Gujarat High Court
International Asset Reconstruction ... vs Radhakrishna Textiles & 9 on 12 December, 2014
Author: K.M.Thaker
Bench: K.M.Thaker
C/SCA/15241/2014 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 15241 of 2014
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INTERNATIONAL ASSET RECONSTRUCTION COMPANY PRIVATE
LIMITED....Petitioner(s)
Versus
RADHAKRISHNA TEXTILES & 9....Respondent(s)
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Appearance:
MR BIJU A NAIR, ADVOCATE for the Petitioner(s) No. 1
MR YH MOTIRAMANI, ADVOCATE for the Petitioner(s) No. 1
MR. SANDIP C BHATT, ADVOCATE for the Respondent(s) No. 9 - 10
MS AB CHATURVEDI, ADVOCATE for the Respondent(s) No. 1 - 8
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CORAM: HONOURABLE MR.JUSTICE K.M.THAKER
Date : 12/12/2014
ORAL ORDER
1. Heard Mr.Motiramani, learned advocate for the petitioner and Ms.Chaturvedi, learned advocate for respondents No.1 to 8 and Mr.Bhatt, learned advocate for respondents No.9 and 10.
2. In present petition, the petitioner has prayed, inter alia, that:
"7(A) that the Honourable Court be pleased to issue a writ of mandamus and/or certiorari and/or a writ in the mandamus and/or certiorari to quash and set aside the Page 1 of 17 C/SCA/15241/2014 ORDER order dated 20.10.2014 passed by the Learned Debts Recovery TribunalII, Ahmedabad in Miscellaneous Application No.52/2014;
(B) that pending the hearing and final disposal of the petition, the Honourable Court be pleased to stay the operation, implementation and execution of the impugned order dated 20.10.2014 passed by the Learned Debts Recovery TribunalII, Ahmedabad in Miscellaneous Application No.52/2014;"
3. So far as the relevant facts involved in present petition are concerned, the petitioner has averred and stated that:
"2.1 Credit facilities advanced by Axis Bank Limited:
The petitioner states that Axis Bank Limited (formerly known as "UTI Bank Limited") had sanctioned cash credit facility of Rs.2,50,00,000/ (Rupees Two Crores Fifty Lakhs Only) to one M/s. Radhakrishna Textiles (for short "the borrower") vide sanctioned letter dated 18.08.2009, which was renewed from time to time. For securing the said facility, the respondent nos.8 to 10 had created equitable mortgage inter alia over Plot No.D/8, Vishal Group Housing Scheme situate on land bearing R.S. No.614/1+2+3, T.P. Scheme No.10, F.P. No.67, 68 & 69 (74, 75 & 76) of Village Adajan, Taluka Choryasi, District Surat (for short "the secured asset") standing in the names of respondent nos.8 to
10. 2.2 20.11.2012 - Notice u/s.13(2) of Securitisation Act:
As the borrower's account became a nonperforming asset a notice dated 20.11.2012 (copy at AnnexureB hereto) u/s.13(2) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short "the Securitisation Act") was issued to all concerned.
2.3 15.02.2013 - Possession Notice:
Pursuant to notice dated 20.11.2012, no representation /objections were received from the respondents. Hence Axis Bank issued possession notice dated 15.02.2013 (copy at AnnexureC hereto) and took symbolic possession of the secured asset.Page 2 of 17 C/SCA/15241/2014 ORDER
2.4 3.09.2013 / 4.09.2013 - Physical possession taken over / Notice for auction:
The petitioner states that Axis Bank Limited thereafter took physical possession of the secured asset on 3.09.2013 and issued the notice dated 4.09.2013 (copy at AnnexureD hereto) inter alia for sale of the secured asset.
2.5 Securitisation Application Nos.9495/2013 and 110 113/2013 and order dated 21.01.2014:
The respondents thereafter filed Securitisation Application Nos.9495/2013 and 110113/2013 against the action of taking over possession of various secured assets. Securitisation Application No.95/2013 (for short "SA 95/2013") pertained to the secured asset in question, wherein the respondents had prayed for the following reliefs:
"6. Reliefs:
The Applicant therefore prays that this Hon'ble Tribunal be pleased:
(A) to quash and set aside the Securitisation Notice dated 20.11.2012 issued by the Authorised Officer of the Respondent Bank u/s.13(2) of the Securitisation Act.
(B) to quash and set aside the action of the Authorised Officer of the Respondent Bank of taking possession on 03/09/2013 of Plot No.D/8 of Vishal Group Housing Scheme and taking possession on 04/09/2013 of Plot No.D/10 of Hari Har Park.
(C) to quash and set aside the joint Possession Notice of 30 days for sale of assets under the Securitisation Act dated 04/09/2013.
(D) to grand such other and further relief as the Hon'ble Tribunal may deem fit in the interest of justice and circumstances of the present case. (E) to provide for the costs of the Securitisation Application."
A copy of the memo of SA 95/2013 is annexed at AnnexureE hereto.
The Learned Tribunal was pleased to allow SA 95/2013 vide order dated 21.01.2014 (copy at AnnexureF hereto) and quashed and set aside the action taken by Axis Bank Limited under Securitisation Act. 2.6 Misc. Appeal No.22/2014 filed before Debts Recovery Appellate Tribunal:
In/around February 2014 Axis Bank Limited thereafter filed Misc. Appeal No.22/2014 before the Debts Recovery Appellate Tribunal, Mumbai (for short "the Learned Appellate Tribunal") challenging the order dated 21.01.2014 filed in SA 95/2013. The Misc. Appeal Page 3 of 17 C/SCA/15241/2014 ORDER No.22/2014 was lastly notified before the Learned Appellate Tribunal on 6.10.2014 but the same was declared as holiday on the occasion of Eid and now the same is posted for further hearing on 5.12.2014.The advocate moved precipe for preponement of the matter but the same was rejected by the Learned Chairperson, DRAT, Mumbai on the ground that there is no urgency.
2.7 29.03.2014 - Assignment of debt in favour of present petitioner IARC:
During the pendency of Misc. Appeal No.22/2014 before the Learned Appellate Tribunal, Axis Bank Limited has assigned the debt of - M/s. Radhakrishna Textiles to present petitioner - International Asset Reconstruction Company Private Limited vide assignment agreement dated 29.03.2014. The present petitioner is not yet joined as a party in the pending Misc. Appeal No.22/2014 before the Learned Appellate Tribunal.
2.8 18.07.2014 - Miscellaneous Application No.52/2014:
The petitioner states that during the pendency Misc. Appeal No.22/2014 before the Learned Appellate Tribunal, the respondent nos.1 to 8 filed Misc. Application No.52/2014 (for short "MA 52/2014") before the Learned Tribunal and prayed for the following reliefs:
"5. The Applicants therefore pray that this Hon'ble Tribunal be pleased to:
A. To direct the Respondent IARC to immediately forthwith restore the possession of the secured asset being D/8, Vishal Nagar, Nr. Gujarat Gas Circle, Adajan Road, Surat to the Applicants;
B. to grant such other and further order as this Hon'ble Tribunal may deem fit in the facts of the present case and in the interest of justice."
A copy of the memo of MA 52/2014 is annexed at AnnexureG hereto. The petitioner herein filed a detailed reply to the said MA 52/2014, which is annexed at AnnexureH hereto.
2.9. 8.10.2014 - Hearing of MA 52/2014:
The petitioner states that at the time of hearing of MA 52/2014 before the Learned Tribunal, the petitioner's advocate had filed a pursis dated 8.10.2014 (copy at AnnexureI hereto) and declared that the Misc. Appeal No.22/2014 is scheduled to be listed before Learned Appellate Tribunal on 5.12.2014.
Originally the said matter was listed on 6.10.2014 and the Debts Recovery Appellate Tribunal, Mumbai declared the same as holiday on the occasion of Eid and hence, the matter was automatically adjourned to 5.12.2014. The advocate for petitioner herein has moved a precipe Page 4 of 17 C/SCA/15241/2014 ORDER before the Learned Chairperson, DRAT, Mumbai but the Learned Chairperson rejected the same on the ground that there is no urgency and the petitioner prayed to the Learned Tribunal that the MA 52/2014 be adjourned to a date beyond 5.12.2014.
2.10 20.10.2014 - Impugned order passed in MA 52/2014:
The petitioners state that the Learned Tribunal was pleased to allow MA 52/2014 vide impugned order dated 20.10.2014 and directed the petitioner to hand over the possession of the secured asset to the respondent nos.8 to 10 on/before 30.10.2014.
The petitioner, after receiving the impugned order dated 20.10.2014, tried to move the precipe but could not move the same as the DRAT, Mumbai was vacant and could move the precipe only on 28.10.2014. On 28.04.2014, the precipe filed by the petitioner / Axis Bank Limited could not be heard on account of paucity of time with the Learned Appellate Tribunal and the matter is posted for hearing on 20.11.2014. 2.11 It is pertinent to note here that one of the securities in the other group account (i.e. Harikrishna Weaving Works) was fraudulently sold by one Mr. Kantilal Kapadia, the head of the Jariwala group and thereby the Appellant was deprived by its security. The purchaser of the said property has filed a SCA bearing no. 12637 of 2013 before this Hon'ble Court, which is pending. Such act on the part of the respondent clearly shows their malafide intention.
2.12 In the background of aforesaid facts, the petitioner is filing this petition challenging the impugned order dated 20.10.2014 passed by the Learned Tribunal in MA 52/2014."
4. The petitioner herein is assignee of Axis Bank who granted loan in favour of an industrial concern named M/s. Radhakrishna Textiles (i.e. present respondent No.1) which is a proprietary concern and respondents No.2 to 8 are guarantors. Respondents No.9 and 10 are mortgagors in the Page 5 of 17 C/SCA/15241/2014 ORDER said transaction. It appears that there was default in repayment of loan. Therefore, the original secured creditor, i.e. Axis Bank initiated action under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('the Act' for short). The notices under sections 13(2) and 13(4) were issued. Thereafter proceedings under section 14 of the Act were also taken out by the secured creditor.
5. Before proceeding further, it is relevant to mention that two properties are involved in the said loan transaction. The said properties are described as D/10 and D/8. Learned advocates for the petitioner and the respondent have clarified that so far as this petition is concerned, the subjectmatter is the property described as D/8.
6. After the secured creditor took over possession of the said properties in question or around that time, the borrowers/guarantors Page 6 of 17 C/SCA/15241/2014 ORDER initiated proceedings before the learned Tribunal by way of an application under section 17 and challenged the action of secured creditor of initiating proceedings under provisions of the Act and/or taking over possession of the property in question.
7. The said application was registered as Securitisation Application No.95 of 2013.
8. After hearing the parties, the learned Tribunal at Ahmedabad passed an order dated 21.1.2014. The operative part of the said order dated 21.1.2014 in Securitisation Application No.95 of 2013 reads thus:
"Securitization Application is allowed without costs. The action taken by the respondent under the SARFAESI Act is hereby quashed and set aside."
9. Axis Bank, i.e. secured creditor challenged the said order dated 21.1.2014 in Securitisation Application No.95 of 2013 before the learned Appellate Tribunal. The said appeal is registered Page 7 of 17 C/SCA/15241/2014 ORDER as Appeal No.22 of 2014.
10. It is not in dispute that the said main appeal being Appeal No.22 of 2014 is pending before the learned Appellate Tribunal.
11. The learned counsel for present petitioner claimed that after the appeal was filed, the original secured creditor, i.e. Axis Bank assigned debt to present petitioner and that, therefore, in the said appeal proceedings related to Appeal No.22 of 2014, present petitioner is substituted instead of original appellant, i.e. Axis Bank.
12. The appellant in the said Appeal No.22 of 2014 have also filed an application seeking stay against the implementation and operation of the order dated 21.1.2014 in Securitisation Application No.95 of 2013.
13. Learned counsel for the petitioner claimed Page 8 of 17 C/SCA/15241/2014 ORDER that until now any order in the said application is not passed by the learned Appellate Tribunal.
14. In this view of the matter, respondents No.1 to 8 filed Misc. Application No.35 of 2014 before the learned Tribunal at Ahmedabad and asked for permission that the secured creditor / assignee should hand over the possession / property.
15. It is not in dispute that the said Application No.35 of 2014 was filed in respect of both secured assets, i.e. D/8 and D/10.
16. Learned advocate for the petitioner submitted that in the said miscellaneous application, a joint purshis came to be filed whereby the petitioner herein handed over possession of the property/asset described as D/10. In view of the joint purshis, the said application came to be disposed of.
17. It appears that subsequently, respondents Page 9 of 17 C/SCA/15241/2014 ORDER No.1 to 8 filed Misc. Application No.52 of 2014 in respect of other property, i.e. the property described as D/8.
18. In the said application also the applicants (in whose favour the original / main order dated 21.1.2014 came to be passed in Securitisation Application No.95 of 2013) prayed that in view of the order dated 21.1.2014 in Securitisation Application No.95 of 2013, the Tribunal may direct the opponent, i.e. the secured creditor / assignee to comply the direction as per the order dated 21.1.2014 in Securitisation Application No.95 of 2013 and hand over the possession of the property in question.
19. At this stage, it is relevant and necessary to recall that during this period, Appeal No.22 of 2014 filed by original secured creditor, i.e. Axis Bank and the stay application preferred alongwith the said appeal has remained pending and the Tribunal has not granted stay against the Page 10 of 17 C/SCA/15241/2014 ORDER implementation and operation of the order dated 21.1.2014 passed in Securitisation Application No.95 of 2013.
20. Having regard to this vital fact the learned Tribunal heard Application No.52 of 2014.
21. At this stage, learned advocate for respondents No.9 and 10 submitted and clarified that actually, the petitioner herein is joined as appellant No.2 in the said appeal, whereas th original secured creditor, i.e. Axis Bank continued to be in the said proceedings. Be that as it may, what is relevant is the fact that against the impugned order dated 21.1.2014 in Securitisation Application No.95 of 2013, the substantive appeal is filed and it is pending before the learned Appellate Tribunal.
22. During the pendency of the appeal proceedings, the order in the abovementioned Misc. Application No.52 of 2014 came to be passed Page 11 of 17 C/SCA/15241/2014 ORDER and the said Application No.52 of 2014 is allowed vide order dated 20.10.2010.
23. In the said order dated 20.10.2014, the learned Tribunal at Ahmedabad has observed and directed that:
"20. Therefore, the respondent company being the assignee of debt from the Axis Bank is bound to restore the actual physical possession to applicant no.8 and respondent no.2 and 3. However, if the appeal filed by the Axis Bank bearing No.22 of 2014 is allowed in favour of the respondent no.1 or Axis Bank, the applicant no.8 and respondent no.2 and 3 will be bound to restore the possession to respondent no.1 company. The applicant no.8 and respondent no.2 and 3 are directed to furnish an affidavit to that effect that if the appeal filed by the Axis bank before the Hon'ble DRAT is allowed then they will restore the possession within a period of 15 days subject to any order passed by the Hon'ble DRAT. The applicant no.8 and respondent no.2 & 3 are further directed not to sell, transfer or part with possession of the aforesaid property in favour of any third party without the prior permission of this Tribunal.
21. Hence, the Miscellaneous Application is allowed with the aforesaid observation. The Respondent no1. Is directed to handover the possession of the aforesaid property to applicant no.8 and respondent no.2 & 3 on or before 30.11.2014."
24. The said order dated 20.10.2014 came to be passed in view of the fact that until now the learned Appellate Tribunal has not passed any order to stay the operation, implementation and execution of the order dated 21.1.2014 in Page 12 of 17 C/SCA/15241/2014 ORDER Securitisation Application No.95 of 2013.
25. Aggrieved by the said order the petitioner has taken out this petition. It is relevant to mention that though statutory remedy by way of appeal is available and despite the fact that an appeal filed by the petitioner against the order dated 21.1.2014 in Securitisation Application No.95 of 2013 is already pending before the learned Appellate Tribunal, the petitioner has taken out present petition against the said order dated 20.10.2014 in Misc. Application No.52 of 2014.
26. In view of the provision under section 18 of the Act, statutory alternative remedy by way of substantive appeal is provided and the said alternative remedy is available to the petitioner against the said order in question, i.e. the order in Misc. Application No.52 of 2014.
27. Despite the fact that the substantive appeal Page 13 of 17 C/SCA/15241/2014 ORDER against the impugned order dated 21.1.2014 in Securitisation Application No.95 of 2013 is already filed and the same is pending, wherein present appellant is already substituted/joined as appellant/coappellant, the petitioner has taken out present petition against the said order dated 20.10.2014 in Misc. Application No.52 of 2014.
28. Mr. Motiramani, learned advocate for the petitioner submitted that the petitioner has challenged the said order on diverse grounds.
29. However, having regard to the fact that the substantive appeal against the impugned order is already pending and instead of availing statutory remedy against the order in Application No.52 of 2014, the petitioner has taken out present petition, in view of this Court the petition does not deserve to be maintainable. Moreover, in view of the decision by Hon'ble Apex Court in case between United Bank of India v. Satyawati Page 14 of 17 C/SCA/15241/2014 ORDER Tondon and Ors. [2010 (8) SCC 110] and in case of Analkumar Rajkishore Mishra v. Dena Bank [AIR 2011 Guj. 187], the Court is not inclined to entertain present petition because the petitioner has statutory alternative remedy available against the action / measures taken by the respondent bank.
30. In this view of the matter, this Court is not inclined to entertain present petition on the aforesaid limited ground viz. a substantive appeal against the order dated 21.1.2014 in main Securitisation Application No.95 of 2013 is pending and against present order, i.e. order dated 20.10.2014 also statutory alternative remedy is available to the petitioner.
31. Having regard to the abovediscussed facts and for the foregoing reasons the petitioner is relegated to statutory alternative remedy.
32. It is clarified that since this Court has not Page 15 of 17 C/SCA/15241/2014 ORDER entertained the petition for the aforesaid reason and has not entered into the contentions sought to be raised by the petitioner, any observations with regard to the contentions of the petitioner are not made lest the appeal proceedings before the learned Tribunal may be affected and influenced in any manner.
33. At this stage, learned advocate for the petitioner submitted that by the order dated 20.10.2014 in Misc. Application No.52 of 2014, the learned Tribunal granted time to the petitioner to hand over the possession to respondent No.1 till 30.10.2014 and thereafter on 30.10.2014, this Court (Coram: Hon'ble Mr.Justice S.H. Vora) granted adinterim relief in this petition in terms of paragraph No.7(B) and that the said adinterim relief has continued until now and that, therefore, the same may be extended for some time.
34. It may be mentioned that in view of the Page 16 of 17 C/SCA/15241/2014 ORDER decision by Hon'ble Apex Court in the case between The State of Orissa vs. Madan Gopal Rungta [AIR 1952 SC 12], the Court is not inclined to continue adinterim relief. However, learned advocates for respondents No.1 to 8 and respondents No.9 & 10 have fairly submitted that the said respondents will not take any action for enforcement of the order for next ten days.
With the aforesaid clarification and observation, the petition is disposed of.
(K.M.THAKER, J.) Bharat Page 17 of 17