Punjab-Haryana High Court
Brij Mohan vs Hindu Cooperative Bank Limited, ... on 6 May, 2024
Author: Lisa Gill
Bench: Lisa Gill
SUNIL
CWP No. 6845 of 2021 (O&M) 1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
CWP No. 6845 of 2021 (O&M).
Date of Decision: May 06, 2024
Brij Mohan
sesees Petitioner(s)
Versus
Hindu Cooperative Bank Ltd., Pathankot
sesees Respondent(s)
CORAM:- HON'BLE MRS. JUSTICE LISA GILL
HON'BLE MS. JUSTICE AMARJOT BHATTI
Present: Mr. Ankush Verma, Advocate
for the petitioner.
None for respondents.
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LISA GILL, J.
1. Prayer in this writ petition is for quashing allegedly
unwarranted action of respondent-Bank for taking physical possession of
property of petitioner. There is further prayer for stay of proceedings under
SARFAESI Act initiated against petitioners, during pendency of this writ
petition and a direction to regularize loan account of petitioner or to consider
representation filed by petitioner to settle his loan account under One Time
Settlement (OTS).
2. Admittedly, petitioner availed of loan of Rs.50 lakhs in the year
2017, which was later on revised to Rs.40 lakhs in the year 2019. Due to
financial indiscipline on the part of petitioner, for reasons as may be, loan
account in question was declared Non-Performing Asset (NPA) on
31.01.2020.
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SUNIL
3. Learned counsel for petitioner submitted that declaration of
accounts NPA and subsequent initiation of proceedings under SARFAESI
Act including issuance of notices under Sections 13(2) and 13(4) of
SARFAESI Act are absolutely illegal, arbitrary and in contravention of
applicable provisions of law. Petitioners, it is submitted also offered to settle
the loan account but to no avail. In the given circumstances, it is prayed that
respondent-financial institution should be directed to settle loan account by
way of OTS. It is thus prayed that this writ petition should be allowed.
4. Perusal of the file reveals that notice of motion was issued in
this writ petition on 24.03.2021 without any interim order in favour of
petitioner. Service was complete as way back in August 2022. At this stage
we do not find any ground for continuance of present proceedings to await
appearance on behalf of respondent or for seeking the reply.
5. Having heard learned counsel for petitioner, we do not find any
ground to interfere in this matter in exercise of jurisdiction under Article 226
of the Constitution of India at this stage. SARFAESI Act is admittedly a
complete code in itself. Interference in proceedings thereunder in exercise of
jurisdiction under Article 226 of the Constitution of India has to be minimal
and it is only in exceptional or extraordinary circumstances that intervention
should be there. Gainful reference in this regard can be made to judgments
of Hon'ble the Supreme Court in Union Bank of India vs. Satyawati
Tandon and others, 2010(8) SCC 110, M/s South Indian Bank Ltd. and
others v. Naveen Mathew Philip and another, 2023(2) RCR (Civil) 771.
Hon'ble the Supreme Court in the case of M/s South Indian Bank (supra)
held as under:-
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5 of 2021 (O&M) 3
"13.......We may, however, reiterate the settled position of law on
the interference of the High Court invoking Article 226 of the
Constitution of India in commercial matters, where an effective
and efficacious alternative forum has been constituted through a
Statute,
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14. A writ of certiorari is to be issued over a decision when the
Court finds that the process does not conform to the law or
statute. In other words, courts are not expected to substitute
themselves with the decision-making authority while finding fault
with the process along with the reasons assigned. Such a writ is
not expected to be issued to remedy all violations. When a
Tribunal is constituted, it is expected to go into the issues of fact
and law, including a statutory violation.
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15. The object and reasons behind the Act 54 of 2002 are very
clear as observed by this Court in Mardia Chemicals Ltd. v. Union
of India, (2004) 4 SCC 311. While it facilitates a faster and
smoother mode of recovery sans any interference from the Court,
it does provide a fair mechanism in the form of the Tribunal being
manned by a legally trained mind. The Tribunal is clothed with a
wide range of powers to set aside an illegal order, and thereafter,
grant consequential reliefs, including re-possession and payment
of compensation and costs. Section 17(1) of the SARFAESI Act
gives an expansive meaning to the expression "any person", who
could approach the Tribunal.
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18. While doing so, we are conscious of the fact that the
powers conferred under Article 226 of the Constitution of India
are rather wide but are required to be exercised only in
extraordinary circumstances in matters pertaining to proceedings
and adjudicatory scheme qua a statute, more so in commercial
matters involving a lender and a borrower, when the legislature
has provided for a specific mechanism for appropriate redressal."
6. Furthermore prayer for directing respondent to sanction OTS in
favour of petitioner, is devoid of any merit. It is a settled position that a
borrower/guarantor does not have a vested right to seek OTS and that there
can be no positive direction to the Banks/financial institutions for
sanctioning OTS. Hon'ble the Supreme Court in Bijnor Urban Cooperative
Bank Ltd. Vs. Meenal Agarwal and others, 2022 AIR (SC) 56, has held as
under:-
9. Even otherwise, as observed hereinabove, no borrower can,
as a matter of right, pray for grant of benefit of One Time
Settlement Scheme. In a given case, it may happen that a person
would borrow a huge amount, for example Rs. 100 crores. After
availing the loan, he may deliberately not pay any amount
towards installments, though able to make the payment. He
would wait for the OTS Scheme and then pray for grant of
benefit under the OTS Scheme under which, always a lesser
amount than the amount due and payable under the loan account
will have to be paid. This, despite there being all possibility for
recovery of the entire loan amount which can be realised by
selling the mortgaged/secured properties. If it is held that the
borrower can still, as a matter of right, pray for benefit under
the OTS Scheme, in that case, it would be giving a premium to
a dishonest borrower, who, despite the fact that he is able to
make the payment and the fact that the bank is able to recover
the entire loan amount even by selling the mortgaged/secured
properties, either from the borrower and/or guarantor. This is
because under the OTS Scheme a debtor has to pay a lesser
amount than the actual amount due and payable under the loan
account. Such cannot be the intention of the bank while offering
OTS Scheme and that cannot be purpose of the Scheme which
may encourage such a dishonesty.
10. If a prayer is entertained on the part of the defaulting
unit/person to compel or direct the financial corporation/bank to
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enter into a one-time settlement on the terms proposed by
it/him, then every defaulting unit/person which/who is capable
of paying its/his dues as per the terms of the agreement entered
into by it/him would like to get one time settlement in its/his
favour. Who would not like to get his liability reduced and pay
lesser amount than the amount he/she is liable to pay under the
loan account? In the present case, it is noted that the original
writ petitioner and her husband are making the payments
regularly in two other loan accounts and those accounts are
regularised. Meaning thereby, they have the capacity to make
the payment even with respect to the present loan account and
despite the said fact, not a single amount/installment has been
paid in the present loan account for which original petitioner is
praying for the benefit under the OTS Scheme.
11. The sum and substance of the aforesaid discussion would be
that no writ of mandamus can be issued by the High Court in
exercise of powers under Article 226 of the Constitution of
India, directing a financial institution/bank to positively grant
the benefit of OTS to a borrower. The grant of benefit under the
OTS is always subject to the eligibility criteria mentioned under
the OTS Scheme and the guidelines issued from time to time. If
the bank/financial institution is of the opinion that the loanee
has the capacity to make the payment and/or that the
bank/financial institution is able to recover the entire loan
amount even by auctioning the mortgaged property/secured
property, either from the loanee and/or guarantor, the bank
would be justified in refusing to grant the benefit under the OTS
Scheme. Ultimately, such a decision should be left to the
commercial wisdom of the bank whose amount is involved and
it is always to be presumed that the financial institution/bank
shall take a prudent decision whether to grant the benefit or not
under the OTS Scheme, having regard to the public interest
involved and having regard to the factors which are narrated
hereinabove.
7. Learned counsel for petitioner is unable to point out any ground
which calls for interference at this stage. Keeping in view facts and
circumstances as above, this writ petition is dismissed with liberty to
petitioner to avail remedy(ies) as may be available to him in accordance with
law for redressal of grievances as raised in this writ petition. Needless to say,
parties are always at liberty to arrive at a mutually acceptable settlement.
8. There is no expression of opinion on the merits of the matter.
(LISA GILL)
JUDGE
(AMARJOT BHATTI)
May 06, 2024 JUDGE
Sunil
Whether speaking/reasoned --: Yes/No.
Whether reportable : Yes/No.
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