Allahabad High Court
Dheerendra Kumar And Another vs Authorised Officer Aadhar Housing ... on 2 April, 2018
Equivalent citations: AIRONLINE 2018 ALL 1076
Bench: Amreshwar Pratap Sahi, Shashi Kant
HIGH COURT OF JUDICATURE AT ALLAHABAD Court No. - 40 AFR Case :- WRIT - C No. - 11706 of 2018 Petitioner :- Dheerendra Kumar And Another Respondent :- Authorised Officer Aadhar Housing Finanace Ltd. And Another Counsel for Petitioner :- Sanjay Kumar Gupta Hon'ble Amreshwar Pratap Sahi,J.
Hon'ble Shashi Kant,J.
Heard Sri Sanjay Kumar Gupta, learned counsel for petitioners, Sri Vijay Saxena, learned counsel for respondent Bank and perused the record.
The petitioners have come up assailing the notice dated 1st March, 2018 issued by the respondent Financial Institution, fixing the date of auction as 31st March, 2018. The said date has already expired but even otherwise learned counsel for petitioners has raised several submissions contending that the auction notice was issued without serving any statutory notice as required under the Securitisation and Reconstruction of Financial Assets and Enforcement of Interest Act, 2002 (hereinafter referred to as 'the Act, 2002').
The petitioners also urged that guarantors were also not served, but possession notice under Section 13(4) of Act, 2002 came to be affixed. The possession notice was not published as alleged in paragraph no. 7 of writ petition. The auction notice was published on 8th June, 2017 in two news papers without following the procedure as prescribed in the Act, 2002. It is admitted in paragraph no. 10 of the petition that the petitioners filed a Securitisation Application no. 292 of 2017 before the Debt Recovery Tribunal challenging the auction notice earlier issued on 8th May, 2017. The application was heard and disposed of and recovery proceedings were set aside vide order dated 18th July, 2017.
Thereafter, a demand notice under Section 13(2) of Act, 2002 was issued to the petitioners on 26.07.2017. On 22nd February, 2018 the possession notice was issued under Section 13(4) read with relevant Rules under the Act, 2002. The same was also published in news papers as stated in paragraph no. 14 of petition.
The grievance is that aforesaid auction was scheduled for 31st March, 2018 i.e. without expiry of the statutory period. Fresh auction was therefore contemplated, but it is urged that there was non compliance of provisions of Section 13 of the Act, 2002 at all stages and Rules framed thereunder.
The contention is that in view of Full Bench Judgment in the case of M/s N.C.M.L. Industries Ltd. through Director and Another Vs. Debt Recovery Tribunal, Allahabad and Others, 2018 (3) Alld. ADJ 102, unless actual possession is taken, the petitioners do not have a right to move an application under Section 17 of the Act, 2002.
To asses the problem faced by the petitioners who are the borrowers what deserves to be noticed is that the Full Bench decision in the case of M/s N.C.M.L. Industries Ltd. and another Vs. Debts Recovery Tribunal, Lucknow and others, (Supra) has traced the entire string of judicial pronouncements in order to resolve the issue referred to it under the referring order of a learned Single Judge dated 19.09.2017 which is as follows:
" In view of the observations made by their Lordships of Hon'ble Supreme Court in the case of Transcore Vs. Union of India and another, (2008) 1 SCC 125 that the dichotomy between symbolic and physical possession does not find place in the SARFAESI Act, which of the two Division Bench Judgements of this Court, either in the case of Sushila Steels (supra) or in the case of Aum Jewels (supra), enunciates the correct law so as to constitute a binding precedence on the issue as to whether remedy of filing appeal under section 17 of the SARFAESI Act is available against an order passed/notice issued under section 13(4)(a) of the Act for possession of the secured assets ?"
From a perusal of the said reference it appears that the two Division Benches were at variance on the said matter of the maintainability on an application (Appeal) in terms of Section 17 of the SARFAESI Act, 2002 in relation to the measures taken under Section 13(4) of the 2002 Act.
In the case of Sushila Steels Vs. Union Bank of India and others, 2014(5) ADJ, 678 the Court observed that there existed a state of uncertainty as regards the remedy available to an aggrieved person in the light of the Supreme Court judgment and went on to observe that mere issuance of possession notice is immaterial till actual possession is taken. It was also observed that where there is resistance on the part of the borrower and recourse is taken to Section 14 by the secured creditor then in such a situation also Section 17 of the Act would not provide a remedy till physical possession of the mortgaged property is delivered to the bank. Thus loss of actual physical possession of the secured assets and its delivery can only give rise to a cause for maintaining an application under Section 17 of the 2002 Act.
In the other judgment in the case of Aum Jewels and others Vs. Vijaya Bank in Writ Petition No.13476 of 2017 decided on 30.03.2017 it was held that in view of the law laid down by the Apex Court in the case of United Bank of India Vs. Satyawati Tandon and others, 2010 (8) SCC, 110 the writ petition was found not to be maintainable on the ground of availability of a statutory alternative remedy under Section 17 of the Act 2002 against the possession notice under Section 13(4) thereof before the Debt Recovery Tribunal. Thus even if symbolic possession had been taken an application under Section 17 of the 2002 Act would be maintainable.
It is the two divergent views in the two judgments that led to the aforesaid reference and the Full Bench held that the right to make an application under Section 17(1) of the 2002 Act matures only when actual physical possession is taken under Section 13(4) of the 2002 Act. The Full Bench further held that the initial action taken under Section 13(4) of the 2002 Act read with Rule 8 of 2002 Rules would not be step taken so as to call it a measure under Section 13(4)(a) of the 2002 Act. Merely taking step to take possession is not amenable to challenge under Section 17 of the 2002 Act. It was further held that symbolic possession is not physical or actual possession. It has further been held that this would frustrate the purpose of the Act in proceedings initiated by banks and other financial institutions keeping in view the statement of objects and reasons for which the 2002 Act was enacted. It was thus specifically held that it is not the intention of the Legislature to provide a remedy under Section 17(1) of the 2002 Act against taking symbolic possession treating it to be a measure under Section 13(4) of the 2002 Act. The Court went on to draw a distinction the difference between taking measures, initiating measures and completing measures. To conclude in paragraph no.39 and 40 of the Full Bench judgment it was stated that till actual physical possession is taken it can not be stated that the measures taken under Section 13(4) of the 2002 Act are complete and therefore unless actual physical possession is taken or the borrower loses possession, he can not have any right to approach the Tribunal under Section 17(1) of the 2002 Act on any ground whatsoever. It was therefore held that the judgment of the Division Bench in the case of Aum Jewels (Supra) does not enunciate the correct law.
The petitioners contend that the Supreme Court decisions have nowhere ruled or drawn any distinction between symbolic possession and actual physical possession to understand the word "measure" as used in Section 13(4) of the 2002 Act. As a matter of fact after the judgment of the Supreme Court in the case of Mardia Chemicals Vs. Union of India 2004(4) SCC, 311 the 2002 Act was amended thrice, one in the year 2004 itself, and then again in the year 2013 and 2016. The Full Bench in its judgment have been rendered the Full Bench has drawn inferences from the judgments rendered by the Supreme Court to draw a conclusion as noted above.
However while doing so the Full Bench has also categorically noticed that the issue which has been framed by the Full Bench and was being answered in the reference was not a question considered in the judgment of Transcore Vs. Union of India and another 2008(1) SCC, 125. This has been categorically mentioned by the Full Bench in paragraph no.19.3 of the report that is extracted hereinunder :
"The Supreme Court did not consider the question whether an application under Section 17(1) of the Act could be filed even before the measures/possession are/is taken as contemplated under sub-section 4 of Section 13. In other words, the Supreme Court did not consider the question whether an application under Section 17(1) of the Act is maintainable before the measures, such as taking possession as provided for under Section 13(4)(a) is available."
This is further reinforced by the observations of the Full bench to the following effect as contained in paragraph no.19.5 of the report is extracted hereinunder :
"It is true, the Supreme Court in Transcore (supra), has not stated in so many words that a recourse to the remedy provided under Section 17(1) can be taken only after the borrower loses possession, may be for the reason that such was not the question before the Supreme Court. But from the above quoted observations it cannot be accepted that taking possession means symbolic and not actual possession under Section 13(4)(a) of the Act."
The Full Bench then went on to refer to the case of United Bank of India Vs. Satyawati Tandon (Supra) and in paragraph no.20.2 of the report held as follows :
"In Satyawati Tondon (supra), the Supreme Court was essentially considering the question whether the Division Bench of the High Court was justified in restraining the appellant from proceeding under Section 13(4) of the Act against the property of respondent and not the question that falls for our consideration."
Further the Full Bench made observations made in paragraph no.20.5 which is extracted hereinunder :
"From bare perusal of the judgment, it is clear that the Supreme Court did not consider the question that falls for our consideration and simply observed that when a remedy under Section 17(1) is available against the action under Section 13(4) or 14, the High Court should not exercise jurisdiction under Article 226 of the Constitution of India. In other words, against the action/measures under Section 13(4) or 14 of the Act, the borrower or a guarantor has a remedy of making an application under Section 17(1) of the Act."
However while considering the ratio of the judgment in the case of Kanhaiyalal Lal Chand Sachdev and others Vs. State of Maharashtra and others 2011 (2) SCC, 782 came to the following conclusion in paragraph no.22.1 of the report of the Full bench judment extracted hereinunder :
"This is again clear from the observations made by the Supreme Court in Kanaiyalal Lalchand (supra), that taking the measure under Section 13(4)(a) means taking actual possession and the remedy under Section 17(1) is available only after losing possession of the secured assets."
The Full Bench then after considering the judgments of the Supreme Court that were referred by it went on to observe in paragraph no.23.1 that the decision in the case of Aum Jewels (Supra) by the Division Bench of this Court which was a subject matter of reference had not discussed the stage at which a remedy can be availed of under Section 17(1) of the 2002 Act. It was also observed in paragraph no.23.1 of the report that the judgments of the Supreme Court in the case of Mardia Chemicals (Supra) and Standard Chartered Bank Vs. V. Nobel Kumar 2013(9) SCC, 620 were not brought to the notice of the Division Bench.
The Full Bench then went on to hold with the aid of the judgment in the case of Agarwal Tracom Pvt. Ltd. Vs. Punjab National Bank and Ors. 2018(1) SCC, 626 that the measures undertaken under Section 13(4) of the 2002 Act would not be completed unless the entire procedure laid down in Rules 8 and 9 for sale of the secured assets is fully complied by the secured creditors.
Considering the ratio of the decision in the case of Standard Chartered Bank (Supra) the Full Bench proceeded to observe that a detailed reference to the said judgment clinches the issue that falls for consideration. The Full bench quoted paragraph no.40 of the judgment of the Supreme Court and then in paragraph no.29 of the Full Bench report concluded as follows:
29. The upshot of legal position that emerges from the judgments of the Supreme Court, insofar as the question referred to for our consideration is concerned, briefly stated, is as under:
(a) The remedy of an application under Section 17(1) is available only after the measures under Section 13(4) have been taken by the Bank/FIs against the borrower.
(b) The issue of notice under Section 13(2) to the borrower and communication contemplated by Section 13(3-A) stating that his representation/objection is not acceptable or tenable, does not attract the application of principles of natural justice. In other words, no recourse to an application under Section 17(1), at that stage, is available/maintainable.
(c) The borrower/person against whom measures under Section 13(4) of the Act are likely to be taken, cannot be denied to know the reason why his application or objections have not been accepted, as a fulfillment of the requirement of reasonableness and fairness in dealing with the same.
(d) One of the reasons for providing procedure under Section 13(4) read with Rule 8 for taking possession is that the borrower should have a clear notice before the date and time of sale/transfer of the secured assets, in order to enable him to tender the dues of the secured creditor with all other charges or to take a remedy under Section 17, at appropriate stage.
(e) The time of 60 days is provided after the "measures" under Section 13(4) have been taken so as to enable the borrower to approach DRT and in such an eventuality, the DRT shall have a jurisdiction to pass any order/interim order, may be subject to conditions, on the application under Section 17(1) of the Act.
(f) The scheme of relevant provisions of the Act and the Rules shows that the Bank/FIs have been conferred with powers to take physical (actual) possession of the secured assets without interference of the Court and the only remedy open to the borrower is to approach DRT challenging such an action/measure and seeking appropriate relief, including restoration of possession, even after transfer of the secured assets by way of sale/lease, on the ground that the procedure for taking possession or dispossessing the borrower was not in accordance with the provisions of the Act/Rules.
(g) If the dues of the secured creditor together with all costs, charges and expenses incurred by them are tendered to them (secured creditors) before the date fixed for sale or transfer, the assets shall not be sold or transferred and in such an eventuality, possession can also be restored to the borrower.
(h) If the possession is taken before confirmation of sale, it cannot be stated that the right of the borrower to get the dispute adjudicated upon is defeated. The borrower's right to get back possession even after the sale remains intact or stands recognised under the scheme of the provisions of the Act.
(i) The borrower is not entitled to challenge the reasons communicated or likely measure, to be taken by the secured creditor under Section 13(4) of the Act, unless his right to approach DRT, as provided for under Section 17(1), matures. The borrower gets all the opportunities, at different stages, either to clear the dues or to challenge the measures under Section 13(4) or even to challenge the reasons rejecting his objections/not accepting the objections, after the measures under Section 13(4) have been taken.
(j) While the banks have been vested with stringent powers for recovery of their dues, safeguards have also been provided for rectifying any error or wrongful use of such powers by vesting DRT with authority, after conducting an adjudication into the matters, to declare any such action invalid and also to restore even though the possession may have been made over to the transferee.
(k) The safeguards provided under the scheme make it further clear that if the Bank/FIs proceeds to take actual possession of the assets that cannot be stalled by the interference of a Court.
(l) If DRT after examining the facts and circumstances of the case and on the basis of evidence produced by the parties, comes to the conclusion that any of the measures referred to in Section 13(4), taken by the secured creditor is not in accordance with the provisions of the Act, it may by order declare that the recourse taken to any one or more measures is invalid and restore possession to the borrower.
(m) Any transfer of secured asset after taking possession thereof by the secured creditor shall vest in the transferee all rights in, or in relation to the secured asset as if the transfer had been made by the owner of such secured assets.
(n) No remedy under Section 17(1) can be taken by the borrower unless he loses actual (physical) possession of the secured assets. In other words, before losing actual possession or unless the secured creditor obtains physical possession of the secured asset under Section 13(4), it is not open to the borrower to take a remedy under Section 17(1) of the Act. "
The aforesaid concluding clause thus seals the fate of the borrower that he has no remedy under Section 17(1) of the 2002 Act unless he loses actual physical possession of the secured assets. In the final opinion of the Full bench there are ample safeguards provided to the borrower to even get physical possession restored in case it is found that the borrower is entitled to retain the possession. Thus at the stage of issuance of possession notice under Appendix IV of the Rules has been held to be not a measure taken under Section 13(4) of the 2002 Act for entertaining an application under Section 17(1) of the 2002 Act before the Debt Recovery Tribunal.
The aforesaid Full Bench judgment to an extent stands at variance with the Apex Court judgment in the case of Authorized Officer, State Bank of Travancore and Ors. Vs. Mathew K.C. 2018(3) SCC, 85 decided on 30.01.2018 which is a decision prior in point of time to the Full Bench decision, and having not noticed the same we find it necessary to extract the entire judgment for appraisal.
"1. Leave granted.
2. The present appeal assails an interim order dated 24.04.2015 passed in a writ petition under Article 226 of the Constitution, staying further proceedings at the stage of Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred as the ''SARFAESI Act'), on deposit of Rs.3,50,000/-within two weeks. An appeal against the same has also been dismissed by the Division Bench observing that counter affidavit having been filed, it would be open for the Appellant Bank to seek clarification/modification/ variation of the interim order.
3. Shri H.P. Raval, learned Senior Counsel appearing for the Appellants, submits that the loan account of the Respondent was declared a Non-Performing Asset (NPA) on 28.12.2014. The outstanding dues of the Respondent on the date of the institution of the writ petition was Rs.41,82,560/-. Despite repeated notices, the Respondent failed and neglected to pay the dues. Statutory notice under Section 13(2) of the SARFAESI Act was issued to the Respondent on 21.01.2015. The objections under Section 13(3A) were considered, and rejection was communicated by the Appellant on 31.3.2015. Possession notice was then issued under Section 13(4) of the Act read with Rule 8 of The Security Interest (Enforcement) 2 Rules, 2002 (hereinafter referred to as ''the Rules') on 21.04.2015.
4. The SARFAESI Act is a complete code by itself, providing for expeditious recovery of dues arising out of loans granted by financial institutions, the remedy of appeal by the aggrieved under Section 17 before the Debt Recovery Tribunal, followed by a right to appeal before the Appellate Tribunal under Section 18. The High Court ought not to have entertained the writ petition in view of the adequate alternate statutory remedies available to the Respondent. The interim order was passed on the very first date, without an opportunity to the Appellant to file a reply. Reliance was placed on United Bank of India vs. Satyawati Tandon and others, 2010 (8) SCC 110, and General Manager, Sri Siddeshwara Cooperative Bank Limited and another vs. Ikbal and others, 2013 (10) SCC 83. The writ petition ought to have been dismissed at the threshold on the ground of maintainability. The Division Bench erred in declining to interfere with the same.
5. Shri Roy Abraham, learned Counsel for the Respondent, submitted that it was desirous to repay the loan, and merely sought regularisation of the loan account. The inability to service the loan was genuine, occasioned due to market fluctuations causing huge loss in business, beyond the control of the Respondent. The failure of the Bank to consider the request for regularisation of the loan account, the absence of a right to appeal under Section 17 against the order passed under Section 13(3A), the Respondent was left with no option but to prefer the writ application as the Respondent genuinely desired to discharge the loans. The collateral security offered included agricultural lands also, which had to be excluded under Section 31 of the SARFAESI Act. There had been violation of the principles of natural justice. A large number of similar writ applications are pending before the High Court preferred by the concerned borrowers, but the Bank has singled out the present Respondent alone for a challenge.
6. We have considered the submissions on behalf of the parties. Normally this Court in exercise of jurisdiction under Article 136 of the Constitution is loathe 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 Commissioner of Income Tax and Others vs. Chhabil Dass Agarwal, 2014 (1) SCC 603, as follows:
"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, Titaghur Paper Mills case 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."
7. The pleadings in the writ petition are very bald and contain no statement that the grievances fell within any of the well defined exceptions. The allegation for violation of principles of natural justice is rhetorical, without any details and the prejudice caused thereby. It harps only on a desire for regularisation of the loan account, even while the Respondent acknowledges its own inability to service the loan account for reasons attributable to it alone. The writ petition was filed in undue haste in March 2015 immediately after disposal of objections under Section 13(3A). The legislative scheme, in order to expedite the recovery proceedings, does not envisage grievance redressal procedure at this stage, by virtue of the explanation added to Section 17 of the Act, by Amendment Act 30 of 2004, as follows :-
"Explanation.--For the removal of doubts, it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including the borrower) to make an application to the Debts Recovery Tribunal under this sub-section."
8. The Section 13(4) notice along with possession notice under Rule 8 was issued on 21.04.2015. The remedy under Section 17 of the SARFAESI Act was now available to the Respondent if aggrieved. These developments were not brought on record or placed before the Court when the impugned interim order came to be passed on 24.04.2015. The writ petition was clearly not instituted bonafide, but patently to stall further action for recovery. There is no pleading why the remedy available under Section 17 of the Act before the Debt Recovery Tribunal was not efficacious and the compelling reasons for by-passing the same. Unfortunately,the High Court also did not dwell upon the same or record any special reasons for grant of interim relief by direction to deposit.
9. 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 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. The 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 long term 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.
10. Even prior to the SARFAESI Act, considering the alternate remedy available under the DRT Act it was held in Punjab National Bank vs. O.C. Krishnan and others, (2001) 6 SCC 569, that :-
"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."
11. In Satyawati Tandon (supra), the High Court had restrained further proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the SARFAESI Act, the availability of remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal, the object and purpose of the legislation, it was observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available holding :-
"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.
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55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection."
12. In Union Bank of India and another vs. Panchanan Subudhi, 2010 (15) SCC 552, further proceedings under Section 13(4) were stayed in the writ jurisdiction subject to deposit of Rs.10,00,000/- leading this Court to observe as follows :
"7. In our view, the approach adopted by the High Court was clearly erroneous. When the respondent failed to abide by the terms of one-time settlement, there was no justification for the High Court to entertain the writ petition and that too by ignoring the fact that a statutory alternative remedy was available to the respondent under Section 17 of the Act."
13. The same view was reiterated in Kanaiyalal Lalchand Sachdev and others vs. State of Maharashtra and others, 2011 (2) SCC 782 observing:
"23. In our opinion, therefore, the High Court rightly dismissed the petition on the ground that an efficacious remedy was available to the appellants under Section 17 of the Act. It is well settled that ordinarily relief under Articles 226/227 of the Constitution of India is not available if an efficacious alternative remedy is available to any aggrieved person. (See Sadhana Lodh v. National Insurance Co. Ltd.; Surya Dev Rai v. Ram Chander Rai and SBI v. Allied Chemical Laboratories.)"
14. In Ikbal (supra), it was observed that the action of the Bank under Section 13(4) of the ''SARFAESI Act' available to challenge by the aggrieved under Section 17 was an efficacious remedy and the institution directly under Article 226 was not sustainable, relying upon Satyawati Tandon (Supra), observing :
"27. No doubt an alternative remedy is not an absolute bar to the exercise of extraordinary jurisdiction under Article 226 but by now it is well settled that where a statute provides efficacious and adequate remedy, the High Court will do well in not entertaining a petition under Article 226. On misplaced considerations, statutory procedures cannot be allowed to be circumvented.
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28.......In our view, there was no justification whatsoever for the learned Single Judge to allow the borrower to bypass the efficacious remedy provided to him under Section 17 and invoke the extraordinary jurisdiction in his favour when he had disentitled himself for such relief by his conduct. The Single Judge was clearly in error in invoking his extraordinary jurisdiction under Article 226 in light of the peculiar facts indicated above. The Division Bench also erred in affirming the erroneous order of the Single Judge."
15. A similar view was taken in Punjab National Bank and another vs. Imperial Gift House and others, (2013) 14 SCC 622, observing:-
"3. Upon receipt of notice, the respondents filed representation under Section 13(3-A) of the Act, which was rejected. Thereafter, before any further action could be taken under Section 13(4) of the Act by the Bank, the writ petition was filed before the High Court. 4. In our view, the High Court was not justified in entertaining the writ petition against the notice issued under Section 13(2) of the Act and quashing the proceedings initiated by the Bank."
16. 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 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 tax payers 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 Satyawati Tandon (supra), has also not been kept in mind before passing the impugned interim order:-
"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, Whirlpool Corpn. v. Registrar of Trade Marks and Harbanslal Sahnia v. Indian Oil Corpn. Ltd. and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order."
17. The writ petition ought not to have been entertained and the interim order granted for the mere asking without assigning special reasons, and that too without even granting opportunity to the Appellant to contest the maintainability of the writ petition and failure to notice the subsequent developments in the interregnum. The opinion of the Division Bench that the counter affidavit having subsequently been filed, stay/modification could be sought of the interim order cannot be considered sufficient justification to have declined interference.
18. We cannot help but disapprove the approach of the High Court for reasons already noticed in Dwarikesh Sugar Industries Ltd. vs. Prem Heavy Engineering Works (P) Ltd. and Another, 1997 (6) SCC 450, observing :-
"32. When a position, in law, is well settled as a result of judicial pronouncement of this Court, it would amount to judicial impropriety to say the least, for the subordinate courts including the High Courts to ignore the settled decisions and then to pass a judicial order which is clearly contrary to the settled legal position. Such judicial adventurism cannot be permitted and we strongly deprecate the tendency of the subordinate courts in not applying the settled principles and in passing whimsical orders which necessarily has the effect of granting wrongful and unwarranted relief to one of the parties. It is time that this tendency stops."
19. The impugned orders are therefore contrary to the law laid down by this Court under Article 141 of the Constitution and unsustainable. They are therefore set aside and the appeal is allowed.
20. All questions of law and fact remain open for consideration in any application by the aggrieved before the statutory forum under the SARFAESI Act."
The aforesaid judgment of the Supreme Court arose out of proceedings under the SARFAESI Act 2002 after a possession notice was delivered on the borrower under Section 13 (4) of the 2002 Act read with Rule 8 of the Security Interest (Enforcement) Rules, 2002. This was therefore a direct case on the issue as to whether a writ petition could be entertained under Article 226 of the Constitution of India staying further proceedings at the stage of Section 13(4) of the 2002 Act read with Rule 8 of the 2002 Rules.
The Apex Court at the outset in paragraph no.3 of the aforesaid judgment has in no uncertain words held that the 2002 Act is a complete code and the High Court ought not to entertain a writ petition in view of the adequate alternative statutory remedy available to the respondent. The Apex Court referred to the decisions in the case of United Bank of India Vs. Satyawati Tandon (Supra) and in the case of Siddwshwara Coop. Bank Ltd. Vs. Ikbal 2013(10) SCC, 83 and then has categorically ruled that the writ petition ought to have been dismissed at the threshold on the ground of maintainability.
In paragraph no.5 of the said judgment the Apex Court has further ruled that the discretionary jurisdiction under Article 226 of the Constitution of India is not absolute and the normal rule is that a writ petition under Article 226 of the Constitution of India can not be entertained if alternative statutory remedies are available. In paragraph no.7 of the judgment extracted hereinabove it has been observed that the High Court did not dwell upon same and had entertained the writ petition. It then in paragraph no.10 referred to the case of United Bank of India Vs. Satyawati Tandon (Supra) and then referred to the judgment in the case of Kanhaiyalal Lal Chand Sachdev and others Vs. State of Maharashtra (Supra) to hold that the High Court of Bombay had rightly dismissed the writ petition on the ground that an efficacious remedy was available to the appellant under Section 17 of the 2002 Act.
Again the said judgment while referring to the case of Siddwshwara Coop. Bank Ltd. Vs. Ikbal (Supra) that arose out of a judgment of the Karnataka High Court indicated that the action of the bank under Section 13(4) of the 2002 Act is available to challenge under Section 17 of the 2002 Act and was an efficacious remedy and further a writ petition under Article 226 of the Constitution of India was not sustainable. The said judgment then goes on to refer to the judgment of the Apex Court in the case of Punjab National Bank Vs. Imperial Gift House 2013(14) SCC, 622 which was a matter arising out of a judgment of the Punjab & Haryana High Court where also any such preemptive action was held to be not entertainable in a writ petition under Article 226 of the Constitution of India.
The judgment in paragraph no.15 as extracted hereinabove has categorically indicated that it is the solemn duty of the Court to apply the correct law when the law stands settled and any departure can be only if it falls under a defined exception after noticing the law.
Thus the aforesaid judgment therefore totally seals the scope of the filing of a writ petition under Article 226 of the Constitution of India as observed therein as in view of the Apex Court the 2002 Act is a complete code.
At this juncture it is also relevant to mention that paragraph no.17 of the judgment of the Apex Court has held that any such entertainment of a writ petition would amount to judicial impropriety.
The Full Bench in paragraph no.25 has taken notice of paragraph no.28 of the judgment in the case of Agarwal Tracom Pvt. Ltd. Vs. Pubjab National Bank and Ors. (Supra). In our opinion paragraph nos.29, 30 and 33 also deserves to be noticed and which have not been discussed by the Full Bench. Paragraph nos.29, 30 and 33 are extracted hereinunder :
29. We also notice that Rule 9(5) confers express power on the secured creditor to forfeit the deposit made by the auction purchaser in case the auction purchaser commits any default in paying installment of sale money to the secured creditor. Such action taken by the secured creditor is, in our opinion, a part of the measures specified in Section 13(4) and, therefore, it is regarded as a measure taken under Section 13(4) read with Rule 9(5). In our view, the measures taken under Section 13(4) commence with any of the action taken in clauses (a) to (d) and end with measures specified in Rule 9.
30. In our view, therefore, the expression "any of the measures referred to in Section 13(4) taken by secured creditor or his authorized officer" in Section 17(1) would include all actions taken by the secured creditor under the Rules which relate to the measures specified in Section13(4).
33. In United Bank of India vs. Satyawati Tondon & Ors., (2010) 8 SCC 110, this Court had the occasion to examine in detail the provisions of the SARFAESI Act and the question regarding invocation of the extraordinary power under Article 226/227 in challenging the actions taken under the SARFAESI Act. Their Lordships gave a note of caution while dealing with the writ filed to challenge the actions taken under the SARFAESI Act and made following pertinent observations which, in our view, squarely apply to the case on hand:
"42. There is another reason why the impugned order should be set aside. If Respondent 1 had any tangible grievance against the notice issued under Section 13(4) or action taken under Section 14, then she could have availed remedy by filing an application under Section 17(1). The expression "any person" used in Section 17(1) is of wide import. It takes within its fold, not only the borrower but also the guarantor or any other person who may be affected by the action taken under Section 13(4) or Section 14. Both, the Tribunal and the Appellate Tribunal are empowered to pass interim orders under Sections 17 and 18 and are required to decide the matters within a fixed time schedule. It is thus evident that the remedies available to an aggrieved person under the SARFAESI Act are both expeditious and effective.
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.
44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution.
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."
It is thus evident that the measures taken under Section 13(4) of the 2002 Act commence with any of the action taken in Clause (a) to (d) of Section 13(4) of the 2002 Act as held by the Apex Court. The action taken to paste a notice in terms of Rule 8 of the 2002 Rules is also contemplated under Section 13(4) of the 2002 Act. To clarify it the judgment in the case of Agarwal Tracom Pvt. Ltd. Vs. Pubjab National Bank and Ors. (Supra) in paragraph no.30 reinforces the phrase "any of the action" to include all actions taken by the secured creditors.
Thus the judgment in the case of Authorized Officer, State Bank of Travancore and Ors. Vs. Mathew K.C. and that in the case of Agarwal Tracom Pvt. Ltd. Vs. Punjab National Bank and Ors. (Supra) both categorically provide that a writ petition under Article 226 of the Constitution of India is not maintainable as there is an efficacious remedy under Section 17 of the 2002 Act available to the aggrieved person in relation to any action taken in terms of Clauses (a) to (d) of Section 13(4) of the 2002 Act inclusive of all actions taken under the Rules which relate to such measures.
There is one more aspect which deserves to be highlighted that in the case of United Bank of India Vs. Satyawati Tandon (Supra) the Apex Court in paragraph no.42 has observed that the person aggrieved under Section 17(1) of the 2002 Act can avail of a remedy if the said person has "any tangible grievance". The word tangible means that which discernible and capable of being dealt with as a fact. It also means to have substance. The aforesaid phrase coupled with the ratio of the decision in paragraph nos.29 and 30 of the judgment in the case of Agarwal Tracom Pvt. Ltd. Vs. Pubjab National Bank and Ors. (Supra) indicates that the measures referred to in Section 13(4) of the 2002 Act would include any such grievance that may effect the right of the aggrieved person so as to enable him to maintain an application under Section 17(1) of the 2002 Act.
It is to be noticed that the Full Bench decision dated 6th February, 2018 is sub-judice before the Apex Court in the case of M/s Hindon Forge Private Ltd & Another Vs. State of U.P. Thr. District Magistrate Ghaziabad & Another in Special Leave to Appeal No. 5895 of 2018 that was entertained on 16th March, 2018 which is extracted hereinunder:-
"List on Tuesday, the 3rd April, 2018 along with C.A. No. 1483 of 2017 and connected matter."
In view of what has been stated above that a writ petition would not ordinarily lie under Article 226 of the Constitution of India against any of the measures taken under Section 13(4) of the 2002 Act, it would be appropriate to refer to a couple of more decisions where the Debt Recovery Tribunal has been considered to be an alternative to all civil court proceedings. Reference be had to the Apex Court decision in the case of M.D. Frozen Foods Exports Pvt. Vs. Hero Fincorp Ltd. AIR 2017 SC 4481. Not only this, while interpreting the word appeal used in Section 17, the Apex Court in the case of Mardia Chemicals (supra) has categorically held that the use of the word appeal is a misnomer, inasmuch as, it is a right conferred on the aggrieved person to file an application under Section 17 for raising a grievance in relation to the measures indicated under Section 13(4) of the Act and the same has further been held to be akin to an original suit where all such issues as permissible under the Act can be raised. Thus, it is clear that without the intervention of Courts, the Act is a complete code making available a remedy under Section 17 of the Act for the measures taken under Section 13(4) of the Act.
The provisions that are relevant to the controversy may be stated in order to understand the purpose and intent of the stage of providing a remedy under Section 17 of the Act. The secured creditor can enforce the security interest in terms of Section 13(1) and the first step informing the borrower of making good the default failing which the creditor would be entitled to exercise rights is provided for under Section 13(2) of the Act. This provision informs the borrower of the action likely to be taken by the creditor to secure the interest by exercising rights as provided for under Section 13(4) of the Act. Thus, the initiation to exercise authority under any of the provisions of Sub-Section (4) of Section 13 commences at the stage of Section 13(2) with a peremptory notice to the borrower to comply with the obligations, or else the action would be taken. It is here, that it would be relevant to refer to paragraph nos. 27 and 28 of the decision in the case of Standard Chartered Bank (supra) which is as follows:-
"27. The "appeal" under section 17 is available to the borrower against any measure taken under section 13(4). Taking possession of the secured asset is only one of the measures that can be taken by the secured creditors. Depending upon the nature of the secured asset and the terms and conditions of the security agreement, measures other than taking the possession of the secured asset are possible under section 13(4). Alienating the asset either by lease or sale, etc. and appointing a person to manage the secured asset are some of those possible measures. On the other hand, Section 14 authorises the Magistrate only to take possession of the property and forward the asset along with the connected documents to the borrower. Therefore, the borrower is always entitled to prefer an "appeal" under section 17 after the possession of the secured asset is handed over to the secured creditor. Section 13(4)(a) declares that the secured creditor may take possession of the secured assets. It does not specify whether such a possession is to be obtained directly by the secured creditor or by resorting to the procedure under section 14. We are of the opinion that by whatever manner the secured creditor obtains possession either through the process contemplated under section 14 or without resorting to such a process obtaining of the possession of a secured asset is always a measure against which a remedy under section 17 is available.
28. It can be noticed from the language of the proviso to section 13(3A) and the language of section 17 that an "appeal" under section 17 is available to the borrower only after losing possession of the secured asset. The employment of the words "aggrieved by....................taken by the secured creditor" in section 17(1) clearly indicates the appeal under section 17 is available to the borrower only after losing possession of the property. To set at naught any doubt regarding the interpretation of section 17, the proviso to sub-section (3A) of section 13 makes it explicitly clear that either the reasons indicated for rejection of the objections of the borrower or the likely action of the secured creditor shall not confer any right under section 17."
A perusal of the above quoted paras would indicate that the words "likely action" is referable to Section 13(3-A) of the Act. It is for this reason, that the proviso to the aforesaid section read with the explanation added to Sub-Section (2) of Section 17 indicates the express indication of the legislature not to provide any remedy under Section 17 at that stage, when there is a likelihood of the action to be taken in future.
The same decision then goes on to explain in paragraph nos. 30 to 33 read with paragraph nos. 11 and 26 thereof which indicates that there are two modes of taking possession, one through the aid of Section 13(4) of the Act and the other under Section 14 of the Act. It has been explained that Section 13(4) is resorted to seek possession by the creditor on it's own whereas Section 14 is invoked to obtain possession with the aid of state coercive power. Thus, two modes of possession are available to the secured creditor under the Act, and therefore, the Apex Court held that taking possession by any one of the measures can be availed by the secured creditor. Thus the legislature has prohibited invoking of Section 17 at the stage of the objections under Section 13(3-A) of the Act. The legislature, therefore, was conscious of the fact that Section 17 was available only after the steps as enshrined under Section 13(4) are taken and not against any likely action before that stage.
In the case of Standard Chartered Bank (supra), the Apex Court in paragraph nos. 27 and 28 has explained that by whatever manner the secured creditor obtains possession either under Section 14 or without resorting to such a process, the same is always a measure against which a remedy under Section 17 is available. Paragraph nos. 27 and 28 have been extracted hereinabove.
The Apex Court in the case of Authorized Officer, Indian OverSeas Bank & Another Vs. Ashok Saw Mill 2009 (8) SCC 366 while explaining the purpose of the amendments brought about under the Act after the case of Mardia Chemicals (supra) ruled that the measures which were provided under Section 13(4) including the exercise of power to take possession was with an intent to prevent any misuse or abuse of the provisions. Paragraphs nos. 33, 35, 36 and 37 of the judgment are relevant. The Court also took notice of the decision in the case of Transcore Vs. Union of India (supra). Apart from the said paragraphs, paragraph nos. 27 and 29 further explain that the purpose of the amendments that were brought about in the Act after Mardia Chemical's case was to give an opportunity to the borrower to approach the DRT "at any stage" against any measure taken by the secured creditor under Sub-Section (4) of Section 13. On the other hand more power was given to the secured creditor to exercise control over the management of the business of the borrower including the right to transfer by way of lease assignment, or sale of the asset in terms of Sub-Section (4) of Section 13. Paragraph no. 29 of the said decision is extracted hereinunder:-
"29.The said amendments were made in order to give an opportunity to the borrower to approach the DRT at any stage against any measure taken by the secured creditor under Sub-section (4) of Section 13 which were not in conformity therewith and to have the possession of secured assets restored in the event such action was found to be invalid. At the same time, more power was given to the secured creditor to exercise control over the management of the business of the borrower which included the right to transfer by way of lease, assignment or sale of the secured assets for releasing the same."
To further substantiate the same, we may refer to paragraph no. 27 of the judgment where it has again been ruled that it would be open to the borrowers to file appeals under Section 17 of the Act where the secured creditor had taken action under Sub-Section (4) of Section 13. The word at any stage against any measure taken in paragraph no. 29 extracted hereinabove, clearly indicates the legislative intent as interpreted in the said decision. The decision of Ashok Saw Mill (Supra) even though, not noticed in Standard Chartered Bank's case, the Apex Court in paragraph no. 19, categorically records that both Section 17 and Section 17-A afford an opportunity to the borrower to the Tribunal or the Court concerned against any measure taken under Section 13(4). The judgment in the case of Standard Chartered Bank (supra), therefore, in no-way dilutes either the judgment of the Apex Court in Transcore's case or the judgment in the case of Ashok Saw Mill (supra).
We may also refer to the scheme of the Act as for an interpretation to be arrived at to support the purpose and object of the legislation, it is necessary to refer to the provisions in this regard. The act was promulgated for bringing about a coordinated single forum and by avoiding multiplicity of laws and agencies to enforce secured assets. This was also to protect the secured assets and prevent any dissipation or mis-utilization that may reduce the secured interest. It was also to reduce delays in the execution of secured interests with the idea of a fast and quick resolution of such pending claims and realize from the borrower that which is due to the creditor.
At the same time, the legislature was also conscious of the fact that this forum was being created as an exclusive forum beyond the purview of courts, and therefore, an overriding effect of the provisions of the Act was incorporated in Section 35 thereof. The Act was made inapplicable to certain categories as define in Section 34 thereof. But when it came to other parallel proceedings being available, it made its intention clear in Section 36 to indicate those enactments that were supplemental to and not in derogation of the provisions of the Act.
As noted above, specific provisions were made for the redressal of any tangible grievances relating to the objections of the person aggrieved, entitled to invoke the provisions of the Act. This is based on the principle that wherever there is a right, there is a remedy provided for to enforce such a right. The creditor therefore was conferred with rights to enforce its secured interest efficaciously and speedily. A corresponding remedy was also provided to the borrower specifically under Section 17 of the Act. The question as to whether the remedy was appropriate or not, and whether it was illusory has already been settled by the decision in the case of Mardia Chemicals (supra) which also ruled for making provisions of taking into account the objections of the borrower. The said observations of the Apex Court were translated into legislation by introducing the amendments in 2004 and again in 2013. The legislature, however, while providing for the same did not extend the benefits of invoking the jurisdiction under Section 17 to a borrower prior to the stage of Section 13(4) of the 2002, Act.
The Apex Court while considering the issue of possession being one of the measures under Section 13(4) in paragraph no. 73 of the decision of Transcore Vs. Union of India (supra) held that there is no dichotomy. It also discussed, Rule 8 and the form of possession of notice contained in Appendix 4. The word "dichotomy" means in two parts, or two mutually exclusive classes. Thus, symbolic or physical possession are not two separate concepts of measures thereby excluding symbolic possession from the meaning of the word possession used under Section 13(4) of the Act. It is here that certain Rules of interpretation have to be pressed into service. As noted above, that the legislature wherever it thought necessary, has specifically excluded the applicability of Section 17 of the Act prior to the stage of Section 13(4). There is no specific prohibition thereafter. There is no question of any dichotomy or defeat of purpose as in Mardia Chemicals (supra), it has been categorically held in paragraph nos. 39 to 45 as to what are measures, and the right maturing on the measures so taken under Section 13(4) of the Act. The dis-entitlement of the borrower to invoke Section 17 prior to the stage of Section 13(4) has been provided for statutorily, but no such prohibition has been indicated thereafter, either by legislation or through a specific pronouncement of the Apex Court on this issue. We are mentioning this as what we find is that the tools of interpretation that have been explained by the Apex Court to be employed in such a situation deserve reference.
We may first refer to the judgment in the case of Reserve Bank of India Vs. Peerless General Finance and Investment Co. Ltd. and others 1987 (1) SCC 424 paragraph 33 extracted hereinunder:-
33. "Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when the object and purpose of its enactment is known. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the glasses of the statute maker, provided by such context its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statute is looked at without the glasses provided by the context. With these glasses we must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the entire Act. No part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and everything is in its place. It is by looking at the definition as a whole in the setting of the entire Act and by reference to what preceded the enactment and the reasons for it that the court construed the expression "Prize Chit" in Srinivasa and we find no reason to depart from the court's construction."
The Apex Court held that the interpretation has to be made according to the text and the context of the Act. The next decision is in the case of Union of India and others Vs. Filip Tiago De Gama of Vedem Vasco De Gama 1990 (1) SCC 277 paragraph nos. 16 and 17 that are extracted hereinunder:-
"16. The paramount object in statutory interpretation is to discover what the legislature intended. This intention is primarily to be ascertained from the text of enactment in question. That does not mean the text is to be construed merely as a piece of prose, without reference to its nature or purpose. A statute is neither a literary text nor a devine revelation. "Words are certainly not crystals, transparent and unchanged" as Mr. Justice Holmes has wisely and properly warned. (Town v. Eisher, 245, U.S. 418, 425, 1918). Learned Hand, J., was equally emphatic when he said. "Statutes should be construed, not as theorems of Euclid, but with some imagination of the purposes which lie behind them." (Lenigh Valley Coal Co. v. Yensavage, 218 FR 547 at 553.)
17. Section 30(2) provides that amended provisions of Section 23(2) shall apply, and shall be deemed to have applied, also to, and in relation to, any award made by the collector or Court between 30 April 1982 and 24 September 1984, or to an appellate order therefrom passed by the High Court or Supreme Court. The purpose of these provisions seems to be that the awards made in that interregnum must get higher solatium in as much as to awards made subsequent to 24 September 1984. Perhaps it was thought that awards made after the commencement of the Amending Act 68 of 1984 would be taken care of by the amended Section 23(2). The case like the present one seems to have escaped attention by innocent lack of due care in the drafting. The result would be an obvious anomaly as will be indicated presently. If there is obvious anomaly in the application of law the Court could shape the law to remove the anomaly. If the strict grammatical interpretation gives rise to absurdity or inconsistency, the Court could discard such interpretation and adopt an interpretation which will give effect to the purpose of the legislature. That could be done, if necessary even by modification of the language used. [See: Mahadeolal Kanodia v. The Administrator General of West Bengal, [1960] 3 SCR 5/8]. The legislators do not always deal with specific controversies which the Court decide. They incorporate general purpose behind the statutory words and it is for the courts to decide specific cases. If a given case is well within the general purpose of the legislature but not within the literal meaning of the statute, then the court must strike the balance.
The third decision is in the case of P.K. Unni Vs. Nirmala Industries and others 1990 (2) SCC 378 paragraph nos. 15 and 16 that are extracted hereinunder:-
"15. The Court must indeed proceed on the assumption that the legislature did not make a mistake and that it intended to say what it said: [See Nalinakhya Bysack v. Shyam Sunder Haldar & Ors., [1953] SCR 533 at 545]. Assuming there is a defect or an omission in the words used by the legislature, the Court would not go to its aid to correct or make up the deficiency. The Court cannot add words to a statute or read words into it which are not there, especially when the literal reading produces an intelligible result. "No case can be found to authorise any court to alter a word so as to produce a casus omissus": Per Lord Halsbury, Mersey Docks v. Henderson. [1888] 13 App. Cas. 595, 602. "We cannot aid the legislature's defective phrasing of an Act, we cannot add and mend, and, by construction, make up deficiencies which are left there": Crawford v. Spooner, [1846] 6 Moore PC 1, 8, 9.
16. Where the language of the statute leads to manifest contradiction Of the apparent purpose of the enactment, the Court can, of course, adopt a construction which will carry out the obvious intention of the legislature. In doing so "a judge must not alter the material of which the Act is woven, but he can and should iron out the creases.": Per Denning, L.J., as he then was, Seaford Court Estates v. Asher, All E.R. [1949] 2 155 at 164. See the observation of Sarkar, J. in M. Pentiah & Ors. v. Muddala Veeramallapa & Ors., [1961] 2 S.C.R. 295 at 314.
The aforesaid position has been reiterated in the case of State of Kerala & another Vs. P.V. Neelakandan Nair & others reported in 2005 (5) SCC 561 paragraph nos. 8 to 16 and in the case of KSL and Industries Ltd. Vs. Arihant Threads Ltd. and others 2015 (1) SCC 166 paragraph no. 51.
In the light of the aforesaid principles laid down by the Apex Court, the High Court cannot add or subtract to the specific words used by the legislature but can explain the nature and purpose thereof. The High Court cannot create a text so as to defeat the context as indicated above. The specific Bar created by the legislature as discussed above for availing the remedy under Section 17 is prior to the stage of Section 13(4) of the Act. The provision as it stands, namely Section 13(4) of the 2002 Act read with Section 17, does not seem to create any situation of ambiguity or absurdity for the Court to fill up any casus omissus. We may add that when the provisions of Section 13(4) of the 2002 Act read with Rule 8 under the 2002 Rules are invoked by the creditor with the a fixation of notice under Appendix IV for possession, the same is a clear assertion of the right to take possession which is separate from Section 14 of the 2002 Act. The remedy to the borrower is against the possession sought to be taken under Section 13(4) of the Act. Thus, the right to avail the remedy does accrue without any indication of adjournment or postponement for invoking Section 17 of the Act. The borrower, therefore, as per the decisions of the Apex Court referred to hereinabove has been conferred the right to avail the remedy of filing an application under Section 17. Any denial of the said remedy spirals the filing of writ petitions before this Court. This has also to be understood in the background that now with the introduction of Section 4(A) to Section 17 as inserted by Act No. 44 of 2016, a tenant or holder of a lease hold right has been given the remedy of filing an application under Section 17. The Tribunal has to examine as to whether the lease has been determined expired, contrary to the provisions of the Transfer of Property Act or to the terms of mortgage or has been created after issuance of notice under Section 13(2) of the Act. The said Section also indicates that if such determination has to be made, then the legislature has not intended that such a determination will be made only after the tenant or the lease holder is thrown out of the premises after taking actual physical possession. This was done consciously after such issues were being raised time and again in courts of law in order to protect the interest of such persons to the extent as indicated in the aforesaid statutory provision.
As already noted above, the judgment in the case of Authorized Officer, State Bank of Travancore & others Vs. Mathew K.C. 2018 (3) SCC 85 which was delivered on 31st January, 2018 has not been noticed by the Full Bench in its judgment dated 6th February, 2018 which has also been made subject matter of challenge in SLP No. 5895 of 2018. In such circumstances, we cannot at this stage say anything further as the matter is already engaging the attention of the Apex Court.
However, with the clear mandate given by the Apex Court in the paragraph 17 of the judgment in the case of Authorized Officer, State Bank of Travancore (supra), there is no occasion for this Court to entertain this writ petition without prejudice to the rights of the petitioner to avail of the remedy under Section 17 of the SARFAESI Act, 2002.
We may now refer to the latest decision of the Apex Court dated 19th March, 2018 in the case of ITC Limited Vs. Blue Coast Hotels Ltd. & others reported in 2018 SCC Online SC 237. This was a case where the auction purchaser had approached the Apex Court against the judgment of the Bombay High Court that had set aside the public auction in favour of the appellant therein. One of the issues raised in the said case was about symbolic possession. While answering the question as to whether a limited transfer through symbolic possession was a legally accepted proposition under the SARFAESI Act or not, the Apex Court after noting the submissions ruled in paragraph nos. 58 to 61 as follows:-
"58. As noticed earlier, the creditor took over symbolic possession of the property on 20.06.2013. Thereupon, it transferred the property to the sole bidder ITC and issued a sale certificate for Rs.515,44,01,000/- on 25.02.2015. On the same day, i.e., 25.02.2015, the creditor applied for taking physical possession of the secured assets under Section 14 of the Act.
59. According to the debtor, since Section 14 provides that an application for taking possession may be made by a secured creditor, and the creditor having ceased to be a secured creditor after the confirmation of sale in favour of the auction purchaser, was not entitled to maintain the application. Consequently, therefore, the order of the District Magistrate directing delivery of possession is a void order. This submission found favour with the High Court that held that the creditor having transferred the secured assets to the auction purchaser ceased to be a secured creditor and could not apply for possession. The High Court held that the Act does not contemplate taking over of symbolic possession and therefore the creditor could not have transferred the secured assets to the auction purchaser. In any case, since ITC Ltd. was the purchaser of such property, it could only take recourse to the ordinary law for recovering physical possession.
60. We find nothing in the provisions of the Act that renders taking over of symbolic possession illegal. This is a well-known device in law. In fact, this court has, although in a different context, held in M.V.S.Manikayala Rao v. M.Narasimhaswami that the delivery of symbolic possession amounted to an interruption of adverse possession of a party and the period of limitation for the application of Article 144 of the Limitation Act would start from such date of the delivery.
61. The question, however, whether the creditor could maintain an application of possession under Section 14 of the Act; even though it had taken over only symbolic possession before the sale of the property to the auction purchaser, depends on whether it remained a secured creditor after having done so."
It may be noticed that in the said case the right of the secured creditor surviving, even after a limited transfer to the auction purchaser has been answered in paragraph no. 68 which is extracted hereinunder:-
"68. In this case, the creditor did not have actual possession of the secured asset but only a constructive or symbolic possession. The transfer of the secured asset by the creditor therefore cannot be construed to be a complete transfer as contemplated by Section 8 of the Transfer of Property Act. The creditor nevertheless had a right to take actual possession of the secured assets and must therefore be held to be a secured creditor even after the limited transfer to the auction purchaser under the agreement. Thus, the entire interest in the property not having been passed on to the creditor in the first place, the creditor in turn could not pass on the entire interest to the auction purchaser and thus remained a secured creditor in the Act.
The aforesaid pronouncement of law, therefore, clearly holds that a limited transfer is a legal device in the shape of symbolic possession which in our opinion also clearly amounts to the assertion of a right by the secured creditor. This, therefore, provides a remedy to the borrower under Section 17 of the Act, as it is a measure contemplated under Section 13(4) of the Act.
We have considered the submissions raised and what we find is that the Full Bench decision delivered on 06.02.2018 has not referred to the decision of Apex Court in the case of Authorized Officer, State Bank of Travancore and Another Vs. Mathew K.C., 2018 (3) SCC 85, the judgment whereof was delivered on 31st January, 2018. The subsequent judgment in the case of ITC Limited (Supra) also acknowledges symbolic possession as a device legally permissible.
In view of what has been stated hereinabove and for all the reasons recorded, we find that the writ petition cannot be entertained under Article 226 of the Constitution of India without prejudice to the rights of the petitioners to avail of the remedy under Section 17 of the SARFAESI Act, 2002. This will, however, be subject to the outcome of any order or judgment passed by the Apex Court in the case of M/s Hindon Forge Pvt. Ltd. & another (supra) in S.L.P. No.5895 of 2018.
The writ petition is accordingly dismissed.
Order Date :- 2.4.2018 R./Shubham/Arif/A.Verma