Karnataka High Court
Ahmed Ali S/O Ali Nayak Sab vs The Union Bank Of India And Ors on 3 September, 2020
Author: Nataraj Rangaswamy
Bench: Nataraj Rangaswamy
1
IN THE HIGH COURT OF KARNATAKA
KALABURAGI BENCH
DATED THIS THE 3RD DAY OF SEPTEMBER, 2020
BEFORE
THE HON'BLE MR.JUSTICE NATARAJ RANGASWAMY
WRIT PETITION No. 226307/2020 (GM-DRT)
BETWEEN:
Ahmed Ali S/o Ali Nayak Sab
Age: 87 years, Occ: Business
R/o H.No.10-2-403, I.B.Road
Manvi, Dist.Raichur-584 123
... Petitioner
(By Sri Sachin M.Mahajan, Advocate)
AND:
1. The Union Bank of India
Raichur Branch
Goshala Road
Raichur-584 101
Rep.by its Senior Manager
2. Mohammed Nasir Ahmed
S/o Ahameduddin
Age: 51 years, Occ: Business
R/o H.No.2-3-68
Near Hazar Baig Masjid
Androon Quilla
Raichur-584 101
2
3. Shakila Begum W/o Ahammad Ali
Age: 73 years, Occ: Household Work
R/o H.No.10-2-122, IB Road
Manvi, Dist. Raichur-584 123
4. Rashid Ali S/o Ahammad Ali
Age:53 years, Occ: Business
R/o H.No.10-2-122, IB Road
Manvi, Dist. Raichur-584 123
5. M/s Ramakrishna Traders
Rep.by its proprietors
G.Paparao S/o Satyanarayana
Age: Major, Occ: Business
Sindhanoor Road, Near APMC
Manvi, Dist. Raichur-584 123
6. Sri Saikumar C.H.
S/o Veeraraju C.H.
Age: Major, Student
R/o Chagbhavi Camp
Near Ganesh Temple
Jambaldinni, Tq.Manvi
Dist. Raichur-584 123
7. The Deputy Commissioner
Raichur-584 101
8. The Gram Panchayat
Neermanvi, Tq.Manvi
Dist. Raichur-584 123
Represented by PDO
... Respondents
(By Smt.Anuradha M.Desai, GA)
This Writ Petition is filed under Articles 226 and 227
of the Constitution of India, praying to issue a writ in the
3
nature of certiorari quashing the order dated 28.10.2014
passed by the respondent No.7 in File No. Sam:Kandaya
DCB/55/2012-13 vide Annexure-G; to quash the order
dated 24.11.2014 passed by the Debt Recovery Tribunal,
Karnataka at Bengaluru in O.A.No.625/2012 vide
Annexure-H.
This petition coming on for preliminary hearing this
day, the Court made the following:
ORDER
The petitioner is the owner of 2 acres of land in Sy.No.122/E situate in Neermanvi village, Manvi Taluka, Raichur District which was converted for non-agricultural land in terms of the order passed by the Deputy Commissioner dated 28-08-1993. He claimed that out of the 2 acres of land, he sold 5600 square feet to the respondent No.2 herein in terms of a sale deed dated 21-11-2008. The respondent No.2 had raised a loan from the respondent No.1-Bank on 08-06-2009 and petitioner, his wife and son stood guarantee for repayment of the loan in terms of letter of guarantee dated 08.06.2009. The petitioner claimed that though he was the owner of the remaining portion of land in Sy.No.122/E, he had not mortgaged the said property or furnished it as collateral 4 security. The counsel for the petitioner invited the attention of this Court to the Memorandum of Deposit of Title Deed dated 28-08-2009 executed by the respondent No.2 in favour of respondent No.1, wherein the words "Bearing Gram Panchayat No.414 measuring 2 acres" is inserted by hand. Learned counsel for the petitioner contended that such insertion is made by the respondent No.1 in collusion with the respondent No.2. In addition, he contended that the petitioner was not a signatory to the Memorandum of deposit of title deed dated 28-08-2009. The petitioner contends that the respondent No.1 without arraying the petitioner as a defendant in O.A.No.625/2012 filed before the Debt Recovery Tribunal under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 obtained a Recovery Certificate on 24-11-2014. In the meanwhile, the petitioner filed O.S.No.23/2018 to protect his possession in respect of the land excluding the portion sold to the respondent No.2. The suit was later dismissed in view of section 34 of the Securitization and Reconstruction of Financial Assets and 5 Enforcement of Security Interest, Act, 2002 (hereinafter referred to as the 'SARFAESI Act, 2002').
2. The respondent No.1, thereafter, initiated proceedings for taking over the possession of the secured asset in terms of Section 14 of the SARFAESI Act, 2002 and thereafter the properties were brought for sale and sale certificate was issued in favour of the respondent Nos.5 and 6.
3. The petitioner has in the instant writ petition challenged the recovery certificate dated 24-11-2014 passed by the DRT in O.A.No.625/2012 and the proceedings initiated under Section 14 of the SARFAESI Act, 2002.
4. Learned counsel for the petitioner contended that the entire process of sanctioning the loan by the respondent No.1 in favour of the respondent No.2 is fraudulent and therefore, the petitioner cannot be deprived of his property, more so, when he has not executed any 6 mortgage deed in respect of the entire extent of 2 acres of land. Learned counsel would contend that the respondent No.2 had purchased 5600 sq. feet of the land and therefore, he could not have mortgaged the entire extent of property.
5. The learned counsel for the petitioner would contend that the remedy under section 17 of the SARFAESI Act, 2002 would not bar filing of the writ petition before this Court. In support of that contention, the learned counsel for the petitioner placed reliance on the judgment of this Court in the case of Deepak Apparells vs. City Union Bank reported in AIR 2016 (2) KAR 101.
6. This Court is mindful of the fact that the petitioner was a guarantor for the repayment of the loan. The wife of the petitioner had signed the deed of mortgage and the son of the petitioner attested the deed of mortgage. Therefore, it cannot be gainsaid that the petitioner had no knowledge of the contents of the mortgage deed. The petitioner did not challenge the 7 recovery certificate issued by the Debts Recovery Tribunal dated 24-11-2014 by an appeal under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The petitioner did not object to the proceedings initiated by the respondent No.1 under Section 13 of SARFAESI Act, 2002 and he made no qualms against the exercise of power to take over possession of the secured asset under Section 14 of the SARFAESI Act, 2002. Further, the secured asset was brought for sale in exercise of the powers under Rule 8 of the Security Interest (Enforcement) Rules 2002. The auction of the secured asset is concluded by issuance of a sale certificate in favour of the respondent Nos. 5 and 6. The petitioner has remained a mute spectator all the while which does not behave a man of ordinary prudence. The case presents clear overtones of a conspiracy between the petitioner and the respondent No.2.
7. In order to appreciate the contention of the learned counsel for the petitioner that the appeal remedy 8 would not debar the exercise of jurisdiction under Article 226 of the Constitution of India, Sections 13 (4) and 17 of the SARFAESI Act, 2002 are relevant and the same are extracted:
"13 (4): In case the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:- (a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset;
[(b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset:
Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt:
Provided further that where the management of whole of the business or part 9 of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security or the debt].
(c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor;
(d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt."
8. An appeal under section 17 of the Act of 2002 is provided and is as follows.
"17. Application Against measures to recover secured debts:
(1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, [may make an application along 10 with such fee, as may be prescribed] to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measure had been taken:
Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower.
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 borrower) to make an application to the Debts Recovery Tribunal under sub-section (1) of section 17.
(IA) An application under sub-section (1) shall be filed before the Debts Recovery Tribunal within the local limits of whose jurisdiction....
(a) the cause of action, wholly or in part, arises;
(b) where the secured asset is located; or 11
(c) the branch or any other office of a bank or financial institution is maintaining an account in which debt claimed is outstanding for the time being.
(2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in sub-section(4) of section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder.
(3) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section(4) of section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management of the business to the borrower or restoration of possession of the secured assets to the borrower or other aggrieved person, it may by order,--
(a) declare the recourse to any one or more measures referred to in sub-section (4) of 12 section 13 taken by the secured creditors as invalid;
(b) restore the possession of the secured assets or management of secured assets to the borrower or such other aggrieved person, who has made an application under sub-section (1), as the case may be; and
(c) pass such other direction as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub-section (4) of section 13.
(4) If, the Debts Recovery Tribunal declares the recourse taken by a secured
creditor under sub-section(4) of section 13, is in accordance with the provisions of this Act and the rules made thereunder, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor shall be entitled to take recourse to one or more of the measures specified under sub- section (4) of section 13 to recover his secured debt.
(4A) Where---
(i) any person, in an application under sub-section(1), claims any tenancy or leasehold 13 rights upon the secured asset, the Debt Recovery Tribunal, after examining the facts of the case and evidence produced by the parties in relation to such claims shall, for the purposes of enforcement of security interest, have the jurisdiction to examine whether lease or tenancy,--
(a) has expired or stood determined; or
(b) is contrary to section 65A of the
Transfer of Property Act, 1882 (4 of
1882); or
(c) is contrary to terms of mortgage; or
(d) is created after the issuance of
notice of default and demand by the
Bank under sub-section (2) of
section 13 of the Act; and
(ii) The Debt Recovery Tribunal is
satisfied that tenancy right or leasehold rights claimed in secured asset falls under the sub- clause (a) or sub-clause (b) or sub-clause (c) or sub-clause (d) of clause (i), then notwithstanding anything to the contrary contained in any other law for the time being in force, the Debt Recovery Tribunal may pass such order as it deems fit in accordance with the provisions of this Act.
(5) Any application made under sub-
section (1) shall be dealt with by the Debts 14 Recovery Tribunal as expeditiously as possible and disposed of within sixty days from the date of such application:
Provided that the Debts Recovery Tribunal may, from time to time, extend the said period for reasons to be recorded in writing, so, however, that the total period of pendency of the application with the Debts Recovery Tribunal, shall not exceed four months from the date of making of such application made under sub-section (1).
(6) If the application is not disposed of by the Debts Recovery Tribunal within the period of four months as specified in sub-section (5), any party to the application may make an application, in such form as may be prescribed, to the Appellate Tribunal for directing the Debts Recovery Tribunal for expeditious disposal of the application pending before the Debts Recovery Tribunal and the Appellate Tribunal may, on such application, make an order for expeditious disposal of the pending application by the Debts Recovery Tribunal.
(7) Save as otherwise provided in this Act, the Debts Recovery Tribunal shall, as far as may 15 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."
9. Thus, it is evident that any person including the petitioner was entitled to file an appeal before the Debt Recovery Tribunal challenging the measures taken by the respondent No.1 for recovery of the dues. The petitioner did not even contest the proceedings under Section 14 of the SARFAESI Act, 2002 within the contours for non compliance of any statutory requirements. It is not the case of the petitioner that the alternative remedy was not efficacious and or that the respondent No.1 has not acted in accordance with the provisions of the SARFAESI Act, 2002 or that the Recovery Certificate and the consequent proceedings were in defiance with the principles of natural justice.
10. The Apex Court in the case of United Bank of India vs. Satyawati Tandon & Others reported in 2010, SC 3413, in the context of Section 17 and Section 16 13(4) of the SARFAESI Act, 2002 held that Writ Courts ought not to exercise jurisdiction under Article 226 of the Constitution of India. In fact the Apex Court held that despite repeated pronouncements, the High Courts continue to ignore the availability of the statutory remedy under the SARFAESI Act, 2002 and deprecated the exercise of jurisdiction under Article 226 which would have serious adverse impact on the rights of Banks and other regulatory authorities. The Apex Court has reiterated the above in State Bank of Travancore vs. Mathew K.C's case reported in 2018 (3) SCC 85.
11. In that view of the matter, this Court cannot exercise jurisdiction to set at naught, the recovery certificate issued by the Debt Recovery Tribunal and the consequent proceedings under Section 14 of the SARFAESI Act, 2002 and sale of the secured asset in favour of the respondent Nos.5 and 6. Hence, this writ petition is dismissed.
Sd/-
JUDGE VNR