Gauhati High Court
Vikas Kucheria & Anr vs Idbi Bank & 2 Ors on 16 September, 2017
Author: Kalyan Rai Surana
Bench: Kalyan Rai Surana
THE GAUHATI HIGH COURT
(THE HIGH COURT OF ASSAM, NAGALAND, MIZORAM &
ARUNACHAL PRADESH)
CRP 439 Of 2016
With
CRP 81 OF 2017
VIKAS KUCHERIA & ANR. .....Petitioners
-Versus-
IDBI BANK & 2 ORS. .....Respondents
BEFORE HON'BLE MR. JUSTICE KALYAN RAI SURANA Advocates for the Petitioners : Mr. O.P. Bhati, Mr. S. Khan, Mr. P. Sarma, : Mr. T.C. Das.
Advocates for the Respondents : Mr. S. Dutta, Mr. A. Das, Mr. S. Haque, : Ms. M. Bordoloi, Mr. N.I. Khan, Mr. S. Das : Mr. R. Hussain, Mr. N. Sarmah.
Date of hearing : 05.09.2017.
Date of judgment and order : 16.09.2017.
JUDGMENT AND ORDER (CAV)
Heard Mr. O.P. Bhati, the learned Counsel for the petitioner, Mr. S. Dutta, the learned Counsel for the respondents No.1 and 2 as well as Mr. A. Das, the learned Counsel for the respondent No.3.
2. At the outset, the learned Counsels appearing for the respondents has raised the issue of maintainability of both the present revisions on the ground that against the orders passed by the Debts Recovery Tribunal, Guwahati (DRT for short), there exists an alternative and efficacious remedy available to the petitioners by filing an appeal as provided in Section 18 of the Securitization And Reconstruction of Financial Assets And Enforcement of Security Interest Act, CRP 439/16 & CRP 81/17 Page 1 of 12 2002 ("SARFAESI Act" for short). Hence, instead of entertaining the present revision, the petitioners may be directed to move the appellate forum. Thus, this Court had heard the learned Counsels for the parties on the preliminary issue raised by the respondents.
3. The brief introductory case of the parties is that the respondents No.1 and 2, i.e. IDBI Bank Ltd. and its Authorized Officer had taken steps under the Securitisation And Reconstruction of Financial Assets And Enforcement of Security Interest Act, 2002 ("SARFAESI Act" for short), against the petitioners for enforcing recovery of a sum of Rs.4,19,10,110.88 (Rupees Four Crore nineteen lakh ten thousand one hundred ten and paise eighty eight only) as on 01.08.2016, as appears from the sale notice published in the newspapers.
4. Against notice dated 17.04.2014 issued under Section 13(2) of the SARFAESI Act, and possession notice dated 06.06.2016 issued under Section 13(12) of the SARFAESI Act, the petitioners approached the Debts Recovery Tribunal, Guwahati (DRT for short). The application filed by the petitioners was registered as Application (SARFAESI) No. 50/2016. Thereafter, during the pendency of the said application, on 28.08.2016, a public notice for sale of immovable properties of the respondents No.1 and 2 was published in the newspapers. The reserve price of the immovable property described in the said notice was Rs.1,70,44,000/- (Rupees One Crore Seventy lakh forty four thousand only). The petitioners challenged the said notice before the learned DRT by filing an application under Section 17 of the SARFAESI Act, which was numbered as Application (SAFAESI) No. 78/2016.
5. In connection with Application (SAFAESI) No. 78/2016, the petitioners had filed M.A. No. 155/2016, praying before the learned DRT to restrain the respondents No.1 and 2 herein from selling the mortgaged properties pursuant to the notice of sale dated 28.08.2016. The prayer was based on the projection that no provision was made for the safe custody of movable properties, the value of CRP 439/16 & CRP 81/17 Page 2 of 12 the property as submitted by the empanelled valuer does not depict the true valuation and that the empanelled valuer was not a approved valuer within the meaning of Rule 2(d) of the Security Interest (Enforcement) Rules, 2002 ("SAFAESI Rules" for short), 2002. The said misc. application was dismissed by the learned DRT by order dated 25.10.2016, which is the subject matter of challenge in CRP 439/2016, which has been filed under Article 227 of the Constitution of India.
6. Thereafter, the entire matter was heard and by order dated 03.02.2017, the learned DRT dismissed (i) Application (SAFAESI) No. 50/2016,
(ii) Application (SAFAESI) No. 78/2016, (iii) M.A. No. 151/16, and (iv) M.A. No. 112/16 filed by the Petitioners. The said order is the subject matter of challenge in CRP 81/2017, which has been filed under Article 227 of the Constitution of India.
7. The learned Counsel for the petitioner has submitted that -
a. The provisions of Rule 2(d) of SARFAESI Rules provides for "approved valuer", and it required that the valuer must be approved by the Board of Directors or Board of Trustees of the secured creditor. By relying on the documents filed in this application, it is submitted that the 'valuer' who had valued the assets was merely an "empanelled valuer", which was not done by the Board of Directors or Board of Trustees of the secured creditor, but by an officer of the Bank.
b. It is submitted that although by the sale notice only sale of immovable properties was advertised, but the valuation report showed that it contains the value of some movable assets also.
c. It is submitted that under Rule 8(5) of the SARFAESI Rules, it was the duty of the respondents No.1 and 2 to obtain a valuation from an approved valuer. Therefore, there has been violation of the statutory Rules, and as the learned DRT did not take notice of such glaring errors and violation of the provisions of SARFAESI Rules that the CRP 439/16 & CRP 81/17 Page 3 of 12 learned DRT had acted illegally, and failed to exercise jurisdiction vested in it by law and the impugned orders amounted to acquiescence of violation of SARFAESI Rules and, as such, the impugned orders suffered from the vice of jurisdictional error. d. It is further submitted by the learned Counsel for the petitioners that he was only making submissions on the preliminary issue raised by the learned counsels for the respondents and was therefore, reserving his right to argue on merit, if called upon to do so.
8. In support of his argument, the learned Counsel for the petitioners has relied on the following cases and submitted as follows:-
i. Mathew Verghese Vs. M. Amritha Kumar & Ors., (2014) 5 SCC 610 to project that Rules 8 and 9 of the SARFAESI Rules were mandatory. ii. State of West Bengal Vs. Samar Kumar Sarkar, (2009) 15 SCC 444 to project that under the provisions of Article 227 of the Constitution of India, this Court had power of exercising superintending jurisdiction over all Courts and Tribunals including the DRT and, as such, it is submitted that merely because there was a remedy of appeal, the jurisdiction of this Court under Article 227 of the Constitution of India cannot be ousted because the complain in the present case is about violation of SARFAESI Rules.
iii. State of Gujarat Vs. Vakhtsinghji Sursinghji Vaghela & Ors., AIR 1968 SC 1481 (Constitution Bench), to project that the power of the High Court cannot be fettered by any Act and the jurisdiction extends to keeping the subordinate tribunals within the limits of their authority and to see that they obey law.
iv. Achutananda Baidya Vs. Prafullya Kumar Gayen & Ors., (1997) 5 SCC 76 to project that the High Court can interfere under Article 227 of the Constitution of India in cases of erroneous assumption of jurisdiction, for acting beyond its jurisdiction, refusal to exercise jurisdiction, error apparent on the face of record, arbitrary or capricious exercise of CRP 439/16 & CRP 81/17 Page 4 of 12 authority or jurisdiction and also has power to interfere with the finding of fact, manifest misreading of evidence thereby indulging in improper exercise of jurisdiction or if its conclusions are perverse.
v. Union of India & Ors. Vs. Debts Recovery Bar Association And Anr., (2013) 2 SCC 574 to project that the Hon'ble Supreme Court of India has held therein that the High Courts are empowered to exercise jurisdiction over DRTs and DRATs to oversee their functioning. vi. Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai & Ors., (1998) 8 SCC 1 to project that High Court had power, discretion and prerogative to issue writs under Article 227 of the Constitution of India when there was violation of principles of natural justice and also when the order was wholly without jurisdiction.
vii. Committee of Management and Another Vs. Vice Chancellor & Ors., AIR 2009 SC 1159 to project that when there was violation of principles of natural justice and also when the order was wholly without jurisdiction the High Court would interfere and such power can be exercised despite alternative remedy being available.
9. It is submitted that the alternative remedy is not available within the State and moreover, the limited remedy available by way of appeal amounted to no remedy at all and, as such, the alternative remedy of appeal was neither efficacious nor the learned DRT or the learned DRAT is inclined to hear any borrower and to give real justice, which, according to the learned counsel for the petitioner, could be seen in the present case in hand.
10. Per contra, the learned counsel for the respondents has submitted that the Constitutionality of SARFAESI Act and SARFAESI Rules has been upheld by the Hon'ble Supreme Court in the case of Mardia Chemicals Ltd. Vs. Union of India, (2004) 4 SCC 311, as such, it is not open for the learned counsels for the petitioners to submit that the remedy as provided under the SARFAESI Act was not efficacious. It is submitted that it is too absurd to even think that there is no CRP 439/16 & CRP 81/17 Page 5 of 12 dispensation of real justice by the learned DRT or the learned DRAT as projected, but as there was no merit in the case of the petitioners, they have approached this court to prolong the matter and to cause delay in the enforcement of security interest by the respondents No.1 and 2. It is submitted that efficacious alternative remedy is provided for under the SARFAESI Act.
11. The learned Counsels for the respondents submit that they do not dispute that this Court has the power and jurisdiction to issue writs under Article 226 of the Constitution of India and powers to interfere with any orders passed by subordinate DRT and DRAT. They admit the ratio of the cases referred to by the learned Counsel for the petitioner, but submit that this was a case where this Court should exercise self-restraint because the respondents No.1 and 2 are in the process of realizing its debts from the petitioners amounting to Rs.4,19,10,110.88 (Rupees Four Crore nineteen lakh ten thousand one hundred ten and paise eighty eight only) as on 01.08.2016 and by their continued challenge to the various steps taken by the respondents No.1 and 2, the sale of immovable property, which was advertised on 28.08.2016 could not materialized even after expiry of over a year now.
12. It is submitted that they had been able to demonstrate before the learned DRT that there are delegation of powers by the Board of Directors to its various levels of officers so that the business of the bank goes on smoothly and that they have produced a copy of the resolution adopted by the Board of Directors in its meeting held on 12.02.2016 by which the current 'Delegation of Power" had been approved, accordingly, under Sl. No. 36, the General Manager (Business), RBG Zone and Deputy General Manager, General Manager, NMG Zone were empowered to empanel any external agencies for recovery and operational matters. Thus, for all intents and purpose, when a valuer is empanelled, such empanelled persons are also called 'approved valuer'.
CRP 439/16 & CRP 81/17 Page 6 of 1213. The learned counsel for the respondents rely on the case of United Bank of India Vs. Satyawati Tondon & Ors., (2010) 8 SCC 110, where the Hon'ble Supreme Court of India has expressed its concern of interfering with the orders of the learned DRT and learned DRAT by the High Court by ignoring the non- exhausting of statutory remedies. Hence, it is submitted that the present applications under Article 227 of the Constitution of India be dismissed, leaving it open for the petitioners to seek appropriate remedy as may be available to them.
14. Considered the submissions made by the learned Counsels for the parties as well as the various cases cited by them.
15. There is no dispute that under Article 227 of the Constitution of India, this Court has the power as well as jurisdiction to exercise extra-ordinary superintending jurisdiction over all subordinate courts and Tribunals within its jurisdiction. However, it would be relevant to quote the observation of the Hon'ble Supreme Court of India in paragraph 42, 43 and 55 of the case of Satyawati Tondon (supra):
"42. There is another reason why the impugned order should be set aside. If Respondent 1 had any tangible grievance against the notice issued under Section 13(4) or action taken under Section 14, then she could have availed remedy by filing an application under Section 17(1). The expression "any person" used in Section 17(1) is of wide import. It takes within its fold, not only the borrower but also the guarantor or any other person who may be affected by the action taken under Section 13(4) or Section 14. Both, the Tribunal and the Appellate Tribunal are empowered to pass interim orders under Sections 17 and 18 and are required to decide the matters within a fixed time schedule. It is thus evident that the remedies available to an aggrieved person under the SARFAESI Act are both expeditious and effective.CRP 439/16 & CRP 81/17 Page 7 of 12
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."
16. This court cannot fail to notice that the value of movable assets like plant and machinery is only Rs.67,000/-. Nevertheless, the sale notice dated 28.08.2016 was not in respect of movable assets. Therefore, the grievance raised by the petitioners seems to be premature, and the petitioners can only raise a valid challenge to the sale of movable properties, if it is actually sold. Moreover, CRP 439/16 & CRP 81/17 Page 8 of 12 there is no bar for the petitioners to claim possession of movable assets by offering adequate security or by paying the value thereof to the respondents No.1 and 2. But, merely because the valuation report contains value of movable property worth Rs.67,000/-, the same is not so glaring that it can shock the conscience of the Court so as to scuttle the attempt of the secured creditor to sale security asset in form of immovable property valued at Rs.1,70,44,000/- (Rupees One Crore Seventy lakh forty four thousand only), being a portion of total dues of Rs.4,19,10,110.88 (Rupees Four Crore nineteen lakh ten thousand one hundred ten and paise eighty eight only) as on 01.08.2016 from the petitioners.
17. The challenge made in the present application appears to be the procedural facet only, involving appointment of 'approved valuer' and the valuation report containing column showing that some movable assets have also been valued and the value thereof is shown as Rs.67,000/-. However, the sale notice as published in the newspapers pertain only to immovable properties, as such, there is no real threat to the right of the petitioners. These are not such matters, which the learned DRAT cannot adjudicate. This Court finds that the learned DRT had dealt with the issue raised by the petitioners that the provisions of Rule 8 and 9 of the SARFAESI Rules have been violated and the said issue is a question of fact and the learned DRAT is the most competent appellate tribunal to deal with the said issue.
18. The Constitutionality of the scheme of hearing under section 17 and Section 18 of the SARFAESI Act has already been upheld. Therefore, this Court is not convinced that the remedy of appeal available before the learned DRAT is not efficacious and complete. Hence, the petitioners must avail the statutory remedy of appeal as envisaged under SARFAESI Act. This Court is of the view that the ratio laid down in the case of Satyawati Tondon (supra) is required to be followed in this case.
CRP 439/16 & CRP 81/17 Page 9 of 1219. Coming to the cases cited by the learned Counsel for the petitioners:-
a. In the case of Mathew Varghese (supra), the issue related to sale of security asset in auction to the auction purchaser. The sale to the auction purchaser was challenged in writ petition before the Hon'ble Kerela High Court. Therefore, the matter was not taken up by the Hon'ble High Court under Article 227 of the Constitution of India as a challenge to the original order.
b. In the case of State of West Bengal (supra), the issue was that the High Court had transferred the case filed under Section 19 of the Administrative Tribunals Act and pending before the Administrative Tribunal to the High Court for its consideration. The transfer order was quashed and the case was directed to be tried by the Tribunal. c. In the case of Vakhtsinghji Sursinghji Vaghela (supra) the matter related to proceedings for claims for compensation and award passed by the Special Deputy Commissioner. The consequent orders by Bombay Revenue Tribunal was revised by the Hon'ble Gujarat High Court under Article 227 of the Constitution of India. It was argued that owing to the provisions contained in Gujarat Taluqdari Abolition Act, 1949 there was finality to appellate order and therefore, the High Court ought not to have interfered with the order under Article 227 of the Constitution of India. While considering the said statement, the Hon'ble Supreme Court of India in paragraph-16 thereof held that "This jurisdiction cannot be limited or fettered by any Act of the State Legislature." The SARFAESI Act is not a State Legislature. In this case also, the matter was not taken up by the Hon'ble High Court as a challenge to the original order, as sought to be done in the present case.
d. In the case of Achutananda Baidya (supra) also the Hon'ble Calcutta High Court was dealing with an appellate order passed by the Sub- Divisional Officer under the provisions of the West Bengal Restoration of Alienated Land Act, 1973. The original order was passed by the CRP 439/16 & CRP 81/17 Page 10 of 12 Special Officer constituted under the said Act. Therefore, here also, the matter was not taken up by the Hon'ble High Court as a challenge to the original order.
e. In the case of Debts Recovery Tribunal Bar Association (supra), the issue taken up by the Hon'ble High Court of Punjab & Haryana High Court related to adequate space for the smooth functioning of DRT at Chandigarh. Thus, the matter was directly related to the administration of justice. It was in the said context that it was held that High Court had supervisory jurisdiction over DRT and DRAT. The Hon'ble High Court was not hearing any challenge to the original judicial order.
f. The case of Whirlpool Corporation (supra) did not arise out of orders passed in Article 227 of the Constitution of India. The suo-motu action by the Registrar of Trade Marks was put to challenge under Article 226 of the Constitution of India. Therefore, even in this case, the Hon'ble Bombay High Court was not hearing any challenge to the original judicial order.
g. In the case of Committee of Management (supra), the management had taken a decision to draw up disciplinary proceedings against the respondent No.3 therein. The matter was challenged in writ jurisdiction and not under Article 227 of the Constitution of India. The remedy available to the concerned person was under U.P. State Universities Act, 1973. In this context, it was held that the availability of alternative remedy was not a bar for the High Court to exercise discretionary jurisdiction to entertain writ petition. In this case, the Hon'ble High Court was not hearing any challenge to the original judicial order under Article 227 of the Constitution of India. h. Thus, in none of the case, the Hon'ble Supreme Court of India had maintained a challenge to the order passed by DRT in an application by the defaulter under Article 227 of the Constitution of India. Rather, in the case of Satyawati Tondon (supra), the direction was issued to CRP 439/16 & CRP 81/17 Page 11 of 12 the High Courts to exercise their discretion in such matters with greater caution, care and circumspection.
20. Therefore, bound by the said ratio of the case of Satyawati Tondon (supra), having visited the facts as narrated in this application, there appears to be nothing on record to show that the learned DRT had usurped any power or jurisdiction, or it had misread any evidence, or acted beyond its jurisdiction, or illegally refused to exercise jurisdiction, or committed any error apparent on the face of record, or had arbitrarily or capriciously exercised any power, or authority or jurisdiction or otherwise indulged in improper exercise of jurisdiction or that any of its conclusions are perverse. Therefore, if according to the learned counsel for the petitioners, the decision of the learned DRT is erroneous, the same is required to be assailed in appeal as provided for in Section 18 of the SARFAESI Act.
21. For the reasons discussed above, the two applications filed by the petitioners are not maintainable due to existence of alternative and efficacious remedy, which in terms of the case of Satyawati Tondon (supra), is required to be exhausted first.
22. In case the petitioners prefer any appeal(s) as provided under Section 18 of the SARFAESI Act within a outer limit of 30 days from today, the limitation provided under Section 18(1) thereof shall stand extended as the petitioners had been bona fide litigating before this Court.
23. With the above observations, these two applications stand dismissed. The parties are left to bear their own cost.
JUDGE Mkumar.
CRP 439/16 & CRP 81/17 Page 12 of 12