Kerala High Court
C.S. Timbers vs Bajaj Finance Ltd on 29 February, 2024
Author: N.Nagaresh
Bench: N.Nagaresh
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE N.NAGARESH
THURSDAY, THE 29TH DAY OF FEBRUARY 2024/10TH PHALGUNA, 1945
WP(C) NO. 14030 OF 2023
PETITIONERS:
1 C.S. TIMBERS,
CHANASSERY PAINGODE,
PUTHENCHIRA P.O.,
THRISSUR DISTRICT, PIN - 680682,
REPRESENTED BY ITS PROPRIETOR.
2 THARAYIL UPENDRAN URMILA,
AGED 62 YEARS,
2/298, CHANASSERY,
PUTHENCHIRA,
THRISSUR DISTRICT -680682
3 C. MANISH CHANDRAN,
AGED 41 YEARS
S/O. CHANDRAN,
CHANASSERY HOUSE,
VALLIVATTOM P.O.,
THRISSUR DISTRICT- 680123
4 CHANDRAN C.S.,
AGED 74 YEARS
2/298, CHANASSERY,
PUTHENCHIRA,
THRISSUR DISTRICT - 680682
BY ADVS.
S.VINOD BHAT
ANAGHA LAKSHMY RAMAN
GREESHMA CHANDRIKA.R
W.P.(C) No.14030/2023
:2:
RESPONDENT:
BAJAJ FINANCE LTD.,
HAVING ITS CORPORATE OFFICE AT 4TH FLOOR,
SURVEY NO.208/1-B, BEHIND WEIKFIELD IT PARK,
VIMAN NAGAR, PUNE-411014 WITH ITS REGIONAL
OFFICE AT 4TH FLOOR, DD TRADE TOWERS, KALOOR-
KADAVANTHARA ROAD, ERNAKULAM-682017,
REPRESENTED BY ITS AUTHORIZED SIGNATORY.
BY ADV. SRI.PRADEESH CHACKO
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 29.02.2024, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
W.P.(C) No.14030/2023
:3:
N. NAGARESH, J.
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W.P.(C) No.14030 of 2023
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Dated this the 29th day of February, 2024
JUDGMENT
~~~~~~~~~
Petitioners, who are borrowers of a financial
advance from the 1st respondent-Bajaj Finance Limited, are
seeking to quash Ext.P3 notice issued by the Advocate
Commissioner appointed by the Chief Judicial Magistrate's
Court, Thrissur under Section 14 of the Securitisation and
Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002.
2. The petitioners state that the home loan was
obtained from the respondent based on an agreement dated
31.10.2014. The respondent invoked the arbitration clause in
the agreement to realise the loan amount from the
petitioners. By Ext.P1 Claim Statement, the respondent
sought to recover approximately ₹1.99 Crore from the
petitioners.
3. In the Claim Petition before the Arbitrator, the
respondent prayed that the petitioners be directed to
handover the possession of the mortgaged residential
property owned by petitioners 2 to 4. The petitioners state
that the petitioners and family have no other place of abode
than the mortgaged property.
4. When arbitration proceedings are pending, the
respondent invoked proceedings under the Securitisation
and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 and Ext.P3 notice of the Advocate
Commissioner appointed under Section 14 of the Act, 2002
is now served on the petitioners, threatening to take physical
possession of the property mortgaged by the petitioners.
The petitioners apprehend that they will be dispossessed
from the residential building where they reside with family.
5. The petitioners submit that any action based on
Ext.P3 cannot continue when adjudicatory proceedings are
on before the Arbitrator. The petitioners would assert that
proceedings under the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act,
2002 are in the nature of enforcement which has to await
adjudicatory proceedings before the Arbitrator. In the
circumstances, Ext.P3 is liable to be quashed, contended the
petitioners.
6. I have heard the learned counsel for the
petitioners and the learned counsel appearing for the
respondent.
7. The 1st petitioner is the borrower of a loan taken
from the respondent as per agreement dated 31.10.2014.
Petitioners 2 to 4 are co-borrowers. The loan was a home
loan and an amount of ₹1.78 Crore was disbursed to the
petitioners. When repayment of loan was defaulted, the
respondent invoked the arbitration clause in the agreement
dated 31.10.2014 and a Sole Arbitrator was appointed. One
of the final reliefs sought for in the Claim Statement filed by
the petitioners before the Sole Arbitrator is to direct the
petitioners to forthwith handover possession of the
mortgaged property, which is a residential building of
petitioners 2 to 4.
8. The petitioners are challenging a notice issued by
the Advocate Commissioner intimating his intention to take
physical possession of the property mortgaged as security
for the loan amount. Ext.P3 notice has been issued in
pursuance of proceedings under the Securitisation and
Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002.
9. The contention of the petitioners is that since
arbitration proceedings which are adjudicatory in nature, are
pending, securitisation proceedings which are executory in
nature, have to wait till Arbitrator passes an Award. Ext.P3 is
therefore unsustainable. The petitioners would contend that
there is no strict adherence to the provisions of the Act, 2002
and the Rules made thereunder before issuing Ext.P3
inasmuch as, according to the description in Ext.P3, the
petitioners have no property.
10. The question arising for consideration is whether
the arbitration proceedings initiated by the respondent and
securitisation proceedings under the Act, 2002 can proceed
simultaneously. By setting up Debts Recovery Tribunals
under the RDDB Act, specialised Tribunals came into
existence entertaining monetary claims by the Banks and
financial institutions. Suits from civil jurisdiction were
transferred to the Debts Recovery Tribunal as Tribunal was
an alternative to civil court recovery proceedings.
11. The question whether parallel proceedings could
go on under the RDDB Act and SARFAESI Act came up for
consideration in Mathew Varghese v. M. Amrita Kumar
and others [(2014) 5 SCC 610] wherein the Hon'ble Apex
Court held that SARFAESI Act will be in addition to the
provisions of the RDDB Act. A reading of Sections 35 and
37 of the SARFAESI Act would make it clear that in the event
of any of the provisions of the RDDB Act not being
inconsistent with the provisions of the Securitisation Act, the
application of both Acts would be complementary to each
other.
12. The Hon'ble Apex Court considered the issue of
simultaneous proceedings under the Securitisation and
Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 and arbitration proceedings
against the borrower. The Apex Court held that it is trite to
say that arbitration is an alternative to the civil proceedings.
When a question was raised as to whether the matters which
came within the scope and jurisdiction of the Debts Recovery
Tribunal under the RDDB Act, could still be referred to
arbitration when both parties have incorporated such a
clause, the answer was given in the affirmative in HDFC
Bank Limited v. Satpal Singh Bakshi [2012 SCC Online
Del 4815].
13. Even though the parties have opted for the mode
of settlement of disputes to an Arbitral Tribunal, the
provisions of the SARFAESI Act are remedy in addition to the
provisions of the Arbitration Act. SARFAESI Act is intended
for liquidation of secured interest through a more expeditious
procedure. The Arbitration Act and the Securitisation and
Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 are therefore cumulative
remedies available to the secured creditors.
14. SARFAESI proceedings are in the nature of
enforcement proceedings, while arbitration is an adjudicatory
process. If the secured assets are insufficient to satisfy the
debts, the secured creditor can proceed against the other
asset in execution against the debtor after determination of
the pending outstanding amount by a competent forum.
Therefore, there is nothing wrong in opting for proceedings
under the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 even
when arbitration proceedings are pending.
The writ petition is therefore without any legal
force and hence it is dismissed.
Sd/-
N. NAGARESH, JUDGE
aks/28.02.2024
APPENDIX OF WP(C) 14030/2023
PETITIONER'S EXHIBITS:
Exhibit P1 THE TRUE COPY OF CLAIM STATEMENT ALONG
WITH DOCUMENTS CASE FILED BY THE
RESPONDENT.
Exhibit P2 THE TRUE COPY OF STATEMENT OF DEFENCE
FILED BY THE PETITIONERS
Exhibit P3 THE TRUE COPY OF THE NOTICE DATED 01-
04-2023 ISSUED BY ADVOCATE
COMMISSIONER APPOINTED BY CHIEF
JUDICIAL MAGISTRATE COURT, THRISSUR IN
Exhibit P4 THE TRUE COPY OF ACKNOWLEDGEMENT CARD.
