M/S Shriram Plast vs Recovery Officer Debts Recovery ...
2024 Latest Caselaw 12787 MP

Madhya Pradesh High Court

M/S Shriram Plast vs Recovery Officer Debts Recovery ... on 7 May, 2024

                                                          1
                          IN    THE      HIGH COURT OF MADHYA PRADESH
                                              AT JABALPUR
                                                    BEFORE
                                        HON'BLE SHRI JUSTICE VINAY SARAF
                                                ON THE 7 th OF MAY, 2024
                                           MISC. PETITION No. 2256 of 2024

                         BETWEEN:-
                         1.    M/S SHRIRAM PLAST THROUGH ITS PARTNERS
                               VIJAY KUMAR SHRIVASTAVA S/O SHRI RAM
                               NARESH SHRIVASTAVA AGED ABOUT 46 YEARS
                               BESIDE PLOT NO.9-A, INDUSTRIAL GROWTH
                               CENTRE, MANERI, MANDLA (MP) (MADHYA
                               PRADESH)

                         2.    SMT. ALKA SHRIVASTAVA W/O SHRI VIJAY
                               KUMAR SHRIVASTAVA, AGED ABOUT 47 YEARS,
                               R/O E-201 NARSINGH NAGAR NEAR RAWAN PARK
                               RANJHI JABALPUR (MADHYA PRADESH)

                         3.    SHRI ABHAY RAJ SHRIVASTAVA S/O SHRI GP
                               SHRIVASTAVA, AGED ABOUT 48 YEARS, R/O E-201
                               NARSINGH NAGAR NEAR RAWAN PARK RANJHI
                               JABALPUR (MADHYA PRADESH)

                                                                                   .....PETITIONERS
                         (BY SHRI MOHD. WAJID HYDER - ADVOCATE)

                         AND
                         1.    RECOVERY      OFFICER  DEBTS  RECOVERY
                               TR IB UN AL 797 SHANNTIKUNJ SOUTH CIVIL
                               LINES JABALPUR (MADHYA PRADESH)

                         2.    MP FINANCIAL CORPORATION PACHPEDI SOUTH
                               CIVIL LINES JABALPUR (MADHYA PRADESH)

                                                                                 .....RESPONDENTS
                         (NONE FOR RESPONDENTS)

                               This petition coming on for admission this day, th e court passed the
                         following:
                                                           ORDER

Heard on the question of admission.

2. It appears that the petitioner No.1/M/s Shriram Plast has availed credit facility from M.P. Financial Corporation, Jabalpur and due to the default committed in repayment of dues payable to respondent No.2, the respondent No.2 filed OA No. 870/2020 before DRT, Jabalpur and DRT, Jabalpur passed the final order on 21.08.2023 and issued the recovery certificate for recovery of Rs. 12,66,31,700/-.

3. The Recovery Officer after receipt of certificate issued under Section 19(7) r/w Section 19(22) of the Act, 1993 registered RC No. 1/2024 and ordered to issue notice to the certificate debtors i.e. the petitioners by order dated 09.02.2024 and fixed the case on 11.03.2024 for their appearance.

4. On 11.03.2024, Mr. Deepak Pachori, Advocate appeared on behalf of certificate debtors and filed his vakalatnama. The certificate holder filed publication report of the demand notice including declaration of assets on affidavit which was published in Dainik Bhaskar Newspaper on 15.02.2024 in Jabalpur Edition and allowed to file Valuation Report of mortgage property. Learned counsel for certificate debtor filed OTS Report, which was taken on record and as per the learned counsel appearing on behalf of Bank, it was taken on record that the OTS was rejected by the Bank. Proceeding dated 11.03.2024 reflects that no objection against the recovery/execution of certificate was filed on behalf of petitioners and the Recovery Officer passed the order for execution of recovery certificate, which is under challenged in the present petition on the ground that on the first date of appearance of certificate debtor, no order could be passed by the Recovery Officer and he ought to have wait till the filing of the objection by the certificate debtor or grant the time to file the objection and therefore, passing of the order for execution of recovery

certificate amounts to violation of principles of natural justice. The other ground raised in the present petition is that the order passed by Recovery Officer is in violation of provisions of RDB Act and Rules made thereunder as well as the provisions of second and third schedule of Income Tax Act and Income Tax (Certificate Proceedings) Rules, 1962.

5. It is submitted on behalf of petitioner that the counsel appeared on behalf of petitioner orally prayed for grant of time to file the objection, but the same was not taken on record and it was not mentioned in the proceeding and without granting time to file objection the order for execution of recovery certificate has been passed. Learned counsel for petitioner raised one more ground that as per the Income Tax (Certificate Proceeding) Rules, 1962 and the schedule second and third of Income Tax Act, the possession of mortgage property cannot be taken before auction. No other ground raised by the petitioner before this Court.

6. Learned counsel for petitioner submits that no opportunity to file the objection was granted and on the first date of appearance of execution proceedings, order was passed and therefore, same is against principles of natural justice.

7. On last date of hearing, i.e. on 03.05.2024 time was granted to learned counsel for petitioner to file affidavit of lawyer who appeared on 11.3.2024

before Recovery Officer and to address on the question of availability of alternative remedy under Section 30 of the Act, 1993.

8. Mr. Deepak Pachori, Advocate who appeared on 11.03.2024 has filed his affidavit stating that on 11.03.2024 he appeared and sought time for filing reply to demand notice and also objection on behalf of certificate debtor, but no time was granted and even the same was not mentioned in the proceeding.

So far as the question of availability of alternative remedy is concerned, learned counsel for petitioner submits that the order has been passed by the authority who was not having any jurisdiction therefore, the petitioner has prayed for issuance of writ of certiorari and the said relief cannot granted by DRT. He further prays that the petitioner has prayed for issuance of writ of mandamus for issuance of direction to the Recovery Officer to comply with the provisions of second and third schedule of Income Tax Act and Rules, 1962 and writ of mandamus cannot be issued by DRT. The order was passed in violation of principles of natural justice therefore, despite availability of alternative remedy, the present petition can be entertained.

9. Learned counsel for petitioner heavily relied upon the judgment of Full Bench reported as AIR 2004 MP 1 (M/s Kowa Spinning Ltd. & Ors. vs. Debt Recovery Tribunal & Ors.) wherein, the Full Bench deciding the issue of availability of alternative remedy held that despite the availability of alternative remedy in appropriate cases, the writ petition may be entertained and it is self imposed restriction and no straitjacket formula can be laid down and it will depend upon the facts of each case. He relied on para 36 of the judgment, which reads as under :

"36. We have referred to the aforesaid decisions only to indicate that there are no inflexible rules for exercise of discretion by High Court while issuing the prerogative writ of cetiorari. It would depend upon the facts of each case. As has been held in the case of Indian Hume Pipe Co. Ltd. (supra), there is no impropriety in the use of discretion if the adjudication involves a pure question of law. In the case of Champalal Binani (supra), the Supreme Court expressed the view that where the order is on the face of it erroneous and raises question of jurisdiction, the High Court can indubitably entertain the writ petition. Thus, it is graphically clear that there is no bar for entertaining a writ petition under Articles 226 and 227 of the Constitution of India where an alternative

remedy has not been taken resort to. It is a self imposed restraint and restriction by the Court itself. While exercising such power under the Constitution the Court is required to keep in view certain factors. As has been noticed when an order is passed without jurisdiction or when principles of natural justice are violated or when the vires of an Act is challenged, or where enforcement of any of the fundamental right is sought or where a pure question of law arises or where a strong case has been made out the Court may exercise the discretion. It is further noted that the Apex Court has also observed that the grounds are not exhaustive. No strait-jacket formula can be laid down. It will depend upon the facts of each case."

10. He further relied on the order passed by Division Bench in WP No. 19444 of 2022 ( Smt. Pramila Dosi & Ors. vs. IDFC First Bank Ltd. & Ors.) on 08.09.2022, wherein the Division Bench after considering the judgment of the Full Bench has held that the issue of maintainability was not decided by the Full Bench and the writ petition is maintainable despite availability of alternative remedy on certain conditions which were mentioned in the judgment o f Whirpool Corporation vs. Registrar of Trade Marks, Mumbai & Ors. (1998) 8 SCC 1. He relied on the para 24 and 25 of the order which reads as under :

"24. Section 56(1) provides that on an application made to the High Court or the Registrar by the person aggrieved, the Tribunal may cancel or vary the registration of the trade mark. Under sub-section (4) of Section 56, this power can be exercised by the "Tribunal" suo motu.

25. "Tribunal" has been defined under Section 2(1)(x) as under:

"2. (1)(x) 'Tribunal' means the Registrar or, as the case may be, the High Court, before which the proceeding concerned is pending.

This definition treats "High Court" and "Registrar" both as "Tribunal" for purposes of this Act."

11. He further relied on the judgment of Apex Court in the matter of State

of Madhya Pradesh and Ors. vs. Sanjay Nagayach and Ors. (2013) 7 SCC 25 wherein, in the facts and circumstances of the case, exercise of writ jurisdiction under Article 226 of the Constitution of India by the High Court was found justified. He relied on para 34 of the judgment which reads as under :

"34. The High Court, in our view, has therefore rightly exercised its jurisdiction under Article 226 of the Constitution and the alternative remedy of appeal is not a bar in exercising that jurisdiction, since the order passed by the Joint Registrar was arbitrary and in clear violation of the second proviso to Section 53(1) of the Act.

12. He further relied on the judgment passed by Division Bench in MP No. 3786 of 2023 on 05.10.2023 in the matter of Kabeer Reality Pvt. Ltd. & Ors. vs. LIC Housing Finance Ltd. & Ors., wherein the issue of availability of alternative remedy under Section 18 of SARFAESI Act, 2002 was considered and the Division Bench despite the availability of appeal, under Section 18 of the Act entertained the petition and issued direction to DRT, Jabalpur to decide the prayer of interim relief of the petitioners therein.

13. In the matter of Kabeer Reality (supra) the order passed by District Magistrate under Section 14 of SARFAESI Act was under challenge before DRT and before passing the order, no notice was issued to the lessee which is mandatory as per the judgment of Apex Court delivered in the matter of Harshad Govardhan Sondagar vs. International Assets Reconstruction Co. Ltd. (2014) 6 SCC 1 and the Division Bench found that the order passed by District Magistrate was prima facie suffers from the defects and under that circumstances, the directions were issued to DRT to consider the application filed by the petitioners therein for interim relief which was deferred by DRT for deciding at the time of final hearing.

14. Learned counsel for petitioner further relied on the judgment of

Division Bench dated 02.04.2024 passed in WP No. 442 of 2024 in the matter o f M/s Om Dutta Industries & Ors. vs. Bank of Maharashtra and Ors. wherein, the order passed by DRT in a proceeding pending under Section 18 of SARFAESI Act and imposition of onerous condition of deposit Rs. 2 Crore while allowing the interim application was under challenge and the Division Bench after considering the facts of the case found that the order was in violation of principles of natural justice and, therefore, entertained the petition and set aside the order passed by DRT and directed to decide the same afresh.

15. So far as the issue of availability of alternative remedy is concerned, the same was already decided by Apex Court in the matter of Whirpool (supra) and reiterated by Division Bench in the matter of Alok Kumar Choubey vs. State of M.P. reported in (2021) 1 MPLJ 348, wherein it is held that in certain circumstances and contingencies despite availability of alternative remedy the petition filed under Section 226 can be entertained.

16. After considering the facts and circumstances of the present case, it appears that so far as the relief of issuance of writ of certiorari is concerned, prima facie no material is available and even no specific pleading was made by the petitioner in the petition that how the Recovery Officer is not having any jurisdiction to entertain the recovery certificate and under which circumstances, the petitioner raises the issue regarding the jurisdiction and competency of Recovery Officer.

17. It is not enough to say that as the petitioner has prayed for issuance o f writ of certiorari, the petition should be entertained. There must be some material on record or some specific pleadings to demonstrate that why the order passed by Recovery Officer was without jurisdiction. In the absence of any specific pleading or availability of any document, the petition cannot be

entertained only on the ground that in the relief clause, the issuance of writ of certiorari has been prayed. Similarly, the second relief claimed by the petitioner for issuance of writ of mandamus for directing the Recovery Officer to follow the provisions of RDB Act, second and third schedule of Income Tax Act and Income Tax (Certificate Proceedings) Rules, 1962, the same direction may be granted by DRT and DRT is competent to issue the direction to Recovery Officer to follow the provisions of these Acts and Rules and for that purpose, there is no need to issue any writ of mandamus. The third relief claimed by the petitioner in the present petition is for issuance of direction to the Recovery Officer for not appointing private agency for execution of its order and this relief can also be claimed before DRT in an appeal. Similarly, the fourth relief by which the petitioner claimed that direction issued to certificate holder bank for accepting bona fide compromise proposal dated 04.04.2024 submitted by the petitioner, the petitioner may approach to DRT or Recovery Officer with a prayer that during the pendency of the recovery proceedings, the petitioner has submitted the proposal, but no such direction can be issued to any Bank for accepting the proposal however, impugned order dated 11.03.2024 reflects that the earlier proposal given by the petitioner was not accepted by the Bank.

18. If under any statute, it is provided that before execution of any order, the aggrieved party has a right to file the objection and no time is granted to file the same, then it may be argued that the order is passed in violation of principles of natural justice. If any party wants to oppose the execution of any recovery certificate, it is for the party to file the objection and if any objection is filed, then the authority is under obligation to decide the same. In the present matter, no such objection was filed. However, the counsel appeared on behalf

of certificate debtor filed the OTS Report, which was taken on record and the same was reflected in the proceeding also therefore, this contention of the petitioner cannot be accepted that despite request, the time was not granted and it was not mentioned in the proceedings. The judgments relied by learned counsel for petitioner except the judgment delivered by Full Bench in the matter of Kowa Spinning Ltd. (supra) no order/judgment was passed in respect of RDB Act and in all the judgments the provisions of SARFAESI Act, 2002 were considered, whereas the present matter is in respect of RDB Act. In the matters of RDB Act, DRT after trial issues the recovery certificate and the same is forwarded to Recovery Officer for the purpose of execution and the certificate keeps the force a decree of Civil Court therefore, in the course of execution until and unless any objection is filed, it cannot be expected from the Recovery Officer to postpone the proceeding for the purpose of filing the objection.

Thus, no case for violation of principles of natural justice is made out.

19. In the similar circumstances the Division Bench of this Court in MP No. 146 of 2024 in the matter of Dinesh Lilwani Vs. Canara Bank & Anr. on 07.02.2024 in para 5, 5.1 and 6 has held as under :

"5. It is no more res integra that High Court would normally not exercise its jurisdiction under Article 227 of the Constitution of India, if an effective and efficacious alternative remedy is available. In the present matter, petitioner has raised several disputed questions of fact in respect of valuation of mortgaged properties, procedure adopted for auction as well as dispute in respect of not affording proper opportunity to petitioner to submit his case. Disputed questions cannot be decided by exercising writ jurisdiction. Apex Court in the matter of M/s Godrej Sara Lee Ltd. (supra) has observed that "where controversy is a purely legal one and it does not involve disputed questions of fact but only questions of law, then it should be decided by the High Court instead of dismissing the writ petition on the ground of an alternative remedy being available".

5.1. Petitioner is having remedy of appeal under Section 30 of the Recovery of Debts and Bankruptcy Act, 1993 to assail impugned order before Debt Recovery Tribunal itself and as observed herein above that several disputed questions of fact have been raised by petitioner in present petition, we do no find it just and proper to exercise supervisory powers under Article 227 of Constitution of India as controversy is not purely a legal one and involves disputed questions of fact. Petitioner can very well avail alternative efficacious remedy under Section 30 of the Recovery of Debts and Bankruptcy Act, 1993 by filing an appeal against impugned order before Debt Recovery Tribunal.

6. The obstacle of limitation may come in way of petitioner in approaching DRT and therefore, this Court directs that in case petitioner approaches DRT by filing an appeal under Section 30 of the Recovery of Debts and Bankruptcy Act, 1993 within a period of 30 days from today along with copy of this order, said appeal shall be entertained on its own merits without being dismissed on limitation alone."

20 . In view of above, in the present case, no circumstances are available to entertain the present petition and exercise the powers under Section 226 of the Constitution of India despite the availability of the alternative remedy of preferring the appeal under Section 30 of RDB Act. The judgments of Apex Court and Division Bench of this Court relied by the petitioners are not helpful to the petitioners as in all the judgments, no such law is laid down that despite availability of alternative remedy in every case, the petition should be entertained and it is always depend upon the facts of the case in hand. In the present matter, the recovery certificate is issued by DRT and RC No.1/24 registered by Recovery Officer and it is duty of the Recovery Officer to execute the certificate at the earliest. Therefore, action of Recovery Officer cannot be criticized only on the ground that learned counsel appearing on behalf of certificate debtor sought time to file objection and same was not granted. There is no provision in law to grant time for filing objection if any certificate debtor is interested to raise any objection and to resist execution of any certificate, he

may prefer objection and in that circumstances, Recovery Officer is under obligation to decide objections. The order passed by Division Bench in the matter of Dinesh Lilwani Vs. Canara Bank & Anr. in MP No. 146 of 2024 passed on 07.02.2024 is squarely applicable to the present case.

21. The Recovery Officer cannot go behind the recovery certificate and, therefore, until and unless any objection has been filed by certificate debtor, Recovery Officer is not under obligation to postpone the proceedings.

22. In the above conspectus, no case is made out to exercise the jurisdiction under Article 226 of the Constitution of India. Consequently, the admission is declined. The petitioner may take recourse available under the law by preferring appeal before DRT under Section 30 of the Act, 1993.

23. With the aforesaid, present petition is dismissed.

(VINAY SARAF) JUDGE Shub