Karnataka High Court
Punjab National Bank Industrial ... vs Mr. Anwar Sherieff S/O Jamaluddin on 19 August, 2006
Equivalent citations: AIR2007KANT9, [2006]134COMPCAS456(KAR), AIR 2007 KARNATAKA 9, 2007 (1) ALJ (NOC) 161(KAR.) = AIR 2007 KARNATAKA 9, 2006 (5) AIR KANT HCR 635, (2006) ILR (KANT) 64, (2006) 134 COMCAS 456, (2007) 2 BANKJ 656
Bench: B. Padmaraj, S. Abdul Nazeer
JUDGMENT
Page 0944
1. Though the matter is listed for admission, with the consent of both sides, the appeal itself is taken up for final disposal and the same is accordingly disposed of by this judgment.
2. This is an intra court appeal filed by the appellant Bank under Section 4 of the Karnataka High Court Act, 1961 against an one line interim order dated 13.7.2005 passed by the learned single Judge in W.P. No. 16245 of 2005 which is still pending on the file of the learned single Judge. The impugned interim order made by the learned single Judge reads as under:
Issue Rule. Interim order as prayed for
3. We have heard the learned Counsel for the parties and carefully perused the relevant case papers including the impugned interim order passed by the learned single Jude as extracted above. We have also been taken Page 0945 through the provisions of the relevant enactments by the learned Counsel for the parties to substantiate their submissions in the matter.
4. Learned Counsel for the appellant Bank apart from apprising us of the facts of this case, has contended as under:
That three legal positions are to be considered in the matter. Firstly, whether a simultaneous proceeding can be initiated by the Bank under the Recovery of Debts due to Banks and Financial Institutions Act, 1983 (hereinafter referred to as the DRT Act) and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as Securitization Act). Secondly, whether the doctrine of election is available to the borrower and that further whether the same would constitute double jeopardy. Thirdly whether the banks are obliged to withdraw the case filed before the Debt Recovery Tribunal for invoking the provisions of the Securitization Act ? That in the instant case, the borrower has availed a huge financial assistance from the Punjab National Bank and when the outstanding loan amount reached 4.33 crores, an application came to be filed before the Debt Recovery Tribunal in accordance with the provisions contained under the DRT Act for recovery of the amount due, on 15.9.2000 in O.A. No. 589 of 2000. At present, the liability is around 6 crores and odd. Further, as a security for the loan facility extended by the Appellant - bank to the borrower, an immovable-landed property was equitably mortgaged by deposit of title deeds with the appellant - bank. While this was so, the appellant-bank on 16.8.2004 issued a notice to the borrower under the Securitization Act and subsequently on 20.5.2005, a possession notice was also given to the borrower. Against which action of the appellant - bank under the Securitisation Act, the respondent - borrower made an application before the Debt Recovery Tribunal in O.A. No. 589 of 2000 with a prayer to direct the appellant -bank not to take further steps pursuant to the letter dated 19.1.2005 addressed by the authorized officer of the appellant - bank, pending disposal of O.A. No. 589/2000. The said application was purported to have been filed under Section 22 of the D.R.T. Act. The respondent - borrower did not however prefer any appeal under Section 17 of the Securitization Act against the measures taken by the appellant - bank under the said Act. It is not in dispute that now the Securitisation Act is held to be constitutionally valid by the Apex Court in the case of Mardia Chemicals Limited etc. etc. v. U.O.I. and Ors. etc. etc. reported in ILR 2004 Kar. 2661. The appellant - bank entered appearance and filed objections to the application filed by respondent - borrower under Section 22 of the DRT Act. After the matter was heard, the Debt Recovery Tribunal rejected the application of the respondent filed under Section 22 of the DRT Act. Aggrieved, the respondent. - borrower preferred a writ petition to this Court in W.P. No. 16245 of 2005. In that writ petition filed before the learned single Judge, despite the objections field by the appellant - bank, the impugned interim order Page 0946 came to be passed on 13.7.2005. It is against this interim order, the present writ appeal is filed by the appellant - bank. With this background facts, the nature of the interim order made by the learned single Judge is clearly unsustainable in law moreso when it is not a speaking order. That apart, the first proviso to Section 19(1) of the DRT Act contemplates that it is open to the bank to withdraw the application filed before the Debt Recovery Tribunal for the purpose of invoking the provisions of the Securitization Act. The expression, "may" used in the 1st proviso to Section 19(1) of the DRT Act would only connote that it is directory and not mandatory in nature. Hence it would be fallacious to contend that in order to invoke the provisions of the Securitization Act, the bank has to first withdraw the application filed before the Debt Recovery Tribunal under the provisions of the DRT Act. It is not at all incumbent or obligatory upon the bank to withdraw the application already filed before the Debt Recovery Tribunal in order to invoke the provisions of the Securitization Act. That apart, the said proviso to Section 19(1) had been inserted w.e.f. 11.11.2004 and it would have a prospective effect and not a retrospective effect on the application that was already filed before the Debt Recovery Tribunal prior to the coming into force of the said proviso. That in the instant case, the steps were initiated under the Securitization Act as far back as on 16.8.2004 which is much prior to the insertion of the proviso and hence it has no application to an action which has already been initiated by the appellant bank. Even otherwise, notwithstanding the proviso to Section 19(1) of the DRT Act, the appellant - bank is not obliged to withdraw the application filed before the Debt Recovery Tribunal which was earlier in point of time. Further if really, the respondent - borrower was aggrieved by any of the measures taken by the appellant - bank under the provisions of the Securitization Act, there is a remedy of appeal provided under the Act under Section 17 and the respondent borrower ought to have preferred an appeal which is an alternative and efficacious remedy available to the respondent. Hence the writ petition filed by the respondent borrower without availing of an alternative and efficacious remedy available to him by way of an appeal under Section 17 of the Act, was clearly not maintainable in law. When the writ petition itself was not maintainable, the learned single Judge ought not to have ventured to pass an interim order of the nature which has been passed in the case. The respondent - borrower having an alternate efficacious remedy by way of an appeal under the Act, he was precluded from invoking the extraordinary jurisdiction of this Court under Article 226 and 227 of the Constitution. The mere assertion on the part of the respondent that there was no efficacious remedy will not suffice. Under the circumstances, therefore, the impugned interim order made by the learned single Judge in the writ petition, which is still pending is clearly not sustainable in law and hence it needs interference in the appeal by this Court.
Page 0947
5. As against this, the learned Counsel for the respondent while supporting the interim order made by the learned single has contended as under:
That the instant appeal filed by the appellant is itself not maintainable in law as the same is against an interim order made by the learned single Judge in the writ petition which is still pending for adjudication. Further the application filed by the appellant - bank under Section 19 of the DRT Act before the Debt Recovery Tribunal is still pending and the appellant bank can always pursue the same. The question whether this property is secured or not is also a matter pending adjudication before the Debt Recovery Tribunal in the application filed earlier under Section 19 of the DRT Act by the appellant. When the matter was so pending, the appellant sought to invoke simultaneous remedy under the Securitization Act which was clearly impermissible in law. While taking measures under the Securitization Act, there was an unilateral adjudication by the appellant - bank itself. Such an unilateral adjudication cannot be countenanced in view of the application filed by the appellant bank under Section 19 of the Act being pending before the Debt Recovery Tribunal wherein even the question regarding adjudication has to be gone into. When the question regarding adjudication of the claim was also required to be gone into in the application filed before the Debt Recovery Tribunal, the appellant - bank could not have resorted to unilateral action of taking measures under the securitisation Act. Further, the 1st proviso to Section 19 of the D.R.T. Act is mandatory in nature as otherwise it would frustrate the very adjudication of the claim sought to be adjudicated under Section 19(1) of the Act. Possession notice for taking measures under the Securitization Act had been issued after the amendment to Section 19(1) came into force and hence the appellant - bank could not have taken measures under the Securitization Act without complying with the requirement of the 1st proviso to Section 19(1) of the D.R.f. Act. The said amendment to Section 19(1) of the DRT Act clearly obligates upon the bank to withdraw the application under the DRT Act before taking measures under the Securitization Act and this having not been done, the initiation of measures by the appellant - bank under the Securitisation Act was clearly not maintainable in law and hence the learned single Judge admitted the writ petition and granted an interim stay which cannot be faulted. The respondent borrower had filed an application under Section 22 of the DRT Act in the pending O.A. No. 589/2000 before the Debt Recovery Tribunal to stay the proceedings initiated by the appellant - bank under the Securitization Act. He did not seek to set aside the sale as that situation had not yet arisen in the case. The application filed by the respondent - borrower under Section 22 of the D.R.T. Act as per Annexure-M would clearly indicate that the prayer made therein was to direct the appellant - bank not to take further steps pursuant to the letter dated 19.1.2005 addressed by the authorized officer of the appellant - bank, pending disposal of the application in Page 0948 O.A. No. 589/2000. Thereafter a detailed objection to this application was filed by the appellant - bank and the matter was argued on 11.3.2005. The Debt Recovery Tribunal has however ultimately dismissed the application fifed by the respondent - borrower mainly placing reliance upon a decision rendered by the DRAT, Chennai, dated 28.2.2005 in R.A. Nos. 10 and 11/2005. Under the circumstances, therefore, and on being aggrieved by the said order of the Debt Recovery Tribunal, the respondent - borrower approached this Court by filing a writ petition in W.P. No. 16245/2005. The alternative remedy though available to the respondent - borrower was not efficacious in the sense even if an appeal had been filed by the respondent - borrower, it would have met with the same result as the Debt Recovery Tribunal could not have taken any other decision in the matter other than the one taken in its order dated 12.5.2005 vide Annexure-N. The learned single Judge who heard the matter at a considerable length entertained the writ petition, issued Rule nisi and passed an interim order as prayed for by the respondent - borrower. The writ petition filed before the learned single Judge is yet to be heard and all these contentions which have been raised by the learned Counsel for the appellant could be urged in the matter which is still pending before the learned single Judge. A careful perusal of the 1st proviso to Section 19(1) of the DRT Act would clearly indicate that the appellant - bank has to withdraw the application filed before the Debt Recovery Tribunal in order to invoke the provisions contained under the Securitization act and this having not been done, the appellant - bank was clearly not entitled to pursue the measures under the Securitization Act. Hence the interim order issued by the learned single Judge in the writ petition which has been admitted for being heard on merits needs no interference by this Court.
6. By way of reply, the learned Counsel for the appellant - bank has further contended that there was an alternative efficacious remedy available to the respondent - borrower by way of an appeal under Section 17 of the Securitisation Act and hence the writ petition filed before this Court without exhausting the remedies available to the respondent under the statute was clearly not maintainable in law. That apart, when the respondent - borrower did not seek to challenge the measures taken by the appellant - bank under the Securitisation Act by filing an appeal under Section 17 of the said Act, the application filed before the Debt Recovery Tribunal under Section-22 of the Act in O.A. No. 589/2000 was clearly not maintainable in law. The respondent - borrower sought for stay of the measures taken by the appellant - bank under the Securitisation Act without challenging the same by way of an appeal provided under the said Act and the course resorted to by him by filing an application before the Debt Recovery Tribunal was wholly misconceived. All these aspects of the matter have not been taken note of by the learned single Judge while issuing an interim order and that too without protecting the interests of the appellant - bank.
Page 0949
7. Learned Counsel for the appellant - bank has placed reliance upon the following decisions:
1. ILR 2004 Kar. 2661 Mardia Chemicals Ltd. etc. etc. v. U.O.I. and Ors. etc. etc.
2. Unreported Judgment rendered by the Debt Recovery Tribunal at Chennai on 28.2.2005 in R.A. Nos. 10 and 11 of 2005 Asset Reconstruction Company (India) Limited v. Kumar Metallurgical Corporation Limited and Ors.
8. Learned Counsel for the respondent - borrower has placed reliance upon the following decisions:
1. 1(2005) BC 97 (DRAT/DRT) Indusind Bank Limited v. Deva Tools and Forgings.
2. Unreported Judgment rendered by the teamed single Judge of this Court on 23.2.2005 in W.P. No. 51325/2004 (GM-RES) (A. Veena v. Corporation Bank and Ors.)
3. (A.P. State Financial Corporation v. GAR Re-Rolling Mills)
9. The Hon'ble Supreme Court (Full Bench) in the case of Mardia Chemicals Ltd. etc. etc. v. U.O.I. and Ors. etc. etc. reported in ILR 2004 Kar 2661 has held as under:
Some facts which need be taken note of are that the banks and the financial institutions have heavily financed the petitioners and other industries. It is also a fact that a large sum of amount remains unrecovered. Normal process of recovery of debts through courts is lengthy and time taken is not suited for recovery of such dues. For financial assistance rendered to the industries by the financial institutions, financial liquidity is essential failing which there is a blockade of large sums of amounts creating circumstances which retard the economic progress followed by a large number of other consequential ill effects. Considering all these circumstances, the Recovery of Debts Due to banks and Financial Institutions Act was enacted in 1993 but as figures show it also did not bring the desired results. Though it is submitted on behalf of the petitioners that it so happened due to inaction on the part of the Governments in creating Debt Recovery Tribunals and appointing Presiding Officers, for a long time. Even after leaving that margin, it is to be noted that things in the concerned spheres are desired to move faster. In the present day global economy it may be difficult to stick to old and conventional methods of financing and recovery of dues. Hence, in our view, it cannot be said that a step taken towards securitisation of the debts and to evolve means for faster recovery of the NPAs was not called for or that it was superimposition of undesired law since one legislation Page 0950 was already operating in the field namely the Recovery of Debts due to Banks and Financial Institutions Act. It is also to be noted that the idea has not erupted abruptly to resort to such a legislation. It appears that a thought was given to the problems and Narasimham Committee was constituted which recommended for such a legislation keeping in view the changing times and economic situation whereafter yet another expert committee was constituted then alone the impugned law was enacted. Liquidity of finances and flow of money is essential for any healthy and growth oriented economy. But certainly, what must be kept in mind is that the law should not be in derogation of the rights which are guaranteed to the people under the Constitution. The procedure should also be fair, reasonable and valid, though it may vary looking to the different situations needed to be tackled and object sought to be achieved.
We are therefore, unable to find much substance in the submission made on behalf of the petitioners that while the Recovery of debts due to Banks and Financial Institutions Act was in operation it was uncalled for to have yet another legislation for the recovery of the mounting dues. Considering the totality of circumstances the financial climate world over, if it was thought as a matter of policy, to have yet speedier legal method to recover the dues, such a policy decision cannot be faulted with nor it is a matter to be gone into by the Courts to test the legitimacy of such a measure relating to financial policy.
It provides that a secured creditor may enforce any security interest without intervention of the Court or tribunal irrespective of Section 69 or Section 69-A of the Transfer of Property Act where according to Sub-section (2) of Section 13, the borrower is a defaulter in repayment of the secured debt or any installment of repayment and further the debt standing against him has been classified as a Non-Performing Asset by the secured creditor. Sub-section (2) of Section 13 further provides that before taking any steps in direction of realizing the dues, the secured creditor must serve a notice in writing to the borrower requiring him to discharge the liabilities within a period of 60 days failing which the secured creditor would be entitled to take any of the measures as provided in Sub-section (4) of Section 13. It may also be noted that as per Sub-section (3) of Section 13, a notice given to the borrower must contain the details of the amounts payable and the secured assets against which the secured creditor proposes to proceed in the event of noncompliance with the notice given under Sub-section (2) of Section 13.
Sub-section (4) provides for four measures which can be taken by the secured creditor in case of non compliance with the notice served upon the borrower. Under Clause (a) of Sub-section (4) the secured creditor may take possession of the secured assets including the right to transfer the secured assets by way of lease, assignment or sale; may take over the management of the secured assets under Clause (b) including right to transfer; under Clause (c) of Sub-section (4) a Page 0951 manager may be appointed to manage the secured assets which have been taken possession of by the secured creditor and may require any person who has acquired any secured assets from the borrower or from whom any money is due to the borrower to pay the same to him as it may be sufficient to pay the secured debtor as provided under Clause (d) of Section 3(4) of the Act. Sub-section (8) of Section 13, however, provides that if all the dues of the secured creditor including all costs, charges and expenses etc. as may be incurred are tendered to the secured creditor before sale or transfer no further steps be taken in that direction.
Mainly it is to be considered as to whether there is absolute bar of any remedy to the borrower, before an action is taken under Sub-section (4) of Section 13 of the Act in view of non-obstante Clause under Sub-section (1) of Section 13 and the bar of the jurisdiction of the civil Court under Section 34 of the Act. Sub-section (1) of Section 13 begins with "Notwithstanding anything contained" under Section 69 of the Transfer of Property Act, any secured interest can be enforced without intervention of the Court or Tribunal.
The purpose of serving a notice upon the borrower under Sub-section (2) of Section 13 of the Act is, that a reply may be submitted by the borrower explaining the reasons as to why measures may or may not be taken under Sub-section (4) of Section 13 in case of noncompliance of notice within 60 days. The creditor must apply his mind to the objections raised in reply to such notice and an internal mechanism must be particularly evolved to consider such objections raised in the reply to the notice. There may be some meaningful consideration of the objections raised rather than to ritually reject them and proceed to take drastic measures under Sub-section (4) of Section 13 of the Act Once such a duty is envisaged on the part of the creditor it would only be conducive to the principles of fairness on the part of the banks and financial institutions in dealing with their borrowers to apprise them of the reason for not accepting the objections or points raised in the reply to the notice served upon them before proceeding to take measures under Sub-section (4) of Section 13. Such reasons, overruling the objections of the borrower, must also be communicated to the borrower by the secured creditor. It will only be in fulfillment of a requirement of reasonableness and fairness in the dealings of institutional financing which is so important from the point of view of the economy of the country and would serve the purpose in the growth of a healthy economy. It would certainly provide guidance to the secured debtors, in general, in conducting the affairs in a manner that they may not be found defaulting and being made liable for the unsavoury steps contained under Sub-section (4) of Section 13.
We are holding that it is necessary to communicate the reasons for not accepting the objections raised by the borrower in reply to notice under Section 13(2) of the Act, more particularly for the reason that normally in the event of non compliance with notice, the party giving Page 0952 notice approaches the Court to seek redressal but in the present, case, in view of Section 13(1) of the Act, the creditor is empowered to enforce the security himself without intervention of the Court. Therefore, it goes with logic and reason that he may be checked to communicate the reason for not accepting the objections, if raised and before he takes the measures like taking over possession of the secured assets etc. This will also be in keeping with the concept of right to know and lender's liability of fairness to keep the borrower informed particularly the developments immediately before taking measures under Sub-section (4) of Section 13 of the Act. It will also cater the cause of transparency and not secrecy and shall be conducive in building an atmosphere of confidence and healthy commercial practice. Such a duty, in the circumstances of the case and the provisions is inherent under Section 13(2) of the Act. The next safeguard available to a secured borrower within the framework of the Act is to approach the Debt Recovery Tribunal under Section 17 of the Act. Such a right accrues only after measures are taken under Sub-section (1) of Section 13 of the Act.
However, to a very limited extent, jurisdiction of the Civil Court can also be invoked, where for example, the action of the secured is alleged to be fraudulent or their claim may be so absurd and untenable which may not require any probe, whatsoever or to say precisely to the extent the scope is permissible to bring an action in the Civil Court in the eases of English mortgages.
10. In the light of the above legal position, let us now advert to the merits of this appeal. It has to be stated at the outset that the impugned interim order passed by the learned single Judge is a non-speaking order inasmuch as it does not indicate as to what weighed with the Court to pass such an interim order. It is an one line order without indicating any reasons for passing such an order. It is not in dispute that the interim prayer sought for by the respondent - writ petitioner was strongly resisted or opposed by the appellant - bank by filing detailed objections. It is equally not in dispute that after the appellant - bank filed its objections, the matter was heard by the learned single Judge on the question of issue of an interim order. It is only thereafter, the interim order came to be issued. That being so, the impugned interim order passed by the learned single Judge should have reflected the contentions that were urged before him and the reasons which weighed with the learned single Judge to pass such an interim order. In the absence of all this, the impugned order made by the learned single Judge is nothing but a non-speaking order which on the face of it is not maintainable. It has been repeatedly held by the Hon'ble Supreme Court that a non-speaking order is improper. Therefore on this ground alone, the impugned interim order made by the learned single Judge is liable to be set aside. That apart, we find that in the instant case if at all the respondent - borrower was aggrieved by any of the measures taken by the appellant - bank under the provisions of the Securitisation Act, he ought to have challenged the same by filing an appeal under Section 17 of the said Page 0953 Act. Be it noted that the Hon'ble Supreme Court in the above referred decision has clearly and categorically observed that the next safeguard available to a secured borrower within the framework of the Securitisation Act is to approach the Debt Recovery Tribunal under Section 17 of the said Act. Such a right accrues only after measures are taken under Sub-section (1) of Section 13 of the Act. That means, the remedy provided to a secured borrower under Section 17 of the Act is one of the important safeguards available to him under the statute even after observing or complying with the fairness to keep the borrower informed of the developments immediately before taking measures under Section 13(4) of the said Act Thus the secured borrower had been provided with several safeguards under the statute itself including the one provided under Section 17 of the Act. But admittedly, the respondent - borrower did not do so. That would imply that he was not at all aggrieved by the measures taken by the appellant - bank under the provisions of the Securitisation Act. Instead of availing the safeguards provided under the Securitisation Act, including the one under Section 17 thereof, the respondent - borrower filed an application under Section 22 of the DRT Act before the Debt Recovery Tribunal in O.A. No. 589/2000 for a direction to the appellant - bank not to take further steps pursuant to the letter dated 19.1.2005 addressed by the authorized officer of the appellant - bank, which was totally misconceived. If really, the respondent - borrower was aggrieved by the measures taken by the appellant - bank under the provisions of the Securitisation Act, he ought to have challenged the same by preferring an appeal under Section 17 of the Securitisation Act. But strangely, the respondent -borrower did not seek to challenge the measures taken by the appellant - bank under the Securitisation Act by filing an appeal and instead he approached the Debt Recovery tribunal in O.A. No. 589/2000 by filing an application under Section 22 of the DRT Act, which was totally misconceived and impermissible in law. Section 22 of the DRT Act only deals with the procedure and powers of the Tribunal and the appellate Tribunal which has nothing to do with the relief sought for by the respondent - borrower before the Debt Recovery Tribunal. The prayer made before the Debt Recovery Tribunal itself was improper and misconceived. The appropriate remedy for the respondent - borrower would have been to prefer an appeal under Section 17 of the Securitization Act, Admittedly, the respondent - borrower did not do this. Though he did not think of challenging the measures taken by the appellant--bank under the provisions of the Securitization Act by preferring an appeal under Section 17 of the said Act, but when he approached this Court by preferring a writ petition, the wisdom dawned upon him to seek to challenge the proceedings initiated by the appellant -bank under the provisions of the Securitization Act, It may be stated even at the cost of repetition that any person (including borrower) who is aggrieved by the measures taken by the secured creditor or his authorized officer under this chapter, may prefer an appeal to the Debts Recovery Tribunal having jurisdiction in the matter within a specified time. The respondent borrower does not dispute that such a remedy was Page 0954 open to him. But admittedly, he did not choose to avail the alternate and efficacious remedy that was available to him under the statute. Then in the circumstances, it is not free from doubt whether the respondent borrower could have maintained a writ petition. In this connection, a reference may be made to a decision of the Hon'ble Supreme court in the case of Ms. Sanjana M. Wig v. Hindustan Petro Corporation Limited reported in 2005 AIR SOW 4535 and also to a decision of the Hon'ble Supreme Court in the case of Central Coal Fields Limited .v. State of Jharkhand reported in 2005 AIR SCW 4348. In the light of these decisions of the Hon'ble Supreme Court, it is not free from doubt whether the writ petition filed by the respondent without availing of an alternative remedy of filing an appeal under the statute was maintainable in law. All these aspects of the matter required consideration by the learned single Judge before passing the impugned interim order. Whether all these aspects of the matter have been considered or not by the learned single Judge could not be reflected from the nature of the impugned interim order passed by the learned single Judge. In a matter like this, where both the parties have been heard before passing the impugned interim order, the learned single Judge was required to indicate the reasons for granting an interim order as prayed for. It was imperative on the learned single Judge to indicate the reasons as to why the prayer for interim order was found acceptance with him. In the absence of any such reasons, the impugned interim order of the learned single Judge is indefensible. Even under Order-41 Rule-5 of CPC which deals with the stay of the proceedings, it is clearly indicated that no order for stay of execution shall be made unless the conditions contemplated therein are satisfied. Though strictly speaking, the provisions of Order 41 Rule 5 of CPC may not be applicable to the writ proceedings, the same can be taken as a guideline for issue of interim order of stay in a case of this nature in view of the provisions contained in Rule-39 of the Writ Proceedings Rules framed by this Court. Certain specific considerations to be noted in the matter of grant or otherwise of an interim order sought for by the petitioner, the basic being non-expression of opinion as to the merits of the matter by the Court, since the issue of interim order usually, is at the earliest possible stage so far as the time frame is concerned. The other considerations which ought to weigh with the Court hearing the application seeking for interim stay are that: Extent of damages being an adequate remedy; that the substantial loss may result to the party applying for stay of execution unless the order is made etc. The issue regarding the grant or otherwise of an interim stay is to be looked from the point of view as to whether on refusal of the interim prayer sought for by the petitioner, he would suffer irreparable loss and injury keeping in view the strength of the parties case. We have not been able to gather from the impugned interim order whether all these issues have been looked into by the learned single Judge while granting an interim order in favour of the respondent petitioner. By a non-reasoned order, the impugned interim order could not have been passed when both the parties had raised several contentions. On plainest consideration of justice, the learned single Judge ought to have set forth Page 0955 the reasons, howsoever brief in the impugned order, indicative of an application of his mind, all the more when the same is amenable to further avenue of challenge. The absence of reasons has rendered the impugned interim order passed by the learned single Judge not sustainable in law. The desirability of a speaking order while dealing with the interim prayer sought for by a party cannot be lightly ignored moreso when both the parties have been heard and they have raised several contentions and as also when the same is amenable to further avenue of challenge. The requirement of indicating reasons in such cases has been judicially recognized as imperative. Reason is the heart, beat of every conclusion, and without the same it becomes lifeless. Even in respect of administrative orders, Lord Denning M.R. in Breen v. Amalgamated Engineering Union reported in 1971 (1) All. E.R. 1148 observed: The giving of reasons is one of the fundamentals of good administration". Failure to give reasons amounts to denial of justice. Reasons are live links between the mind of the decision taker to the controversy in question and the decision or conclusion arrived at Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the "inscrutable face of the sphinx", it can, by its silence, render it virtually impossible for the Courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system; reasons at least sufficient to indicate an application of mind to the matter before Court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made, in other words, a speaking out. In this connection, a reference may be made to a decision of the Hon'ble Supreme Court in the case of Bolin Chetia v. Jagadish Bhuyan and Ors. reported in 2005 AIR SCW 1481 wherein it is observed in para 11 of the decision that: "....The first appellate Court exercising power to dismiss the appeals summarily ought to pass a speaking order making it precise that it did go into the pleas - of fact and/or law - sought to be urged before it and upon deliberating on them found them to be devoid of any merit or substance and giving brief reasons. This is necessary to satisfy any superior jurisdiction to whom the aggrieved appellant may approach that the power to summarily dismiss the appeal was exercised judicially and consciously by way of an exception." In this connection, a reference may also be made to a decision of the Hon'ble Supreme Court in the case of State of Punjab v. Bhagsingh reported in 2004 AIR SCW 102 and also to another decision of the Hon'ble Supreme Court, in the case of Cyril Lasrado v. Juliana Maria Lasrado and Anr. reported in 2004 (6) SCALE 607 (relevant paras 10, 11 and 12)
11. In view of the aforesaid legal position, the impugned interim order made by the learned single Judge is clearly unsustainable in law and is liable to Page 0956 be set aside. We however refrain from discussing the facts and various arguments advanced at great length by both the parties in detail because we are inclined to remit the matter back to the learned single Judge for fresh decision in accordance with law. It may be stated even at the cost of repetition that reasons introduce clarity in an order. We are therefore inclined to hold that the learned single Judge ought to have set forth its reasons, howsoever brief in its impugned order, indicative of an application of its mind, when admittedly several contentions were raised by both the parties before the learned single Judge. In these circumstances, we feel that it would be appropriate if the matter is remitted back to the learned single Judge for a decision afresh on the interim prayer sought for by the respondent. It would be open to the parties to putforth all such contentions in support of the grant or otherwise of the interim order.
12. In the result, therefore, this writ appeal filed by the appellant - bank is allowed in part to the extent as indicated above. The impugned interim order of the learned single Judge is hereby set aside and the matter is remitted back to the learned single Judge for a decision afresh on the grant or otherwise of the interim prayer sought for by the respondent. In the circumstances of the case, there is however no order as to costs.