South Indian Bank Limited vs N.P.Junais
2024 Latest Caselaw 31473 Ker

Kerala High Court

South Indian Bank Limited vs N.P.Junais on 5 November, 2024

                 IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                 PRESENT

          THE HONOURABLE THE CHIEF JUSTICE MR. NITIN JAMDAR

                                    &

                    THE HONOURABLE MR. JUSTICE S.MANU

     TUESDAY, THE 5TH DAY OF NOVEMBER 2024 / 14TH KARTHIKA, 1946

                           WA NO. 1761 OF 2024

     AGAINST THE ORDER/JUDGMENT DATED IN WP(C) NO.36482 OF 2024 OF

HIGH COURT OF KERALA

APPELLANTS:

     1        SOUTH INDIAN BANK LIMITED,
              REGIONAL OFFICE, HAPPY TOWER, VAIKKOM MUHAMMED BASHEER
              ROAD, MANANCHIRA, KOZHIKODE, REGISTERED OFFICE AT SOUTH
              INDIAN BANK HOUSE, T.B.ROAD, MISSION QUARTERS, THRISSUR,
              REP BY ITS CHIEF MANAGER AND AUTHORIZED OFFICER, PIN -
              680001

     2        THE AUTHORIZED OFFICER AND CHIEF MANAGER,
              SOUTH INDIAN BANK LIMITED, REGIONAL OFFICE, HAPPY TOWER,
              VAIKKOM MUHAMMED BASHEER ROAD, MANANCHIRA, KOZHIKODE, PIN
              - 673001

     3        THE BRANCH MANAGER,
              SOUTH INDIAN BANK LIMITED, MAVOOR ROAD BRANCH, KOZHIKODE,
              KERALA, PIN - 673004


              BY ADV P.A.AUGUSTINE(AREEKATTEL)


RESPONDENTS:

              N.P.JUNAIS,
              AGED 48 YEARS
              S/O. KUTTYHASSAN, MANAGING PARTNER M/S OJIN BAKES, DOOR
              NO.1/4780, A,B,C,D,E,G, DHANA PLAZA, WEST NADAKKAVU,
              KOZHIKODE, PIN - 673011
                                         2024:KER:82534
WA NO. 1761 OF 2024
                               2


          P.A.AUGUSTINE(AREEKATTEL)
          SRI ABDUL RAOOF PALLIPATH

    THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON
05.11.2024, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
                                                                  2024:KER:82534
WA NO. 1761 OF 2024
                                        3

                                                                         CR
                                   JUDGMENT

Dated this the 5th day of November, 2024.

Nitin Jamdar, C.J.

Heard Mr. P.A.Augustine Areekattel, learned counsel appearing for the Appellants and Mr.Abdul Raoof Pallipath, learned counsel appearing for the Respondent.

2. The Respondent/Original Petitioner is the borrower of the Appellant Bank. The Appellant Bank after classifying the loan account of the Petitioner as non-performing asset, proceeded against the Petitioner under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 Act (SARFAESI Act). The Petitioner filed an application before the Debt Recovery Tribunal. The Debt Recovery Tribunal initially granted interim order and thereafter vacated the same, against which, the remedy of the Petitioner is to approach the Debt Recovery Appellate Tribunal. Instead, the Petitioner filed Writ Petition under Article 226 of the Constitution of India.

3. The law in this regard is settled. In the case of United Bank of India v. Satyawati Tondon [(2010) 8 SCC 110] , the Hon'ble Supreme Court has taken note of interference by the High Courts under Article 226 of the Constitution of India and disapproved such interference in the matter under which remedy is available under the SARFAESI Act. In the latest decision in the case of HR Invent Educational Society v. UCO Bank, [(2024) 6 SCC 2024:KER:82534 WA NO. 1761 OF 2024

579], the Hon'ble Supreme Court has again sounded a note of caution as under:

"22. The law with regard to entertaining a petition under Article 226 of the Constitution in case of availability of alternative remedy is well settled. In Satyawati Tondon [United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110 : (2010) 3 SCC (Civ) 260: 2010 INSC 428], this Court observed thus :

(SCC p. 123, paras 43-45) "43. Unfortunately, the High Court [Satyawati Tondon v.

State of U.P., 2009 SCC OnLine All 2608] 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.

44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the 2024:KER:82534 WA NO. 1761 OF 2024

enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution.

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."

23. It could thus be seen that, this Court has clearly held 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. It has been held 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. The Court clearly observed that, 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. It has been held that, though the powers of the High Court under Article 226 of the Constitution are of widest amplitude, still the courts cannot be oblivious of the rules of self-imposed restraint evolved by this Court. The Court further held that though the rule of 2024:KER:82534 WA NO. 1761 OF 2024

exhaustion of alternative remedy is a rule of discretion and not one of compulsion, still it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution.

24. The view taken by this Court has been followed in Agarwal Tracom (P) Ltd. v. Punjab National Bank[Agarwal Tracom (P) Ltd. v. Punjab National Bank, (2018) 1 SCC 626: (2018) 1 SCC (Civ) 425 : 2017 INSC 1146].

25. In State Bank of Travancore v. Mathew K.C. [State Bank of Travancore v. Mathew K.C., (2018) 3 SCC 85 : (2018) 2 SCC (Civ) 41 : 2018 INSC 71] , this Court was considering an appeal against an interim order passed by the High Court in a writ petition under Article 226 of the Constitution staying further proceedings at the stage of Section 13(4) of the SARFAESI Act. After considering various judgments rendered by this Court, the Court observed thus : (SCC p. 94, para 16) "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."

26. The same position was again reiterated by this Court in Phoenix ARC (P) Ltd. v. Vishwa Bharati Vidya Mandir [Phoenix ARC (P) Ltd. v. Vishwa Bharati Vidya Mandir, (2022) 5 SCC 345 : (2022) 3 SCC (Civ) 153 : 2022 INSC 44].

27. Again, in Varimadugu Obi Reddy v. B. Sreenivasulu 2024:KER:82534 WA NO. 1761 OF 2024

[Varimadugu Obi Reddy v. B. Sreenivasulu, (2023) 2 SCC 168 :

(2023) 1 SCC (Civ) 58 : 2022 INSC 1207], after referring to earlier judgments, this Court observed thus : (SCC pp. 181-82, para 34) "34. The order of the Tribunal dated 1-8-2019 was an appealable order under Section 18 of the SARFAESI Act, 2002 and in the ordinary course of business, the borrowers/person aggrieved was supposed to avail the statutory remedy of appeal which the law provides under Section 18 of the SARFAESI Act, 2002. In the absence of efficacious alternative remedy being availed, there was no reasonable justification tendered by the respondent borrowers in approaching the High Court and filing writ application assailing order of the Tribunal dated 1-8-2019 under its jurisdiction under Article 226 of the Constitution without exhausting the statutory right of appeal available at its command."

28. It could thus be seen that this Court has strongly deprecated the practice of entertaining writ petitions in such matters.

29. Recently, in Celir LLP [Celir LLP v. Bafna Motors (Mumbai) (P) Ltd., (2024) 2 SCC 1 : (2024) 1 SCC (Civ) 62:

2023 INSC 838], after surveying various judgments of this Court, the Court observed thus: (SCC p. 81, para 101) "101. More than a decade back, this Court had expressed serious concern despite its repeated pronouncements in regard to the High Courts ignoring the availability of statutory remedies under the Rdbfi Act and the Sarfaesi Act and exercise of jurisdiction under Article 226 of the Constitution. Even after the decision of this Court in Satyawati Tondon [United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110 : (2010) 3 SCC (Civ) 260: 2010 INSC 428], it appears that the High Courts have continued to exercise its writ jurisdiction under Article 226 ignoring the statutory remedies under the Rdbfi Act and 2024:KER:82534 WA NO. 1761 OF 2024

the SARFAESI Act."

30. It can thus be seen that it is more than a settled legal position of law that in such matters, the High Court should not entertain a petition under Article 226 of the Constitution particularly when an alternative statutory remedy is available. ....

41. While dismissing the writ petition, we will have to remind the High Courts of the following words of this Court in Satyawati Tondon [United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110: (2010) 3 SCC (Civ) 260: 2010 INSC 428] since we have come across various matters wherein the High Courts have been entertaining petitions arising out of the DRT Act and the SARFAESI Act in spite of availability of an effective alternative remedy: (SCC p. 128, para 55) "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."

(emphasis supplied) The above dicta is clear and binding. The impugned order has not referred to this position of law.

4. Therefore, though the Appellant Bank has stated that if certain amount is paid installments can be offered this is a matter of commercial prudence for the Appellant Bank and it was because the Petition was entertained. In these 2024:KER:82534 WA NO. 1761 OF 2024

circumstances, we are of the opinion that the remedies of the Petitioner was to approach the Debt Recovery Appellate Tribunal.

5. The impugned order is accordingly set aside, leaving it open to the Petitioner to approach the Debt Recovery Appellate Tribunal for further relief. The Appeal is disposed of.

sd/-

Nitin Jamdar, Chief Justice sd/-

S. Manu, Judge Nsd