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Gopichand Lalwani & Ors vs Standard Chartered Bank & Anr on 17 November, 2021

Author: Prateek Jalan

Bench: Prateek Jalan

                   $~61 (2021 Cause List)
                   *     IN THE HIGH COURT OF DELHI AT NEW DELHI

                   +         W.P.(C) 12980/2021

                             GOPICHAND LALWANI & ORS.                ..... Petitioners
                                         Through: Mr. Sanjeev Bhandari, Advocate
                                                  with Mr. Amit Dhall, Advocate
                                                           versus
                             STANDARD CHARTERED BANK & ANR.       ..... Respondents
                                         Through: Ms. Reena Khorana, Advocate
                   CORAM:
                   HON'BLE MR. JUSTICE PRATEEK JALAN
                                              ORDER

% 17.11.2021 The proceedings in the matter have been conducted through hybrid mode [physical and virtual hearing].

CM APPL. 40904/2021 (exemption) Exemption allowed, subject to all just exceptions. The application stands disposed of.

W.P.(C) 12980/2021

1. Issue notice. Ms. Reena Khorana, learned counsel, accepts notice on behalf of the respondents-Standard Chartered Bank ["the Bank"].

2. The petitioners had taken certain credit facilities from the Bank against the security of a property [B-47, Shankar Garden, Najafgarh Road, Vikas Puri, New Delhi-110018] ["the property"]. The Bank has taken proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, ["SARFAESI Act"] in respect of the property. On the Bank's application, the Chief Metropolitan Magistrate ["CMM"] passed an order dated Signature Not Verified Digitally signed By:SHITU NAGPAL Signing Date:18.11.2021 10:46:05 W.P.(C) 12980/2021 Page 1 of 6 06.02.2021 under Section 14 of the Act pursuant to which a Receiver took possession of the property on 05.03.2021. The measures taken by the Bank have been challenged by the petitioners in Securitisation Application No. 90/2021 which remains pending before Debts Recovery Tribunal ["DRT"]-I, Delhi.

3. On 22.10.2021, the Bank issued a notice for auction of the property scheduled on 12.11.2021. The petitioners have filed two Interlocutory Applications before the DRT-I, Delhi in respect of the said auction sale under Diary Nos. 4092/2021 and 4093/2021 dated 04.11.2021. The applications have not been heard as the DRTs in Delhi are, at present, not functioning for want of Presiding Officers. In these circumstances, the petitioners have also filed the application under Section 17(7) of the SARFAESI Act read with Section 17A(2) of the Recovery of Debts and Bankruptcy Act, 1993 ["RDB Act"] before the Debts Recovery Appellate Tribunal ["DRAT"] for transfer of the Securitisation Application to a functional DRT. Unfortunately, as the learned Chairperson of the DRAT, Delhi has also demitted office on 30.10.2021, in terms of a notification dated 29.10.2021, issued by the Department of Financial Services, Ministry of Finance, Government of India, the transfer application has also remained unheard.

4. In these circumstances, the petitioners have been compelled to approach this Court under Article 226 of the Constitution for a direction transferring the proceedings in the Securitisation Application to the DRT, Jaipur, which is the only functional DRT under the jurisdiction of the DRAT, Delhi.

5. As all the three DRTs in Delhi are without Presiding Officers, several petitions have been filed in this Court seeking similar reliefs.

Although some petitions under Article 226 were entertained, it was thereafter brought to the notice of the Court that the DRAT is empowered to transfer the applications/petitions to another functional DRT within the jurisdiction of the DRAT on the ground of urgency, in exercise of the powers conferred by Section 17(7) of the SARFAESI Act read with Section 17A(2) of the RDB Act. Several orders were passed by the DRAT, Delhi transferring proceedings from the DRTs in Delhi to the DRT, Jaipur, which is the only functional DRT within the jurisdiction of the DRAT, Delhi. This Court also disposed of petitions under Article 226 with liberty to the petitioners to approach the DRAT, Delhi for such relief.

6. The Section 17(7) of the SARFAESI Act and 17A(2) of the RDB Act read as follows:-

Section 17(7) of the SARFAESI Act -

"17- Right to Appeal-

(7) Save as otherwise provided in this Act, the Debts Recovery Tribunal shall, as far as may be, dispose of application in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and the rules made thereunder."

Section 17A(2) of the RDB Act -

"17A - Power of Chairperson of Appellate Tribunal xxxx xxxx xxxx (2) The Chairperson of an Appellate Tribunal having jurisdiction over the Tribunals may, on the application of any of the parties or on his own motion after notice to the parties, and after hearing them, transfer any case from one Tribunal for disposal to any other Tribunal"

7. This Court has since passed orders in several cases, transferring proceedings to a functional DRT, e.g., by order dated 10.11.2021 in W.P.(C) 12610/2021 [M/s Tulip Data Services Pvt. Ltd. & Anr. Vs. Signature Not Verified Digitally signed By:SHITU NAGPAL Signing Date:18.11.2021 10:46:05 W.P.(C) 12980/2021 Page 3 of 6 Edelweiss Asset Reconstruction Company Ltd. & Anr.] and by order dated 15.11.2021 in W.P.(C) 12811/2021 [Greatway Estates Pvt. Ltd. vs. Yes Bank Ltd. & Anr.]. I am of the view that this approach is also consistent with the judgments of the Supreme Court which make it clear, particularly in the context of the proceedings under the SARFAESI Act, that the writ jurisdiction should rarely be exercised.

8. In United Bank of India vs. Satyawati Tondon and Others (2010) 8 SCC 110, the Court held as follows:-

"43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.

xxxx xxxx xxxx

45. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular Signature Not Verified legislation contains a detailed mechanism for redressal of Digitally signed By:SHITU NAGPAL Signing Date:18.11.2021 10:46:05 W.P.(C) 12980/2021 Page 4 of 6 his grievance.

46. It must be remembered that stay of an action initiated by the State and/or its agencies/instrumentalities for recovery of taxes, cess, fees, etc. seriously impedes execution of projects of public importance and disables them from discharging their constitutional and legal obligations towards the citizens. In cases relating to recovery of the dues of banks, financial institutions and secured creditors, stay granted by the High Court would have serious adverse impact on the financial health of such bodies/institutions, which (sic will) ultimately prove detrimental to the economy of the nation. Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters. Of course, if the petitioner is able to show that itscase falls within any of the exceptions carved out in Baburam Prakash Chandra Maheshwari v. Antarim Zila Parishad [AIR 1969 SC 556] , Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8 SCC 1] and Harbanslal Sahnia v. Indian Oil Corpn. Ltd. [(2003) 2 SCC 107] and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order."

(Emphasis supplied.)

9. The observations in Satyawati Tondon (supra) have been followed by the Supreme Court inter alia in Authorized Officer, State Bank of Travancore and Another vs. Mathew K.C. (2018) 3 SCC 85 [paragraphs 5, 9 to 15], and the recent judgment in C. Bright vs. District Collector and Others (2021) 2 SCC 392 [paragraph 22].

10. Ms. Khorana states that in the present case, the sale has already been confirmed in favour of a third party and 25% of the sale proceeds have been received by the Bank. However, she has no objection to the proceedings being transferred to the DRT, Jaipur.

11. For the reasons aforesaid, the writ petition is disposed of with the following directions:-

(a) The Securitisation Application No.90/2021 filed by the petitioners before the DRT-I, Delhi and pending interlocutory applications therein are transferred from the DRT-I, Delhi to the DRT, Jaipur.

(b) The Registrar, DRT-I, Delhi, is directed to transmit the records of the said securitisation application and pending interlocutory applications to the DRT, Jaipur digitally.

(c) Mr. Bhandari is also directed to coordinate with the Registrar, DRT, Jaipur to transmit the digital records of the aforesaid case to the DRT, Jaipur, if so permitted.

(d) As the sale has already been confirmed and further steps are likely to be taken by the end of November, 2021, the proceedings be listed before the DRT, Jaipur on 26.11.2021 at 2:00 PM for directions/hearing. The DRT, Jaipur will permit the parties to appear online [through video conferencing], if they so request.

(e) The DRT, Jaipur is directed to hear the petitioners' case, at least on the question of interim relief, and pass appropriate orders as expeditiously as possible, and latest by 06.12.2021.

(f) As the property has been sold to a third party, Ms. Khorana is directed to disclose the details of the auction purchaser to Mr. Bhandari, so that the auction purchaser can also be impleaded.

12. It is made clear that this Court has not entered into the merits of the petitioners' case, which are to be decided by the DRT in accordance with law.

13. The writ petition is disposed of with these directions.

PRATEEK JALAN, J NOVEMBER 17, 2021/'j' / Signature Not Verified Digitally signed By:SHITU NAGPAL Signing Date:18.11.2021 10:46:05 W.P.(C) 12980/2021 Page 6 of 6