19 pandemic situation. So far as the challenge to the action of the respondent-Bank in issuing the auction sale notice dated 27.02.2021 under the provisions of rules 8(6) and 9 of the Rules, 2002 is concerned, the petitioners have remedy to file application under Section 17 of the Act, 2002 before the DRT, Ranchi and as such this Court is not inclined to entertain the prayer made by the petitioners in I.A. No. 1665 of 2021 also.

15. Accordingly, I.A No. 1665 of 2021 also stands dismissed

(Rajesh Shankar, J.) Ritesh/ AFR