Gujarat High Court
Bengani Udyog Pvt Ltd Through Director ... vs Authorised Officer, Small Industries ... on 5 September, 2018
Author: Sonia Gokani
Bench: Sonia Gokani
C/SCA/12985/2018 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 12985 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS JUSTICE SONIA GOKANI
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1 Whether Reporters of Local Papers may be allowed to
see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law
as to the interpretation of the Constitution of India or any
order made thereunder ?
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BENGANI UDYOG PVT LTD THROUGH DIRECTOR SURENDER KUMAR
BENGANI
Versus
AUTHORISED OFFICER, SMALL INDUSTRIES DEVELOPMENT BANK
(SIDBI)
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Appearance:
ADITYA A GUPTA(7875) for the PETITIONER(s) No. 1
MOHIT A GUPTA(8967) for the PETITIONER(s) No. 1
MR AR GUPTA(1262) for the PETITIONER(s) No. 1
for the RESPONDENT(s) No. 2
MR BHARAT JANI(352) for the RESPONDENT(s) No. 1
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CORAM: HONOURABLE MS JUSTICE SONIA GOKANI
Date : 05/09/2018
ORAL JUDGMENT
Rule. Learned Advocate, Mr. Jani, waives service of rule for the respondent No.1, whereas, learned AGP waives for Respondent No.2.
Page 1 of 30C/SCA/12985/2018 JUDGMENT 1. This is a petition, preferred under
Articles 226 and 227 of the Constitution of India by the petitioner, challenging the action of Respondent No.1-Bank, initiated under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002, ('for short', Securitization Act), 2002, in the following factual background:
2. The petitioner is engaged in the business of manufacturing and trading of stainless steel utensils which had availed 'Working Capital Term Loan' ('WCTL' in brief) of Rs.64/- lakh and the Secured Business loan of Rs.2.05/- crore. Against the said loan, a mortgage was created on the factory premises being (1) plot No. 514 & 515, Kathwada Industrial Estate and (2) Flat Nos. 42 and 43, situated on the 4th Floor of the Scheme known as ' Jayraj Apartments' of New Tatsat Cooperative Housing Society Ltd., situated on the land bearing Survey Nos. 352/1, 352/2 and 353 of village Rakhiyal, Taluka: City, sub-District & Distrct: Ahmedabad.
3. It is the say of the petitioner on the strength of the Memorandum of Understanding, threats and intimidation by one, Mr. Prakash Jain, he illegally entered into the petitioner-
Company and he has illegally siphoned away stock Page 2 of 30 C/SCA/12985/2018 JUDGMENT worth Rs.5/- crores in or around April, 2016.
4. A Suit being Regular Civil Suit No. 1234 of 2016 came to be filed to restrain Mr. Jain from entering into the premises. Further, a complaint being Criminal Case No. 218 of 2016 is also filed against Mr. Jain, which is pending. Likewise, the Suit being Civil Suit No. 825 of 2018 for recovery of Rs.10/- crore also has been preferred by the petitioner-Company against said Mr. Jain.
5. In this backdrop of facts, the petitioner-Company's account was declared NPA on 08.06.2016 and a Demand Notice was issued by respondent-Bank on 10.10.2016 under Section 13(2) of the Securitization Act for a sum of Rs.2,39,97,786/-. Purusuant to the said notice, the petitioner-Company handed over the plots bearing Nos. 42 and 43 of the company, located at Jayraj Complex for settling its dues. The petitioner-Company also released its Fixed Deposits Receipts of Rs.13/- lakh in favour of the Bank and thus, the total amount of Rs.33/- lakh came to be paid to Respondent No.1-Bank. It is averred that the petitioner-Company has cleared all its dues pertaining to the WCTL.
6. It is lamented that in order to take Page 3 of 30 C/SCA/12985/2018 JUDGMENT possession of the mortgaged property, the respondent-Bank has approached District Magistrate by filing an application along with affidavit on 31.05.2017 and an order came to be passed by the learned District Magistrate on 05.07.2018 under Section 14 of the Securitization Act to take physical possession of the property in question.
A notice also came to be issued by Mamlatdar dated 30.07.2018. The possession of the property was to be taken on 24.08.2018. According to the petitioner there are around 40 workers working in the factory and the factory is in working condition. It would be detrimental, therefore, if the possession of the factory is taken over, not only to the borrowers but also to the labourers working in it. It is, further, the grievance on the part of the petitioners that the affidavit dated 31.05.2017 filed by respondent- Bank is bad in law, because the correct details have not been disclosed by it. Under Section 14 of the Securitization Act, it is mandatory for the respondent-Bank to furnish the entire details and this non-compliance would vitiate the proceedings. The Respondent-Bank has disclosed a sum of Rs.2,39,97,786/-, as outstanding amount on the date of the complaint, i.e. 31.05.2017, disregarding the payment of Rs.33/- lakh made by Page 4 of 30 C/SCA/12985/2018 JUDGMENT the petitioner to the respondent-Bank, which goes to the root of the matter.
The petitioner has, therefore, approached this Court with the following prayers:
"17. ...
(a) YOUR LORDSHIP BE PLEASED TO quash and set aside the impugned order dated 05.07.2018 passed by the Ld. Magistrate at Annexure C to this petition and notice dated 30.07.2018, bearing No. City/Asarva/Securitization/C. 2586/Vashi.656/2018 issued by the Ld. Mamlatdar at Annexure - D to this petition as illegal, null and void ab-initio in the interest of justice.
(b) YOUR LORDSHIP BE PLEASED TO to stay the operation, of the impugned order dated 05.07.2018 passed by the Ld. Magistrate at Annexure C to this petition and notice dated 30.07.2018, bearing No. City/Asarva/Securitization/C. 2586/Vashi.656/2018 issued by the Ld. Mamlatdar at Annexure - D to this petition pending admission, hearing and final disposal of this petition.
(c) ... " 7. Learned Advocate, Mr. Bharat Jani,
appearing for and on behalf of the respondent- Bank had sought time to conduct the matter on Page 5 of 30 C/SCA/12985/2018 JUDGMENT 23.08.2018, and therefore, the matter was posted on 29.08.2018. Considering the ensuing holidays, it was directed that no proceedings be carried out till 29.08.2018, since, the hearing was fixed on that day.
8. Affidavit-in-reply is filed for and on behalf of Respondent-Bank dated 28.08.2018, wherein, all averments and allegations are denied in toto. It is specifically denied that the respondent-Bank has not disclosed the true facts, while obtaining the order of the learned District Magistrate. It is emphasized that the statutory remedy is available to the petitioner under Section 17 of the Securitization Act, and therefore, it is for the petitioner to challenge before the Debts Recovery Tribunal ('DRT' in brief), which is the competent authority to decide all the issues, which have been raised before this Court. Reliance is placed in this regard on the decision of the Apex Court in 'STATE BANK OF TRAVANCORE VS. MATHEW K.C.', (2018) 3 SCC 85
9. It is, further, contended by the respondent-Bank that the WCTL of Rs.64/- lakh and the secured business loan was of Rs.205/- lakh was made available to the petitioner. However, it is denied that the mortgaging of the factory Page 6 of 30 C/SCA/12985/2018 JUDGMENT premises was created for securing both the said loans. The factory premises was mortgaged only with a view to securing business loan of Rs.205/- lakh. It is, further, contended by the respondent that property being Flat Nos. 42 and 43, situated at Jayraj complex, of which the physical possession was also to be taken, the same could be done only in the month of January, 2018, i.e. after filing of the application before the District Magistrate. It is also conceded that the maturity proceeds of the FDRs of Rs.13/- lakh have been adjusted against the WCTL.
10. So far as the working condition of the factory and the total number of workers working in the factory are concerned, according to the respondent, on inspection, it was found that the factory was working at a very low capacity with only four to five workers. Thus, there is no manufacturing at all. It is reiteratively denied that the respondent-Bank has not disclosed the repayment made by the borrower and urged that the respondent-Bank is entitled to take possession under Section 13(4) and Section 14 of the Securitization Act.
11. This Court has heard, at length, learned Advocates on both the sides, who have fervently made their submissions along the line of their Page 7 of 30 C/SCA/12985/2018 JUDGMENT pleadings.
12. Without entering into the merits of the mater, at the outset, the aspect of availability of alternative remedy is to be considered, being conscious of the powers of the writ-jurisdiction to be exercised under Article 226 of the Constitution, the law on the point requires to be borne in mind. The exercise of discretionary powers under Article 226 of the Constitution are not absolute and the same has to be exercised in accordance with law. Namely, when alternative statutory remedy is available, writ petition under Article 226 of the Constitution would not lie. Except, in the cases falling within the well defined exceptions, as laid down in the case of 'CIT VS. CHHABIL DAS AGARWAL', (2014) 1 SCC
603.
13. The Apex Court in the case of 'UNITED BANK OF INDIA SATYAWATI TONDON AND OTHERS' (Supra) has held that Securitization Act is a complete Code by itself, providing for expeditious recovery of the dues arising out of loan granted by the financial institutions. Further, the remedy of appeal by the aggrieved under Section 17 of the Securitization Act is followed by a right to appeal before the appellate Tribunal under Section 18 before the Page 8 of 30 C/SCA/12985/2018 JUDGMENT DRT. The High Court, therefore, should not entertain the writ-petition in wake of the availability of the alternative statutory remedy.
14. It is, thus, clear from the aforesaid decision that even if, no objection is raised for and on behalf of either of the parties, if the law is very settled and clear, the Court is expected to apply the correct law to the situation. This being the financial matter, the grant of any interim order would be injurious to the other side for having involved public money at the tax-payers expenses. This Court is, therefore, required to be extremely slow in exercise of its discretion to grant stay in the matter, particularly, in a matter under the Securitization Act.
15. Learned Advocate, Mr. Gupta, was categorically asked with regard to non-resorting to the alternative remedy. However, he has maintained that for the reasons stated in this petition, this case would fall under the exception, which would entitled him to invoke writ-jurisdiction.
16. It is not in dispute that the petitioner had availed WCTL of Rs.64/- lakh and secured financial benefits of loan of Rs.2.5/- crore from Page 9 of 30 C/SCA/12985/2018 JUDGMENT the respondent-Bank and against the said, mortgage was created on the factory so also on the residential premises. It is the admission on the part of the petitioner that due to inter se dispute with the person, who had entered into his business that the petitioner's account had become NPA. There are various litigations going on with Mr. Prakash Jain, who, according to the petitioner, has illegally entered into their business.
17. Be that as it may, suffice it to note here that the respondent-Bank had approached the District Magistrate under Section 14 of the Securitization Act by filing an application along with an affidavit on 31.05.2014, taking the physical possession of the property in question, which is impugned in this petition.
18. Essentially, the ground raised for invoking the writ-jurisdiction of this Court is that there is an obligation on the part of the respondent to file an affidavit duly declaring that all the requirements, as stated in the proviso, has been satisfied. The respondent-Bank has, in its affidavit-in-reply, categorically stated that the amount of Rs.13/- lakh has already been shown as the amount deposited by the petitioner, which has been duly reflected in the Page 10 of 30 C/SCA/12985/2018 JUDGMENT relevant record. However, that would not mean that the petitioner is entitled to approach this Court under the writ-jurisdiction and not resort to the alternative remedy, which is efficacious also. All the issues, which have been raised before this Court, can also be raised before the competent forum of DRT or the appellate authority of the DRT, in the event of DRT not entertaining the plea of the petitioner. The sole ground, on which the petitioner is before this Court, is the repayment of Rs.33/- lakh. This is, in no manner, furnish a ground to the petitioner to circumvent the statutory remedy made available under the law.
19. In case of 'UNITED BANK OF INDIA VERSUS SATYAWATI TONDON AND OTHERS', (2010) 8 SCC 110, the High Court had restrained further proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the Securitization Act, the availability of remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal, the object and purpose of the legislation, it was observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available under the law. The Apex Court, while considering the provisions of Sections Page 11 of 30 C/SCA/12985/2018 JUDGMENT 13(4), 14, 17 and 18 of the Securitization Act, further, observed and held that if respondent No.1 had any tangible grievance against the notice issued under Section 13(4) or action taken under Section 14, then she could have availed remedy by filing an application under Section
17. The expression `any person' used in Section 17(1) is of wide import. It takes within its fold, not only the borrower but also guarantor or any other person who may be affected by the action taken under Section 13(4) or Section 14. Both, the Tribunal and the Appellate Tribunal are empowered to pass interim orders under Section 17 and 18, the petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigor in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions, and therefore, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc., the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi judicial bodies for redressal of the grievance of any Page 12 of 30 C/SCA/12985/2018 JUDGMENT aggrieved person. Therefore, in all such cases, High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute. The relevant observations read thus:
"43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.Page 13 of 30
C/SCA/12985/2018 JUDGMENT
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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 the 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."
20. The Apex Court also recognized the powers of the High Courts under Article 226 of the Constitution and held that the same are more wide and there is no express limit of exercise. However, in the very same breath, the Apex Court has held and observed that at the same time, one cannot be oblivious of the rules of the self- imposed restraint laid down by the Apex Court, which the High Court is bound to keep in mind, while exercising the powers under Article 226 of the Constitution.
21. In 'STATE BANK OF TRAVANCORE VS. MATHEW K.C.', (Supra), the Apex Court was considering a case, where, the entire order passed under writ- petition under Article 226 of the Constitution was assailed before the Apex Court, staying the Page 14 of 30 C/SCA/12985/2018 JUDGMENT further proceedings initiated under Section 13(4) of the Securitization Act, where, the Apex Court observed and held as under:
"6. 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 Page 15 of 30 C/SCA/12985/2018 JUDGMENT 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 case, Titaghur Paper Mills case 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."
7. The pleadings in the writ petition are very bald and contain no statement that the grievances fell within any of the well defined exceptions. The allegation for violation of principles of natural justice is rhetorical, without any details and the prejudice caused thereby. It harps only on a desire for regularisation of the loan account, even while the Respondent acknowledges its own inability to service the loan account for reasons attributable to it alone. The writ petition was filed in undue haste in March 2015 immediately after disposal of objections under Section 13(3A). The legislative scheme, in order to expedite the recovery proceedings, does not envisage grievance redressal procedure at Page 16 of 30 C/SCA/12985/2018 JUDGMENT this stage, by virtue of the explanation added to Section 17 of the Act, by Amendment Act 30 of 2004, as follows :-
"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 the borrower) to make an application to the Debts Recovery Tribunal under this sub- section."
8. The Section 13(4) notice along with possession notice under Rule 8 was issued on 21.04.2015. The remedy under Section 17 of the SARFAESI Act was now available to the Respondent if aggrieved. These developments were not brought on record or placed before the Court when the impugned interim order came to be passed on 24.04.2015. The writ petition was clearly not instituted bonafide, but patently to stall further action for recovery. There is no pleading why the remedy available under Section 17 of the Act before the Debt Recovery Tribunal was not efficacious and the compelling reasons for by-passing the same. Unfortunately, the High Court also did not dwell upon the same or record any special reasons for grant of interim relief by direction to Page 17 of 30 C/SCA/12985/2018 JUDGMENT deposit.
9. 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. The 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.
Page 18 of 30C/SCA/12985/2018 JUDGMENT
10. 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."
11. In Satyawati Tandon (supra), the High Court had restrained further Page 19 of 30 C/SCA/12985/2018 JUDGMENT proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the SARFAESI Act, the availability of remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal, the object and purpose of the legislation, it was observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available holding :-
"43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court Page 20 of 30 C/SCA/12985/2018 JUDGMENT must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.
***
55. 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 the 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."
12. In Union Bank of India and another vs. Panchanan Subudhi, 2010 (15) SCC 552, further proceedings under Section 13(4) were stayed in the writ jurisdiction subject to deposit of Rs.10,00,000/- leading this Court to observe as follows :
"7. In our view, the approach adopted by the High Court was clearly erroneous. When the respondent failed to abide by the terms of one-time settlement, there was no justification for the High Court to entertain the writ petition and that too by ignoring the fact that a statutory alternative remedy Page 21 of 30 C/SCA/12985/2018 JUDGMENT was available to the respondent under Section 17 of the Act."
13. The same view was reiterated in Kanaiyalal Lalchand Sachdev and others vs. State of Maharashtra and others, 2011 (2) SCC 782 observing:
"23. In our opinion, therefore, the High Court rightly dismissed the petition on the ground that an efficacious remedy was available to the appellants under Section 17 of the Act. It is well settled that ordinarily relief under Articles 226/227 of the Constitution of India is not available if an efficacious alternative remedy is available to any aggrieved person. (See Sadhana Lodh v. National Insurance Co. Ltd.; Surya Dev Rai v. Ram Chander Rai and SBI v. Allied Chemical Laboratories.)"
14. In Ikbal (supra), it was observed that the action of the Bank under Section 13(4) of the 'SARFAESI Act' available to challenge by the aggrieved under Section 17 was an efficacious remedy and the institution directly under Article 226 was not sustainable, relying upon Satyawati Tandon (Supra), observing :
"27. No doubt an alternative remedy is not an absolute bar to the exercise of extraordinary jurisdiction under Article 226 but by now it is well settled that where a statute provides efficacious and adequate remedy, the High Court will do well in not entertaining a Page 22 of 30 C/SCA/12985/2018 JUDGMENT petition under Article 226. On misplaced considerations, statutory procedures cannot be allowed to be circumvented.
* * *
28.......In our view, there was no justification whatsoever for the learned Single Judge to allow the borrower to bypass the efficacious remedy provided to him under Section 17 and invoke the extraordinary jurisdiction in his favour when he had disentitled himself for such relief by his conduct. The Single Judge was clearly in error in invoking his extraordinary jurisdiction under Article 226 in light of the peculiar facts indicated above. TheDivision Bench also erred in affirming the erroneous order of the Single Judge."
15. A similar view was taken in Punjab National Bank and another vs. Imperial Gift House and others, (2013) 14 SCC 622, observing:-
"3. Upon receipt of notice, the respondents filed representation under Section 13(3-A) of the Act, which was rejected. Thereafter, before any further action could be taken under Section 13(4) of the Act by the Bank, the writ petition was filed before the High Court.
4. In our view, the High Court was not justified in entertaining the writ petition against the notice issued under Section 13(2) of the Act and quashing the proceedings Page 23 of 30 C/SCA/12985/2018 JUDGMENT initiated by the Bank."
16. It is the solemn duty of the Court to apply the correct law without waiting for an objection to be raised by a party, especially when the law stands well settled. Any departure, if permissible, has to be for reasons discussed, of the case falling under a defined exception, duly discussed after noticing the relevant law. In financial matters grant of ex-parte interim orders can have a deleterious effect and it is not sufficient to say that the aggrieved has the remedy to move for vacating the interim order. Loans by financial institutions are granted from public money generated at the tax payers expense. Such loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as entrustment by the public. Timely repayment also ensures liquidity to facilitate loan to another in need, by circulation of the money and cannot be permitted to be blocked by frivolous litigation by those who can afford the luxury of the same. The caution required, as expressed in Satyawati Tandon (supra), has also not been kept in mind before passing the impugned interim order:-
"46. It must be remembered that stay of an action initiated by the State and / or its agencies / instrumentalities for recovery of taxes, cess, fees, etc. seriously Page 24 of 30 C/SCA/12985/2018 JUDGMENT impedes execution of projects of public importance and disables them from discharging their constitutional and legal obligations towards the citizens. In cases relating to recovery of the dues of banks, financial institutions and secured creditors, stay granted by the High Court would have serious adverse impact on the financial health of such bodies/institutions, which (sic will) ultimately prove detrimental to the economy of the nation."
16. Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters. Of course, if the petitioner is able to show that its case falls within any of the exceptions carved out in Baburam Prakash Chandra Maheshwari v.
Antarim Zila Parishad, Whirlpool Corpn. v. Registrar of Trade Marks and Harbanslal Sahnia v. Indian Oil Corpn. Ltd. and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order."
17. The writ petition ought not to have been entertained and the interim order granted for the mere 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 Page 25 of 30 C/SCA/12985/2018 JUDGMENT 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 justification to have declined interference.
18. We cannot help but disapprove the approach of the High Court for reasons already noticed in Dwarikesh Sugar Industries Ltd. vs. Prem Heavy Engineering Works (P) Ltd. and Another, 1997 (6) SCC 450, observing :-
"32. When a position, in law, is well settled as a result of judicial pronouncement of this Court, it would amount to judicial impropriety to say the least, for the subordinate courts including the High Courts to ignore the settled decisions and then to pass a judicial order which is clearly contrary to the settled legal position. Such judicial adventurism cannot be permitted and we strongly deprecate the tendency of the subordinate courts in not applying the settled principles and in passing whimsical orders which necessarily has the effect of granting wrongful and unwarranted relief to one of the parties. It is time that this tendency stops."
22. It is, thus, clear that the Apex Court has held that any action initiated by the State or its agencies or its instrumentalities for Page 26 of 30 C/SCA/12985/2018 JUDGMENT recovery of tax, cess, fees etc., is indiscriminately interfered with the same seriously impedes execution of projects of public importance and disables them from discharging their constitutional and legal obligations towards the citizens. In cases relating to recovery of the dues of banks, financial institutions and secured creditors, stay granted by the High Court would have serious adverse impact on the financial health of such bodies / institutions which ultimately prove detrimental to the economy of the nation. It also has held that the availability of an alternative remedy is not an absolute bar to the exercise of extraordinary jurisdiction under Article 226 of the Constitution, however, when an alternative and efficacious remedy is available, the High Court would normally and ordinarily not entertain the petition under Article 226 of the Constitution in a routine manner. The disputes of the petitioner company inter se or with the third party, who claims to be the partner, could hardly be a ground for stopping recovery of outstanding dues of the Bank. Even if the Civil Suit in that regard as well as criminal proceedings qua the third party are pending, so far as the petitioner is concerned, the respondent bank who has otherwise followed the legal procedures and has availed the legal remedy against the borrower and Page 27 of 30 C/SCA/12985/2018 JUDGMENT others, is entitled to proceed. Ground of non- inclusion of certain amount can always be raised before the DRT as is the case of the petitioner and that aspect also does not fall under any of the exceptions, which otherwise is carved out for this court to invoke the writ jurisdiction, particularly, in wake of the availability of the efficacious alternative remedy as discussed, herein above.
23. In wake of the availability of the alternative, efficacious remedy to the petitioner, this petition is not being entertained and is DISMISSED.
23.1 It is being clarified that this Court has not entered into the merits of the matter and only on the ground availability of alternative, efficacious remedy, this Court has chosen not to entertain this petition. The petitioner, if, choses to approach an appropriate authority for the purpose of redressal of its grievances, it is needless to say that the authority concerned shall consider the plea of the petitioner, in accordance with law.
23.1 None of the observations made in this order shall NOT COME in the way of the either side in pursuing the alternative remedy.
Page 28 of 30C/SCA/12985/2018 JUDGMENT 24. At this stage, learned advocate appearing for, Mr. Gupta, for the petitioner
seeks stay of the proceedings.
24.1 Learned advocate Ms. Mohini Bhavsar appearing for the respondent-Bank has strongly objected to the same and has urged that it is only on account of the illness for one day that Mr. Jani, learned advocate appearing for the Bank, the bank had agreed not to proceed with the matter. Thereafter, because of the pendency of this petition, the bank has chosen not to proceed against the petitioner. In any case, the petitioner is not availing the alternative remedy, and therefore, the court may not protect the petitioner.
24.2 This court notices that on 23.08.2018, considering the fact that the matter was pending before this Court and it was to proceed for hearing, the bank had been directed to maintain status-quo. Let that STAY continue till 10TH SEPTEMBER, 2018.
A copy of this order shall be made available to both the sides. Rule is discharged.
(SONIA GOKANI, J)
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C/SCA/12985/2018 JUDGMENT
UMESH /-
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