Gujarat High Court
Bhavesh Haridas Thakkar vs Bank Of Baroda on 10 December, 2018
Author: Mohinder Pal
Bench: Mohinder Pal, A.C. Rao
C/SCA/16134/2018 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 16134 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE MOHINDER PAL
and
HONOURABLE MR.JUSTICE A.C. RAO
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1 Whether Reporters of Local Papers may be allowed to YES
see the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy of the NO
judgment ?
4 Whether this case involves a substantial question of law NO
as to the interpretation of the Constitution of India or any
order made thereunder ?
==========================================================
BHAVESH HARIDAS THAKKAR
Versus
BANK OF BARODA
==========================================================
Appearance:
MR SN SOPARKAR, SENIOR ADVOCATE with
MR YUVRAJ THAKORE, ADVOCATE with
MS AB CHATURVEDI(5419) for the PETITIONER(s) No. 1,2
BHASKAR SHARMA(9209) for the RESPONDENT(s) No. 1
NOTICE NOT RECD BACK(3) for the RESPONDENT(s) No. 5
NOTICE SERVED(4) for the RESPONDENT(s) No. 2,3
NOTICE UNSERVED(8) for the RESPONDENT(s) No. 4
UNSERVED WANT OF TIM(31) for the RESPONDENT(s) No. 6
==========================================================
CORAM:HONOURABLE MR.JUSTICE MOHINDER PAL
and
HONOURABLE MR.JUSTICE A.C. RAO
Page 1 of 19
C/SCA/16134/2018 CAV JUDGMENT
Date : 10/12/2018
CAV JUDGMENT
(PER : HONOURABLE MR.JUSTICE A.C. RAO) 1.00. RULE. Mr.Bhaskar Sharma, learned counsel waives the service of notice of Rule on behalf of the contesting respondent No.1 - Bank. Though notice is served on behalf of the respondent Nos.2 and 3, none appeared on their behalf.
2.00. At the request of the learned counsel for the respective parties and considering the issue involved in the petition, present petition is taken up for final hearing today and heard the learned counsel for the respective parties at length.
3.00. By way of filing this application under Article 226 of the Constitution of India, the petitioners have challenged the judgment and order dated 28/05/2017 passed by the respondent No.6 - Debt Recovery Tribunal-I, Ahmedabad in Original Application No.605 of 2015.
3.01. The respondent No.1 Bank herein filed an application against the petitioners and other respondents, for recovery of Rs.3,94,15,72,611.29/- along with interest at the rate of 19% till realization and future interest at the rate of 18.65% from 25.11.2015. After conclusion of the proceedings, the Presiding Officer of the learned Gujarat Revenue Tribunal has directed the defendants to pay the dues, either jointly or severally, within a period of two months, failing which, the respondent No.1 herein - Bank will be entitled to sell the hypothecated movables, mortgaged properties, personal Page 2 of 19 C/SCA/16134/2018 CAV JUDGMENT movable and immovable properties of the defendants. It is further ordered that the respondent No.1 is further entitled to future interest at the rate of 16.65% per annum with monthly rests from the date of filing of Original Application till full recovery is made from the defendants and 2% penal simple interest from the date of Original Application till realization. The petitioners have challenged the impugned judgment and order passed by the learned Tribunal dated 28/05/2017 in the present writ petition.
4.00. Mr.S.N. Soparkar, learned Senior Advocate appearing on behalf of the petitioners has vehemently contended that there is no privity of contract between the petitioners and the respondent No.1 - Bank, and neither petitioners are guarantors or mortgagors. Therefore, the impugned judgment and order dated 28/05/2017 is in breach of principles of natural justice and is required to be quashed and set aside.
4.01. At the time of arguments, Mr.Soparkar, learned Senior Advocate for the petitioners was asked a pointed question about maintainability of the present writ petition when there is an alternative remedy by way of filing statutory appeal is available to the petitioners. In reply to the said query, learned advocate for the petitioners has relied upon the decision in case of Whirlpool Corporation V/s. Registrar of Trade Marks, Mumbai and Others reported in (1998) 8 SCC 1 wherein it is held that:
"15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ Page 3 of 19 C/SCA/16134/2018 CAV JUDGMENT petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or whether the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case law on this point but to cut down this circle of fornices whirlpool we would rely or some old decisions of the evolutionary era of the constitutional law as they still hold the field.
16. Rashid Ahmad vs. Municipal Board, kairana, laid down that existence of an adequate legal remedy was a factor to be taken into consideration in the matter of granting Writs. This was followed by another Rashid case, namely, K.S.Rashid & Son Vs. The Income Tax Investigation Commissioner which reiterated the above proposition and held that where alternative remedy existed, it would be a sound exercise of discretion to refuse to interfere in a petition under Article 226. This proposition was, however, qualified by the significant words, "unless there are good grounds therefor", which indicated that alternative remedy would not operate as an absolute bar and that Writ Petition under Article 226 Page 4 of 19 C/SCA/16134/2018 CAV JUDGMENT could still be entertained in exceptional circumstances.
17. Specific and clear rule was laid down in State of U.P. vs. Mohd. Nooh as under :
"But this rule requiring the exhaustion of statutory remedies before the Writ will be granted is a rule of policy convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies."
18. This proposition was considered by a Constitution Bench of this Court in A.V. Venkateswaran, Collector of Customs. vs Ramchand Sobhraj Wadhwani and was affirmed and followed in the following words:
"The passages in the judgments of this Court we have extracted would indicate (I) that the two exceptions which the learned solicitor General formulated to the normal rule as to the effect of the existence of an adequate alternative remedy were by no means exhaustive and (2) that even beyond them a discretion vested in the High Court to have entertained the petition and granted the petitioner relief notwithstanding the existence of an alternative remedy. We need only add that the broad lines of the general principles Page 5 of 19 C/SCA/16134/2018 CAV JUDGMENT on which the Court should act having been clearly laid down, their application to the facts of each particular case must necessarily be dependent on a variety of individual facts which must govern the proper exercise of the discretion of the Court, and that in a matter which is thus per-eminently one of discretion, it is not possible or even if it were, it would not be desirable to lay down inflexible rules which should be applied with rigidity in every case which comes up before the Court".
19. Another Constitution Bench decision in Calcutta Discount co. Ltd. vs Income Tax Officer Companies Distt. laid down :
"Though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment. The High Court will issue appropriate orders or directions to prevent such consequences. Writ of certiorari and prohibition can issue against Income Tax Officer acting without jurisdiction under Section 34 Income Tax Act".Page 6 of 19 C/SCA/16134/2018 CAV JUDGMENT
20. Much water has since flown beneath the bridge, but there has been no corrosive effect on these decisions which though old, continue to hold the field with the result that law as to the jurisdiction of the High Court in entertaining a Writ Petition under Article 226 of the Constitution, in spite of the alternative statutory remedies, is not affected, specially in a case where the authority against whom the Writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation."
4.02. Mr.Soparkar, learned Senior Advocate appearing on behalf of the petitioners has also relied upon the decision of the Hon'ble Supreme Court in case of Popcorn Entertainment and Another V/s. City Industrial Development Corpn. And Another reported in (2007) 9 SCC 593, wherein it is held that:
"22. He invited our attention to the Whirlpool Corporation case (Supra) wherein this Court has held that there are three clear-cut circumstances wherein a writ petition would be maintainable even in a contractual matter. Firstly, if the action of the respondent is illegal and without jurisdiction, Secondly, if the principles of natural justice have been violated and Thirdly, if the appellants' fundamental rights have been violated.
23. According to the learned senior counsel, all the three principles as laid down in Whirlpool Corporation Page 7 of 19 C/SCA/16134/2018 CAV JUDGMENT have been made out in the instant case because the action of CIDCO is wholly without jurisdiction as it is seeking to resile from a concluded contract contrary to the express terms of the contract. Secondly, CIDCO, has violated the principles of natural justice as an order affecting the right of the appellant has been passed without giving an opportunity of hearing to the appellant and thirdly, the appellants' fundamental rights as guaranteed under Article 14 of the Constitution of India have been violated because similar allotments made without calling for tenders are not sought to be cancelled and the appellant is being singled out by CIDCO while seeking to cancel the allotment in favour of the appellant.
47. We have given our careful consideration to the rival submissions made by the respective counsel appearing on either side. In our opinion, the High Court has committed a grave mistake by relegating the appellant to the alternative remedy when clearly in terms of the law laid down by this Court, this was a fit case in which the High Court should have exercised its jurisdiction in order to consider and grant relief to the respective parties. In our opinion, in the instant case, 3 of the 4 grounds on which writ petitions can be entertained in contractual matter were made out and hence it was completely wrong of the High Court to dismiss the writ petitions. In the instant case, 3 grounds as referred to in Whirlpool Corpn. (supra) has been made out and accordingly the writ petition was clearly maintainable and the High Court has Page 8 of 19 C/SCA/16134/2018 CAV JUDGMENT committed an error in relegating the appellant to the civil court."
4.03. Mr.Soparkar, learned Senior Advocate appearing on behalf of the petitioners has also relied upon the decision of the Hon'ble Apex Court in the case of Executive Engineer, Southern Electricity Supply Company of Orissa Limited (Southco) and Another V/s. Sri Seetaram Rice Mill reported in (2012) 2 SCC 108 wherein it is held that:
"80. It is a settled canon of law that the High Court would not normally interfere in exercise of its jurisdiction under Article 226 of the Constitution of India where statutory alternative remedy is available. It is equally settled that this canon of law is not free of exceptions. The courts, including this Court, have taken the view that the statutory remedy, if provided under a specific law, would impliedly oust the jurisdiction of the Civil Courts. The High Court in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India can entertain writ or appropriate proceedings despite availability of an alternative remedy. This jurisdiction, the High Court would exercise with some circumspection in exceptional cases, particularly, where the cases involve a pure question of law or vires of an Act are challenged. This class of cases we are mentioning by way of illustration and should not be understood to be an exhaustive exposition of law which, in our opinion, is neither practical nor possible to state with precision. The availability of alternative statutory or Page 9 of 19 C/SCA/16134/2018 CAV JUDGMENT other remedy by itself may not operate as an absolute bar for exercise of jurisdiction by the Courts. It will normally depend upon the facts and circumstances of a given case. The further question that would inevitably come up for consideration before the Court even in such cases would be as to what extent the jurisdiction has to be exercised.
82. It is argued and to some extent correctly that the High Court should not decline to exercise its jurisdiction merely for the reason that there is a statutory alternative remedy available even when the case falls in the above-stated class of cases. It is a settled principle that the Courts/Tribunal will not exercise jurisdiction in futility. The law will not itself attempt to do an act which would be vain, lex nil frustra facit, nor to enforce one which would be frivolous-lex neminem cogit ad vana seu inutilia-the law will not force any one to do a thing vain and fruitless. In other words, if exercise of jurisdiction by the Tribunal ex facie appears to be an exercise of jurisdiction in futility for any of the stated reasons, then it will be permissible for the High Court to interfere in exercise of its jurisdiction. This issue is no longer res integra and has been settled by a catena of judgments of this Court, which we find entirely unnecessary to refer to in detail. Suffices it to make a reference to the judgment of this Court in the case of Whirlpool Corporation v. Registrar of Trade Marks, Mumbai [(1998) 8 SCC 1] where this Court was concerned with the powers of the Registrar of Trade Page 10 of 19 C/SCA/16134/2018 CAV JUDGMENT Marks and the Tribunal under the Trade and Merchandise Marks Act, 1958 and exercise of jurisdiction by the High Court in face of availability of a remedy under the Act.
83. This Court while referring to various judgments of this Court and specifying the cases where the alternative remedy would not bar the exercise of jurisdiction by the Court, held as under: -
"14. The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of Habeas Corpus, Mandamus, prohibition, Qua Warranto and Certiorari for the enforcement of any of the Fundamental Rights contained in Part III of the Constitution but also for "any other purpose".
15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to Page 11 of 19 C/SCA/16134/2018 CAV JUDGMENT operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case law on this point but to cut down this circle of forensic whirlpool we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field.
19. Another Constitution Bench decision in Calcutta Discount Co. Ltd. v. ITO laid down :
"Though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Court will issue appropriate orders or directions to prevent such consequences. Writ of certiorari and prohibition can issue - against Income Tax Officer acting without jurisdiction Under Section 34 Income Tax Act."
20. Much water has since flown under the Page 12 of 19 C/SCA/16134/2018 CAV JUDGMENT bridge, but there has been no corrosive effect on these decisions which though old, continue to hold the field with the result that law as to the jurisdiction of the High Court in entertaining a writ petition under Article 226 of the Constitution, in spite of the alternative statutory remedies, is not affected, specially in a case where the authority against whom the writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation.
21. That being so, the High Court was not justified in dismissing the writ petition at the initial stage without examining the contention that the show cause notice issued to the appellant was wholly without jurisdiction and that the Registrar, in the circumstances of the case, was not justified in acting as the `Tribunal'."
5.00. Mr.Bhaskar Sharma, learned advocate appearing for the respondent No.1 Bank has vehemently submitted that the petitioners have alternative efficacious remedy which is provided by the statute itself, however, without availing the statutory remedy of appeal, the petitioners have approached this Court and therefore, the present petition is not maintainable.
5.01. Mr.Bhaskar Sharma, learned advocate appearing for the respondent No.1 Bank has relied upon the decision of the Page 13 of 19 C/SCA/16134/2018 CAV JUDGMENT Hon'ble Apex Court in the case of United Bank of India V/s. Satyawati Tondon and Others, reported in (2010) 8 SCC 110, wherein it is held that:
"21. The views expressed in Titaghur Paper Mills Co. Ltd. v. State of Orissa (supra) were echoed in Assistant Collector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Ltd. and others MANU/SC/0169/1984 : (1985) 1 SCC 260 in the following words:
"Article 226 is not meant to short-circuit or circumvent statutory procedures. It is only where statutory remedies are entirely ill- suited to meet the demands of extraordinary situations, as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to Article 226 of the Constitution. But then the Court must have good and sufficient reason to bypass the alternative remedy provided by statute. Surely matters involving the revenue where statutory remedies are available are not such matters. We can also take judicial notice of the fact that the vast majority of the petitions under Article 226 of the Constitution are filed solely for the purpose of obtaining interim orders and thereafter prolong the Page 14 of 19 C/SCA/16134/2018 CAV JUDGMENT proceedings by one device or the other. The practice certainly needs to be strongly discouraged."
22. In Punjab National Bank v. O.C. Krishnan and others MANU/SC/0452/2001: (2001) 6 SCC 569, this Court considered the question whether a petition under Article 227 of the Constitution was maintainable against an order passed by the Tribunal under Section 19 of the DRT Act and observed:
"5. In our opinion, the order which was passed by the Tribunal directing sale of mortgaged property was appealable under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short "the Act"). The High Court ought not to have exercised its jurisdiction under Article 227 in view of the provision for alternative remedy contained in the Act. We do not propose to go into the correctness of the decision of the High Court and whether the order passed by the Tribunal was correct or not has to be decided before an appropriate forum.
6. The Act has been enacted with a view to provide a special procedure for recovery of debts due to the banks and the financial institutions. There is a hierarchy of appeal provided in the Act, namely, filing of an appeal under Section 20 and this fast-track Page 15 of 19 C/SCA/16134/2018 CAV JUDGMENT 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."
27. 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 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."
Making above submissions and relying upon the aforesaid decision, learned counsel for the respondent No.1 Bank has Page 16 of 19 C/SCA/16134/2018 CAV JUDGMENT requested to dismiss the present petition.
6.00. Short question which arises in the present petition for consideration of this Court is whether when the petitioners have alternative statutory remedy by way of preferring Appeal before the appellate forum, the present petition is maintainable or not ?
6.01. The controversy involved in the present petition is no more res-integra in view of decision of the Hon'ble Apex Court in the case of United Bank of India Versus Satyawati Tondon and others, reported in (2010) 8 SCC 110.
6.02. In the case of United Bank of India (supra), the Hon'ble Apex Court, while dealing with the provisions of the Secularization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2001 and the question regarding invocation of extraordinary powers under Articles 226 and 227 of the India, has held that the High Court will not entertain a petition under Article 226 of the Constitution of India if an effective remedy is available to the aggrieved person. The Hon'ble Apex Court has further observed that this rule of not entertaining a writ petition under Article 226, in case case there is an alternative efficacious remedy available, applies with a greater rigorous in matters involving recovery of taxes, cess, fees,, other types of public money and the dues of Bank and other financial institutions. It has also been held that before availing the remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute. It is also further held that Article 226 is not meant to short-circuit or circumvent statutory Page 17 of 19 C/SCA/16134/2018 CAV JUDGMENT procedures. It is further observed and held by the Hon'ble Apex Court that High Court must insist that before availing remedy under Article 226 of the Constitution of India, a person must exhaust the remedies available under the relevant statute. Under the circumstances, as held by the Hon'ble Apex Court in the case of Union Bank of India (supra), when in the matter where public money is involved and aggrieved party has an alternative remedy under the relevant statute and when the Recovery of Debts and Bankruptcy Act, 1993 is a self-contained Code, writ petition under Article 226 and 227 of the Constitution of India, without availing the statutory remedy of appeal, is not maintainable and the present petition deserves to be dismissed.
6.03. The view taken by the Hon'ble Apex Court in the decisions cited by the learned counsel for the petitioners, are not applicable to the facts of the case on hand in view of decision of the Hon'ble Apex Court in the case of Union Bank of India (supra).
6.04. The Hon'ble Apex Court in case of United Bank of India (Supra) wherein the the Hon'ble Apex Court has shown its displeasure to the High Court where statutory remedies under the DRT Act and SARFSESI Act is ignored by the High Court and exercised jurisdiction under Article 226 for passing order. The Hon'ble Apex Court has observed that while passing such order has adverse impact on the right of Banks and other financial institutions to recover their dues.
7.00. Considering the overall facts and circumstances of the case and decision of the Hon'ble Apex Court in the case of Page 18 of 19 C/SCA/16134/2018 CAV JUDGMENT Union Bank of India (supra), we are of the considered opinion that the petitioners have statutory alternative remedy to prefer Appeal before the appellate forum under the DRT Act and the petitioners are not able to point out that there is violation of principles of natural justice or fundamental rights of the petitioners and therefore the present petition preferred under Articles 226 and 227 of the Constitution of India without availing statutory remedy of appeal, is not required to be entertained. Present petition fails and the same is required to be dismissed and is accordingly dismissed as not maintainable on the ground that the petitioners have statutory alternative efficacious remedy to prefer statutory appeal before the appellate forum under the Act. However, it is clarified that this Court has not gone into the merits of the matter and the present petition has been dismissed solely on the ground of alternative remedy. Rule is discharged. No costs.
Sd/-
(MOHINDER PAL, J) Sd/-
(A. C. RAO, J) RAFIK Page 19 of 19