C.M.John vs M/S.Pegasus Assets Reconstruction (P) ...
2024 Latest Caselaw 6 Ker

Kerala High Court

C.M.John vs M/S.Pegasus Assets Reconstruction (P) ... on 3 January, 2024

Author: N.Nagaresh

Bench: N.Nagaresh

         IN THE HIGH COURT OF KERALA AT ERNAKULAM
                            PRESENT
              THE HONOURABLE MR.JUSTICE N.NAGARESH
 WEDNESDAY, THE 3RD DAY OF JANUARY 2024 / 13TH POUSHA, 1945
                    WP(C) NO. 31175 OF 2022
PETITIONER:

         C.M.JOHN,
         AGED 48 YEARS
         S/O.MATHEW, CHAMAVALAPPIL HOUSE,
         NEAR HOLY CONVENT, POTTA, THRISSUR - 680722

         BY ADV T.RAJASEKHARAN NAIR


RESPONDENTS:

    1    M/S.PEGASUS ASSETS RECONSTRUCTION (P) LTD.,
         NO.31/970 B2, UZHIZELIL TOWERS, 1ST FLOOR,
         SUBHASH CHANDRA BASE ROAD,PONNURUNNI,
         VYITTLA P.O., KOCHI - 682019, REP. BY P.M.MOHAN.
    2    INDUSIND BANK LIMITED,
         REGISTERED OFFICE, AT 2401,
         GEN.THIMMAYYA ROAD, PUNE - 411001,
         REPRESENTED BY ITS MANAGER.

         BY ADVS.
              ANZIL SALIM
              LAL K.JOSEPH


     THIS WRIT PETITION       (CIVIL) HAVING COME UP     FOR
ADMISSION ON 03.01.2024,      THE COURT ON THE SAME      DAY
DELIVERED THE FOLLOWING:
 WP(C) No.31175 of 2022
                                   2




                              JUDGMENT

Dated this the 3rd day of January, 2024

The petitioner has approached this Court aggrieved by

initiation of proceedings under the Securitisation and

Reconstruction of Financial Assets and Enforcement of

Security Interest Act, 2002.

2. The petitioner states that he along with his wife

executed a loan agreement dated 27.12.2018 and availed a

Housing Loan of ₹1,05,00,000/- from the 2 nd respondent-

Bank. The petitioner provided equitable mortgage of property

having an extent of 3.80 Ares in Kuttichira Village of

Chalakudy Taluk.

3. The petitioner states that the tenure of the loan was

15 years and had to be paid in 181 equated monthly

instalments. The petitioner remitted substantial amount. But,

when certain default occurred in repayment, the

2nd respondent resorted to SARFAESI proceedings and a

Demand Notice was issued for payment of ₹1,14,98,000/-

along with further interest, as per Ext.P1. The 2 nd respondent-

Bank also moved the Chief Judicial Magistrate's Court,

Thrissur and obtained an order under Section 14 of the

Securitisation and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002. The Advocate

Commissioner has issued Ext.P2 Demand Notice. The

petitioner states that he is not in a position to remit the amount

demanded by the Bank in a lump.

4. The petitioner filed W.P.(C) No.25520 of 2019 and

this Court as per Ext.P4 judgment directed that if a suitable

proposal for settlement of loan account is submitted by the

petitioner, the 2nd respondent-Bank will be free to consider

the same. If a proposal is not made, the Bank will be at liberty

to proceed against the petitioner. The petitioner submitted

Ext.P5 proposal. However, the 1st respondent issued Ext.P6

stating that such proposal cannot be accepted as it is not

viable.

5. The petitioner states that Exts.P1 and P2 notices

and Ext.P6 letter issued by the 1st respondent are highly

arbitrary. The respondents ought to have realised the fact that

the petitioner is not a chronic defaulter. In the circumstances,

the petitioner seeks to direct the respondents to regularise the

loan and allow the petitioner to pay the amount by the agreed

EMI regularly in full satisfaction of the loan amount within a

period prescribed by the respondents.

6. The 1st respondent-Asset Reconstruction Company

entered appearance and resisted the writ petition. The 1 st

respondent filed a statement. On behalf of the 1 st respondent,

it is submitted that the petitioner created equitable mortgage

of the property having an extent of 3.80 Ares. When the EMIs

were defaulted, security proceedings were initiated against

the petitioner. The prayer in the writ petition is to regularise

the loan and allow the petitioner to pay the amount by the

agreed EMI regularly. Due to the failure of the petitioner to

comply with the agreed terms, the loan account has been

declared as NPA and the debt has been made over to the

1st respondent-Asset Reconstruction Company.

7. The 1st respondent further submitted that on

28.09.2022, when the 1st respondent along with the Advocate

Commissioner appointed by the Chief Judicial Magistrate's

Court, Thrissur, visited the secured asset for taking

possession, the petitioner issued Ext.R1(d) letter submitting

that he will surrender the secured asset to the 1 st respondent

within five days, if he cannot deposit the entire amount in five

days.

8. Heard.

9. The counsel for the petitioner submitted that the

proceedings of the respondents under the Securitisation and

Reconstruction of Financial Assets and Enforcement of

Security Interest Act, 2002 is illegal since the loan account

was transferred to the Asset Reconstruction Company on the

same day the loan was renewed. The Standing Counsel, on

the other hand, would point out that the loan account was

declared as NPA in the year 2018 and the loan account was

transferred to the Asset Reconstruction Company on

14.03.2019. In the circumstances, I do not find any illegality in

the action of the Bank transferring the loan account to the 1st

respondent-Asset Reconstruction Company.

10. The counsel for the petitioner then contended that if

the petitioner is granted six months' time to clear the entire

outstanding dues, the petitioner may be able to find out a

purchaser for sale of another property of the petitioner. The

petitioner will be thus able to clear the entire dues in six

months time. It is to be noted that the liability of the petitioner

exceeds ₹1.8 Crores as on 19.10.2022. When huge amounts

are due to the Bank, the petitioner cannot be granted time for

repayment liberally.

11. The Apex Court has held in the judgment in

Phoenix ARC Private Limited v. Vishwa Bharati Vidya

Mandir [2022 (1) KLT Online 1124 (SC)] that if the

proceedings are initiated under the SARFAESI Act and any

proposed action is to be taken and the borrower is aggrieved

by any of the actions of the Private Bank, borrower has to

avail the remedy under the SARFAESI Act and no writ petition

would lie and is maintainable or entertainable. Filing of writ

petitions by the borrower before the High Court under Article

226 of the Constitution of India is an abuse of process of the

Court.

12. The grievance of the petitioner is relating to the

proceedings initiated by the respondents under Sections 13

and 14 of the Securitisation Act and the attempt of the

respondents to take over and sell the secured asset provided

by the petitioner.

13. It is settled law that no writ would lie against the

proceedings initiated by a financial institution under the

provisions of the SARFAESI Act. In United Bank of India v.

Satyawati Tondon and others [(2010) 8 SCC 110], the

Hon'ble Apex Court declared that no writ petition shall be

entertained against the proceedings initiated under the

SARFAESI Act at the instance of a defaulter since the statute

provides for an efficacious alternate remedy.

14. In the judgment in Authorised Officer, State Bank

of Travancore v. Mathew K.C. [2018 (1) KLT 784], the

Hon'ble Apex Court reiterated that no writ petition would lie

against the proceedings under the SARFAESI Act in view of

the statutory remedy available under the said Act.

15. Following the judgment in Satyawati Tondon

(supra), a Division Bench of this Court in the judgment in

Anilkumar v. State Bank of India [2020 (2) KLT 756]

declined to exercise jurisdiction under Article 226 of the

Constitution of India against the proceedings initiated under

the Securitisation Act.

16. In South Indian Bank Limited v. Naveen Mathew

Philip [2023 (4) KLT 29], the Apex Court held that when the

legislature has provided a specific mechanism for appropriate

redressal, the powers conferred under Article 226 of the

Constitution of India shall be exercised only in extraordinary

circumstances.

17. In Jayakrishnan A. v. Union Bank of India and

others (W.P.(C) No.30803/2023), this Court held that writ

petition challenging any proceedings under the Securitisation

Act is not maintainable since the aggrieved person has an

effective and efficacious remedy before the Tribunal

constituted under the Act which is competent to adjudicate the

issues of fact and law, including statutory violations.

In the light of the categorical pronouncements of law

made by the Apex Court and by this Court, the above writ

petition is not maintainable and it is dismissed.

Sd/-

N.NAGARESH JUDGE spk

APPENDIX OF WP(C) 31175/2022

PETITIONER EXHIBITS

EXHIBIT P1 A TRUE PHOTOCOPY OF THE DEMAND NOTICE ISSUED BY THE 1 ST RESPONDENT TO THE PETITIONER DATED 05.02.2019 EXHIBIT P2 A TRUE PHOTOCOPY OF THE NOTICE DATED 18.9.2019 ISSUED BY THE ADVOCATE COMMISSION IN CRI.M.P. NO.3335/2019 ON THE FILE OF THE CJM, THRISSUR TO THE PETITIONER EXHIBIT P3 A TRUE PHOTOCOPY OF THE NOTICE ISSUED BY THE ADVOCATE COMMISSIONER TO THE PETITIONER DATED 06.08.2022 EXHIBIT P4 A TRUE PHOTOCOPY OF THE JUDGMENT IN W.P.(C) 25520/2019 DATED 25.8.2022 PASSED BY THIS HONOURABLE COURT EXHIBIT P5 A TRUE PHOTOCOPY OF THE PROPOSAL SUBMITTED BY THE PETITIONER BEFORE THE LST RESPONDENT EXHIBIT P6 A TRUE PHOTOCOPY OF THE LETTER DATED 13.9.2022 ISSUED BY THE LST RESPONDENT

RESPONDENT ANNEXURES

ANNEXURE R1(A) TRUE COPY OF THE ASSIGNMENT DEED DATED 14.03.2019 ANNEXURE R1(B) TRUE COPY OF THE ASSIGNMENT INTIMATION LETTER DATED 5.02.2019 SENT BY THE ASSIGNOR BANK TO THE RESPONDENTS ANNEXURE R1(C) TRUE COPY OF THE ACCOUNT STATEMENT FOR THE PERIOD FROM 29/12/2018 TO 20/11/2019 ANNEXURE R1(D) TRUE COPY OF THE LETTER DATED 28/09/2022 ISSUED BY THE PETITIONER TO THE 1ST RESPONDENT EXHIBIT R1(E) TRUE COPY OF THE RBI CIRCULAR RBI/2022-23/128 DOR.SIG.FIN.REC.75/ 26.03.001/2022-23 DATED 11/10/2022 REVIEWING THE REGULATORY FRAMEWORK FOR

ASSET RECONSTRUCTION COMPANIES (ARCS). EXHIBIT R1(F) TRUE COPY OF THE JUDGMENT DATED 12/01/2022 OF THE HON'BLE SUPREME COURT OF INDIA IN PHOENIX ARC PVT.

LTD. V. VISHWA BHARATI VIDYA MANDIR AND REPORTED AS 2022 (1) KLT ONLINE 1124 (SC)