Delhi High Court - Orders
M/S Strong Connections Enterprises And ... vs Au Small Finance Bank Limited on 12 November, 2021
Author: Prateek Jalan
Bench: Prateek Jalan
$~45 (2021 Cause List)
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 12724/2021
M/S STRONG CONNECTIONS
ENTERPRISES AND ORS ..... Petitioners
Through: Mr. Sidharth Chopra &
Mr. Navneet Thakran, Advocates
versus
AU SMALL FINANCE BANK LIMITED ..... Respondent
Through: Mr. Samarendra Kumar, Advocate
CORAM:
HON'BLE MR. JUSTICE PRATEEK JALAN
ORDER
% 12.11.2021 The proceedings in the matter have been conducted through video conferencing.
CM APPL. 40082/2021 (exemption) Exemption allowed, subject to all just exceptions. The application is disposed of.
W.P.(C) 12724/2021 & CM APPL. 40081/2021 (interim stay)
1. Issue notice. Mr. Samarendra Kumar, learned counsel, accepts notice on behalf of the respondent-Bank.
2. The petitioners seek recourse against an order dated 09.10.2021, passed by the 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 Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:13.11.2021 06:57:28 W.P.(C) 12724/2021 Page 1 of 8 instance of the Bank, by the said order, the CMM has appointed a Receiver over the petitioners' property [714/200 falling under Kh. No. 714/200/1 in the Abadi of Shri Ram Gali No. 1, Vill. Maujpur, Illaqa Shahdara, New Delhi admeasuring 116 Sq. yd.] in exercise of powers under Section 14 of the Act.
3. The property was admittedly given by the petitioners as security for certain credit facilities taken by them from the Bank. In view of the petitioners' default in repayment, the Bank commenced proceedings under the SARFAESI Act. The Receiver appointed by the CMM has given a notice dated 30.10.2021 proposing to take the possession of the property on 15.11.2021 at 10:00 AM. The petitioners have filed a Securitisation Application under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal ["DRT"]-III, Delhi, under Diary No. 241/2021 dated 11.11.2021. The application has not been taken up for hearing as the DRTs in Delhi, at present, are non-functional for want of Presiding Officers. It is in these circumstances, the petitioners have been compelled to approach this Court under Article 226 of the Constitution.
4. As all the three DRTs in Delhi are without Presiding Officers, several petitions have been filed in this Court seeking similar reliefs. Although some petitions under Article 226 of the Constitution were entertained, it was thereafter brought to the notice of the Court that the Debts Recovery Appellate Tribunal ["DRAT"] is empowered to transfer the applications/petitions to another functional DRT within the jurisdiction of the DRAT on the ground of urgency, in exercise of the powers conferred by Section 17(7) of the SARFAESI Act read with Section 17A(2) of the Recovery of Debts and Bankruptcy Act, 1993 Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:13.11.2021 06:57:28 W.P.(C) 12724/2021 Page 2 of 8 ["RDB Act"]. Several orders were passed by the DRAT, Delhi transferring proceedings from the DRTs in Delhi to DRT, Jaipur, which is the only functional DRT within the jurisdiction of the DRAT, Delhi. This Court also disposed of petitions under Article 226 of the Constitution with liberty to the petitioners to approach the DRAT, Delhi for such relief.
5. However, the aforesaid course has now been rendered impossible by virtue of the fact that the learned Chairperson of the DRAT, Delhi has also demitted office on 30.10.2021 in terms of a notification dated 29.10.2021, issued by the Department of Financial Services, Ministry of Finance, Government of India.
6. The question to be considered in these circumstances is whether it would be appropriate to entertain the present proceedings on merits, or for this Court to exercise the power under Section 17(7) of the SARFAESI Act read with Section 17A(2) of the RDB Act, which read as follows:-
Section 17(7) of the SARFAESI Act -
"17- Right to Appeal-
(7) Save as otherwise provided in this Act, the Debts Recovery Tribunal shall, as far as may be, dispose of application in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and the rules made thereunder."
Section 17A(2) of the RDB Act -
"17A - Power of Chairperson of Appellate Tribunal xxxx xxxx xxxx (2) The Chairperson of an Appellate Tribunal having jurisdiction over the Tribunals may, on the application of Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:13.11.2021 06:57:28 W.P.(C) 12724/2021 Page 3 of 8 any of the parties or on his own motion after notice to the parties, and after hearing them, transfer any case from one Tribunal for disposal to any other Tribunal"
7. It is clear from the above that the Chairperson of the DRAT has jurisdiction to transfer a case from one DRT under his/her jurisdiction to another DRT. In the present situation where the office of the Chairperson of DRAT, Delhi is also vacant, this Court has taken the view that exercise of such power by this Court would be the appropriate course, as the petitioners' ordinary statutory remedy has been rendered unavailable for reasons beyond its control. Enabling a party to invoke that remedy is preferable to entertaining the case on merits in writ proceedings. Orders to this effect have been passed inter alia in W.P.(C) 12125/2021 [Shrim Industries And Ors. vs. Bank of Baroda And Anr.] and W.P.(C) 12595/2021 [Smt. Kamlesh vs. Indian Overseas Bank] on 10.11.2021.
8. Although the existence of an alternative remedy is not an absolute bar to the exercise of jurisdiction under Article 226 of the Constitution, this Court has relied upon the judgments of the Supreme Court which make it clear, particularly in the context of proceedings under the SARFAESI Act, that the writ jurisdiction should rarely be exercised.
9. In United Bank of India vs. Satyawati Tondon and Others (2010) 8 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 Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:13.11.2021 06:57:28 W.P.(C) 12724/2021 Page 4 of 8 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 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 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 Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:13.11.2021 06:57:28 W.P.(C) 12724/2021 Page 5 of 8 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.)
10. 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].
11. I am of the view that the transfer of proceedings in the present case also to a functional DRT would be consistent with this approach of the Supreme Court, rather than entertaining the proceedings under Article 226 of the Constitution.
12. As the possession of the property is due to be taken on 15.11.2021, Mr. Sidharth Chopra, learned counsel for the petitioners, seeks some interim protection. Mr. Samarendra Kumar, learned counsel for the respondent-Bank, states that the principal amount of the overdue instalments after giving the petitioners the benefit of moratorium as per the notification of the Reserve Bank of India is to the tune of ₹12.5 lakhs. I am of the view that the petitioners are entitled to some interim protection in order to enable them to avail of their statutory remedies subject to a without prejudice deposit being made.
13. For the reasons aforesaid, the writ petition is disposed of with the following directions:
a. The Securitisation Application filed by the petitioners before Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:13.11.2021 06:57:28 W.P.(C) 12724/2021 Page 6 of 8 the DRT-III, Delhi under Diary No. 241/2021 dated 11.11.2021, and pending applications therein, are transferred from the DRT-III, Delhi to DRT, Jaipur.
b. The Registrar, DRT-III, Delhi, is directed to transmit the records of the said Securitisation Application and pending Interlocutory Applications to DRT, Jaipur digitally. c. Learned counsel for the petitioners is also directed to coordinate with the Registrar DRT, Jaipur, to transmit the digital records of the aforesaid case to the DRT, Jaipur directly, if so permitted.
d. The proceedings be listed before the DRT, Jaipur for directions/hearing on 24.11.2021 at 2:00 PM. DRT, Jaipur will permit the parties to appear online [through vide conference], if they so request.
e. DRT, Jaipur is directed to hear the petitioners' case at least on the question of interim relief, and pass appropriate orders, as expeditiously as possible, and latest by 03.12.2021. f. Subject to any other orders passed by the DRT, Jaipur in terms of the aforesaid directions, the Receiver appointed by the order of the CMM dated 09.10.2021 is directed to defer the proceedings for taking physical possession of the property until 07.12.2021 at 11:00 AM. The Receiver will not be required to give any further notice to the petitioners for taking of possession of the property on the aforesaid date, subject to any orders passed by the DRT, Jaipur on the petitioners' application(s) in terms of this order.
Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:13.11.2021 06:57:28 W.P.(C) 12724/2021 Page 7 of 8g. The aforesaid order is subject to deposit of a sum of ₹5 lakhs by the petitioners with the respondent-Bank by 17.11.2021 and deposit of a further sum of ₹5 lakhs by 29.11.2021. h. The aforesaid amounts will be deposited and accepted without prejudice to the rights and contentions of the parties and subject to the orders that may be passed by the DRT, Jaipur.
i. The petitioners are 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.
14. It is made clear that this Court has not entered into the merits of the controversy, which is to be decided by the DRT in accordance with law.
15. The writ petition is disposed of in these terms.
16. Mr. Chopra states that the petitioners would like to approach the respondent-Bank for regularisation of its account. They may do so without prejudice to the rights and contentions of the parties.
PRATEEK JALAN, J NOVEMBER 12, 2021 'hkaur' Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:13.11.2021 06:57:28 W.P.(C) 12724/2021 Page 8 of 8