Karnataka High Court
M/S Shyam Enterprises vs Union Bank Of India on 13 December, 2023
Author: S.Sunil Dutt Yadav
Bench: S.Sunil Dutt Yadav
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WA No. 100355 of 2023
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 13TH DAY OF DECEMBER, 2023
PRESENT
THE HON'BLE MR JUSTICE S.SUNIL DUTT YADAV
AND
THE HON'BLE MR JUSTICE VIJAYKUMAR A.PATIL
WRIT APPEAL NO. 100355 OF 2023 (GM-RES)
BETWEEN:
M/S SHYAM ENTERPRISES,
A PROPRIETORSHIP CONCERN,
NO. 473, NEAR DEVI MAIDAN,
K.B. ROAD, YELLAPUR,
UTTAR KANNADA 581359,
REPRESENTED BY ITS PROPRIETOR,
MANJUNATH VISHWESHWAR HEBBAR.
- PETITIONER
(BY SRI. RAVIRAJ C PATIL AND
SRI. S.S. JOSHI, ADVOCATES)
AND:
UNION BANK OF INDIA
NO. AE.3, NEAR DARGA GATE,
Digitally signed APMC YARD, AMARGOL, HUBBALLI,
by VINAYAKA B
V DHARWAD DISTRICT 580025,
Date:
2023.12.21 R/BY ITS BRANCH HEAD.
10:41:12 +0530
- RESPONDENT
(BY SRI. GIRISH S. HULMANI, ADVOCATE)
THIS WRIT APPEAL IS FILED U/S.4 OF KARNATAKA HIGH
COURT ACT, 1961, PRAYING TO, SET-ASIDE THE ORDER OF THE
LEARNED SINGLE JUDGE DATED 31/3/2023 PASSED IN
W.P.NO.102287/2021 AND ALLOW THE SAID WRIT PETITION AS
PRAYED FOR IN THE IN THE INTEREST OF JUSTICE AND EQUITY &
ETC.
THIS APPEAL, COMING ON FOR PRELIMINARY HEARING,
THIS DAY, S. SUNIL DUTT YADAV J., DELIVERED THE FOLLOWING:
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WA No. 100355 of 2023
JUDGMENT
The present appeal is filed calling in question the
correctness of the order of the learned Single Judge
passed in W.P.No. 102287/2021 whereby the learned
Single Judge has rejected the writ petition on the ground
that an alternative efficacious remedy is available and in
light of the judgment of the Apex Court in the case of
United Bank of India vs. Satyawati Tondon and
another - (2010) 8 SCC 110. The learned Single Judge
has observed that the writ petition ought not to be
entertained without the petitioner/ appellant having
recourse to the procedure prescribed under the
Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002, (for short 'the
Act').
2. The learned Single Judge has also observed
that the disputed question of fact as to whether the
petitioner is entitled for restructuring of loan, cannot be
gone into.
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3. The writ petition was filed by the petitioner who
is the appellant herein seeking for the following reliefs:
"i) Issue a writ of declaration, or writ in the
nature of declaration or any other appropriate
writ, order, or direction holding and declaring
that the classification of the accounts of the
petitioner as NPA by the respondent - Bank
as per intimation dated 17.06.2021 at
Annexure-P is illegal and void being contrary
to the RBI circular bearing No. RBI/2015-
16/338/FIDD.MSME AND NFS.BC.
No.21/06.02.31/2015-16 dated 17.03.2016 at
Annexure-A.
ii) issue a writ of mandamus or an order or
direction in the nature of mandamus directing
the respondent o consider the request of the
petitioner dated 04.06.2021 at Annexure-L for
restructuring of its loans in accordance with
law."
4. It is clear that the petitioner is seeking to
challenge the aspect of classification of account of the
petitioner as 'Non-Performing Asset' (NPA) by the
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respondent - Bank. This aspect of classification eventually
leads to proceedings under Section 13(4), which is the
appropriate stage to have legal grievance addressed. The
learned Single Judge has considered all contentions and
has refused to entertain the writ petition in light of the
availability of alternative remedy in terms of the procedure
prescribed under the SARFAESI Act under Section 13(2),
where the borrower makes a default in repayment of
secured debt or any installment thereof, and his account is
classified as non-performing asset, then, the secured
creditor may issue notice in writing calling upon the
borrower to discharge his liability. The procedure includes
taking of appropriate steps as stipulated under sub-section
13(4). Insofar as the grievance against action under
Section 13(4), there is a remedy available under Section
17 of the SARFAESI Act, whereby any person aggrieved
including the borrower may make an application before the
Debts Recovery Tribunal ('DRT') having jurisdiction.
Accordingly, any grievance as regards the steps taken
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under Section 13(4) which includes classification of the
account as NPA, is a matter that can be raised in terms of
the procedure prescribed under Section 17 of the
SARFAESI Act.
5. Accordingly, we find no infirmity with the
reasoning of the learned Single Judge. The observations
made in the case of Satyawati Tondon (supra) at
paragraph No.55 and 56 are of relevance which are as
below:
"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.
56. Insofar as this case is concerned, we are
convinced that the High Court was not at all justified in
injuncting the appellant from taking action in
furtherance of notice issued under Section 13(4) of the
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Act. In the result, the appeal is allowed and the
impugned order is set aside. Since the respondent has
not appeared to contest the appeal, the costs are made
easy.
6. The same position is reiterated by the Apex
Court in the case of M/s. South Indian Bank Limited
and others vs. Naveen Mathew Philip and another
etc. - SLP (Civil) No. 22021-22022/2022 disposed off on
17.04.2023. Paragraph 18 of the said order reads as
follows:
"While doing so, we are conscious of the fact that
the powers conferred under Article 226 of the
Constitution of India are rather wide but are
required to be exercised only in extraordinary
circumstances in matters pertaining to
proceedings and adjudicatory scheme qua a
statute, more so in commercial matters involving
a lender and a borrower, when the legislature has
provided for a specific mechanism for appropriate
redressal."
7. Accordingly, we find that the recourse to writ
proceedings in the present facts of the case ought to have
been entertained as substantive remedy is available as
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against any action taken under Section 13(4) of the
SARFAESI Act, accordingly, we find no reasons to
entertain the writ petition.
8. Learned counsel for the appellant submits that
necessary steps would be taken to seek for substantive
remedy against the grievance in light of the alternative
remedy available as observed by this Court. The time
spent before this Court in writ petition as well as the
appeal proceedings may be taken note of appropriately in
the event the appellant were to invoke the substantive
remedy at this point of time. All contentions are kept
open.
9. In light of the observations made above, the
writ appeal is disposed off.
Sd/-
JUDGE
Sd/-
JUDGE
