Karnataka High Court
Mahesh vs Authorized Officer/ on 12 April, 2018
Author: Krishna S Dixit
Bench: Krishna S.Dixit
IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH
DATED THIS THE 12 T H DAY OF APRIL 2018
R
BEFORE
THE HON'BLE MR.JUSTICE KRISHNA S.DIXIT
WRIT PETITION NO.102826 OF 2017 (GM-RES)
BETWEEN:
MAHESH S/O. HEMADREPPA SAJJANAAR,
AGE:47 YEARS, OCC. BUSINESS,
R/O. H. NO. 3132/58,
J. H. PATEL NAGAR,
NEAR KEB, MUNDARGI -582 118.
... PETITIONER
(BY SRI. R.H.ANGADI, ADVOCATE)
AND
1. AUTHORIZED OFFICER/
DEPUTY GENERAL MANAGER
IDBI BANK LTD., MANVI BUILDING,
CTS NO. 3799/1/A/3A
GENERAL KARIYAPPA CIRCLE,
PALA BADAMI ROAD,
GADAG -582 101.
2. THE BRANCH MANAGER,
IDBI BANK LTD., MANVI BUILDING,
CTS NO. 3799/1/A/3A,
GENERAL KARIYAPPA CIRCLE,
PALAL BADAMI ROAD,
GADAG - 582 101.
3. M/S. HEMAGIRISH TRADERS
GENERAL MERCHANT & COMM. AGENTS,
PLOT NO. 9, APMC YAR,
2
GADAG ROAD,
MUNDARGI 582 118
DIST:GADAG BY ITS PROPRIETRESS
SMT. MAHADEVI W/O GURUPADAPPA HAVINAL-DEAD
HER LEGAL HEIRS ARE AS UNDER :
3(A).GURUPADAPPA S/O.MALLAPPA HAVINAL,
AGE-70 YEARS, OCC-AGRICULTURE,
R/O.MUNDARGI, TQ-MUNDARGI,
DIST-GADAG-582 118.
3(B) HEMAGIRISH S/O.GURUPADAPPA HAVINAL,
AGE-40 YEARS, OCC-AGRICULTURE,
R/O.MUNDARGI, TQ-MUNDARGI,
DIST-GADAG-582 118.
3(C) NAGARAJ S/O.GURUPADAPPA HAVINAL,
AGE-36 YEARS, OCC-GOVT.SERVANT,
R/O.MUNDARGI, TQ-MUNDARGI,
DIST-GADAG-582 118.
3(D) ANNADANESH S/O.GURUPADAPPA HAVINAL,
AGE-34 YEARS, OCC-GOVT. SERVANT,
R/O.MUNDARGI, TQ-MUNDARGI,
DIST-GADAG-582 118.
3(E) RAVIKUMAR S/O.GURUPADAPPA HAVINAL,
AGE-32 YEARS, OCC-BANK EMPLOYEE,
R/O.MUNDARGI, TQ-MUNDARGI,
DIST-GADAG-582 118.
... RESPONDENTS
(BY SRI.RAVI S.MATTUR, ADVOCATE FOR R-1 & 2)
(BY SRI.PRASHANT HOSAMANI, ADVOCATE FOR R-3(A-E)
THIS WRIT PETITION IS FILED UNDER ARTCILES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED
POSSESSION NOTICE DATED:06.03.2017 ISSUED BY THE RESPONDENT
NO.1 VIDE ANNEXURE-C AND DIRECT THE RESPONDENT NO.1 AND 2
3
TO EXHAUST ALL THE REMEDIES AGAINST RESPONDENT NO.3 WHO IS
BORROWER TO RECOVER THE DUE AMOUNT OF RS.44,59,815/-.
THIS PETITION COMING ON FOR ORDERS, THIS DAY THE
COURT MADE THE FOLLOWING:-
ORDER
In this Writ Petition, Petitioner has laid a challenge to the possession notice dated 06.03.2017 issued by the 1st Respondent Authorized Office/Deputy General Manager of IDBI Bank Ltd., Gadag, whereby the possession of the Petitioner's property is sought to be taken by way of enforcing guaranty for the repayment of Bank debt.
2. Brief facts stated are ; Petitioner happens to be the guarantor for the repayment of the loans contracted by 3rd Respondent M/s.Hemagirish Traders taken from the 2nd Respondent-Bank. By way of guarantee, Petitioner admittedly has executed a Memorandum of Equitable Mortgage of his property in favour of lending Bank for securing the repayment of said loans, which have fallen over due.
3. The 3rd Respondent Principal borrower has failed to repay the entire loan amounts despite Demand Notice dated 20.12.2016 4 and therefore the same occasioned the issuance of Possession Notice at Annexure-C to the Writ Petition under Section 13(12) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 Read with Rule-3 of the Security Interest (Enforcement) Rules, 2002. The same is in challenge in this Writ Petition.
4. The learned counsel for the Petitioner submits that, he is only a guarantor for the repayment of the debts contracted by the 3rd Respondent borrower who too has furnished his property by way of security for their repayment. Therefore without exhausting the coercive measures against the principal borrower or his property, it is not open to the Respondent-Bank straight way to proceed against the guarantor.
5. The learned counsel for the Petitioner submits that, the 1st Respondent is an Authority exercising statutory power and therefore it answers the definition of State given by Article 12 of the Constitution of India as interpreted by the Apex Court in R.D.Shetty's case and therefore its actions are liable to scrutiny under judicial review in exercise of extraordinary power vested in 5 this Court Articles 226 and 227 of the Constitution of India and consequently the action of the Respondent should fair and unarbitrary as required under Article 14. He submits that, the action of the 1st Respondent is arbitrary and therefore is liable to be set at naught.
6. I have carefully considered the contentions of the Petitioner-Guarantor whose liability has always been coextensive with that of the principal borrower. When the Bank enters into a loan transaction the matter is purely contractual in nature and therefore there is no element of public law involved warranting invocation of writ jurisdiction vested in this Court under Articles 226 and 227 of the Constitution of India. It is well settled by the decision of the Apex Court in the case of Life Insurance Corporation of India v. Escorts Ltd. And others, reported in AIR 1986 SC 1370 The relevant paragraph reads as under :
"While it cannot be doubted that every action of the State or an instrumentality of the State must be informed by reason and that, in appropriate cases, actions uninformed by reason may be questioned as arbitrary in proceedings under Act.226 or Art.32 of the Constitution, Art.14 cannot be construed as a charter for judicial review of State 6 actions and to call upon the State to account for its actions in its manifold activities by stating reasons for such actions. For example, if the action of the State is political or sovereign in character, the Court will keep away from it. The court will not debate academic matters or concern itself with the intricacies of trade and commerce. If the action of the State is related to contractual obligations or obligations arising out of the tort, the Court may not ordinarily examine it unless the action has some public law character attached to it. Broadly speaking, the court will examine actions of State if they pertain to the public law domain and refrain from examining them if they pertain to the private law field."
7. The contention of the Petitioner that even otherwise also the Respondent-Bank is not entitle to proceed against the surety/guarantor without exhausting its remedy against the principal borrower is legally incorrect. A surety is not entitle to dictate terms to the lending Bank. He cannot compel either the Bank to exhaust its remedies against the borrower. It is always open to the Bank or lender to proceed against the guarantor without exhausting remedy against the principal borrower.
8. The Apex Court in the case of State Bank of India v. Saksaria Sugar Mills Ltd and Others reported in 1986 2 SCC 145 7 has held at paragraph No.7 of the said Judgment which reads as under :
"7. It is unfortunate that the High Court erred in overlooking words "other than those relating to secured liabilities to banks and financial institutions" referred to in the notification which had the effect of excluding the mortgage in favour of the State Bank of India from the scope of the notification issued under Section 7 of the Act. The High Court further erred in not noticing that even when a notification is issued under Section 7(1)(b) of the Act suspending the operation of any agreement or assurances of property to which a notified sugar undertaking or the person owning is a party, any proceeding against the guarantor would remain unaffected by the issuance of such a notification. Under Section 128 of the Indian Contract Act, 1872, save as provided in the contract, the liability of the surety is co- extensive with that of the principal debtor. The sureties thus became liable to pay the entire amount. Their liability was immediate and it was not deferred until the creditor exhausted his remedies against the principal debtor..............."
9. In these circumstances the Writ Petition is rejected at the stage of Admission. However this rejection will not come in the way of the Petitioner-Guarantor or the 3rd Respondent-principal borrower negotiating some ease by way of One Time Settlement 8 under the schemes obtaining in the Bank. Since the 3rd Respondent principal borrower submits that, he shall make all efforts to settle the dues under such scheme within the time and subject to the terms to be stipulated by the 2nd Respondent-Bank.
Sd/-
JUDGE Ckk