Gujarat High Court
M/S Jayveer Industries vs M/S Cfm Assets Reconstruction Pvt. Ltd on 27 February, 2024
NEUTRAL CITATION
C/SCA/3477/2024 ORDER DATED: 27/02/2024
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 3477 of 2024
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M/S JAYVEER INDUSTRIES & ORS.
Versus
M/S CFM ASSETS RECONSTRUCTION PVT. LTD.
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Appearance:
MR RUSI B TRIVEDI FOR MALAV M MULANI(8844) for the Petitioner
for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE HEMANT M.
PRACHCHHAK
Date : 27/02/2024
ORAL ORDER
1. By way of present petition under Article 226 of the Constitution of India, the petitioners have prayed for the following reliefs :
"(a) YOUR LORDSHIPS BE PLEASED to issue any appropriate writ, order or direction to quash and set aside the impugned notice dated 22/02/2024 passed by the Court Commissioner, Addl. Chief Judicial Magistrate, Radhanpur, as being illegal, without jurisdiction, in breach of the principles of natural justice and the provisions of the SARFAESI Act, 2002 and further direct the respondent bank to defer with the process of taking the physical possession of the property on 03/03/2024 in the interest of justice [At Annexure-A].
(b) YOUR LORDSHIPS BE PLEASED to stay the impugned notice dated 22/02/2024 passed by the Court Commissioner, Addl. Chief Judicial Magistrate, Radhanpur, as being illegal, without jurisdiction, in breach of the principles of natural justice and the provisions of the SARFAESI Act, 2002 and further be pleased to restrain the respondent from taking further steps against the petitioners under the SARFAESI Act, 2002 pending admission and final disposal of the petition [At Annexure-A].Page 1 of 21 Downloaded on : Fri Mar 15 21:06:36 IST 2024
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(c) BE PLEASED pass such other and further orders, which may be deemed fit in the interest of justice."
2. The petitioners have challenged the physical possession notice dated 22.02.2024, which was served upon the petitioner on 22.02.2024 itself, issued by the Court Commissioner of the Addl. Chief Judicial Magistrate, Radhanpur pursuant to the allowing the application filed by the respondent under Section 14 of the Securitization and Reconstructions of financial Assets and Enforcement of Security Interest Act, 2002 (for short "the SARFAESI Act").
3. Learned advocate for the petitioner has submitted that the order under Section 14 was passed without issuing notice under Section 13(2) of the SARFAESI Act to the petitioner and the same is passed behind the back and it was not served upon the petitioner and directly the notice for possession was issued against the petitioner. He has submitted that by the notice only the petitioner came to know that the respondent Bank is likely to take the possession of the mortgaged property and therefore, the petitioner approached this Court by way of filing the present petition.
Page 2 of 21 Downloaded on : Fri Mar 15 21:06:36 IST 2024 NEUTRAL CITATION C/SCA/3477/2024 ORDER DATED: 27/02/2024 undefined 3.1 In support of his submissions, learned advocate for the
petitioner has referred and relied upon the decision of the Division Bench of this Court passed in Writ Petition (PIL) No.68 of 2012 and submitted that as per the directions issued by the Division Bench, atleast 14 days' time to be granted by the respondent Bank to the concerned person who is in actual occupation of the property in question and therefore, in the present case, since such procedure was not followed by the respondent Bank, the petitioner has approached this Court and urged that the present petition be entertained and appropriate order be passed in favour of the petitioner as prayed for in the present petition.
4. Heard learned advocate Mr.Rusi B. Trivedi appearing on behalf of Mr.Malav Mulani, the learned advocate for the petitioners and perused the material placed on record. At this juncture, this Court cannot go into the disputed facts that whether the petitioner has received the notice or not or whether the notice was served upon him or not or whether the order was passed behind his back, etc., because all these are the disputed facts and required to be adjudicated and by Page 3 of 21 Downloaded on : Fri Mar 15 21:06:36 IST 2024 NEUTRAL CITATION C/SCA/3477/2024 ORDER DATED: 27/02/2024 undefined preferring the Special Civil Application the adjudication of such disputed facts or obligations cannot be dealt with by this Court.
It is well settled by the Hon'ble Apex Court way-back in the year 2009 in case of City and Industrial Development Corporation Vs. Dosu Aardeshir Bhiwandiwala, reported in [2009] 1 SCC 168, wherein, in paragraph 22, it has been observed and held as under :
"22. In our opinion, the High Court while exercising its extraordinary jurisdiction under Article 226 of the Constitution is duty bound to take all the relevant facts and circumstances into consideration and decide for itself even in the absence of proper affidavits from the State and its instrumentalities as to whether any case at all is made out requiring its interference on the basis of the material made available on record. There is nothing like issuing an ex-parte writ of Mandamus, order or direction in a public law remedy. Further, while considering validity of impugned action or inaction the court will not consider itself restricted to the pleadings of the State but would be free to satisfy itself whether any case as such is made out by a person invoking its extra ordinary jurisdiction under Article 226 of the Constitution. The court while exercising its jurisdiction under Article 226 is duty bound to consider whether :
(a) adjudication of writ petition involves any complex and disputed questions of facts and whether they can be satisfactorily resolved;
(b) petition reveals all material facts;
(c) the petitioner has any alternative or effective remedy for the resolution of the dispute;
(d) 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;Page 4 of 21 Downloaded on : Fri Mar 15 21:06:36 IST 2024
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The court in appropriate cases in its discretion may direct the State or its instrumentalities as the case may be to file proper affidavits placing all the relevant facts truly and accurately for the consideration of the court and particularly in cases where public revenue and public interest are involved. Such directions always are required to be complied with by the State. No relief could be granted in a public law remedy as a matter of course only on the ground that the State did not file its counter affidavit opposing the writ petition. Further, empty and self-defeating affidavits or statements of Government spokesmen by themselves do not form basis to grant any relief to a person in a public remedy to which he is not otherwise entitled to in law."
4.1 The above decision is subsequently referred to and relied by this Court in a number of cases and therefore, the statutory efficacious remedy under Section 17 of the SARFAESI Act is available to the petitioner, whereby the petitioner has to approach the DRT by way of preferring an appeal under Section 17 and therefore, time and again, the Hon'ble Apex Court has relegated the petition only on the ground that the statutory efficacious remedy under Section 17 of the SARFAESI Act is available to the petitioner and therefore, the Court cannot entertain petition under Article 226 & 227 of the Constitution of India. The Supreme Court has deprecated the practice to entertain the petition.
4.2 So far as the contention raised by the petitioner with Page 5 of 21 Downloaded on : Fri Mar 15 21:06:36 IST 2024 NEUTRAL CITATION C/SCA/3477/2024 ORDER DATED: 27/02/2024 undefined
regard to non-receipt of notice under Section 13(2) of the Act is concerned, it would be appropriate to refer to the decision of the Hon'ble Apex Court in case of Kanaiyalal Lalchand Sachdev & Ors. Vs. State of Maharashtra & Ors., reported in [2011] LawSuit(SC) 76, wherein, it has been observed and held that "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."
4.3 So far as the question with regard to entertaining the present petition by this Court is concerned, it would be appropriate to refer to the decision of the Hon'ble Apex Court in case of Phoenix Arc Private Limited Vs. Vishwa Bharati Vidya Madir, reported in [2022] 5 SCC 345, wherein, it has been observed and held in paragraphs 10, 12 and 13 as under :
Head Note B. Constitution of India - Art.226 -
Maintainability of writ petition - Proceedings under SARFAESI Act - Held, is proceedings are initiated under the Page 6 of 21 Downloaded on : Fri Mar 15 21:06:36 IST 2024 NEUTRAL CITATION C/SCA/3477/2024 ORDER DATED: 27/02/2024 undefined SARFAESI Act and/or any proposed action is to be taken and the borrower is aggrieved by any of the actions of the private bank/bank/ARC, borrower has to avail the remedy under the SARFAESI Act and no writ petition would lie and/or is maintainable and/or entertainable.
"10. Assuming that the communication dated 13.08.2015 can be said to be a notice under Section 13(4) of the SARFAESI Act, in that case also, in view of the statutory remedy available under Section 17 of the SARFAESI Act and in view of the law laid down by this Court in the cases referred to hereinabove, the writ petitions against the notice under Section 13(4) of the SARFAESI Act was not required to be entertained by the High Court. Therefore, the High Court has erred in entertaining the writ petitions against the communication dated 13.08.2015 and also passing the ex-parte ad- interim orders directing to maintain the status quo with respect to possession of secured properties on the condition directing the borrowers to pay Rs. 1 crore only (in all Rs.3 crores in view of the subsequent orders passed by the High Court extending the exparte ad-interim order dated 26.08.2015) against the total dues of approximate Rs.117 crores. Even the High Court ought to have considered and disposed of the application for vacating the ex- parte adinterim relief, which was filed in the year 2016 at the earliest considering the fact that a large sum of Rs.117 crores was involved.
12. Even otherwise, it is required to be noted that a writ petition against the private financial institution - ARC - appellant herein under Article 226 of the Constitution of India against the proposed action/actions under Section 13(4) of the SARFAESI Act can be said to be not maintainable. In the present case, the ARC proposed to take action/actions under the SARFAESI Act to recover the borrowed amount as a secured creditor. The ARC as such cannot be said to be performing public functions which are normally expected to be performed by the State authorities. During the course of a commercial transaction and under the contract, the bank/ARC lent the money to the borrowers herein and therefore the said activity of the bank/ARC cannot be said to be as performing a public function which is normally expected to be performed by the State authorities. If proceedings are initiated under the SARFAESI Act and/ or any proposed action is to be taken and the borrower is aggrieved by any of the actions of the private bank/bank/ARC, borrower has to avail the remedy under the SARFAESI Act and no writ petition would lie and/or is maintainable and/or entertainable. Therefore, decisions of this Court in the cases of Praga Tools Corporation (supra) and Page 7 of 21 Downloaded on : Fri Mar 15 21:06:36 IST 2024 NEUTRAL CITATION C/SCA/3477/2024 ORDER DATED: 27/02/2024 undefined Ramesh Ahluwalia (supra) relied upon by the learned counsel appearing on behalf of the borrowers are not of any assistance to the borrowers.
13. Now, so far as the submission on behalf of the borrowers that in exercise of the powers under Article 226 of the Constitution, this Court may not interfere with the interim / interlocutory orders is concerned, the decision of this Court in the case of Mathew K.C. (supra) is required to be referred to.
13.1 In the case of Mathew K.C. (supra) after referring to and/or considering the decision of this Court in the case of Chhabil Dass Agarwal (supra), it was observed and held in paragraph 5 as under:-
"5. We have considered the submissions on behalf of the parties. Normally this Court in exercise of jurisdiction under Article 136 of the Constitution is loath to interfere with an interim order passed in a pending proceeding before the High Court, except in special circumstances, to prevent manifest injustice or abuse of the process of the court. In the present case, the facts are not in dispute. The discretionary jurisdiction under Article 226 is not absolute but has to be exercised judiciously in the given facts of a case and in accordance with law. The normal rule is that a writ petition under Article 226 of the Constitution ought not to be entertained if alternate statutory remedies are available, except in cases falling within the well-defined exceptions as observed in CIT v. Chhabil Dass Agarwal [CIT v. Chhabil Dass Agarwal, (2014) 1 SCC 603], as follows: (SCC p. 611, para 15) "15. Thus, while it can be said that this Court has recognised some exceptions to the rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal case [Thansingh Nathmal v. Supt. of Taxes, AIR 1964 SC 1419] , Titaghur Paper Mills case [Titaghur Paper Mills Co. Ltd. v. State of Orissa, (1983) 2 SCC 433] and other similar judgments that the High Court will not entertain a petition under Article 226 of the Constitution if an effective Page 8 of 21 Downloaded on : Fri Mar 15 21:06:36 IST 2024 NEUTRAL CITATION C/SCA/3477/2024 ORDER DATED: 27/02/2024 undefined 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 still holds the field. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation."
13.2 Applying the law laid down by this Court in the case of Mathew K.C. (supra) to the facts on hand, we are of the opinion that filing of the writ petitions by the borrowers before the High Court under Article 226 of the Constitution of India is an abuse of process of the Court. The writ petitions have been filed against the proposed action to be taken under Section 13(4). As observed hereinabove, even assuming that the communication dated 13.08.2015 was a notice under Section 13(4), in that case also, in view of the statutory, efficacious remedy available by way of appeal under Section 17 of the SARFAESI Act, the High Court ought not to have entertained the writ petitions. Even the impugned orders passed by the High Court directing to maintain the status quo with respect to the possession of the secured properties on payment of Rs.1 crore only (in all Rs.3 crores) is absolutely unjustifiable. The dues are to the extent of approximately Rs.117 crores. The ad-interim relief has been continued since 2015 and the secured creditor is deprived of proceeding further with the action under the SARFAESI Act. Filing of the writ petition by the borrowers before the High Court is nothing but an abuse of process of Court. It appears that the High Court has initially granted an ex-parte ad-interim order mechanically and without assigning any reasons. The High Court ought to have appreciated that by passing such an interim order, the rights of the secured creditor to recover the amount due and payable have been seriously prejudiced. The secured creditor and/or its assignor have a right to recover the amount due and payable to it from the borrowers. The stay granted by the High Court would have serious adverse impact on the financial health of the secured creditor/assignor. Therefore, the High Court should have been extremely careful and circumspect in exercising its discretion while granting stay in such matters. In these circumstances, the proceedings before the High Court deserve to be dismissed."
4.4 In the recent decision passed by the Division Bench of this Court in case of XL Alugraphics Mumbai Private Page 9 of 21 Downloaded on : Fri Mar 15 21:06:36 IST 2024 NEUTRAL CITATION C/SCA/3477/2024 ORDER DATED: 27/02/2024 undefined Limited Vs. Internal Assets and Reconstruction Company Private Limited, reported in [2023] LawSuit (Guj.) 435, it has been observed and held in paragraphs 17, 18, 19 and 21 as under :
"17. The decision of the Hon'ble Apex Court rendered in the case of Punjab National Bank (Supra) is the base judgement wherein the Apex Court has held that the order passed by the Tribunal directing sale of mortgaged property is Appealable under Section 20 of Recovery of Debts Debts Due to Banks and Financial Institutions Act (For short "the Recovery of Debts Act"). High Court's interference by way of jurisdiction under Article 227 of the Constitution of India in wake of the alternative remedy has not been approved by the Apex Court. Thus, the correctness of the decision of the Tribunal, according to the Apex Court can be decided before an appropriate forum and not in a jurisdiction under Article 227 of Constitution of India. This has been reiterated by the Apex Court by referring to the decision in the case of The State of Madhya Pradesh and others (Supra) wherein, the Apex Court has observed as under:-
"5. While entertaining the writ petition under Article 226 of the Constitution of India challenging the Assessment Order denying the Input rebate, the High Court has observed that there are no disputed question of facts arise and it is a question to be decided on admitted facts for which no dispute or enquiry into factual aspects of the matter is called for. The aforesaid can hardly be a good/valid ground to entertain the writ petition under Article 226 of the Constitution of India challenging the Assessment Order denying the Input rebate against which a statutory remedy of appeal was available.
6. At this stage, a recent decision of this Court in the case of The State of Maharashtra and Others v. Greatship (India) Limited (Civil Appeal No. 4956 of 2022, decided on 20.09.2022) is required to be referred to. After taking into consideration the earlier decision of this Court in the case of United Bank of India v. Satyawati Tondon and others, reported in (2010) 8 SCC 110, it is observed and held that in a tax matter when a statutory remedy of appeal is available, the High Court ought not to have entertained the writ petition Page 10 of 21 Downloaded on : Fri Mar 15 21:06:36 IST 2024 NEUTRAL CITATION C/SCA/3477/2024 ORDER DATED: 27/02/2024 undefined under Article 226 of the Constitution of India against the Assessment Order by-passing the statutory remedy of appeal. While holding so, this Court considered the observations made by this Court in paragraphs 49 to 53 in Satyawati Tondon (supra), which read as under:
"49. The views expressed in Titaghur Paper Mills Co. Ltd. vs. State of Orissa (1983) 2 SCC 433 were echoed in CCE v. Dunlop India Ltd. (1985) 1 SCC 260 in the following words: (SCC p. 264, para 3) "3. Article 226 is not meant to short-circuit or circumvent statutory procedures. It is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations, as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to Article 226 of the Constitution. But then the Court must have good and sufficient reason to bypass the alternative remedy provided by statute. Surely matters involving the revenue where statutory remedies are available are not such matters. We can also take judicial notice of the fact that the vast majority of the petitions under Article 226 of the Constitution are filed solely for the purpose of obtaining interim orders and thereafter prolong the proceedings by one device or the other. The practice certainly needs to be strongly discouraged."
50. In Punjab National Bank v. O.C. Krishnan (2001) 6 SCC 569 this Court considered the question whether a petition under Article 227 of the Constitution was maintainable against an order passed by the Tribunal under Section 19 of the DRT Act and observed: (SCC p. 570, paras 5-6) "5. In our opinion, the order which was passed by the Tribunal directing sale of mortgaged property was appealable under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short 'the Act'). The High Court ought not to have exercised its jurisdiction under Article 227 in view of the provision for alternative remedy contained in the Page 11 of 21 Downloaded on : Fri Mar 15 21:06:36 IST 2024 NEUTRAL CITATION C/SCA/3477/2024 ORDER DATED: 27/02/2024 undefined Act. We do not propose to go into the correctness of the decision of the High Court and whether the order passed by the Tribunal was correct or not has to be decided before an appropriate forum.
6. The Act has been enacted with a view to provide a special procedure for recovery of debts due to the banks and the financial institutions. There is a hierarchy of appeal provided in the Act, namely, filing of an appeal under Section 20 and this fast-track procedure cannot be allowed to be derailed either by taking recourse to proceedings under Articles 226 and 227 of the Constitution or by filing a civil suit, which is expressly barred. Even though a provision under an Act cannot expressly oust the jurisdiction of the Court under Articles 226 and 227 of the Constitution, nevertheless, when there is an alternative remedy available, judicial prudence demands that the Court refrains from exercising its jurisdiction under the said constitutional provisions. This was a case where the High Court should not have entertained the petition under Article 227 of the Constitution and should have directed the respondent to take recourse to the appeal mechanism provided by the Act."
51. In CCT v. Indian Explosives Ltd. [(2008) 3 SCC 688] the Court reversed an order passed by the Division Bench of the Orissa High Court quashing the show- cause notice issued to the respondent under the Orissa Sales Tax Act by observing that the High Court had completely ignored the parameters laid down by this Court in a large number of cases relating to exhaustion of alternative remedy.
52. In City and Industrial Development Corpn. v. Dosu Aardeshir Bhiwandiwala [(2009) 1 SCC 168] the Court highlighted the parameters which are required to be kept in view by the High Court while exercising jurisdiction under Article 226 of the Constitution. Paras 29 and 30 of that judgment which contain the views of this Court read as under: (SCC pp. 175-76) "29. In our opinion, the High Court while exercising its extraordinary jurisdiction under Article 226 of the Constitution is duty-bound to take all the relevant facts Page 12 of 21 Downloaded on : Fri Mar 15 21:06:36 IST 2024 NEUTRAL CITATION C/SCA/3477/2024 ORDER DATED: 27/02/2024 undefined and circumstances into consideration and decide for itself even in the absence of proper affidavits from the State and its instrumentalities as to whether any case at all is made out requiring its interference on the basis of the material made available on record. There is nothing like issuing an ex parte writ of mandamus, order or direction in a public law remedy. Further, while considering the validity of impugned action or inaction the Court will not consider itself restricted to the pleadings of the State but would be free to satisfy itself whether any case as such is made out by a person invoking its extraordinary jurisdiction under Article 226 of the Constitution.
30. The Court while exercising its jurisdiction under Article 226 is duty- bound to consider whether:
(a) adjudication of writ petition involves any complex and 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) 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.
The Court in appropriate cases in its discretion may direct the State or its instrumentalities as the case may be to file proper affidavits placing all the relevant facts truly and accurately for the consideration of the Court and particularly in cases where public revenue and public interest are involved. Such directions are always required to be complied with by the State. No relief could be granted in a public law remedy as a matter of course only on the ground that the State did not file its counter-affidavit opposing the writ petition. Further, empty and self-defeating affidavits or statements of Government spokesmen by themselves do not form basis to grant any relief to a person in a public law remedy to which he is not otherwise entitled to in law."
53. In Raj Kumar Shivhare v. Directorate of Page 13 of 21 Downloaded on : Fri Mar 15 21:06:36 IST 2024 NEUTRAL CITATION C/SCA/3477/2024 ORDER DATED: 27/02/2024 undefined Enforcement [(2010) 4 SCC 772] the Court was dealing with the issue whether the alternative statutory remedy available under the Foreign Exchange Management Act, 1999 can be bypassed and jurisdiction under Article 226 of the Constitution could be invoked. After examining the scheme of the Act, the Court observed: (SCC p. 781, paras 31-32) "31. When a statutory forum is created by law for redressal of grievance and that too in a fiscal statute, a writ petition should not be entertained ignoring the statutory dispensation. In this case the High Court is a statutory forum of appeal on a question of law. That should not be abdicated and given a go-by by a litigant for invoking the forum of judicial review of the High Court under writ jurisdiction. The High Court, with great respect, fell into a manifest error by not appreciating this aspect of the matter. It has however dismissed the writ petition on the ground of lack of territorial jurisdiction.
32. No reason could be assigned by the appellant's counsel to demonstrate why the appellate jurisdiction of the High Court under Section 35 of FEMA does not provide an efficacious remedy. In fact there could hardly be any reason since the High Court itself is the appellate forum."
7. In view of the above, the impugned judgment and order passed by the High Court entertaining the writ petition under Article 226 of the Constitution of India against the Assessment Order denying the benefit of Input rebate is unsustainable and the same deserves to be quashed and set aside and the original writ petitioner is to be relegated to prefer an appeal against the Assessment Order dated 28.02.2015 passed by the Divisional Deputy Commissioner, Commercial Tax, Jabalpur, which may be available under Section 46(1) of the MP VAT Act, 2002.
18. Yet another decision of the Apex Court rendered in case of Authorized Officer, State Bank of Travancore and Ors. (Supra) where, the challenge was made under Section 13(4) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). High Court stayed the further proceedings under Section 13(4) of Page 14 of 21 Downloaded on : Fri Mar 15 21:06:36 IST 2024 NEUTRAL CITATION C/SCA/3477/2024 ORDER DATED: 27/02/2024 undefined SARFAESI Act on deposit of certain amount. The question before the Apex Court was whether the High Court is justified in staying further proceedings.
19 Apex Court has also held that it is the solemn duty of the Court to apply the correct law without waiting for an objection to be raised by a party, especially when the law stands well settled. Any departure, if permissible, has to be for the reasons recorded in the case falling under a defined exception on duly discussing and noticing the relevant law. The grant of ex-parte stay in the financial matters, according to the Apex Court would have a deleterious effect and the aggrieved persons would always have the remedy to move for vacating the interim order.
21. Noticing the well settled law on the subject, without expressing anything on merits in favour of the either of the parties, writ petition is hereby not entertained and stands dismissed on the ground of availability of alternative efficacious statutory remedy of appeal to the petitioner by relegating it to prefer an appeal before the Appellate Authority under Section 20 of "The Recovery of Debts Act". If such an appeal is preferred within period of four (4) weeks from the date of receipt of this order, the same shall be decided expeditiously by the concerned Tribunal. In the meantime, the interim relief granted earlier by this court shall continue to govern the parties for four weeks."
4.5 It would also be appropriate to refer to the recent decision of the Hon'ble Apex Court in case of M/S. South Indian Bank Ltd. & Ors. Vs. Naveen Mathew Philip & Anr. Etc. Etc., reported in [2023] LiveLaw (SC) 320, wherein, it has been observed and held as under :
"17. We shall reiterate the position of law regarding the interference of the High Courts in matters pertaining to the SARFAESI Act by quoting a few of the earlier decisions of this Court wherein the said practice has been deprecated while requesting the High Courts not to entertain such cases.
• Federal Bank Ltd. v. Sagar Thomas, (2003) 10 SCC 733, Page 15 of 21 Downloaded on : Fri Mar 15 21:06:36 IST 2024 NEUTRAL CITATION C/SCA/3477/2024 ORDER DATED: 27/02/2024 undefined "18. From the decisions referred to above, the position that emerges is that a writ petition under Article 226 of the Constitution of India may be maintainable against (i) the State (Government); (ii) an authority; (iii) a statutory body; (iv) an instrumentality or agency of the State; (v) a company which is financed and owned by the State; (vi) a private body run substantially on State funding; (vii) a private body discharging public duty or positive obligation of public nature; and (viii) a person or a body under liability to discharge any function under any statute, to compel it to perform such a statutory function.
xxx xxx xxx
26. A company registered under the Companies Act for the purposes of carrying on any trade or business is a private enterprise to earn livelihood and to make profits out of such activities. Banking is also a kind of profession and a commercial activity, the primary motive behind it can well be said to earn returns and profits. Since time immemorial, such activities have been carried on by individuals generally. It is a private affair of the company though the case of nationalized banks stands on a different footing. There may well be companies, in which majority of the share capital may be contributed out of the State funds and in that view of the matter there may be more participation or dominant participation of the State in managing the affairs of the company. But in the present case we are concerned with a banking company which has its own resources to raise its funds without any contribution or shareholding by the State. It has its own Board of Directors elected by its shareholders. It works like any other private company in the banking business having no monopoly status at all. Any company carrying on banking business with a capital of five lakhs will become a scheduled bank. All the same, banking activity as a whole carried on by various banks undoubtedly has an impact and effect on the economy of the country in general. Money of the shareholders and the depositors is with such companies, carrying on banking activity. The banks finance the borrowers on any given rate of interest at a particular time. They advance loans as against securities. Therefore, it is obviously necessary to have regulatory check over such activities in the interest of the company itself, the shareholders, the depositors as well as to maintain the proper financial equilibrium of the national economy. The banking companies have not been set up for the purposes of building the economy of the State; on the other hand such private companies have been voluntarily established for their own purposes and interest but their activities are kept under check so that their Page 16 of 21 Downloaded on : Fri Mar 15 21:06:36 IST 2024 NEUTRAL CITATION C/SCA/3477/2024 ORDER DATED: 27/02/2024 undefined activities may not go wayward and harm the economy in general. A private banking company with all freedom that it has, has to act in a manner that it may not be in conflict with or against the fiscal policies of the State and for such purposes, guidelines are provided by Reserve Bank so that a proper fiscal discipline, to conduct its affairs in carrying on its business, is maintained. So as to ensure adherence to such fiscal discipline, if need be, at times even the management of the company can be taken over. Nonetheless, as observed earlier, these are all regulatory measures to keep a check and provide guidelines and not a participatory dominance or control over the affairs of the company. For other companies in general carrying on other business activities, maybe manufacturing, other industries or any business, such checks are provided under the provisions of the Companies Act, as indicated earlier. There also, the main consideration is that the company itself may not sink because of its own mismanagement or the interest of the shareholders or people generally may not be jeopardized for that reason. Besides taking care of such interest as indicated above, there is no other interest of the State, to control the affairs and management of the private companies. Care is taken in regard to the industries covered under the Industries (Development and Regulation) Act, 1951 that their production, which is important for the economy, may not go down, yet the business activity is carried on by such companies or corporations which only remains a private activity of the entrepreneurs/companies.
27. Such private companies would normally not be amenable to the writ jurisdiction under Article 226 of the Constitution. But in certain circumstances a writ may issue to such private bodies or persons as there may be statutes which need to be complied with by all concerned including the private companies. For example, there are certain legislations like the Industrial Disputes Act, the Minimum Wages Act, the Factories Act or for maintaining proper environment, say the Air (Prevention and Control of Pollution) Act, 1981 or the Water (Prevention and Control of Pollution) Act, 1974 etc. or statutes of the like nature which fasten certain duties and responsibilities statutorily upon such private bodies which they are bound to comply with. If they violate such a statutory provision a writ would certainly be issued for compliance with those provisions. For instance, if a private employer dispenses with the service of its employee in violation of the provisions contained under the Industrial Disputes Act, in innumerable cases the High Court interfered and has issued the writ to the private bodies and the companies in that regard. But the difficulty in issuing a writ may arise where there may not be any non-compliance with or violation Page 17 of 21 Downloaded on : Fri Mar 15 21:06:36 IST 2024 NEUTRAL CITATION C/SCA/3477/2024 ORDER DATED: 27/02/2024 undefined of any statutory provision by the private body. In that event a writ may not be issued at all. Other remedies, as may be available, may have to be resorted to."
• State Bank of Travancore v. Mathew K.C., (2018) 3 SCC 85, "5. We have considered the submissions on behalf of the parties. Normally this Court in exercise of jurisdiction under Article 136 of the Constitution is loath to interfere with an interim order passed in a pending proceeding before the High Court, except in special circumstances, to prevent manifest injustice or abuse of the process of the court. In the present case, the facts are not in dispute. The discretionary jurisdiction under Article 226 is not absolute but has to be exercised judiciously in the given facts of a case and in accordance with law. The normal rule is that a writ petition under Article 226 of the Constitution ought not to be entertained if alternate statutory remedies are available, except in cases falling within the well-defined exceptions as observed in CIT v. Chhabil Dass Agarwal [(2014) 1 SCC 603], as follows: (SCC p. 611, para 15) "15. Thus, while it can be said that this Court has recognised some exceptions to the rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal v. Supt. of Taxes [AIR 1964 SC 1419], Titaghur Paper Mills Co. Ltd. v. State of Orissa [(1983) 2 SCC 433: 1983 SCC (Tax) 131] and other similar judgments that 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 still holds the field. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation."
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8. The Statement of Objects and Reasons of the SARFAESI Act states that the banking and financial sector in the country was felt not to have a level playing field in comparison to other participants in the financial markets in the world. The financial institutions in India did not have the power to take possession of securities and Page 18 of 21 Downloaded on : Fri Mar 15 21:06:36 IST 2024 NEUTRAL CITATION C/SCA/3477/2024 ORDER DATED: 27/02/2024 undefined sell them. The existing legal framework relating to commercial transactions had not kept pace with changing commercial practices and financial sector reforms resulting in tardy recovery of defaulting loans and mounting non-performing assets of banks and financial institutions. Narasimhan Committee I and II as also the Andhyarujina Committee constituted by the Central Government Act had suggested enactment of new legislation for securitisation and empowering banks and financial institutions to take possession of securities and sell them without court intervention which would enable them to realise longterm assets, manage problems of liquidity, asset liability mismatches and improve recovery. The proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as "the DRT Act") with passage of time, had become synonymous with those before regular courts affecting expeditious adjudication. All these aspects have not been kept in mind and considered before passing the impugned order.
9. Even prior to the SARFAESI Act, considering the alternate remedy available under the DRT Act it was held in Punjab National Bank v. O.C. Krishnan [(2001) 6 SCC 569] that: (SCC p. 570, para 6) "6. The Act has been enacted with a view to provide a special procedure for recovery of debts due to the banks and the financial institutions. There is a hierarchy of appeal provided in the Act, namely, filing of an appeal under Section 20 and this fast-track procedure cannot be allowed to be derailed either by taking recourse to proceedings under Articles 226 and 227 of the Constitution or by filing a civil suit, which is expressly barred. Even though a provision under an Act cannot expressly oust the jurisdiction of the court under Articles 226 and 227 of the Constitution, nevertheless, when there is an alternative remedy available, judicial prudence demands that the Court refrains from exercising its jurisdiction under the said constitutional provisions. This was a case where the High Court should not have entertained the petition under Article 227 of the Constitution and should have directed the respondent to take recourse to the appeal mechanism provided by the Act."
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15. It is the solemn duty of the court to apply the correct law without waiting for an objection to be raised by a party, especially when the law stands well settled. Any departure, if permissible, has to be for reasons discussed, of the case falling under a defined Page 19 of 21 Downloaded on : Fri Mar 15 21:06:36 IST 2024 NEUTRAL CITATION C/SCA/3477/2024 ORDER DATED: 27/02/2024 undefined exception, duly discussed after noticing the relevant law. In financial matters grant of ex parte interim orders can have a deleterious effect and it is not sufficient to say that the aggrieved has the remedy to move for vacating the interim order. Loans by financial institutions are granted from public money generated at the taxpayer's expense. Such loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as entrustment by the public. Timely repayment also ensures liquidity to facilitate loan to another in need, by circulation of the money and cannot be permitted to be blocked by frivolous litigation by those who can afford the luxury of the same. The caution required, as expressed in United Bank of India v. Satyawati Tondon [(2010) 8 SCC 110: (2010) 3 SCC (Civ) 260], has also not been kept in mind before passing the impugned interim order: (SCC pp. 123-24, para 46) "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 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."
6. For the foregoing reasons and in light of the aforesaid decisions of the Hon'ble Apex Court as well as this Court, I am not inclined to entertain the present petition on the ground that statutory efficacious remedy under Section 17 of the Page 20 of 21 Downloaded on : Fri Mar 15 21:06:36 IST 2024 NEUTRAL CITATION C/SCA/3477/2024 ORDER DATED: 27/02/2024 undefined SARFAESI Act is available to the petitioner, and hence, the present petition is hereby dismissed.
7. It is clarified that this Court has not entered into the merits of the matter.
(HEMANT M. PRACHCHHAK,J) Dolly Page 21 of 21 Downloaded on : Fri Mar 15 21:06:36 IST 2024