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Delhi High Court - Orders

Archana Pawar vs Union Of India & Ors on 12 November, 2021

Author: Prateek Jalan

Bench: Prateek Jalan

                    $~5 (2021 Cause List)
                    *     IN THE HIGH COURT OF DELHI AT NEW DELHI
                    +   W.P.(C) 11593/2021 & CM APPL. 35775/2021
                        ARCHANA PAWAR                                     ..... Petitioner
                                         Through: Mr. Nimish Chib, Advocate.
                                                versus
                        UNION OF INDIA & ORS.                        ..... Respondents
                                         Through: Mr. Ravi Prakash, CGSC with
                                                    Mr.Jatin Puniyani, GP & Mr.
                                                    Gurtejpal Singh, Advocate for
                                                    UOI.
                                                    Mr. Sanjeev Bhandari & Mr.
                                                    Sushant Bail, Advocates for R-2.
                    CORAM:
                    HON'BLE MR. JUSTICE PRATEEK JALAN
                                   ORDER

% 12.11.2021 The proceedings in the matter have been conducted through video conferencing.

1. By the present writ petition, the petitioner seeks a stay on the implementation of the order dated 02.09.2021 passed by the learned Chief Metropolitan Magistrate ["CMM"] under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ["SARFAESI Act"] at the instance of the respondent No.2- Cholamandalam Investment and Finance Company Ltd. By the said order, the CMM appointed a Receiver over the property of the petitioner (C-1/48. Gali No. 19, Old No. c-280, Block-C, Khajoori Khas, Near Laxmi Dairy, Delhi-110094), and directed him to take physical possession thereof.

2. Notice in the writ petition was issued on 08.10.2021 on the ground that the petitioner's Securitisation Application under Section 17 of the Signature Not Verified SARFAESI Act could not be heard by the Debts Recovery Tribunal Digitally Signed By:SHITU NAGPAL Signing Date:15.11.2021 12:26:41 W.P.(C) 11593/2021 Page 1 of 6 ["DRT"]- III, Delhi, for want of a Presiding Officer. The respondent no. 2 was not represented at that stage. The Court granted limited ad interim relief to the petitioner, deferring the taking over of the physical possession of the property until the next date of hearing. The matter was next listed on 28.10.2021, when this Court granted the petitioner liberty to approach the Debts Recovery Appellate Tribunal ["DRAT"] for transfer of its pending Securitisation Application to a functional DRT within the jurisdiction of DRAT, Delhi, in exercise of powers under Section 17(7) of the SARFAESI Act read with Section 17A(2) of the Recovery of Debts and Bankruptcy Act, 1993 ["RDB Act"]. The interim orders were continued.

3. However, the petitioner's transfer application, filed before the DRAT in terms of the order dated 28.10.2021, has not been heard as the office of Chairperson of the DRAT, Delhi is also vacant by virtue of a notification dated 29.10.2021, issued by the Department of Financial Services, Ministry of Finance, Government of India.

4. As all the three DRTs and the DRAT in Delhi are at present non- functional, this Court had occasion to consider several similar petitions under Article 226 of the Constitution of India. This Court has taken the view that it is preferrable to exercise the power of transfer of the Securitisation Application to a functional DRT in order to enable the parties to avail of their statutory remedies, rather than to entertain petitions under Article 226 of the Constitution on merits. This approach is consistent with the settled jurisprudence of the Supreme Court that writ proceedings should not be entertained if statutory remedies can be availed of to challenge measures taken under the SARFAESI Act.

In United Bank of India vs. Satyawati Tondon and Others (2010) 8 Digitally Signed By:SHITU NAGPAL Signing Date:15.11.2021 12:26:41 W.P.(C) 11593/2021 Page 2 of 6 SCC 110, the Court held as follows:-

"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.

xxxx xxxx xxxx

45. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance.

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 Signature Not Verified financial health of such bodies/institutions, which (sic will) Digitally Signed By:SHITU NAGPAL Signing Date:15.11.2021 12:26:41 W.P.(C) 11593/2021 Page 3 of 6 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 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 [AIR 1969 SC 556] , Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8 SCC 1] and Harbanslal Sahnia v. Indian Oil Corpn. Ltd. [(2003) 2 SCC 107] and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order."

(Emphasis supplied.)

6. The observations in Satyawati Tondon (supra) have been followed by the Supreme Court inter alia in Authorized Officer, State Bank of Travancore and Another vs. Mathew K.C. (2018) 3 SCC 85 [paragraphs 5, 9 to 15], and the recent judgment in C. Bright vs. District Collector and Others (2021) 2 SCC 392 [paragraph 22].

7. I am of the view that the appropriate course in the present case also would be to transfer the petitioner's Securitisation Application for hearing to a functional DRT, rather than to decide the case under Article 226 of the Constitution of India.

8. As the petitioner is suffering a threat of dispossession, Mr. Nimish Chib, learned counsel for the petitioner seeks some interim protection. He submits that the petitioner is a third party to the mortgage claimed by the respondent No.2. It is his contention that the petitioner purchased the property by way of registered sale deed dated 28.09.2017 read with a rectification deed dated 10.11.2017.

9. Mr. Sanjeev Bhandari, learned counsel for the respondent No. 2, draws my attention to the counter affidavit of the respondent No. 2, in which Signature Not Verified it is stated that the respondent No. 2 was given a security of the Digitally Signed By:SHITU NAGPAL Signing Date:15.11.2021 12:26:41 W.P.(C) 11593/2021 Page 4 of 6 asset by the then owners on 31.10.2013. The Security Interest was also registered under Section 22 and 23 of the SARFAESI Act with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India. A copy of the registration has also been placed on record. In these circumstances, Mr. Bhandari submits that even if the petitioner is a third party to the transaction, she had notice of the interest of the respondent No. 2, by virtue of Section 26 of the SARFAESI Act.

10. Although I am of the view that the contentions of the parties on merits are required to be determined by the DRT, in order to enable the petitioner to avail of her statutory remedies, it is necessary to defer the proceedings for taking of the possession of the property. In order to balance the interests of the parties, such an order can be made subject to a deposit being made by the petitioner.

11. In the circumstances aforesaid, the writ petition is disposed of with the following directions:-

a. Securitisation Application No. 249/2021 filed by the petitioner pending before the DRT-III, Delhi is transferred to DRT, Jaipur. b. The Registrar DRT-III, Delhi is directed to transmit the records of the said Securitisation Application, and all pending Interlocutory Applications to DRT, Jaipur digitally.

c. Learned counsel for the petitioner is also directed to coordinate with the Registrar DRT, Jaipur, to transmit the digital records of the applications of the case directly to DRT, Jaipur, if so permitted. d. The application be listed before the DRT, Jaipur for directions/hearing on 23.11.2021 at 2:00 PM. DRT, Jaipur will permit the parties to appear online by video-conferencing, if they Signature Not Verified so request.

e. DRT, Jaipur is directed to hear the petitioner's case at least on the question of interim relief, and pass appropriate orders as expeditiously as possible, and at the latest by 07.12.2021. f. Subject to any other orders by the DRT, Jaipur in this regard, the Receiver appointed by the CMM dated 02.09.2021 is directed to defer the proceedings for taking physical possession of the property until 10.12.2021 at 11:00 AM. The Receiver will not be required to give any further notice to the petitioner for taking possession of the property on the aforesaid date, subject to any orders passed by the DRT, Jaipur.

g. The aforesaid order is subject to the deposit of a sum of ₹ 5 lakh by the petitioner with the respondent No.2 by 22.11.2021. The amount will be deposited and accepted without prejudice to the rights and contention of the parties and subject to orders to be passed by the DRT, Jaipur.

h. The petitioner is directed not to create any third party interests in the title or possession of the property, and to maintain status quo with regard to the character of the property until the said date.

12. It is made clear that this Court has not entered into the merits of the petitioner's case, and the aforesaid order is passed only to enable the petitioner to invoke her statutory remedies.

13. The writ petition, alongwith pending application, stand disposed of with these directions.

PRATEEK JALAN, J NOVEMBER 12, 2021 „pv‟ Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:15.11.2021 12:26:41 W.P.(C) 11593/2021 Page 6 of 6