Jharkhand High Court
Ms Black Diamond Techno Pvt Ltd Through ... vs State Bank Of India Through Its Chief ... on 20 April, 2016
Author: D. N. Patel
Bench: D. N. Patel, Ananda Sen
IN THE HIGH COURT OF JHARKHAND AT RANCHI
L.P.A. No. 98 of 2015
with
I.A. No. 942 of 2015
4. M/s Black Diamond Techno Pvt. Ltd., a limited company duly
incorporated under the provisions of the Companies Act, 1956, having
its office at NH-32, P.O. K.G. Asharam, Govindpur Road, Dhanbad and
works at Kolakusma, Saraidhella, Dhanbad, through its Director Rohit
Kumar Singh, son of Sri Binay Singh, Resident of Shanti Colony, P.O.
Saraidhela, P.S. Saraidhela, District Dhanbad
5. Binay Singh, son of Sri Tribeni Prasad Singh, Resident of Shanti
Colony, P.O. Saraidhela, P.S. Saraidhela, District Dhanbad
6. Rohit Kumar Singh, son of Sri Binay Singh, Resident of Shanti
Colony, P.O. Saraidhela, P.S. Saraidhela, District Dhanbad
...... Appellants
Versus
1. State Bank of India, having its Corporate Office at Corporate
Centre, Madam Cama Road, Nariman Point, Mumbai- 400 021
(Maharastra) and having its one of the Branches at State Bank of India,
S.M.E. Branchi, Goodwill Properties, 2nd Floor, Bank More, P.O. Bank
More, P.S. Dhanbad, Dhanbad through its Chief Manager
2. Authorised Officer, State Bank of India, S.M.E. Branch, Goodwill
Properties, 2nd Floor, Bank More, P.O. Bank More, P.S. Dhanbad, District
Dhanbad
3. E. Procurement Technology Ltd., Wall Street 2, Opposite Prient
Club, Ellis Bridge, Ahmedabad, Gujrat, P.O. & P.S. Ellis Bridge, District-
Ahmedabad, Gujrat through its Managing Director.
...... Respondents
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CORAM: THE HON'BLE MR. JUSTICE D. N. PATEL
THE HON'BLE MR. JUSTICE ANANDA SEN
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For the appellants: M/s Biren Poddar, Sr. Advocate, Deepak
Sinha & Darshana Poddar, Advocates
For the respondents: M/s Indrajit Singh & Ranjan Kumar,
Advocates
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Order No.08: Dated 20 th April, 2016
Per D. N. Patel, J.:
1. Being aggrieved and feeling dissatisfied, by the judgment and order, delivered by learned Single Judge in W.P.(C) No. 6411 of 2014 dated 20 th January, 2015, whereby the writ petition, preferred by the original petitioners (appellants herein) for quashing the auction notice dated 28th November, 2014, published in daily newspapers, namely, Telegraph & Prabhat Khabar both dated 28 th November, 2014, was dismissed on the ground of availability of efficacious alternative remedy, the original petitioners have preferred this Letters Patent Appeal.
2. Factual Matrix:
• Following is the sanctioned limit, as per Annexure 1 to the memo of this Letters Patent Appeal:2.
Sl.No. Facility Existing Sanctioned
Limit Limit
A] FUND BASED LIMITS:
a. Cash Credit (Stocks) 250.00 150.00
b. Cash Credit (Book Debts) (Cover Period 30 days) 50.00 50.00
c. e-DFS Limit with DSIPL 190.00 140.00
d. Fresh Sanction of WCTL (Repayable in 30 qtly instalments) - 100.00
e. Fresh Sanction of Corporate Loan (Repayable in 30 qtly - 45.00
instalments)
f. Advance payment to CISPL within thew overall limit of CC (50.00) (50.00)
(stock) limit of Rs. 150.00 lac
Total of Fund Based Limits 490.00 485.00
B] NON-FUND BASED LIMITS:
a. Bank Guarantee NAP NAP
b. Derivative Limit (Cancelled) 2.50 NIL
Total of Non-Fund Based Limits 2.50 NIL
TOTAL LIMIS 492.50 485.00
• It appears from the letter at Annexure 1 to the memo of this L.P.A. that
there are terms and conditions for repayment also and the rate of interest is 14.20% per annum, as per paragraph no. 3 of the terms and conditions at Annexure A to the letter at Annexure 1.
• It appears that after taking a loan of sizable amount, some meager amount was paid and sizable amount remained outstanding and, hence, a notice under Section 13(2) of the Act, 2002 was issued to the appellants on 15 th May, 2014 (Annexure 4 to the memo of this L.P.A.) and the outstanding amount was at Rs.4,41,27,461.92 paise as on 15 th May, 2014 and accrued interest with effect from 1st March, 2014.
• There is no reply of the notice under Section 13(2) of the Act, 2002.
• One letter dated 5th June, 2014 (Annexure 5 to the memo of this L.P.A.) was written by the appellants for Renewal Project Report of Black Diamond Techno Pvt. Ltd. along with Action Plan, wherein desire was shown by these appellants to sell the property, which is in the shape of vehicles, spare parts, tools and other equipments, belonging to someone else i.e. Chevrolet Sales India Pvt. Ltd. Thus, a promise was given to sell somebody's else property and to make payment of Rs.108 Lacs, which 3. was rightly declined by the Bank vide communication dated 16 th June, 2014 (Annexure 8 to the memo of this L.P.A.).
• Thereafter, possession notice was issued by the respondents on 16 th July, 2014 under Rule 8(1) of the Security Interest (Enforcement) Rules, 2002 (Annexure 6 to the memo of this L.P.A.) to be made effective with effect from 25th July, 2014. Thereafter, possession of immovable property of the appellants was taken over with effect from 25 th July, 2014 and with respect to certain movable property symbolic possession was also take over later on.
• Public notice was given for auction of the property on 28 th November, 2014 and actual auction has taken place on 29 th December, 2014 to the highest bidder. The highest bidder has already offered the amount, but, as the stay has been granted by this Court vide order dated 1 st April, 2015, the property has not been handed over to the highest bidder. • These appellants (original petitioners) have challenged the public notice for auction of the property dated 28th November, 2014, published in the daily newspapers, namely, Telegraph & Prabhat Khabar both dated 28 th November, 2014.
3. Arguments canvassed by learned counsel for appellants:
• Learned counsel appearing for the appellants submitted that valuation of the property, in question, as per the respondent-Bank as on 10 th December, 2012 was higher whereas in the public notice for auction, lesser amount has been mentioned and subsequently it has also been argued that prior to the auction, thirty days clear notice has not been given to these appellants by the respondent-Bank.
• Learned counsel for the appellants relying upon the decisions, rendered by Hon'ble the Supreme Court in the case of Ram Kishun & ors. v.
State of Uttar Pradesh & ors. , as reported in (2012)11 SCC 511 and in the case of Mathew Varghese v. M. Amritha Kumar & ors. , as reported in (2014)5 SCC 610, submitted that the Bank cannot behave like a property dealer and clear 30 days notice ought to have been given prior to auction and there is also a breach of Rule 8(2) of the Security Interest (Enforcement) Rules, 2002.
• Learned counsel for the appellants submitted that these aspects of the 4. matter have not been properly appreciated by the learned Single Judge, while dismissing the writ petition, preferred by these appellants, and hence, the judgment and order passed by the learned Single Judge dated 20th January, 2014 in W.P.(C) No. 6411 of 2014 deserves to be quashed and set aside.
4. Arguments canvassed by learned counsel for respondents:
• Learned counsel for the respondents submitted that no error has been committed by the learned Single Judge, while dismissing the writ petition preferred by these appellants as under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter to be referred as "the Act, 2002 " for short) an efficacious alternative remedy by way of appeal is available to these appellants. It is also submitted by the learned counsel for the respondents that even in the judgment delivered by Hon'ble the Supreme Court in the case of Mathew Varghese v. M. Amritha Kumar & ors. , as reported in (2014)5 SCC 610, firstly the defaulter had gone to Debt Recovery Tribunal and thereafter, to the High Court. Learned counsel for the respondent-Bank has taken this Court to various annexures about th defaults made by these appellants, which is for approximately Rs. 4,53,00,000/-, for which notice under Section 13(2) of the Act, 2002 was given which is dated 15th May, 2014 and thereafter notice for taking over possession of the property in question was also given on 16 th July, 2014 and actual possession of the movable property was taken over with effect from July, 2014 and thereafter auction notice was given on 20 th November, 2014 and actual auction has taken place on 29th December, 2014, which is absolutely in consonance with the provisions of the Act, 2002 and the Rules made thereunder. In fact, there is no reply to the notice given by the respondent-Bank under Section 13(2) of the Act, 2002. Nonetheless, the so called correspondence of the appellants dated 5 th June, 2014, which is, in fact, no reply to the notice under Section 13(2) of the Act, 2002, but, looking to the subject of the said letter dated 5 th June, 2014 of these appellants and also looking to the contents of the said letter/correspondence, it is a Renewal Project Report of the Black Diamond Techno Pvt. Ltd. along with action plan, has also been replied by 5. the respondent-Bank vide letter dated 16 th June, 2014, which is at Annexure-8 to the memo of L.P.A. No. 102 of 2015. This L.P.A. No. 102 of 2015, wherein the notices under Section 13(2) and 13(4) of the Act, 2002 were challenged, has been dismissed by this Court today itself and the stay granted by this Court in favour of the appellants has also been vacated by this Court. It is further submitted by the learned for the respondents that L.P.A. No. 102 of 2015, preferred by these appellants against the judgment and order passed in W.P.(C) No. 4030 of 2014, which was dismissed on the ground of availability of alternative efficacious remedy, having already been dismissed, let in this Appeal also a similar order may be passed.
5. REASONS:
Having heard learned counsel for both the sides and looking to the facts and circumstances of this case, we see no reason to entertain this Letters Patent Appeal, mainly for the following facts and reasons:
(i) These appellants are borrower from the State Bank of India and a sizable amount is yet to be paid by these appellants, for which a notice was issued by the respondent-Bank under Section 13(2) of the Act, 2002.
(ii) As per the aforesaid facts, the amount payable is Rs.4,41,27,461.92 paise plus the accrued interest with effect from 1 st April, 2014.
(iii) It appears that this notice has not been replied to by these appellants at all.
(iv) It appears that the so called correspondence, which is dated 5 th June, 2014, which is, in fact, neither a reply nor a representation upon the said notice under Section 13(2) of the Act, 2002, has also been replied by the respondent-Bank vide letter dated 16 th June, 2014 and, thereafter, notice under Section 13(4) of the Act, 2002 was also issued, which is dated 16 th July, 2014 and actual possession of the immovable property of these appellants was taken over with effect from 25 th July, 2014.
(v) It appears that thereafter, notice has been given on 20 th November, 2014 and the actual auction has taken place on 29 th December, 2014 i.e. after days.
(vi) Looking to the provisions of the Act, 2002 to be read with the provisions of the Security Interest (Enforcement) Rules, 2002, it appears that 6. prima facie neither there is any breach of the Act, 2002 nor the Rules, 2002.
( v i i ) As we are relegating these appellants to the efficacious alternative remedy, we are not going into the fine dissection of all the arguments, canvassed by these appellants that how wrong they are, but, suffice it to say that as there is efficacious alternative remedy available to these appellants under Section 17 of the Act, 2002, no error has been committed by the learned Single Judge, while dismissed the writ petition being W.P.(C) No.6411 of 2014 vide order dated 20 th January, 2015.
( v i i i ) It has been held by Hon'ble the Supreme Court in the case of United Bank of India v. Satyawati Tondon & ors. , as reported in (2010)8 SCC 110, specially paragraph nos. 43 to 45 and 55 thereof, as under:
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.
44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution.
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.
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.
7.(ix) It has further been held by Hon'ble the Supreme Court in the case of Kanaiyalal Lalchand Sachdev & ors. v. State of Maharashtra & ors. , as reported in (2011)2 SCC 782 , specially paragraph nos. 21 to 25 thereof, as under:
21. In Indian Overseas Bank v. Ashok Saw Mill the main question which fell for determination was whether the DRT would have jurisdiction to consider and adjudicate post Section 13(4) events or whether its scope in terms of Section 17 of the Act will be confined to the stage contemplated under Section 13(4) of the Act? On an examination of the provisions contained in Chapter III of the Act, in particular Sections 13 and 17, this Court held as under: (SCC pp. 375-76, paras 35-36 & 39) "35. In order to prevent misuse of such wide powers and to prevent prejudice being caused to a borrower on account of an error on the part of the banks or financial institutions, certain checks and balances have been introduced in Section 17 which allow any person, including the borrower, aggrieved by any of the measures referred to in sub-section (4) of Section 13 taken by the secured creditor, to make an application to the DRT having jurisdiction in the matter within 45 days from the date of such measures having taken for the reliefs indicated in sub-section (3) thereof.
36. The intention of the legislature is, therefore, clear that while the banks and financial institutions have been vested with stringent powers for recovery of their dues, safeguards have also been provided for rectifying any error or wrongful use of such powers by vesting the DRT with authority after conducting an adjudication into the matter to declare any such action invalid and also to restore possession even though possession may have been made over to the transferee.
* * *
39. We are unable to agree with or accept the submissions made on behalf of the appellants that the DRT had no jurisdiction to interfere with the action taken by the secured creditor after the stage contemplated under Section 13(4) of the Act. On the other hand, the law is otherwise and it contemplates that the action taken by a secured creditor in terms of Section 13(4) is open to scrutiny and cannot only be set aside but even the status quo ante can be restored by the DRT."
(emphasis supplied by us)
22. We are in respectful agreement with the above enunciation of law on the point. It is manifest that an action under Section 14 of the Act constitutes an action taken after the stage of Section 13(4), and therefore, the same would fall within the ambit of Section 17(1) of the Act. Thus, the Act itself contemplates an efficacious remedy for the borrower or any person affected by an action under Section 13(4) of the Act, by providing for an appeal before the DRT.
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.)
24. In City and Industrial Development Corpn. v. Dosu Aardeshir Bhiwandiwala this Court had observed that: (SCC p. 175, para 30) "30. The Court while exercising its jurisdiction under Article 226 is duty-bound to consider whether:
(a) adjudication of the writ petition involves any complex and 8. disputed questions of facts and whether they can be satisfactorily resolved;
(b) the petition reveals all material facts;
(c) the petitioner has any alternative or effective remedy for the resolution of the dispute;
(d) the person invoking the jurisdiction is guilty of unexplained delay and laches;
(e) ex facie barred by any laws of limitation;
(f) grant of relief is against public policy or barred by any valid law; and host of other factors."
25. In the instant case, apart from the fact that admittedly certain disputed questions of fact viz. non-receipt of notice under Section 13(2) of the Act, non-communication of the order of the Chief Judicial Magistrate, etc. are involved, an efficacious statutory remedy of appeal under Section 17 of the Act was available to the appellants, who ultimately availed of the same. Therefore, having regard to the facts obtaining in the case, the High Court was fully justified in declining to exercise its jurisdiction under Articles 226 and 227 of the Constitution.
(x) It has also been held by Hon'ble the Supreme Court in the case of Union of India & ors. v. Major General Shri Kant Sharma & anr. , as reported in (2015) 6 SCC 773 , specially paragraph no. 36 thereof, as under:
36. The aforesaid decisions rendered by this Court can be summarised as follows:
(i) The power of judicial review vested in the High Court under Article 226 is one of the basic essential features of the Constitution and any legislation including the Armed Forces Tribunal Act, 2007 cannot override or curtail jurisdiction of the High Court under Article 226 of the Constitution of India.(Refer: L. Chandra Kumar and S.N. Mukherjee.)
(ii) The jurisdiction of the High Court under Article 226 and this Court under Article 32 though cannot be circumscribed by the provisions of any enactment, they will certainly have due regard to the legislative intent evidenced by the provisions of the Acts and would exercise their jurisdiction consistent with the provisions of the Act. (Refer: Mafatlal Industries Ltd.)
(iii) When a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation. (Refer: Nivedita Sharma.)
(iv) The High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance. (Refer: Nivedita Sharma.) (Emphasis supplied)
(xi) Looking to the peculiar facts of the present case that though notice under Section 13(2) and thereafter, under Section 13(4) of the Act, 2002, as stated herein above, have been given by the respondent-Bank to these appellants, but, none of these notices has ever been replied by these appellants, except the so called one correspondence dated 5 th June, 2014, which is heavily relied upon these appellant and which is, in fact, neither a reply nor a representation upon the notice under Section 13(2) of the Act, 9. 2002, nonetheless this correspondence has also been replied by the respondent vide letter dated 16 th June, 2014. The respondent-Bank has all power, jurisdiction and authority to take recourse under the Act, 2002 and hence, the action of the respondent-Bank prima facie cannot be said to have been exercised in want of jurisdiction. Moreover, looking to Section 17 of the Act, 2002 there is alternative efficacious remedy available to these appellants and, thus, all the contentions, which have been raised either in the memo of writ petition or in the memo of this Letters Patent Appeal, can also be raised before the Tribunal.
( x i i ) Much has been argued by the learned counsel for the appellants about the time limit to the decide the representation as well as for giving notice in regard to public auction etc., but, on being asked as to what is the time limit for repayment of the dues, learned counsel for the appellants submitted that mobile phone of these appellants is not working .
6. As a cumulative effect of the aforesaid facts, reasons and judicial pronouncements, no error has been committed by the learned Single Judge while dismissing the writ petition being W.P.(C) No. 6411 of 2014 vide order dated 20 th January, 2015 and hence, there being no substance, this Letters Patent Appeal is hereby dismissed.
7. If the appellants are approaching the appellate forum under Section 17 of the Act, 2002, the said appellate forum will decide the disputes between the parties, in accordance with law and on the basis of the evidences on record and without being influenced by the observations, made by learned Single Judge vide order dated 20 th January, 2015 in W.P.(C) No. 6411 of 2014 as well as without being influence by the observations, made by this Court while dismissing this Letters Patent Appeal.
8. The interim relief, if any granted by this Court is hereby vacated.
I.A. No. 942 of 2015:
9. In view of final disposal of the instant Letters Patent Appeal, I.A. No. 942 pf 2015 also stands disposed of.
( D.N. Patel, J. ) (Ananda Sen, J.) A.K.Verma/