Karnataka High Court
Canara Bank vs Anant Kumar Sakre And Anr on 22 July, 2022
1
IN THE HIGH COURT OF KARNATAKA
KALABUR AGI BEN CH
ND
DATED THIS THE 22 DAY OF JULY, 2022
PRESENT
TH E H ON 'BLE MR.JUS T IC E S RE EN IVA S H ARIS H K UMAR
AN D
THE HON'BLE MR.JU ST ICE S.RA CHAIAH
WR IT APPEAL N o.200178/2021 (GM-RES)
C/W
WR IT APPEAL N o.200194/2021 (GM-RES)
IN WA N o.200 178 / 2 021 :
Be tw ee n:
M/s. T alam pally Ve nture Pvt. Ltd.
Blo ck N o. 302, 3rd Floo r
Sw iss C om ple x, No .33,
Ra ce C o urse Ro ad
Be ngalu ru-56 0 001
By its M anaging D irector
...Ap pe ll a nt
(By S ri A meet Kuma r D esh pan de , Se nio r Cou n se l for
Sri G anesh S ub has chan d ra Kal ab u rag i , Ad voc ate )
An d:
1. S ri Anant K umar S akhare
S /o Ram a Rao S akhre
A ged ab out 57 Y ea rs
R esid ing at No . 5-3 50
Ne ar Roza Police Stat ion
K alaburagi- 5 85 10 4
2. C anara B ank
R epre sente d b y its
A utho rized Of ficer
2
S tat ion B azar Branch
K alaburagi - 585 102
... Respond en ts
(By S mt . Sa ndhya U . P rabh u & S ri S ang an abasava
B. Pati l, Advo cat es f o r R1 ; S ri S.S . As pall i , Advo cate
fo r R2 )
This Writ App eal is filed u nder S ection 4 of the
Karnataka Hig h Cou rt Act read with Rule 10(4)(i)(a) of
the W rit Proceedings Rules , p raying to allow this
app eal and se t asid e the final order d ated 15.11.2021
pas sed by the learned Sing le Judg e in
W.P.No.201415/2021 (GM-R ES) and to p as s any suc h
app ropriate ord ers as this Cou rt m ay deem fit to grant
in the facts and circumstances of th e case.
IN WA N o.200 194 / 2 021 :
Be tw ee n:
Canara B an k
Re pre sente d by it s
Autho rize d Off icer
Canara B an k,
St at ion Ba zar B ranch
Ka labur agi- 585 102
...Ap pe ll a nt
(By S ri S .S. A sp al li , Advoc ate )
An d:
1. S ri Anant K umar S akre
S /o Ram a Rao S akhre
A ged 57 Yea rs
R esid ing at No . 5-3 50
Ne ar Roza Police Stat ion
K alaburagi- 5 85 10 4
3
2. M/s. T alam pa lly Ve nture Pvt . Ltd.
Blo ck No .30 2, 3 r d Floo r
Sw is s C om plex, No. 33,
Race C o urs e Road
Be ngaluru-5 60 001
By its Pro prieto r
... Respond en ts
(By S mt . Sa ndhya U . P rabh u Adv ocat e for R1 ;
S ri Am eet Ku ma r D esh p an de , S en io r C ou n se l f o r
S ri Ganesh Su bhas chan dra Kalabu rag i , Advoc ate
fo r R2 )
This Writ App eal is filed u nder S ection 4 of the
Karnataka Hig h Cou rt Act, read with Rule 10(4)(i)( a)
of th e W rit Pro ceed ings Ru les p raying to allow this
app eal and se t asid e the final order d ated 15.11.2021
pas sed by the learned Sing le Judg e in
W.P.No.201415/2021 (GM-R ES) and to p as s any suc h
app ropriate ord ers as this Cou rt m ay deem fit to grant
in the facts and circumstances of th e case.
These Writ Ap peals having been heard and
reserved on 18.07.2022 and coming on for
pronouncement th is d ay, SREEN IVAS HARISH
KUMAR J., delivered the fo llowing:
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JUDGMENT
The order dated 15.11.2021 in writ petition No.201415/2021 has given rise to these two writ appeals which have been disposed of by a common judgment.
2. The first respondent in the appeals was the writ petitioner. For the sake of convenience the writ petitioner is referred to as the borrower, the appellant in W.A.No.200178/2021, as auction purchaser and the appellant in W.A.No.200194/2021, as bank.
3. The default committed by the borrower in repaying the loan that he had obtained from the bank resulted in collateral security created in land bearing Sy.No.77 measuring 17 acres 39 guntas situated at the village Malagatti, Taluk Aurad, District Kalaburagi ('property' for short) being brought to auction by the bank under Section 13(4) of The Securitization And Reconstruction Of 5 Financial Assets And Enforcement Of Security Interest Act, 2002 ('SARFAESI ACT' for short). The borrower filed the writ pe tition seeking a writ of certiorari to quash the sale notice dated 03.06.2021 published in the news paper on 11.06.2021 as per Annexure-H and e-mail communication dated 23.07.2021 issued by the bank as per Annexure-L. He also sought a wr it of mandamus to the bank to consider his representation dated 20.07.2021. The learned Single Judge by order dated 15.11.2021, allowed the writ petition canceling the sale deed executed by the bank in favour of the auction purchaser and directed the bank as also the auction purchaser to execu te such documents as ar e required to annul the sale deed in respect of aforementioned property. The learned Single Judge also gave other directions as may be necessary for appropriating the amount that the borrower owed to the bank from the deposit made by him in the 6 High Cour t and to take such other steps for completing the process of re-transfer of the property from the auction purchaser to the borrower. Aggrieved by the order of learned Single Judge, these two writ appeals are filed.
4. The case posited by the borrower in the writ court was that he availed loan of Rs.59,75,000/- from the bank on 26.10.2007 for con struction of a godown in the property referred to above. The property was offered as collateral security for the loan by executing a mortgage by deposit of title deeds. It was agreed between him and the bank that the loan should be repaid in 132 monthly installments spread over for a span of 11 years. He was paying the installments regularly. Without issuing any notice to him, the property was brought to sale. The bank claimed to have taken symbolic possession of the property in the year 2015 itself. In fact on 05.11.2018, he made payment of Rs.9,00,000/- and on 19.11.2018, he 7 made payment of Rs.6,50,000/-. All these payments were subsequent to notice said to have been given in the year 2015 itself for taking possession. All of a sudden in the year 2021, without issuing fresh demand notice, the bank issued a letter to him intimating that the property was sold in auction on 29.06.2021 for Rs.3,30,00,000/- to M/s Talampalli Venture Private Limited i.e., the auction purchaser. This letter dated 05.07.2021 was served on him personally on 20.07.2021. In the said letter it was mentioned that the sale notice had been issued on 02.06.2021.
5. The borrower alleged in the writ petition that in-fact he was not issued with any notice before taking over possession and before conducting the auction. H is main contention was that the property could not have been sold in auction under the provisions of SARFAESI Act as no action under its Section 13(4) could be taken in 8 respect of an agricultural land. On 20.07.2021, the borrower wrote a letter to the bank expressing his desire to clear entire outstanding dues. He had made ready Rs.80,00,000/- for clearing the dues. But he received a reply from the bank that the auction purchaser had already paid Rs.3,30,00,000/- to it and thereby his loan account had been closed appropriating his dues from the sale proceeds and he should come over to bank and collect the balance of the sale proceedings. The borrower stated that if really auction was to be held, it was not required to sell entire 17 acre 39 guntas of land. The value of the godown itself was Rs.1,65,00,000/-. Any part of the land could have been sold for realizing the actual dues to the bank. In this view, the auction was bad.
6. Placing the facts as stated above before the writ court, the borrower took up the grounds in the writ petition that - SARFAESI Act prohibited 9 sale of agricultural land, that the bank managed to sell the property without issuing any notice, that the bank should not have initiated sale based on alleged possession notice of the year 2015 having received more than 25% of the loan amount, that the possession notice was in valid since the amount due from him had been reduced to a great extent and in this view, a fresh notice should have been issued to him, that the letter dated 05.07.2021 issued by the bank only stated that highest bid was for Rs.3.30 crore and therefore the sale was not complete on that day, that if the godown con structed in an area of 25,740 Sq.Ft. had been sold, it would have cleared the entire loan and also the penal interest if any, that the bank having approached the Debt Recovery Tribunal ('Tribunal' for short) by making an application for recovering the dues and having obtained an order from the Tribunal should not have invoked the provisions of SARFAESI Act, etc. 10
7. The bank conte nded in the writ petition that on 06.02.2008, a sum of Rs.56,00,000/- was sanctioned to the borrower for construction of a rural godown in the land bearing Sy.No.77/AA of Malagatti village and that on 25.05.2009, another sum of Rs.4,00,000/- was also sanctioned to the borrower. The mortgage created on the said land was registered. The borrower executed letters of revival on 24.01.2011, 06.07.2013 and 15.05.2014 admitting the liability. He became a defaulter and therefore on 16.08.2015, the borrower's loan account was classified as Non Performing Asset (NPA). On 23.09.2015, the bank issued a notice to the borrower under Section 13(2) of SARFAESI Act calling upon him to discharge an amount of Rs.61,61,774/- found due as on 22.09.2015 within 60 days from the date of receipt of the notice. The borrower received the notice but did not reply, then the bank issued possession notice on 24.11.2015 and took symbolic possession. The 11 bank published the notice dated 24.11.2015 in the news papers Prajavani and Deccan Herald. On 13.11.2020, the bank issued sale notice along with e-auction sale notice dated 11.11.2020 to the borrower giving him an opportunity to discharge the liability. This notice was also pub lished in the newspapers Deccan Herald and Prajavani on 14.11.2020. Again on 12.01.2021, one more notice was issued to the borrower and that e-auction notice dated 11.11.2020 was also communicated to him in order to give an opportunity to him to clear th e dues. This notice was also published in the newspapers dated 13.01.2021. On 02.06.2021, sale notice under Section 13(4) of the SARFAESI Act was issued and that the e-auction sale notice dated 02.06.2021 was also communicated to him. Th is notice was also published in the newspapers Deccan Herald and Prajavani on 11.06.2021. An authorized officer of the bank visited the property to serve 12 the sale notice to the borrower and as he refused to receive it, notice was affixed on the house of the godown. Then Talampalli Venture Private Limited participated in the auction and as it was the highest bidder for Rs.3,30,00,000/-, its bid was accepted. The auction thus held was also communicated to the borrower by letter dated 05.07.2021. After deposit of the entire sale proceeds, it was communicated to the borrower that his loan account was closed. Then the bank execu ted sale certificate dated 26.07.2021 in favour of the auction pur chaser and it was registered on 30.07.2021 in the office of Sub- Registrar Kalaburagi. Thereafter the borrower was called upon to come over to bank and collect the balance that remained after appropriating the dues from the sale proceeds. Giving these chronological events, the bank prayed for dismissing the wr it petition.
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8. We have heard the arguments of Sri Ameet Kumar Deshpande, learned Senior Counsel for the au ction purchaser, Sri S.S.Aspalli, learned counsel for the Bank and Smt. Sandhya U Prabhu, learned counsel for the borrower. Smt. Sandhya U Prabhu also filed her synopsis of arguments. Whatever they elaborated while arguing may be referred contextually, but the highlights of their arguments are as follows:
9. Sri Ameet Kumar Deshpande raised the main point that writ petition was not main tainable in view of efficacious remedy being provided under Section 17 of the SARFAESI Act and in this view the learned Single Judge should not have allowed the writ petition.
10. Sri S.S.Aspalli submitted that after declaring the borrower's loan accoun t as NPA, the bank was competent to take action under Section 13(4). Notices were issued to the borrower and 14 they were all served. There was no infirmity in the auction procedure. He also submitted that the writ was not maintainable.
11. Smt. Sandhya U Prabhu raised the points that writ was maintainable inspite of remedy being provided for under Section 17 of the Act; that in view of Section 31(i) of the Act, the agricultural land could not have been sold in auction; that having obtained order from Debt Recovery Tribunal in T.A.No.2265/2017, the bank could not have resorted to action under Se ction 13 of the Act; that the bank did not issue the notices to the borrower before taking action under Section 13 of the Act and that entire 17 acres 39 guntas was not necessary to b e sold, a part of it wou ld have fetched the actual dues to the bank.
12. Since the question of maintainability of the writ petition has been raised , we have to answer this que stion. Obviously we have to refer 15 to Section 17 of the Act. Its Sub-section(1) states that, if any person including a borrower is aggrieved by any of the measures referred to in Section 13(4) of the Act, he may file an application to the jurisdictional Debt Recovery Tribunal within 45 days. That means action taken by the Secured Creditor can be questioned before the Debt Recovery Tribunal. The argument of Sri Ameet Kumar Deshpande and Sri S.S.Aspalli was that when Section 17 provides for efficacious remedy, the borrower should have approached the Debt Recovery Tribunal instead of filing a writ petition in the High Court. Sri Ameet Kumar Deshpande argued that though Article 226 of the Constitution of India does not bar filing of a writ petition under exceptional circumstances, the aggrieved party must avail the remedy provided under the Act itself when the statute provides for a remedy. Therefore writ petition shou ld have been dismissed. In support of his argument, he 16 placed reliance on the judgments of the Hon'ble Supreme Court in the cases of PHOENIX ARC PRIVATE LIMITED V. VISHWA BHARATI VIDYA MANDIR AND OTHERS [C IVIL APPEAL NO.257- 259/2022], UNITED BANK OF INDIA V. SATYAWATI TONDON AND OTHERS [(2010)8 SCC 110], Gm. SRI SIDDESHWAR A CO-
OPERATIVE BANK LTD., V. IKBAL [AIR ONLINE 2013 SC 47].
13. Smt. Sandhya U Prabhu met this point of argument by su bmitting that the very initiation of the action under Section 13(4) of the Act was not permitted because Section 31 of the Act excludes its applicability to any interest created in the agricultural land. Since in the present case security interest is created in the agricultural land, the bank could not have proceeded under Section
13. What is involved is jur isdiction of the bank to invoke Section 13 in respect of an agricultural land and as it is apparently clear that there is violation 17 of Section 31, it can be questioned only in the writ petition and not by filing an application under Section 17 of the Act. In support of her arguments, she has placed reliance on the judgments of the Supreme Court in the case of UTTAR PRAD ESH POWER TRANSMISSION CORPORATION LTD. AND ANOTHER V. C.G.POWER AND INDUSTRIAL SOLUTIONS LIMITED AND ANOTHER [2021 SCC ONLINE SC 383].
14. We now refer to the decisions cited by the le arned counsel.
14.1 In Phoenix ARC Private Limited (supra), the clear observations of the Supreme Court about the maintainability of the wr it petition in relation to action taken under Section 13(4) of the Act, is found in para 13.2. It is as follows:
13.2 Applying the law laid down by this Court in the case of Mathew K.C. (supra) to the facts o n han d, we are of th e opinion that 18 filing of th e writ petitions by th e borrow ers before the High Court under A rticle 226 of the Constitution of Indi a is an ab use of proces s of the Cou rt. The writ p etitions hav e been filed ag ainst the propos ed actio n to be taken und er Section 13(4). A s observed herei nabove, even assuming th at the commu nication dated 13.08 .2015 w as a notice under S ection 13(4), in that cas e also, in view of the statutory, efficacious remedy avail able by way of ap peal un der Section 17 of the SAR FAESI Act, the High Court ought not to have entertain ed the wri t p etitions.
Even th e impu gned ord ers p ass ed by the High Court directing to maintain the status quo with respect to the possession o f the secured properties on payment of Rs.1 crore only (in all Rs.3 crores) is ab solutely u njustifiab le. The d u es are to the extent of approximately Rs.117 crores. T he ad-interim relief has been continu ed since 2015 and the secured creditor is deprived of proceed ing furthe r with the ac tion under the SARFAESI Act. Filing of th e w rit petitio n b y the borrow ers before the High Cou rt is nothing but an ab use of process of Co urt. It appears that th e High Court has initially granted an ex-parte ad- interim order m ech anically and wit hout assi gning any reasons. The High Court ought 19 to have appreciated that by pas sing such an interim order, the rights of the secured creditor to recover the amo unt due and payable have been seriously prejudiced . The secu red creditor and/or its assignor have a right to recover the amo unt due and payable to it from the borrow ers. The stay granted by the High Court would have serio us adverse impact on th e financial health of the secured creditor/ assign or. Therefore, the High Court s hould have been extrem ely care ful and ci rcu mspect in exercising its discretion while granting stay in such m atters. In these ci rcumstances, th e proceedings before the High C ourt d eserv e to b e dismissed .
(emphasis sup plied ) 14.2 Satyavati Tondon (supra) discusses the question whether the H igh Court can entertain a writ petition under Article 226 when a remedy is available under Section 17 of the Act. It is held in paragraphs 18 and 27 as below:
18. While exp ressing the afo resaid view, we are conscious that the powers conferred upon the Hi gh Court under Article 226 of the Cons titution to issue to any perso n or 20 authority, including in appropriate cases, any Governmen t, directions, ord ers or w rits including the five prero gative writs fo r the enforcement o f any of the rights conferred by Part III or for any other pu rpose are very wide and there is no expres s li mitation on exercise of th at power b ut, at the same tim e, we can not be o blivious of th e rules of self-
imposed restrai nt evolved by this Co urt, which every Hig h Co urt is boun d to keep in view w hile exercising power under Article 226 of the Constitution. It is tru e that the rule of exhaustio n of alternative remed y is a rule of discretion and not one of compulsion, b ut i t is diffic ult to fathom any reason why the High Court should en tertain a petition filed unde r Arti cle 226 of th e Constitution and pass interim order ignoring the fact th at the petitioner can avail effective alternative remed y by filing ap plic ation, appeal, revisio n, etc. and the particul ar legislation contains a d etailed mechanism for red ressal of his grievan ce. It mus t b e remembered that stay of an action initiated by the State and/o r its ag encies/ins trum entalities for recovery of taxes , cess, fees, etc. seriously imp edes execution of p rojects of public impo rtance and disabl es th em f rom dis ch arging their constitution al and leg al obligations tow ards 21 the citi zens. In cases relatin g to recovery of the du es of ban ks, financial i nstitutions and secu red creditors, stay gran ted by th e High Court would hav e seriou s adverse impact on the fin ancial h ealth of su ch bod ies/institutions, which ul timately prov e detrim ental to the economy of the natio n. Therefo re, the Hig h Co urt should be extrem ely care ful and ci rcu mspect in exercising its discretion to grant stay in such matters. O f course, i f the petition er is ab le to show th at its case falls within any of the exc eptions carved out in B aburam Prakash Chand ra M ahes hwari v. Antarim Zila Paris had AIR 1969 SC 556, Whirlpool Corporation v. Regis trar of T rade Marks, Mumb ai (1998) 8 SCC 1 and Harb anslal Sahnia and ano th er v. Indian Oil Corpo ration Ltd. and others (2003) 2 SCC 107 and some othe r judgm ents , then the High Cou rt may, after considering all the relevant param eters and public interes t, pass ap propriate int erim ord er.
27. It is a matter of serious c oncern th at despite repeated pronou nc ement of this Court, the High Courts conti nue to ignore the avail ability of statutory remedies und er the DRT Act and SARFAESI Ac t and exercise jurisdiction under Article 226 for p assing 22 ord ers which h ave serio us ad verse impact on the right of ban ks and other financial institutio ns to recov er their du es. We hope and tru st that in fu ture the High Courts will exercise their discretion in su ch matters with greater caution, care and circumspection.
(emphasis sup plied ) 14.3 Gm. Sri Siddeshwara Co-
operative Bank Ltd. (supra) is another case where the Hon'ble Supreme Court has discussed applicability of Section 17 of the Act in relation to action taken under Section 13 of the Act. In para 31 of the said judgment it is held as below:
31. No doub t an altern ative rem edy is not an absolu te bar to the exercise of extrao rdinary jurisdiction u nder Article 226 but by now it is well settled that where a statu te provides ef ficaciou s and adeq uate rem ed y, the High Court will do well in not entertaini ng a petition under Article 226. On mispl aced considerations, statutory procedures c annot be allow ed to be circumvented.23
14.4 In the case of Uttar Pradesh Power Transmission Corporation Ltd. and another (supra), it is held:
68. It is well settl ed that availability of an altern ative remedy does not prohibit the High Court from entertaining a writ petition in an app ropriate case. T he Hi gh Court may entertai n a w rit peti tion, no twithstanding th e avail ability of an al ternative remedy, particul arly (1) where the w rit petition seeks enfo rcem ent of a fund amental right;
(ii) where th ere is failure of prin ciples of natu ral ju stic e or (iii) where the impugned ord ers or pro ceed ings are wholly without jurisdiction or (iv) th e vires o f an Act is und er challenge. Reference m ay be mad e to Whirlpool Corporation v. Registrar o f Trad e Marks, Mumb ai and Ors. reported in (1998) 8 SCC 1 : AIR 1999 SC 22 and Pimpri Chinchw ad Municipal Corporation V. Gayatri Cons truction Comp any, reported in (2008) 8 SCC 172, cited on b ehalf of Respondent No.1.
15. The conspectus of the above decisions is this: It is not as though High Court cannot entertain a writ petition under Article 226 of the 24 Constitution whenever alternative remedy is available. Writ jurisdiction can certainly be invoked where fundamental rights are sought to be enforced or their violation is complained of, or where there is failure of principles of natural justice or when the order impugned in the writ petition was passed by an author ity having no jurisdiction or vires of an Act is questioned. But the question is not only the availability of alternative remedy, bu t if it pertains to availability of efficaciou s remedy, the High Court should not ordinarily entertain the writ petition. The judgments that Sri Ameet Kumar Deshpande and Sri S.S.Asp alli have relied upon directly deal with availability of efficaciou s remedy under Section 17 of the Act. Though in those cases the order of granting interim orders in relation to action under Section 13 of the Act were questioned, the issue whether writ petition can be entertained when efficacious remedy under Section 17 of the Act is 25 available, is discussed at length. But the judgment of the Supreme Court in Uttar Pradesh Power Transmission Corporation Ltd. (supra), does not discuss applicability of Section 17 of the Act. What the Supreme Court has reiterated is the settled principle as to when the High Court can entertain writ petition inspite of availability of alternative remedy. Therefore we are of the opinion that Uttar Pradesh Power Transmission Corpor ation Ltd. (supra), does not countenance the argument of Smt. Sandhya U Prabhu that the writ petition is maintainable.
16. Even if we analyze the scope of Section 17, it can be very well said that it relates to questioning the measures taken under Section 13(4) of the Act. The word 'measure' includes enforcing a security interest for recovery of the dues to the bank or financial institution. If by virtue of Section 31, no action can be taken in relation to security interest created in an 26 agricultural property, there is no bar for questioning the same under Section 17 of the Act. The Debt Recovery Tribunal can decide whether a secured creditor can proceed under Section 13(4) in respect of security interests as enumerated in Section 31 of the Act.
17. Other points of argument of Smt. Sandhya U Prabhu were that the borrower has disputed the service of notice under Section 13(2) of the Act and the possession notice and that the Commissioner appointed by the wr it court has given a report that the property is an agricultural land and there is nothing more to be ascertained even if an enquiry is held. Moreover even if it is to be ascertained once again, the DRT cannot record evidence while deciding an application under Section 17 and therefore writ petition is maintainable.
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18. We are unable to accept her arguments. Plain reading of Section 17 of the Act shows that it is just an application where enquiry is also permitted. Remedy provided under Section 17 is not an appeal. It is useful to extract here Sub- sections (2) and (3) of Section 17:
17. Appli cation aga inst measures to recover secured debts:--
(1) xx xx xxx (2) The Deb ts Recovery Tribun al s hall consider wheth er any of the measu res ref erred to in sub -section (4) of section 13 taken by th e secured creditor fo r enforcement of security are in accord ance with the p rovisions of this Ac t and th e rules mad e thereund er.
(3) If, the Debts Recov ery Tri bun al, after examining the facts and circu ms tances of the case and evidence p roduced by the parties, comes to the conclusion that any of the measu res referred to in sub-s ection (4) of section 13 , taken by th e secured creditor are not in accord ance with th e provisions o f this Act and th e rules m ade th ereunder, and require restoration of th e managemen t of the 28 secu red assets to the b orrow er or restoration of possession of the s ecured assets to the borrower, it m ay by o rder,
(a) declare t he recours e to any one or more measu res referred to in-sub-section (4) of section 13 taken by the secured assets as inv alid and (b ) res tore the possession o f the secured assets to the borrower or restore the man agement of th e secu red assets to the borrower, as the case may be, and
(c) pass su ch ord er as it m ay consider app ropriate and necess ary in relatio n to any of the recourse taken by the secured credito r und er sub-s ectio n (4) of section 13.
19. Sub-section (2) makes it very clear that the DRT can examine whether the measures taken under Section 13(4) are in accordance with the provisions of the Act. According to Sub-section(3), the DRT can examine the facts and circumstances of the case and also evidence produced by the parties. After examining the facts, circumstances and evidence, DRT can declare any of the measures taken under Section 13(4) as invalid; it 29 can restore the possession of secured assets or the management to the borrower or other aggrieved persons and it can also issue any other directions as found to be appropriate. Th is being the scope of Section 17, the borrower could have urged all the grounds that he had taken in the writ petition before the DRT by making an application under Section 17 of the Act. It is an unacceptable argument that DRT cannot record evidence in a proceeding under Section 17, in our opinion it can. Therefore we are of the clear opinion that the writ petition filed by the borrower was not maintainable.
20. If we peruse the impugned order, what we find is, infact the learned Single Judge has too opined that writ petitioner i.e., the borrower ought to have approached the DRT. But the learned judge appears to have taken a decision to entertain the writ petitioner for some other reasons, namely, entire property measuring 17 30 acre 39 guntas was auctioned for a consideration of Rs.3,30,00,000/-. When the actual due was very less, it was not necessary to auction the entire land. The learned Single Judge has taken note of the fact that the borrower had already deposited Rs.3,41,00,000/- before this Court on 19.10.2021 to show his bonafides and therefore the case appears to be excep tional one for entertaining the writ petition. We may state that the learned Single Judge appears to have entertained the writ petition showing sympathy towards the petitioner. Ofcourse we do not deny the fact that sympathy can be shown if genuine grounds are made out by the borrower for not being able to repay the loan. The enforcement action taken under the SARFAESI Act or Order XXI of the Code of Civil Procedure relating to sale of movables or immovables, is to see that money owed by the borrower is repaid. It is not with a view to bringing the property for auction and 31 especially if Rules 55(a) and 83 of Order XXI CPC are read, it can be said that opportunities are given to the judgment debtor for repaying the money at various stages. Looked in this view, it cannot be said that the bank cannot resort to action under Section 13 of the Act if the borrower does not show promptness in repaying the loan borrowed by him. Bank is a Trustee of public money. Very aptly we quote an observation of the Supreme Cour t in the case of AUTHORIZED OFFICER, STATE BANK OF TRAVANCORE V. MATHEW K C [AIR 2018 SC 676]. It is held that:
16....... ....... ....... Loans by fin ancial institutio ns are granted from pu blic money gen erated at th e tax p ayers expense. S uch loan does not b ecom e the property of the person takin g the loan, b ut retains its charac ter of pub lic mo ney given in a fiduciary c apacity as entrustm ent by the public. Timel y rep ayment also ensures liq uidity to facilitate loan to another in need , by circulation of the mon ey and 32 canno t be permitted to be b locked by frivolou s litig ation by those who can afford the luxury of the same. The cau tion required, as expressed in Satyawati Tand on (supra), has also not been kept in mind before passi ng the impugned i nterim ord er:
21. Therefore we may state that if a borrower fails to repay the loan despite several chances being g iven to him by the bank, ultimately it has to take recourse to enforcement action provided under law. There was no need for the learned Single Judge to be unduly the sympathetic, he could have as well left those issues to be decided by DRT.
22. Then with regard to agricultural nature of the property, Smt. Sandhya U Prabhu argued that the record of rights produced by the borrower and the commissioner's report clearly indicate that it is an agricultural land and Section 31(i) is a clear bar. The argument of Sri Ameet Kumar Deshpande was that merely for the reason that in the revenue 33 records the property is shown as agricultural land, it cannot be said that Section 31(i) is applicable to exclude the property from the purview of enforcement under Section 13(4) of the Act. The property may be agricultural, but did the parties intend to use the property for agricultural purpose or not is the determining factor to apply bar under Section 31. In support of his arguments, he has placed reliance on the judgments of the Supreme Court in the case of INDIAN BANK AND ANOTHER V. PAPPIREDDIYAR AND ANOTHER (2018) 18 SC 252 and ITC LIMITED V. BLUE COAST HOTELS LIMITED AND OT HERS [(2018)15 SCC 99].
22.1 In Blue Coast Hotels (supra) in para 37 and 38 it is he ld as below:
37. In the present case, securi ty interes t w as created in respect of several parcels of land , which were meant to b e a p art of singl e unit i.e. the five star hotel in Goa. Some parcels of land now claim ed as agricul tu ral land were 34 app arently purchased by the d ebtor from agriculturis ts and are entered as agricultural lands in th e revenue records. The debto r applied to the revenu e authorities for the conversion of these land s to non-a gricultural lands which is pending till d ate due to policy decision.
38. It is undisputed that these land s were mo rtg aged in favour of th e cred itor under a deed dated 26.02.2010. Obviously, since no secu rity interest can b e created in respect of agricultural land s and yet it was so created, goes to show that th e parties di d not treat the land as agricultural land and th at the deb tor off ered the land as security on this basis. The und isputed position is that the total land on which the Go a Hotel w as lo cated ad m easures 182 225 sq. mtrs. O f these, 2335 sq. m trs. are u sed for growing veg etables, fruits, shrubs and trees for captiv e consumption of th e hotel. Th ere is no subs tantial evid enc e ab out the growing of vegetab les but w hat s eems to b e on th e land are some trees b earing cu rry leaves and coco nut. This amoun ts to ab out 12.8 % of the total area.
(emphasis sup plied ) 35 22.2 In K.Pappireddiyar(supra), the judgment of Blue Coast Hotels Limited (supra) is referred and held as below:
8. The expression security interest, both before and after the amendment, exclud es wh at is specified in Sec tion 31. Clause (i) of Section 31 s tipulates that the provi sions of the Act will no t be ap plicable to any security interest created in ag ricultural land . The statu tory d iction ary in Sectio n 2 does not contain a d efinition of the expression agricultural land. Wheth er a particular piece of land is ag ricultural in n ature is a question of fact. In the decision of this Court in Blue Coast Hotels Limited (sup ra), a secu rity interest was created in respect of several parcels of land w hich w ere m eant to b e a p art of a sin gle unit, for establishing a ho tel in Goa. Som e of the parcels w ere p urchased by the d ebtor fro m ag riculturists and were entered as agricultural l ands in the revenue records. The d ebtor had applied to the revenue au thority for the conversion of the land to non- agricultu ral u se, but the applications were pend ing. This Court held that the fact that the debtor h ad created a secu rity interest was indicative of the 36 position that the parties d id not treat the land as agricultural land. The und isput ed position w as that the hotel was located on 1,82,225 squ are meters of l and of which 2,335 square metres were used for growing vegetab les an d fruits for captiv e consumption. In this b ackgroun d, th e two-
judge Bench of this Court h eld that :
49. The mortgage is th us in tended to cover th e entir e prop erty of the Goa Hotel. Pri ma facie, apart from the fact that th e parties them selves u nderstood that the l ands in q uestion are not agricultural, i t also appears th at h aving regard to th e use to which they are pu t and the pu rpose of such us e, they are ind eed not agricultu ral.
The Court further held th at:
57. .... h aving reg ard to th e chara cter of the land and th e pu rpose for w hich i t is set apart, we are of the view that the land in question is not an ag ricultural land. The Hig h Court mis-
directed itself in holding th at the land was an agri cul tu ral l and m erely because it stood as s uch in th e revenue entries , 37 even thoug h the application mad e fo r such conversation lies pending till date."
(emphasis sup plied )
23. Smt. Sandhya U Prabhu tried to distinguish the applicability of above two decisions on facts. In this regard, we may state that in the con text of cir cumstances, the interpretation of Section 31(i) is involved. Pertinently we may quote what the Supreme Court has observed in para 29 of its judgment in Blue Coast Hotels Limited (supra). The observation is, "However, we are of the view that the construction of the Act should not be affected by the facts of a particular case". Therefore the ratio in Blue Coast Hotels Limited(supra) and K.Pappireddiyar(supra) is applicable.
24. Further, we may state that the intention of the parties is a question of fact. Direct evidence as to what was the intention of the parties is seldom available, inference as to 38 existence of intention must be gathered from other proved facts. Therefore the DRT might as well decide this issue in the application filed under Section 17 of the Act.
25. Another point argued by Smt. Sandhya U Prabhu was that the bank having obtained an order by making an application under Section 19 of the Recovery of Debts and Bankruptcy Act should have proceeded to take action under the said Act. Though she submitted that the action under Section 13 of the Act is parallely available, her emphasis of argument was, once an order on the application under Section 19 of the DRT Act was obtained, there was no bar as su ch to proceed against the agricultural property. Sri Ameet Kumar Deshpande replied to this argument by placing reliance on the judgment of the Supreme Court in the case of M/S. TRANSCORE V. UNION OF INDIA AND ANOTHER [AIR 2007 SC 712], that the remedy available under the Act is 39 independent, and just because the bank approached the DRT by making an application under Section 19, it cannot be said that the bank lost its righ t to take action under the Act. He argued that doctrine of election is not applicable. Sri S.S.Aspalli also argued that both actions are independent. He refers to Section 35 of the Act. The Supreme Court in the case of M/s. Transcore (supra), has held as below:
26. In our view, Section 17(4) shows th at the secu red credito r is free to take recou rse to any of th e m easures under Section 13(4) notwithstanding anything contained in any other law for the time being in fo rce, e.g., for the sake of argu men t, if in th e given c ase the measu res u nd ertaken by the secu red c reditor und er S ec tion 13(4) comes in c onflict with, let us say the provision under the State land revenue law, then notwiths tanding such conflict, the pro vision of Sec tion 13(4) shall overrid e the local law. This position also stands clarified by S ectio n 35 of the NP A Act which states tha t th e pro visions of NPA Act shall overrid e all other laws whic h are incon sistent with th e NPA Act. Section 40 35 is also important f rom ano ther angle. As stated above, th e NP A Act is not inheren tly o r impliedly inconsistent with the DRT Act in terms of rem edies fo r enfo rcement of secu rities. S ection 35 gives an overriding ef fect to th e NPA Act with all other l aws if such o th er l aws are in consistent with the NPA Act. As far as the p resent case is concerned , the remed ies are complimen tary to each other and, therefore, the doctrine of election has no application to the p resent case.
26. Therefore we have to state that the action taken by the bank under Section 13(4) of the Act, de spite an order having been already passed by the DRT deciding an application under Section 19 of the DRT Act, cannot be said to be improper.
27. Smt. Sandhya U Prabhu while arguing emphasized the fact that there was no service of notice on the borrower. On this point, she placed reliance of the judgment of Supreme Court in the case of OASIS DEALCOM PRIVATE LIMITED V. 41 KHAZANA DEALCOMM PRIVATE LIMITED AND OTHERS [(2016)10 SCC 214]. She also urged another point that there was no need to bring entire property for sale when a part of it could have fetched the actual dues to the bank and in this regard she referred to the judgment in the case of RAM K ISHUN AND OTHERS V. STATE OF UTTAR PRADESH AND OTHERS [(2012)11 SCC 511]. We agree with her argument that service of notice as envisaged under Section 13(2) of the Act and Security Interest Enforcement Rules are mandatory and any infraction in issuance and publication of notice vitiates the whole action. But the bank disputes the contention of the borrower and according to it there was service of notice and publication in news papers. Again th is is a disputed question of fact on which evidence is necessary and therefore, this can be decided only in a proceeding under Section 17 of the Act. 42
28. So also whether sale of part of the property would have fetched the entire dues, is a question of fact. Sri Ameet Kumar Deshpande and Sri S.S.A spalli argued that the bank was not in a position to auction a part of the property because of the reason that the part of the property to be sold was required to be demarked first, and certain revenue documents were required to be produced. The bank could not have obtained the revenue documents without th e consent and co- operation of the borrower. This submission indicates that the bank may be having a reason as to why it did not opt to sell a part of the property, but in our opinion this issue can be decided by the DRT as it is also a question of fact.
29. It is very important to mention here that actually the writ court has not considered all the points that Smt. Sandhya U Prabhu argued before us. The learned Single Judge has allowed the writ petition on some other grounds. But from the 43 foregoing discussion we come to conclusion that the order of the learned S ingle Judge is not sustainable. These writ appeals deserve to be allowed. Hence the following:
ORDER Both writ appeals are allowed.
The order dated 15.11.2021 in
W.P.No.201415/2021 (GM-RES) is set-
aside.
Liberty is given to the borrower to approach the DRT, but legal contentions are kept open to be decided by DRT.
There is no order as to costs.
Sd/-
JUDGE Sd/-
JUDGE KMV