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M/S Shri Krishnan Tradings A ... vs Union Bank Of India Through Its ... on 12 September, 2023

Author: Sushrut Arvind Dharmadhikari

Bench: Sushrut Arvind Dharmadhikari, Pranay Verma

                                                        1
                           IN    THE     HIGH COURT OF MADHYA PRADESH
                                               AT INDORE
                                                  BEFORE
                           HON'BLE SHRI JUSTICE SUSHRUT ARVIND DHARMADHIKARI
                                                     &
                                   HON'BLE SHRI JUSTICE PRANAY VERMA
                                          ON THE 12 th OF SEPTEMBER, 2023
                                           WRIT PETITION No. 3300 of 2023

                          BETWEEN:-
                          1.    M/S     SHRI    KRISHNAN     TRADINGS    A
                                PROPRIETORSHIP CONCERN THROUGH ITS
                                PROPRIETOR ANSHUMAN KRISHNAN SITUATED
                                AT 81/1, NEW SIGNAL VIHAR, DISTRICT INDORE
                                (MADHYA PRADESH)

                          2.    ANSHUMAN KRISHNAN S/O LATE SHRI VIJAY
                                KRISHNAN,    AGED   ABOUT    47    YEARS,
                                OCCUPATION: PROPRIETOR M/S SHRI KRISHNAN
                                TRADINGS R/O 81/1, NEW SIGNAL VIHAR,
                                COLONY MHOW DISTRICT INDORE (MADHYA
                                PRADESH)

                          3.    SMT. SIMONA KRISHNAN W/O SHRI ANSHUMAN
                                KRISHNAN, AGED ABOUT 46 YEARS, R/O 81/1,
                                NEW SIGNAL VIHAR COLONY, MHOW DISTRICT
                                INDORE (MADHYA PRADESH)

                                                                               .....PETITIONERS
                          (SHRI AMIT S. AGRAWAL, LEARNED SENIOR ADVOCATE ASSISTED BY
                          SHRI ARIHANT KUMAR NAHAR, COUNSEL FOR THE PETITIONERS).

                          AND
                          1.    UNION BANK OF INDIA THROUGH ITS
                                AUTHORISED OFFICER FORTUNA PLOT NO. 06,
                                ROAD NO. 2, ANOOP NAGAR, A.B. ROAD
                                (KHAJRANA) DISTRICT INDORE (MADHYA
                                PRADESH)

                          2.    UNION BANK OF INDIA, REGIONAL OFFICE, 12/12,
                                JEEVAN PRADEEP BUILDING, ANOOP NAGAR,
                                INDORE (MADHYA PRADESH)

                          3.    M/S BALRAJ CONSTRUCTION, REPRESENTED BY
Signature Not Verified
                                PARTNER SHRI MANJEET SINGH BHATIA, 308
Signed by: SREEVIDYA
Signing time: 9/14/2023
2:28:19 PM
                                                               2
                                SATGURU PARINAYA,           A.B.   ROAD,     INDORE
                                (MADHYA PRADESH)

                          4.    DISTRICT        MAGISTRATE, INDORE          (MADHYA
                                PRADESH)

                          5.    DISTRICT         MAGISTRATE, DHAR           (MADHYA
                                PRADESH)

                                                                                         .....RESPONDENTS
                          (SHRI ANAND SINGH BAHRAWAT, LEARNED COUNSEL FOR THE
                          RESPONDENT NO.1 AND 2)
                          (SHRI RAVINDRA SINGH CHHABRA, LEARNED SENIOR ADVOCATE
                          ASSISTED BY SHRI ROHIT SHARMA, COUNSEL FOR RESPONDENT NO.3)
                          (SHRI ANIKET NAIK, DY. ADVOCATE GENERAL FOR RESPONDENTS NO.
                          4 AND 5/STATE)


                                This petition coming on for admission this day, Justice Sushrut Arvind

                          Dharmadhikari passed the following:
                                                               ORDER

Heard on the question of maintainability of the writ petition. This petition under Article 226/227 of the Constitution of India assailing the order dated 03.02.2023 passed in S.A.No. 96/2022 by the Debt Recovery Tribunal (DRT), Jabalpur permitting respondent No.3 to participate in the auction conducted on 20.01.2022 whereby the mortgaged properties of the petitioners were put to auction by the respondent/bank.

2. Though, the issue of alternative remedy was initially considered while passing the order dated 07.02.2023, however, the respondents appeared on caveat and the reply was not filed. This Court, prima facie, was of the opinion that the writ petition can be entertained. There is no doubt with regard to the maintainability of a writ petition under Article 226 of the Constitution of India, however, the issue in this petition would be 'entertainability' of the writ petition in view of the fact of availability of statutory alternative remedy under Section 18 of the Securitization and Reconstruction of Financial Assets and Signature Not Verified Signed by: SREEVIDYA Signing time: 9/14/2023 2:28:19 PM 3 Enforcement of Security Interest Act 2002 (referred to as 'SARFAESI Act' hereinafter).

3. Shri Agrawal, learned Senior Counsel appearing for the petitioners submitted that, no doubt there is an alternative remedy available to the petitioner under Section 18 of the SARFAESI Act, however, exception has been carved out regarding maintainability of a writ petition in certain situations. In the present case, legal questions have been raised with regard to proclamation of sale as well as auction.

4. Learned Senior Counsel for the petitioners, relying on the judgment of the Apex Court in case of Union Bank of India vs. Satyawati Tondon, (2010) 8 SCC 110 contended that the Apex Court dismissed the SLP indicating that a writ petition was filed immediately after a notice was issued under Section 13(4), therefore, it was held that a writ petition would not be maintainable and eventually the entertainment of the petition was held to be bad. However, in the aforesaid judgment exceptions have been carved out that if an exceptional case arises, the High Court can entertain a writ petition. Apart from this, learned Senior Counsel also relied on the judgment in case of M/s Godrej Sara Lee Ltd. vs. The Excise and Taxation Officer-Cum-Assessing Authority & Ors., [2023] 3 SCR 871 and contended that alternative remedy cannot by itself be a mechanical ground to dismiss the writ petition. Rather, the High Court has discretion to entertain a writ petition. It has been held that dismissal of the writ petition without examining whether an exceptional case has been made out for entertaining the writ petition would not be proper. On these grounds, learned Senior Counsel for the petitioners contended that the writ petition is very much maintainable.

5. On the other hand, Shri Chhabra, learned Senior Counsel appearing Signature Not Verified Signed by: SREEVIDYA Signing time: 9/14/2023 2:28:19 PM 4 for respondent No.3 vehemently opposed the prayer and contended that the petitioners are having statutory efficacious remedy of filing an appeal under Section 18 before the Debts Recovery Appellate Tribunal (DRAT), Allahabad. He further contended that learned Senior counsel for the petitioners are unable to point out that the grounds raised in this writ petition cannot be raised in appeal before the DRAT and therefore, he has no option but to file the writ petition. In series of cases, this Court is of the consistent view that the writ petitions cannot be entertained when there is an efficacious statutory remedy of appeal available to petitioner. Learned Senior counsel for the respondent has relied on the judgment of the Apex Court in case of South Indian Bank Ltd. & Ors. vs. Naveen Mathew Philip & Anr., 2023 SCC Online SC 435 to contend that the Apex Court has reiterated the settled position of law on the interference of the High Court invoking Article 226 of the Constitution of India in commercial matters when an effective and efficacious alternative forum has been constituted through the statute. The Apex Court even went on to say that, "We are also constrained to take judicial notice of the fact that certain High Courts continue to interfere in such matters, leading to a regular supply of cases before this Court. One such High Court is that of Punjab & Haryana.''

6. In paragraph 14 of the judgment in case of South Indian Bank Ltd. & Ors (supra), the Apex Court has held as under :

''14. A writ of certiorari is to be issued over a decision when the Court finds that the process does not conform to the law or statute. In other words, courts are not expected to substitute themselves with the decision-making authority while finding fault with the process along with the reasons assigned. Such a writ is not expected to be issued to remedy all violations. When a Tribunal is constituted, it is expected to go into the issues of fact and law, including a statutory violation. A question as to whether such a violation would be over a mandatory Signature Not Verified Signed by: SREEVIDYA Signing time: 9/14/2023 2:28:19 PM 5 prescription as against a discretionary one is primarily within the domain of the Tribunal. So also, the issue governing waiver, acquiescence, and estoppel.....

15. .......

16. Approaching the High Court for the consideration of an offer by the borrower is also frowned upon by this Court. A writ of mandamus is a prerogative writ. In the absence of any legal right, the Court cannot exercise the said power. More circumspection is required in a financial transaction, particularly when one of the parties would not come within the purview of Article 12 of the Constitution of India.

When a statute prescribes a particular mode, an attempt to circumvent shall not be encouraged by a writ court. A litigant cannot avoid the noncompliance of approaching the Tribunal which requires the prescription of fees and use the constitutional remedy as an alternative. ...........''

7. Learned Senior Counsel for respondent No.3 contended that the aforesaid judgment was not considered by this Court while passing of the order dated 07.02.2023 since the judgment was not in existence at that time and the same came to be passed on 17.04.2023. Therefore, in the aforesaid facts and circumstances, this petition deserves to be dismissed with liberty to the petitioner to avail the alternative remedy.

8. Heard learned counsel for the parties.

9. The Apex Court, in case of State Bank of Travancore vs. Mathew K.C., (2018) 3 SCC 85, has held as under :

''5. 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 vs. Supt. of Taxes, AIR 1964 SC 1419, Titaghur Paper Mills Co. Ltd. vs. State of Orissa, (1983) 2 SCC 433 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.''

6. ......

7. ......

8. 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.

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.

9. 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.''

10. Admittedly, the petitioners have not availed the efficacious statutory remedy under Section 18 of the SARFAESI Act. There is no bar for the petitioners to raise all the grounds raised in this petition before the appellate forum. Therefore, this Court is not inclined to entertain the writ petition. Accordingly, the same is hereby dismissed.

11 . However, the petitioners would be at liberty to approach the appropriate forum in appeal, if so advised, within a period of 15 days from today for which the question of limitation would not come in the way of filing an appeal, if done within the aforesaid period.

12. Since, the interim order of status-quo dated 07.02.2023 with regard to properties in question was passed protecting the petitioners, it is directed that the status-quo order shall continue for a further period of 30 days from today. The same shall stand vacated automatically after expiry of 30 days from today.

                             (S. A. DHARMADHIKARI)       (PRANAY VERMA)
                                      JUDGE                  JUDGE




                          vidya




Signature Not Verified
Signed by: SREEVIDYA
Signing time: 9/14/2023
2:28:19 PM