Madhya Pradesh High Court
Manker Food Company Thr. Prafull Manker vs The Chirman Credit Guarantee Fund Trust ... on 27 March, 2019
Equivalent citations: AIRONLINE 2019 MP 337
Bench: S.K.Seth, Vijay Kumar Shukla
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HIGH COURT OF MADHYA PRADESH : JABALPUR
W.P.No. 5726/2019
Manker Food Company
-Versus-
Chairman, Credit Guarantee Fund Trust for Micro
& Small Enterprises & others
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CORAM :
Hon'ble Shri Justice S.K.Seth, Chief Justice.
Hon'ble Shri Justice Vijay Kumar Shukla, Judge.
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Dr. Rashmi Pathak, Advocate for the petitioner.
ORDER
(Jabalpur dt.: 27.03.2019) Per : V.K. Shukla, J.-
Heard on admission.
The petitioner has invoked the writ jurisdiction of this court under Article 226/227 of the Constitution of India, seeking quashment of the notice published in the News Paper for taking over possession under the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,2002(hereinafter referred to as SARFAESI Act).
2. The facts adumbrated in nutshell are that the petitioner company availed the loan from the respondent Financial Institution i.e. Corporation Bank in the form of "Term Loan" for a sum of Rs.59 lacs and cash credit limit of Rs.10 lacs and also contributed sum of Rs. 35 lacs as the proprietors capital.
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3. Upon perusal of the impugned notice, it is evident that the respondent Corporation Bank had issued a notice under sub section-2 of Section 13 of the SARFAESI Act and thereafter by order dated 29-01-2019 the mortgaged property has been acquired in accordance with the provisions of Section 13(4) of the SARFAESI Act.
4. The sole contention of the learned counsel for the petitioner is that financial assistance taken by the petitioner is fully covered under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) Scheme of Government of India and therefore, unless the proposal of the petitioner for restructure is financed the Bank could not have resorted to the recourse under the SARFAESI Act.
5. On being confronted with the availability of an alternative and efficacious remedy under Section 17 of the SARFAESI Act, learned counsel for the petitioner submits that the grounds which have been canvassed in the present petition can be appreciated in writ jurisdiction without resorting to the alternative remedy.
6. To appreciate the aforesaid submissions of the counsel for the petitioner, it is apposite to refer the relevant provisions of Sections 13. The relevant provisions of the Act are reproduced hereunder:
" 13.Enforcement of security interest.--
(1) Notwithstanding anything contained in section 69 or section 69A of the Transfer of Property Act, 1882, any security interest created in favour of any secured creditor may be enforced, without the 3 intervention of the court or tribunal, by such creditor in accordance with the provisions of this Act.
(2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any installment thereof, and -his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to dischargein full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under subsection (4). [Provided that --
(i) The requirement of classification of secured debt as non-performing asset under this sub-
section shall not apply to a borrower who has raised funds through issue of debt securities; and
(ii) in the event of default, the debenture trustee shall be entitled to enforce security interest in the same manner as provided under this section with such modifications as may be necessary and in accordance with the terms and conditions of security documents executed in favour of the debenture trustee;] (3) The notice referred to in sub-section (2) shall give details of the amount payable by the borrower and the secured assets intended to the enforced by the secured creditor in the event of non-payment of secured debts by the borrower.
[(3A) If, on receipt of the notice under sub-section (2), the borrower makes any representation or raises any objection, the secured creditor shall consider 4 such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate [within fifteen days] of receipt of such representation or objection the reasons for non-acceptance of the representation or objection to the borrower:
Provided that the reasons so communicated or the likely action of the secured creditor at the stage of communication of reasons shall not confer any right upon the borrower to prefer an application to the Debts Recovery Tribunal under section 17 or the Court of District Judge under section 17A.".] (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 of the business is severable, the secured creditor shall take over the management of business of the borrower which is relatable to the security for 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;5
(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.
7. Sub-section (4) of Section 13 of the Act authorizes the secured creditor to take possession of the secured assets including that the secured creditor has a right to transfer by way of lease, assignment or sale for realising the secured debts.
8. Against the action under Sub Section 4 of Section 13, Section 17 of the Act, 2002 provides an appeal to the Debts Recovery Tribunal . In the case of Mardia Chemicals Ltd. and others Vs. Union of India and others (2004)4 SCC 311, the Apex Court held that against an action under Sub Section 4 of Section 13 of the Act,2002, there is alternative and efficacious remedy available to the borrower and guarantor under Section 17 of the Act, 2002. In the case of Union Bank of India and another Vs. Panchanan Subudhi (2010)15 SCC 552, the Apex Court held that the High Court ought not to have interfered against a notice under Section 13(2) and against under Section 13(4) of the Act, 2002 when the statutory remedy was available under Section 17 of the Act, 2002. In the case of Kanaiyalal Lalchand Sachdev and others Vs. State of Maharashtra and others (2011)2 SCC 782, the Apex Court held that the High Court rightly dismissed the petition on the ground that efficacious and alternative remedy was available to the 6 borrower/ guarantor under Section 17 of the Act, 2002. It is well settled that ordinarily relief under Article 226/227 of the Constitution of India is not available, if efficacious and alternative remedy is available to an aggrieved person.
9. The Division Bench of this court in the case of Sunil Garg Vs. Bank of Baroda & others, W.P.No.19028/2017, decided on 16-04-2018 examined the validity of the order passed by the Debt Recovery Tribunal in the proceedings under Section 17 of the SARFAESI Act, whereby the application was dismissed on the ground that the same is not maintainable till the actual possession is taken. The Division Bench referring the various judgments of the Apex Court held that the appeal under section 17 of the SARFAESI Act would be maintainable against the order passed under Section 14 of the of the SARFAESI Act.
10. In a recent judgment passed by the Supreme Court in the case of Authorized Officer, State Bank of Travancore and another Vs. Mathew K.C. (2018)3 SCC 85, considering a case under SARFAESI Act, held that discretionary jurisdiction under Article 226 is not absolute but has to be exercised judiciously in given facts of a case and in accordance with law. Normally a writ petition under Article 226 ought not to be entertained if alternative statutory remedies are available, except in cases falling within the well-defined exceptions. Relevant para-16 is reproduced below:
"16. The writ petition ought not to have been entertained and the interim order granted for the mere 7 asking without assigning special reasons, and that too without even granting opportunity to the appellant to contest the maintainability of the writ petition and failure to notice the subsequent developments in the interregnum. The opinion of the Division Bench that the counter-affidavit having subsequently been filed, stay/modification could be sought of the interim order cannot be considered sufficient jurisdiction to have declined interference."
11. In view of the aforesaid enunciation of law, the present petition is not maintainable as alternative and efficacious remedy is available.
12. Accordingly, the writ petition is dismissed.
(S.K.SETH) (VIJAY KUMAR SHUKLA) CHIEF JUSTICE JUDGE hsp. Digitally signed by HARSAHAI PATERIYA Date: 2019.03.28 14:01:51 +05'30'