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Delhi High Court - Orders

Sunil Beiniwal vs Punjab National Bank on 25 November, 2021

Author: Prateek Jalan

Bench: Prateek Jalan

                    $~35 (2021 Cause List)
                    *     IN THE HIGH COURT OF DELHI AT NEW DELHI

                    +           W.P.(C) 11681/2021

                                SUNIL BEINIWAL                                   ..... Petitioner
                                             Through:         Mr. Sanjeev Bhandari            and
                                                              Ms.Reena Jain, Advocates.

                                                          versus

                                PUNJAB NATIONAL BANK                    ..... Respondent
                                             Through: Mr. Ajay Shanker, Advocate.

                    CORAM:
                    HON'BLE MR. JUSTICE PRATEEK JALAN

                                             ORDER

% 25.11.2021 The proceedings in the matter have been conducted through hybrid mode [virtual and physical hearing].

CM APPL. 41958/2021 (Application on behalf of the Petitioner for extension of time granted in order dated 28.10.2021)

1. By way of the captioned writ petition, the petitioner challenged proceedings taken by the respondent-Punjab National Bank ["the Bank"] under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ["SARFAESI Act"]. Although he had filed an application for this purpose before the Debts Recovery Tribunal ["DRT"]-III, Delhi, the DRTs in Delhi are, at present, non-functional for want of Presiding Officers. The petition under Article 226 of the Constitution was entertained in these circumstances.

2. The operative portion of the order dated 28.10.2021, by which the petition was disposed of, reads as follows:-

"3. It has since come to my notice that in respect of urgent matters filed before the DRTs in Delhi, parties can approach the Chairperson of the Debts Recovery Appellate Tribunal ["DRAT"] under Section 17(7) of the SARFAESI Act read with Section 17A(2) of the Recovery of Debts and Bankruptcy Act, 1993 for transfer of their petitions to another DRT within the jurisdiction of the DRAT. A copy of the order dated 13.10.2021 passed by the DRAT in Misc. Application No. 97/2021 arising out of S.A. No. 86/2020 has also been brought to my attention, wherein proceedings were transferred from the DRT-I, Delhi to the DRT, Jaipur on the ground of urgency.

4. Having regard to this position, I am of the view that it would be appropriate to permit the petitioner to invoke the statutory remedy as aforesaid, instead of entertaining the present petition under Article 226.

5. Mr. Bhandari states that the petitioner is agreeable to the aforesaid procedure. However, he seeks an extension of the interim protection granted by this Court in order to enable him to invoke his statutory remedies.

6. Having regard to the aforesaid, the learned Receiver is directed to defer the taking of possession of the property until 30.11.2021, subject to the petitioner depositing a sum of ₹8 Lakhs by 15.11.2021. The deposit may be made and accepted without prejudice to the rights and contentions of the parties. The petitioner is directed to maintain status quo with regard to the title, possession and character of the property. Subject to orders that may be passed by the DRT/DRAT pursuant to the proceedings instituted by the petitioner, the learned Receiver will not be required to give any further notice to the petitioner for taking of possession of the property on 30.11.2021 at 2:30 PM.

7. The DRAT/DRT is requested to consider the petitioner's application expeditiously keeping the Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:25.11.2021 21:43:38 W.P.(C) 11681/2021 Page 2 of 8 aforesaid schedule in mind."

3. In terms of the aforesaid order, the petitioner filed an application for transfer of the proceedings before the Debts Recovery Appellate Tribunal ["DRAT"]. However, as the office of the Chairperson of the DRAT, Delhi is also vacant since 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, the application has not been taken up for hearing. As the interim protection granted by this Court comes to an end on 30.11.2021, the petitioner has filed this application seeking an extension of time for him to argue the matter before the DRT and for an extension of the interim relief.

4. The petitioner has admittedly deposited the sum ₹8 lakhs as directed by this Court.

5. As none of the DRTs in Delhi are functioning at present, this Court has had occasion to consider several similar petitions. This Court has taken the view that it is preferable to enable the parties to agitate their statutory remedies rather than entertain writ petitions under Article 226 of the Constitution on merits. In several cases, this Court has, therefore, exercised the power under Section 17 of the SARFAESI Act, read with Section 17A(2) of the Recovery of Debts and Bankruptcy Act, 1993 ["RDB Act"] to transfer the pending securitisation proceedings to a functional DRT on the ground of emergency.

6. The said statutory provisions 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 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, I am of the view that exercise of such power by this Court would be the appropriate course. The petitioner's ordinary statutory remedy has been rendered unavailable for reasons beyond his control. Enabling a party to invoke that remedy is preferable to entertaining the case on merits in writ proceedings. Although the existence of an alternative remedy is not an absolute bar to the exercise of jurisdiction under Article 226 of the Constitution, the judgments of the Supreme Court make it clear, particularly in the context of proceedings under the SARFAESI Act, that the writ jurisdiction should rarely be exercised.

8. 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 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 Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:25.11.2021 21:43:38 W.P.(C) 11681/2021 Page 5 of 8 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 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.)

9. 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].

10. I am of the view that the transfer of the proceedings pending before DRT-III, Delhi in the present case also to a functional DRT would be consistent with this approach of the Supreme Court, rather than entertaining the proceedings further under Article 226 of the Constitution. However, given the factual situation outlined above, the petitioner would have to be protected until he is able to agitate his case before the transferee Tribunal.

11. In these circumstances, the present application is disposed of with Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:25.11.2021 21:43:38 W.P.(C) 11681/2021 Page 6 of 8 the following directions:-

a. The securitisation application filed by the petitioner before the DRT-III, Delhi, being SA No. 271/2021, is transferred from the DRT-III, Delhi to the DRT, Jaipur, which is the only functional DRT under the jurisdiction of the DRAT, Delhi. b. The Registrar, DRT-III, Delhi, is directed to transmit the records of the said securitisation application to the Registrar, DRT, Jaipur, in digitised form.

c. Learned counsel for the petitioner is also directed to coordinate with the Registrar, DRT, Jaipur, to transmit the digitised records of the aforesaid securitisation application to the DRT, Jaipur, if so permitted.

d. The securitisation application be listed before the DRT, Jaipur for hearing/directions on 07.12.2021 at 2:00 PM. The DRT, Jaipur will permit the parties to appear online [through video conference], if they so request.

e. The DRT, Jaipur will hear the parties and pass appropriate orders, at least on the question of interim orders, as expeditiously as possible, and latest by 17.12.2021.

f. Subject to the orders passed by the DRT, Jaipur in terms of these directions, the Receiver appointed by the Chief Metropolitan Magistrate is directed to defer the proceedings for taking physical possession of the property, being Flat No. QU-272 A, Ground Floor, Pitampura, Delhi-110034 ["the property"], until 21.12.2021 at 11:00 AM. No further notice will be required to be given to the petitioner for taking possession of the property on the said date, Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:25.11.2021 21:43:38 W.P.(C) 11681/2021 Page 7 of 8 subject to the orders passed by the DRT, Jaipur pursuant to these directions.

g. As the petitioner has already deposited the sum as directed by the order dated 28.10.2021, no further deposit is called for at this stage. h. The petitioner is directed not to create any third party interest as far as the title and possession of the property is concerned, and to maintain status quo with regard to the character of the property.

12. The application stands disposed of with these directions.

PRATEEK JALAN, J NOVEMBER 25, 2021 'pv' Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:25.11.2021 21:43:38 W.P.(C) 11681/2021 Page 8 of 8