Kerala High Court

Akhil vs Union Of India on 6 July, 2021

W.A.No. 646/2021                  :1:


               IN THE HIGH COURT OF KERALA AT ERNAKULAM
                                PRESENT
           THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR
                                   &
               THE HONOURABLE MR. JUSTICE SHAJI P.CHALY
                       TH
         TUESDAY, THE 6   DAY OF JULY 2021 / 15TH ASHADHA, 1943

                           WA NO. 646 OF 2021
 JUDGMENT DATED 26.03.2021 IN WP(C) 7965/2021 OF HIGH COURT OF KERALA
APPELLANT/PETITIONER:

            AKHIL
            AGED 32 YEARS
            S/O. HARSHAN (LATE), CHAMAVILA VEEDU, THRIKOVILVATTOM,
            THATTARKONAM, KOLLAM.
            BY ADV NAMITHA JYOTHISH

RESPONDENTS/RESPONDENTS:

     1      UNION OF INDIA
            REPRESENTED BY IT SECRETARY TO GOVERNMENT, MINISTRY OF
            MICRO SMALL AND MEDIUM ENTERPRISES CENTRAL SECRETARIAT,
            NEW DELHI-110 001.
     2      THE RESERVE BANK OF INDIA
            NEW CENTRAL OFFICE BUILDING, SHAHID BHAGATH SINGH ROAD,
            FORT MUMBAI, 400 001, REPRESENTED BY ITS CHIEF GENERAL
            MANAGER.
     3      THE AUTHORIZED OFICER
            STATE BANK OF INDIA, STRESSED ASSETS RECOVERY BRANCH, LMS
            COMPOUND, OPP. MUSEUM WEST GATE, VIKAS BHAVAN P.O.,
            THIRUVANANTHAPURAM-695 033.
     4      THE STATE BANK OF INDIA
            KILIKOLLOOR BRANCH, KOLLAM, PIN-691 004, REPRESENTED BY
            ITS MANAGER.


            R1 & R2 BY SRI. P.VIJAYAKUMAR, ASG FOR R1 AND R2
            R3 & R4 BY SRI. JAWAHAR JOSE, SC


     THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 06.07.2021, THE
     COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
 W.A.No. 646/2021                   :2:




                    Dated this the 6th day of July, 2021.

                               JUDGMENT

SHAJI P. CHALY, J.

This appeal is filed, by the writ petitioner challenging the

judgment dated 26.03.2021 in W.P.(C) No. 7965 of 2021, which was

filed seeking the benefit of schemes in the matter of liquidation of a

liability under a cash credit facility availed by his deceased father for

running an industry and challenging the coercive steps initiated for the

realisation of the amount due under the cash credit facility.

2. Facts leading to the writ appeal are as follows:

The appellant's father was the proprietor of an industry by name

'Jayam Match Works' registered under the Ministry of Micro Small and

Medium Enterprises (MSME), engaged in the production of raw

materials for the manufacture of matches and similar products. In the

year 2014, appellant's father had availed a cash credit facility for

Rs.50,00,000/- from the 4th respondent Bank towards the working

capital of the said business. The guarantors for the said facility were

the appellant, his mother and his grandmother, and two items of

immovable property owned by them were offered as security for the

said transaction.

3. It was the case of the appellant that because of the illness of

his father, he committed a default in repaying the cash credit facility.

Thereafter, respondents 3 and 4 invoked the provisions of the

SARFAESI Act and proceeded to take coercive steps and being

aggrieved by the same, appellant's father has filed W.P.(C) No. 42615

of 2018 before this Court. This Court, as per Ext. P5 judgment dated

07.01.2019 disposed of the writ petition permitting him to remit the

entire amount of Rs. 61,74,000/- due to the Bank in 12 equal monthly

instalments starting from 15.02.2019. But, he could not comply with

the same, as he was hospitalized and consequent to which the

appellant has taken over the business.

4. In the meantime, respondents 3 and 4 approached the Chief

Judicial Magistrate court seeking assistance for taking physical

possession of the property and an Advocate Commissioner was

appointed and he issued Ext. P6 notice dated 01.10.2019 seeking

vacant possession of the secured asset. Aggrieved by the same,

appellant's father has again filed W.P.(C) No. 28252 of 2019 before this

Court, which was disposed of directing the Bank to consider the

representation of the writ petitioner seeking to clear the liability.

5. While so, the first respondent introduced Ext. P8 Credit

Guarantee Scheme for Subordinated Debt (CGSSD). According to the

appellant/writ petitioner, going by Ext. P8, the benefit of the scheme

would be available even to accounts which had become NPA as on

31.03.2018. In the light of the said scheme, the writ petitioner sent a

representation to the Hon'ble Prime Minister seeking reduction of the

liability, which in turn was forwarded to the 4th respondent, who

rejected the claim of the benefit of the scheme as per Ext. P10 on the

ground that the account has become NPA on 30.03.2018. Thereafter,

the writ petitioner's father expired on 10.09.2020.

6. While so, the 4th respondent issued Ext. P12, notice to the

writ petitioner giving him an option to settle the liability under the OTS

scheme; but, he could not apply for the same. Thereafter, the

appellant was served with Ext. P13 sale notice. Hence, he approached

this Court by filing the writ petition.

7. The learned counsel for the appellant contended that the

learned single Judge ought to have found that the refusal of the 3 rd

respondent to extend the benefit of CGSSD scheme to the cash credit

facility for the business concern in question is illegal and totally

unjustified. As is evident from Ext. P9 statement of account, there

was remittance of more than Rs.2,00,000/- on 31.03.2018. According

to the appellant/writ petitioner, the account, though NPA, on the said

date should have been treated as eligible for the benefit of the scheme

as the business concern meets the criteria of being an 'eligible

borrower' as defined in clause V of the scheme.

8. It was also contended that the interpretation given by the 4 th

respondent regarding the applicability of the CGSSD scheme to the

cash credit facility in question is contrary to the objective of the

scheme and hence, the learned single Judge ought to have rejected

the same.

9. It was further submitted that respondents 3 and 4 are not

justified in proceeding with the sale of property ignoring the fact that

six months' time will be available for clearing the liability in terms of

the OTS scheme, which the appellant is ready to avail of. The learned

single Judge ought to have found that the appellant is entitled to seek

the benefit of CGSSD scheme in spite of Exts. P5 and P7 judgment,

which were passed prior to the introduction of the same. It was also

contended that as is evident from Ext. P12, letter the Bank itself did

not pin down the appellant to the conditions in Exts.P5 and P7

judgments and offered the benefit of an OTS scheme for settling the

liability for a much lesser amount than what was earlier demanded.

10. We have heard the counsel on either side and perused the

materials on record .

11. Repeatedly, the Hon'ble Supreme Court has held that writ

petitions against proceedings initiated under the SARFAESI Act, 2002

should not be entertained. A reference to a recent judgment of the

Hon'ble Supreme Court on that aspect would be worthwhile.

In Authorised Officer, State Bank of Travancore and Another v.

Mathew K.C. reported in (2018) 3 SCC 85, at paragraphs 15 to 18,

the Hon'ble Supreme Court held as under:

"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 United Bank of India v. Satyawati Tondon and others [AIR 2010 SC 3413], 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, [1969 AIR 556, 1969 SCR (1) 518], Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8 SCC 1], and Harbanslal Sahnia v. Indian Oil Corpn. Ltd.

[AIR 2003 SC 2120] and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order." (emphasis supplied)

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. v. 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."

18. The impugned orders are therefore contrary to the law laid down by this Court under Art.141 of the Constitution and unsustainable. They are therefore set aside and the appeal is allowed."

12. Again, In Civil Appeal Nos.10243-10250 of 2018 [ICICI

Bank Ltd. v. Umakanta Mohapatra and Others], by order dated

5.10.2018, the Hon'ble Apex Court reaffirmed the legal position that

High Court has no jurisdiction to entertain writ petitions under Article

226 of the Constitution of India, relating to matters coming under the

purview of SARFAESI Act, 2002, where a statutory remedy is available

by filing an application under Section 17 of the said Act.

13. In K.C.Mathew's case, Hon'ble Apex Court stated that writ

petition challenging proceedings initiated against SARFAESI Act, 2002

is not maintainable, in the light of the alternate remedy provided

under the statute. Following the decision in K.C.Mathew's case, we

are not inclined to interfere with the judgment in W.P(C). No.12989 of