Rajasthan High Court - Jodhpur

Lakhi Bherwani vs M/S. Fullerton India Credit ... on 16 August, 2021

Bench: Vijay Bishnoi

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR

S.B. Civil Writ Petition No. 10850/2021

1. Lakhi Bherwani S/o Harish Bherwani, Aged About 57

Years, Plot No.b-21, Sector-B, Section-4, Hari Ganga

Shastri Nagar,, Masuria Jodhpur (Raj.).

2. Jitendra Bherwani S/o Harish Bherwani, Aged About 46

Years, Plot No.b-21, Sector-B, Section-4, Hari Ganga

Shastri Nagar, Masuria Jodhpur (Raj.).

----Petitioners Versus

1. M/s. Fullerton India Credit Company Ltd., Through Its

Managing Director, Registered Office At Megh Towers,

Third Floor, Old No.307, New No.165, Poonamallee High

Road, Maduravoyal, Chennai-600095 (Tamil Nadu).

2. M/s Fullertion India Credit Company Limited, Through Its

Authorized Officer, First Floor, North And South Wing,

Saurath Tower, Office No.5,6,7,8,9,10,11 And 12, Plot

No.c-2, Gautam Marg, Vaishali Nagar, Jaipur-302021

(Rajasthan).

                                                                ----Respondents



For Petitioner(s)        :     Mr. Lokesh Mathur





                                      (2 of 9)                 [CW-10850/2021]


           HON'BLE MR. JUSTICE VIJAY BISHNOI

                      Judgment / Order

16/08/2021

This writ petition has been preferred on behalf of the

petitioners being aggrieved with the order dated

9.8.2021 passed by the Debts Recovery Tribunal, Jaipur

(for short 'the DRT') in SA No.197/2021, whereby certain

interim directions have been issued.

In response to the query raised by this Court as to

whether the impugned order is appeallable before the

DRAT as per Section 18 of the SARFAESI Act, learned

counsel for the petitioners has submitted though the

statutory remedy of appeal is available to the petitioners,

however, since the impugned order is without jurisdiction

and the DRT has granted the reliefs, which were even not

been prayed before it, this Court can very well interfere

in this writ petition under Article 226 of the Constitution.

In support of the above contention, learned counsel

for the petitioners has placed reliance on the decisions of

the Hon'ble Supreme Court rendered in Industrial

Credit and Investment Corporation of India Ltd. Vs.

Grapco Industries Ltd. and Others, reported in AIR

1999 SC 1975 and State of W.B. and others Vs.

(3 of 9) [CW-10850/2021]

Ashit Nath Das and others, reported in AIR 1988 SC

729.

Having heard learned counsel for the petitioners and

after going through the material available on record, I am

of the opinion that when the statutory remedy of appeal

is available to the petitioners, the writ petition under

Article 226 of the Constitution of India is not liable to be

interfered with.

The Hon'ble Supreme Court in the case of United

Bank of India Vs. Satyawati Tondon and Ors.,

reported in AIR 2010 SC 3413 has deprecated the

practice of the High Courts in interfering with the matters

falling under the SARFAESI Act and has observed as

under:-

"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."

Later on, relying on the above judgment passed in

Satyawati Tondon's case (supra), the Hon'ble Supreme

Court again in State Bank of Travancore and Ors. Vs.

(4 of 9) [CW-10850/2021]

Mathew K.C., reported in AIR 2018 SC 676 has held as

under :

"9.The statement of objects and reasons of the SARFAESI Act states that the banking and financial sector in the country was felt not to have a level playing field in comparison to other participants in the financial markets in the world. The financial institutions in India did not have the power to take possession of securities and sell them. The existing legal framework relating to commercial transactions had not kept pace with changing commercial practices and financial sector reforms resulting in tardy recovery of defaulting loans and mounting non-performing assets of banks and financial institutions. The Narasimhan Committee I and II as also the Andhyarujina Committee constituted by the Central Government Act had suggested enactment of new legislation for securitisation and empowering banks and financial institutions to take possession of securities and sell them without court intervention which would enable them to realise long term assets, manage problems of liquidity, asset liability mismatches and improve recovery. The proceedings under the Recovery of Debts due to Banks and Financial Institutions Act,1993, (hereinafter referred to as 'the DRT Act') with passage of time, had become synonymous with those before regular courts affecting expeditious adjudication. All these aspectshave not been kept in mind and considered before passing the impugned order.

10. Even prior to the SARFAESI Act, considering the alternate remedy available under the DRT Act it was held in Punjab National Bank vs. O.C. Krishnan and others,(2001) 6 SCC 569, that :

6. The Act has been enacted with a view to provide a special procedure for recovery of debts due to the banks and the financial institutions. There is a hierarchy of appeal provided in the Act, namely, filing of an appeal under Section 20 and this fast-track procedure cannot be allowed to be derailed either by taking recourse to proceedings under Articles 226 and 227 of the Constitution or by filing a civil suit, which is expressly barred. Even though a provision under an Act cannot expressly oust the jurisdiction of the court under Articles 226 and 227 of the Constitution, nevertheless, when there is an alternative remedy available, judicial prudence demands that the Court refrains from exercising its jurisdiction under the said constitutional provisions. This was a case where the High Court should not have entertained the petition under Article 227 of the Constitution and should have directed the respondent to take recourse to the appeal mechanism provided by the Act.

(5 of 9) [CW-10850/2021]

11. In Satyawati Tandon (supra), the High Court had restrained further proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the SARFAESI Act, the availability of remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal, the object and purpose of the legislation, it was observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available holding :

43. Unfortunately, the High Court 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.

***

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.

12. In Union Bank of India and another vs. Panchanan Subudhi, 2010 (15) SCC 552, further proceedings under Section 13(4) were stayed in the writ jurisdiction subject to deposit of Rs.10,00,000/- leading this Court to observe as follows :

(6 of 9) [CW-10850/2021]

7. In our view, the approach adopted by the High Court was clearly erroneous. When the respondent failed to abide by the terms of one-time settlement, there was no justification for the High Court to entertain the writ petition and that too by ignoring the fact that a statutory alternative remedy was available to the respondent under Section 17 of the Act.

13. The same view was reiterated in Kanaiyalal Lalchand Sachdev and others vs. State of Maharashtra and others,2011 (2) SCC 782 observing :

23. In our opinion, therefore, the High Court rightly dismissed the petition on the ground that an efficacious remedy was available to the appellants under Section 17 of the Act. It is well settled that ordinarily relief under Articles 226/227 of the Constitution of India is not available if an efficacious alternative remedy is available to any aggrieved person. (See Sadhana Lodh v. National Insurance Co. Ltd.; Surya Dev Rai v. Ram Chander Rai and SBI v. Allied Chemical Laboratories.)

14. In Ikbal (supra), it was observed that the action of the Bank under Section 13(4) of the 'SARFAESI Act' available to challenge by the aggrieved under Section 17 was an efficacious remedy and the institution directly under Article 226 was not sustainable, relying upon Satyawati Tandon (Supra), observing :

27. No doubt an alternative remedy is not an absolute bar to the exercise of extraordinary jurisdiction under Article 226 but by now it is well settled that where a statute provides efficacious and adequate remedy, the High Court will do well in not entertaining a petition under Article 226. On misplaced considerations, statutory procedures cannot be allowed to be circumvented.

***

28.......In our view, there was no justification whatsoever for the learned Single Judge to allow the borrower to bypass the efficacious remedy provided to him under Section 17 and invoke the extraordinary jurisdiction in his favour when he had disentitled himself for such relief by his conduct. The Single Judge was clearly in error in invoking his extraordinary jurisdiction under Article 226 in light of the peculiar facts indicated above. The Division Bench also erred in affirming the erroneous order of the Single Judge.

(7 of 9) [CW-10850/2021]

15. A similar view was taken in Punjab National Bank and another vs. Imperial Gift House and others, (2013) 14 SCC 622, observing:

3. Upon receipt of notice, the respondents filed representation under Section 13(3-A) of the Act, which was rejected. Thereafter, before any further action could be taken under Section 13(4) of the Act by the Bank, the writ petition was filed before the High Court.

4. In our view, the High Court was not justified in entertaining the writ petition against the notice issued under Section 13(2) of the Act and quashing the proceedings initiated by the Bank.

16. It is the solemn duty of the Court to apply the correct law without waiting for an objection to be raised by a party, especially when the law stands well settled. Any departure, if permissible, has to be for reasons discussed, of the case falling under a defined exception, duly discussed after noticing the relevant law. In financial matters grant of ex-parte interim orders can have a deleterious effect and it is not sufficient to say that the aggrieved has the remedy to move for vacating the interim order. Loans by financial institutions are granted from public money generated at the tax payers expense. Such loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as entrustment by the public. Timely repayment also ensures liquidity to facilitate loan to another in need, by circulation of the money and cannot be permitted to be blocked by frivolous litigation by those who can afford the luxury of the same. The caution required, as expressed in Satyawati Tandon (supra), has also not been kept in mind before passing the impugned interim order :

46. It must be remembered that stay of an action initiated by the State and/or its agencies/instrumentalities for recovery of taxes, cess, fees, etc. seriously impedes execution of projects of public importance and disables them from discharging their constitutional and legal obligations towards the citizens. In cases relating to recovery of the dues of banks, financial institutions and secured creditors, stay granted by the High Court would have serious adverse impact on the financial health of such bodies/institutions, which (sic will) ultimately prove detrimental to the economy of the nation. Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters. Of

(8 of 9) [CW-10850/2021]

course, if the petitioner is able to show that its case falls within any of the exceptions carved out in Baburam Prakash Chandra Maheshwari v. Antarim Zila Parishad, Whirlpool Corpn. v. Registrar of Trade Marks and Harbanslal Sahnia v. Indian Oil Corpn. Ltd. and some other judgments, then the High Court may, afterconsidering all the relevant parameters and public interest, pass an appropriate interim order.

17. 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.

18. We cannot help but disapprove the approach of the High Court for reasons already noticed in Dwarikesh Sugar Industries Ltd. vs. Prem Heavy Engineering Works (P) Ltd. and Another, 1997 (6) SCC 450, observing :

32. When a position, in law, is well settled as a result of judicial pronouncement of this Court, it would amount to judicial impropriety to say the least, for the subordinate courts including the High Courts to ignore the settled decisions and then to pass a judicial order which is clearly contrary to the settled legal position. Such judicial adventurism cannot be permitted and we strongly deprecate the tendency of the subordinate courts in not applying the settled principles and in passing whimsical orders which necessarily has the effect of granting wrongful and unwarranted relief to one of the parties. It is time that this tendency stops.

19. The impugned orders are therefore contrary to the law laid down by this Court under Article 141 of the Constitution and unsustainable. They are therefore set aside and the appeal is allowed."

In view of the above authoritative pronouncements,

wherein the Hon'ble Supreme Court has clearly held that

(9 of 9) [CW-10850/2021]

if alternate statutory remedy of appeal is available under

the SARFAESI Act, ordinarily a writ petition under Article

226 of the Constitution of India, should not be

entertained.

Hence, this writ petition is dismissed only on the

ground of availability of alternate statutory remedy of

appeal to the petitioners.

The petitioners are free to avail alternate statutory

remedy of appeal available to them under the law.