Smt. Shimona Krishnan vs Bank Of India
2022 Latest Caselaw 5703 MP

Writ Petition No.1404 of 2006                                   1


The High Court of Madhya Pradesh : Bench At Indore

DIVISION BENCH:     HON'BLE MR. JUSTICE VIVEK RUSIA &
                    HON'BLE MR. JUSTICE AMARNATH (KESHARWANI)


                 WRIT PETITION No. 1404 of 2006

           Between:-
           SMT. SHIMONA KRISHNAN W/O ANSHUMAN
           KRISHNAN, AGED - 29 YEARS, OCCUPATION -
           HOUSEWIFE, R/O 81/1, NEW SIGNAL VIHAR,
           MHOW (M.P.)
                                         .....PETITIONER


           AND

1.         BANK OF INDIA, MHOW BRANCH, MHOW (M.P.)
           COLLECTOR / DISTRICT MAGISTRATE INDORE
2.
           (MADHYA PRADESH)
           TEHSILDAR,  TEHSIL      -   MHOW,     MHOW
3.
           (MADHYA PRADESH)
           ANSHUMAN S/O LATE CO. VIJAY KRISHNAN ,
           AGED ABOUT 30 YEARS, OCCUPATION:
4.
           BUSINESSMAN 81/1 NEW SIGNAL VIHAR
           MHOW. (MADHYA PRADESH)
           SMT. SMRITI KRISHNAN W/O LATE COL. VIJAY
           KRISHNAN , AGED ABOUT 54 YEARS,
5.
           OCCUPATION: BUSINESSMAN 81/1 NEW SIGNAL
           VIHAR MHOW. (MADHYA PRADESH)
           THE STATE OF M.P. THROUGH PRINCIPAL
6.         SECRETARY VALLBH BHAWAN BHOPAL M.P.
           (MADHYA PRADESH)
                                       .....RESPONDENTS
 Writ Petition No.1404 of 2006                                             2


Presence :
                                ********
       Shri P.V. Bhagwat, learned counsel for the petitioner.
       Ms. Darshana Baghel, learned counsel for the respondent No.1 / Bank.
       Shri Shrey Raj Saxena, learned Deputy Advocate General for the
respondents / State.
                                ********


                          ORDER

(Delivered on this 20th day of April, 2022 )

As per Vivek Rusia, J:

The petitioner has filed the present petition under Article 226 of the Constitution of India being aggrieved by the RRC dated 28.06.2005 issued by respondent No.3 at the instance of respondent No.1. The Petitioner, respondents No.4 & 5 are members of one family and there is no conflict of interest between them but to rule out the objection of non-joinder of necessary parties they are being impleaded as formal respondents.

02. In the year 2003, the petitioner and respondents No.4 & 5 (hereinafter referred to as borrowers) jointly availed the benefit of the loan of Rs.11,00,000/- from respondent No.1 / Bank for the purchase of Plot No.403 situated at Panchratna Apartment, Manoramaganj, Indore. Since there was default and delay in repayment of the loan, respondent No.1 had initiated proceedings for recovery of the outstanding amount which was more than 12.00 lakhs under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of

Security Interest Act, 2002 (SARFAESI Act) and put the aforesaid mortgaged plot for sale by way of auction. The plot was sold for Rs.6,50,000/- and a sale certificated dated 27.06.2005 was issued in favour of purchaser Shri Amarlal Badlani. The borrower did not challenge the aforesaid auction sale and accepted the measures taken by the respondent / Bank.

03. Since the aforesaid amount of Rs.6,50,000/- was not sufficient to clear the entire outstanding, therefore, the respondent / Bank has proceeded for recovery of the balance amount by way of RRC under the provisions of Madhya Pradesh Lok Dhan (Shodhya Rashiyon Ki Vasuli) Adhiniyam, 1988 (hereinafter referred as the Adhiniyam of 1988) and rules made thereunder. The Collector, in turn, forwarded the RRC dated 28.06.2005 to the Tehsildar, Ambedkar Nagar for further proceedings. Under the order of Tehsildar dated 02.01.2006, the Kurki Amin attached house No.81/1 situated at New Signal Vihar Colony with furniture, a Maruti Gypsy bearing registration No.MP 09 HA 2716 and Bolero Car bearing registration No.MP 09 V 3766. According to the petitioner, the aforesaid proceedings were taken in his absence.

04. Being aggrieved by the proceedings initiated for recovery of the loan amount under the Adhiniyam of 1988, the petitioner has approached this Court by way of the writ petitioner. Initially, the petitioner has challenged the entire proceedings taken by respondents No.1 to 3 for recovery of the

balance amount under the provisions of Adhiniyam of 1988. Later on, by way of amendment, the petitioner has challenged the validity of Adhiniyam of 1988 so far as it applies to the banking companies and sought that the same be struck down as being ultra vires beyond the legislative competence of the Madhya Pradesh State Legislature.

05. The respondent No.1 / Bank has filed the reply justifying its action of initiation of recovery of the balance amount of the loan under the provisions of the Adhiniyam of 1988. It has been submitted that in the said revenue recovery proceedings, the Tehsildar has attached house No.81/1 situated at New Signal Vihar Colony with furniture, a Maruti Gypsy bearing registration No.MP 09 HA 2716 and Bolero Car bearing registration No.MP 09 V 3766. After the attachment, the Tehsildar directed for issuance of a proclamation of sale. So far as the vehicles are concerned, the Tehsildar has directed for summoning the registration book of the vehicle and notice to RTO. Thereafter, notices were published in the local newspaper for conducting an auction sale, but it was postponed on 09.03.2006. Thereafter, there is nothing on record to show the status of the sale.

06. Neither counsel for the petitioner nor respondents' counsel are in a position to give the status of subsequent recovery proceedings initiated under provisions of the Adhiniyam of 1988.

07. The issues which are under consideration in the petition

are as under: -

(i) Whether the provisions of the Adhiniyam of 1988, so far as they relate to the banking companies liable to be struck down being ultra vires and beyond the legislative competence of M.P. State Legislature or not ?

(ii) Whether the Bank can be permitted to initiate recovery proceedings under two different enactments one by one or not ?

(iii) Whether the house loan given by the Bank comes under the Socially Desirable Scheme of the Bank can be recovered under the Adhiniyam of 1988 or not ?

08. Shri Bhagwat learned counsel for the petitioner submitted that in the case of New Laxmi Oil Mills v/s Bank of India reported in 1998 (2) M.P.L.J. 144 although the Division Bench of this Court has upheld the validity of the Adhiniyam of 1988 but it has not been considered that Entry 45 (Banking) falls within the domain of Parliament, therefore, the State Legislature is not competent to enact the law in the field of banking. This issue was raised before the Division Bench, but it was neither dealt with nor rejected. Hence, the petitioner is free to raise these issues in this petition.

09. Shri Shrey Raj Saxena, learned Deputy Advocate General for the respondents / State has placed reliance on a judgment delivered by the Apex Court in the case Harish Tara Refractories (P) Limited v/s Certificate Officer, Sadar Ranchi & Others reported in (1994) 5 SCC 324, in which the Apex

Court has considered the validity of Bihar & Orissa Public Demand Recovery Act, 1914 considering the Entry 45, List I, Seventh Schedule of the Constitution of India and held that even if the legislation incidentally trenches upon the seat reserved for the Central Government it will not be bad on that account. It is further submitted that once the validity of the Act has been upheld by the Division Bench and the same has attained finality, hence no interference is called for.

10. In the case of New Laxmi Oil Mills (supra), the arguments were raised by the petitioner that the matter falls under Entry 85 ('public debt') and Entry 45 (Banking) fall within the legislative domain of Parliament, and therefore, the State Legislature was not competent to enact the law. The Division Bench has considered the aforesaid arguments and held that the State Legislature can create a new Court, recognize the existing Court, provide jurisdiction to the said Court and also take away existing jurisdiction. Under Entry 11-A, the power is given to the State Authority to recover the bank loan would fall under 11- A, List - III, hence, the same is a valid piece of legislation and it has also been held that the Act has received the essence of the President, and therefore, it cannot be said that the Act is ultra vires. In view of the aforesaid judgments, the relief claimed by the petitioner in respect of the validity of the Act is hereby declined.

11. Ms. Darshana Baghel, learned counsel for respondent

No.1 / Bank submitted that the Bank proceeded under the provisions of SARFAESI Act against the borrower and could secure only Rs.6,50,000/- out of total outstanding dues. For the recovery balance amount of Rs.6,33,450/-, the Bank has rightly initiated proceedings for recovery of the said amount through State Revenue Machinery which is legal and justified. As the outstanding dues became less than Rs.10,00,000/-, for which the Debt Recovery Tribunal is not having pecuniary jurisdiction, therefore, the Bank has only one remedy to recover the outstanding amount by way of issuing RRC. It is further submitted that the house loan was notified by the Government under the Ahiniyam of 1988 by issuing a notification dated 13.09.2000, therefore, the Tehsildar has not committed any error while proceeding against the petitioner by attaching the property and vehicle.

12. Initially, the outstanding dues against the borrowers were more than Rs.10,00,000/-, therefore, the proceedings under the provisions of SARFAESI Act were initiated by the bank. The respondent / Bank initiated the proceedings under Section 13 of the SARFAESI Act and took possession of the secured assets and sold them by way of auction and recovered Rs.6,50,000/-. Since the outstanding amount was not released, therefore, in order to recover the balance amount, the bank has decided to proceed under the Adhiniyam of 1988.

13. Section 13(10) of the SARFAESI Act provides that

where dues of the secured creditor are not fully satisfied with the sale proceeds of the secured assets, the secured creditor may file an application in the form and manner as may be prescribed to the DRT having jurisdiction or a competent court, as the case may be, for recovery of the balance amount from the borrower. Section 13(11) also entitles the secured creditor to proceed against the guarantors to sell the pledged assets without taking measures under clauses (a) to (d) of sub-section (4), therefore, after the auction of secured assets, the respondent / Bank should have filed an application before the DRT having jurisdiction or a competent Court.

14. Section 1(4) of the Recovery of Debts Due to Banks & Financial Institutions Act, 1993 (hereinafter referred as the Act of 1993) provides that the provisions of this Act shall not apply where the amount of debt due to the bank or financial institutions is less than ten lakh rupees and there are no secured assets available with the Bank to approach the DRT under Section 19, therefore, the respondent / Bank could approach because the amount due against the borrower is less than Rs.10,00,000/-.

15. Section 13(10) of the SARFAESI Act says that either Tribunal or competent Court is having jurisdiction. Admittedly, the Tehsildar is not a Court.

16. Under Section 3(D)(iii)(c), any person party to an agreement fails to comply with the terms and conditions of the

agreement, the banking companies may send such certificate in such form as may be prescribed and consistent with the provision of sub-section (2) of Section 4 to the Collector of the district, and thereafter, the Collector, on receipt of the certificate shall take the step to recover the amount stated therein as arrears of land revenue, therefore, there is no scope of adjudication in respect of the amount and liability written in RRC i.e. the amount which is liable to recover as land revenue under the provisions of M.P. Land Revenue Code, 1959, whereas Section 13(10) provides that banking companies and financial institutions can take step by way of DRT or competent Court. The Collector or Revenue Authority is not a Court under the provisions of MPLRC and even under the Adhiniyam of 1988.

17. The Supreme Court of India in the case of Unique Butyle Tube Industries (P) Ltd. v. U.P. Financial Corporation reported in (2003) 2 SCC 455 has held as under :-

"9. Section 34 of the Act consists of two parts. Sub- section (1) deals with the overriding effect of the Act notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than the Act. Sub-section (1) itself makes an exception as regards matters covered by sub-section (2). The U.P. Act is not mentioned therein. The mode of recovery of debt under the U.P. Act is not saved under the said provision i.e. sub-section (2) which is of considerable importance so far as the present case is concerned. Even a bare reading therein makes it clear that it is intended to be in addition to and not in derogation of certain statutes; one of which is the Financial Act. In other words, a bank or a financial institution has the option or choice to proceed either under the Act or under the modes of recovery permissible under

the Financial Act. To that extent, the High Court's conclusions quoted above were correct. Where the High Court went wrong is by holding that the proceedings under the U.P. Act were permissible. The U.P. Act deals with separate modes of recovery and such proceedings are not relatable to proceedings under the Financial Act.

In view of the above Writ Petition is allowed. RRC dated 28.06.2005 issued by respondent No.3 at the instance of respondent No.1 is hereby quashed.

No order as to cost.

   (VIVEK RUSIA)                           (AMAR NATH (KESHARWANI))
     JUDGE                                         JUDGE
Ravi
Digitally signed by RAVI PRAKASH
Date: 2022.04.21 16:54:26 +05'30'