Madhya Pradesh High Court

M/S Carnival Films Private vs Yes Bank Limited on 1 May, 2023

Author: Sujoy Paul

1
M.P. No. 2186 OF 2023

IN THE HIGH COURT OF MADHYA
PRADESH
AT JABALPUR
BEFORE
SHRI JUSTICE SUJOY PAUL
&
SHRI JUSTICE AVANINDRA KUMAR SINGH
ON THE 3rd OF MAY, 2023
MISC. PETITION No. 2186 of 2023

BETWEEN :-
1. M/S CARNIVAL FILMS PRIVATE
LIMITED F M -18 MANSAROVAR
COMPLEX 7 NO SHOP SHIVAJI NAGAR
BHOPAL 462 016 M.P. THROUGH ITS
AUTHORISED SIGNATORY.

2. M/S CARNIVAL CAPITAL HOLDING
PRIVATE LIMITED F M-18
MANSAROVAR COMPLEX 7 NO. SHOP
SHIVAJI NAGAR BHOPAL 462016 M.P.
THROUGH ITS AUTHORISED
SIGNATORY
....PETITIONERS
(BY SHRI SATISH AGRAWAL AND SHRI UMANG GOYAL - ADVOCATES )

AND

1. YES BANK LIMITED YES BANK
HOUSE 6 TH FLOOR OFF WESTERN
EXPRESS HIGHWAY SANTACRUZ
EAST MUMBAI -55 MS THROUGH ITS
AUTHORISED OFFICER

2. J C FLOWERS ASSET
RECONSTRUCTION P LIMITED,
2
M.P. No. 2186 OF 2023

REGISTERED OFFICE: 12TH FLOOR
CROMPTON GREAVES HOUSE, DR
ANNIE BESANT ROAD WORLI
MUMBAI 100030 (MAHARASHTRA)
THROUGH ITS AUTHORISED OFFICER

3. IDBI TRUSTEESHIP SERVICES
LIMITED (SECURITY TRUSTEE) ASIAN
BUILDING GROUND FLOOR 17 R
KAMANI MARG BALLARD ESTATE
MUMBAI 400001MS THROUGH ITS
AUTHORISED OFFICER
.....RESPONDENTS
(BY SHRI ATULANAND AWASTHI - SENIOR ADVOCATE ASSISTED BY
SHRI SACHIN KUMAR JAIN - ADVOCATE)
.......................................................................................................

This petition coming on for hearing this day, JUSTICE SUJOY
PAUL passed the following:

ORDER

With the consent, finally heard.

This petition filed under Article 227 of the Constitution of India takes exception to the order of learned Debt Recovery Tribunal dated 11.04.2023 passed in S.A.No. 276/ 2023 whereby the application preferred by the petitioner under Section 17(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short SARFAESI Act) was directed to be returned to the petitioners with the liberty to file it before appropriate forum.

2. Draped in brevity, the admitted facts between the parties are that the petitioners filed an application under Section 17 of the SARFAESI

M.P. No. 2186 OF 2023

Act before the Debts Recovery Tribunal, Jabalpur which was registered as S.A.No. 276/23. Upon receiving notices, the respondent Bank entered appearance before the Tribunal and filed I.A.No. 1422/2023 raising preliminary objection regarding maintainability of the application.

3. The parties were heard by learned Tribunal on the said application and the impugned order dated 11.04.2023 came to be passed whereby the application aforesaid was directed to be returned.

4. The pivotal question before the Tribunal was regarding the maintainability of said application under Section 17 of the Act.

5. Shri Satish Agrawal, learned counsel for the petitioners submits that the Registered Office of the petitioners is admittedly situated at Bhopal. The petitioners received three notices at Bhopal which were issued by the Bank on 26.07.2021 and 20.01.2023 under Section 13(2) of the SARFAESI Act. Thereafter, the Chief Metropolitan Magistrate (C.M.M.), Esplanade, Mumbai passed the impugned order dated 4.4.2022 in exercise of power under Section 14 of the SARFAESI Act. The bone of contention of Shri Agrawal is that issuance of notice under Section 13(2) of the said Act also constitutes a part of the 'cause of action'. The order passed under Section 14 may be the outcome of the said proceeding but by no stretch of imagination, it can be said that notices so issued under Section 13(2) of the Act which were admittedly delivered on the registered address of the petitioners at Bhopal, do not constitute even a miniscule part of 'cause of action'. He placed reliance on a Division Bench order of Lucknow Bench of High Court

M.P. No. 2186 OF 2023

in Rampal Soni and another Vs. State of U.P. (Misc. Single Case No. 13556/21) and judgment of Calcutta High Court in case of Ramsay Exim and Technology Private Limited and others Vs. I.C.I.C.I Bank Limited (C.O. No. 1916/19 decided on 11.09.2019). On the strength of these two orders of Lucknow Bench and Calcutta High Court, Shri Agrawal submits that part of 'cause of action' has certainly arisen within the territory of D.R.T., Jabalpur at Bhopal. In that event, in the teeth of Section 17(1A) of SARFAESI Act, the Tribunal certainly had jurisdiction. The Tribunal, without considering the import and legislative intention behind insertion of Section 17(1A) in the statute book and without dealing with the judgments of Lucknow Bench and Calcutta High Court aforesaid non suited the present petitioners which is bad in law. The analogy drawn by the Tribunal is based on the pre amended provision of Section 17 which has lost much of its shine in view of legislative intention ingrained while inserting Section 17 (1A) in the statute book.

6. To further elaborate, Shri Satish Agrawal, learned counsel for the petitioners submits that Section 13 (2) notices dated 20.1.2023 relates to certain properties, which are situated in the State of M.P. Thus, parts of 'cause of action' which is part of bundle of facts have certainly arisen with the territory of learned Debt Recovery Tribunal, Jabalpur.

7. Sounding a contra note, Shri Atulanand Awasthy learned Senior Counsel assisted by Shri Sachin Jain submits that the impugned order of the Tribunal is appealable under Section 18 of the Act and,

M.P. No. 2186 OF 2023

therefore, this petition may not be entertained and the petitioners may be relegated to avail the appellate remedy. Shri Awasthy, learned Senior Counsel also placed reliance on a Single Bench Judgment of Calcutta High Court in C.O. No. 3372 of 2008 with C.A. N. No.2980 of 2009 (Elements Coke Pvt. Ltd. Vs. UCO Bank). Learned Senior Counsel submits that although this judgment relates to a period when Section 17(1A) of Securitisation Act did not become part of the Statute, the judgment still deals with the aspect of 'cause of action'. This judgment is in favour of the bank. He submits that the learned Tribunal has not committed any error of law which warrants interference by this Court in exercise of power under Article 227 of the Constitution of India.

8. In rejoinder submissions, Shri Satish Agrawal placed reliance on a recent judgment of the Supreme Court reported in 2023 LiveLaw (SC) 70 M/S Godrej Sara Lee Ltd. Vs. the Excise and Taxation Officer - cum - Assessing Authority and others) and urged that since a pure legal question cropped up before this Court, despite availability of alternative remedy, this petition can be entertained. Another limb of argument of Shri Agrawal is that the Tribunal only decided an interlocutory application and did not pass any order under Section 17 of the Act and, therefore, appeal under Section 18 of the Securitisation Act is not tenable.

9. Learned counsel for the parties confined their arguments to the extent indicated above.

M.P. No. 2186 OF 2023

10. We have heard learned counsel for the parties at length and perused the record.

11. So far the objection of alternative remedy is concerned, suffice it say that since a pure question of law is raised before us in the light of recent judgment of Supreme court in Godrej Sara Lee Ltd. (supra), we are not inclined in this round to relegate the petitioners to avail the remedy of appeal. Pertinently, the Indore Bench in W.P. No.3300 of 2023 (M/s Shri Krishnan Tradings and others Vs. Union Bank of India and others) and M.P. No. 2004 of 2023 (Agro B.R.K. Energy Ltd. And others Vs. Bank of India and others) has also entertained the petitions despite availability of alternative remedy.

12. Before dealing with the rival contentions, it is apposite to quote Section 17(1A) which became part of the Statute Book w.e.f. 1 st of September 2016 :-

[(1A) An application under sub-section (1) shall be filed before the Debts Recovery Tribunal within the local limits of whose jurisdiction -

(a) the cause of action, wholly or in part, arises;

(b) where the secured asset is located; or ( c) the branch or any other office of a bank or financial institution is maintaining an account in which debt claimed is outstanding for the time being.] (Emphasis supplied)

13. The parties were at loggerheads before the Tribunal on the question whether any part of 'cause of action' has arisen within the territory of the Debt Recovery Tribunal, Jabalpur or whether any other clause of (1A) is attracted. The petitioners in Para-3 ('jurisdiction of

M.P. No. 2186 OF 2023

the Tribunal') of their application filed under Section 17 of the Act pleaded as under :-

'3. Jurisdiction of the Tribunal :-

The applicants declare that the subject matter of this application falls within the jurisdiction of this Hon'ble Tribunal, since alleged borrower /mortgagor is situated within territorial jurisdiction of this Hon'ble Tribunal. Action has been initiated to have effect at Bhopal, M.P. which is within the territorial jurisdiction of this Hon'ble Tribunal.' (Emphasis Supplied)

14. Learned Tribunal passed the impugned order and directed to return the application to the petitioners. A plain reading of the impugned order of the Tribunal leaves no room for any doubt that it has treated the starting point for counting the 'cause of action' from the date the order of CMM dated 4.4.2022 is passed. The Tribunal has not taken pains to assign a single reason as to why the judgment of Lucknow Bench and Calcutta High Court cited by the petitioners did not suit it. Putting it differently, it was the minimum expectation from a Tribunal of first instance before whom the question of its jurisdiction is cropped up to deal with rival contentions with accuracy and precision. It was the duty of the Tribunal to deal with the rival contentions and judgments cited by the parties and pass the order by assigning adequate reasons.

15. Since the Tribunal has failed to deal with the question of jurisdiction by dealing with the relevant judgments relating to the question of 'cause of action' and jurisdiction, we are unable to

M.P. No. 2186 OF 2023

countenance the impugned order dated 11.4.2023. Resultantly, the said order is set aside. The matter is remitted back before the Tribunal to rehear the parties on the question of jurisdiction and pass a fresh order in accordance with law.

16. The parties agreed to appear before the Debt Recovery Tribunal, Jabalpur on 12th of May 2023. The Registry of this Court shall forthwith send a copy of this order to the learned Debt Recovery Tribunal, Jabalpur. Thus, for appearance of the parties before the Debt Recovery Tribunal, Jabalpur, no fresh notices will be required to be issued by the Tribunal. The Tribunal shall decide the question of maintainability afresh expeditiously and till such time fresh decision is taken, the ad - interim protection given by this Court shall remain in operation. The petition is disposed of without expressing any opinion on merits of the case.

(SUJOY PAUL) (AVANINDRA KUMAR SINGH) JUDGE JUDGE Vikram

VIKRAM Digitally signed by VIKRAM SINGH DN: c=IN, o=HIGH COURT OF MADHYA PRADESH, ou=HIGH COURT OF MADHYA PRADESH, postalCode=482001, st=Madhya Pradesh, 2.5.4.20=5e3bf9b63759d9c0513833048a47283c8f667 32878c5d090341a0b75ce6d1e91,

SINGH pseudonym=0AEDD33AA7448729F1E72B903F78F040 27BCFA24, serialNumber=FDD89E77C40EC11A8EC3AAADEF0E2E 7DAFEC93C010D5EFB1CD4A15D8A674147A, cn=VIKRAM SINGH Date: 2023.05.04 12:45:01 +05'30'