Gujarat High Court
Sonali Sunil Bhanushali vs Authorized Officer Hdfc Bank & 4 on 11 April, 2016
Author: N.V.Anjaria
Bench: N.V.Anjaria
C/SCA/1843/2016 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 1843 of 2016
With
CIVIL APPLICATION NO. 2578 of 2016
In
SPECIAL CIVIL APPLICATION NO. 1843 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE N.V.ANJARIA
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1 Whether Reporters of Local Papers may be allowed to see the judgment ? No 2 To be referred to the Reporter or not ? No 3 Whether their Lordships wish to see the fair copy of the judgment ? No 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of No India or any order made thereunder ?
========================================================== SONALI SUNIL BHANUSHALI....Petitioner(s) Versus AUTHORIZED OFFICER HDFC BANK & 4....Respondent(s) ========================================================== Appearance:
MR AM PAREKH, ADVOCATE for the Petitioner(s) No. 1 MR SUDHIR NANAVATI, SR. ADVOCATE WITH MR BHAVESH CHOKSI FOR MRS VD NANAVATI, ADVOCATE for the Respondent(s) No. 1 NOTICE SERVED BY DS for the Respondent(s) No. 2 - 5 ========================================================== CORAM: HONOURABLE MR.JUSTICE N.V.ANJARIA Date : 11/04/2016 Page 1 of 12 HC-NIC Page 1 of 12 Created On Wed Apr 13 01:16:07 IST 2016 C/SCA/1843/2016 CAV JUDGMENT COMMON CAV JUDGMENT The captioned petition was filed on 29th January, 2016. On 05th February, 2016 this Court issued Notice and granted ex-parte ad-interim relief. The aforesaid Civil Application under Article 226(3) of the Constitution for vacating the ad-interim relief was filed by the respondent on 14th March, 2016. It was adjourned to 29th March, 2016, then to 30th March, 2016, thereafter to 01th April, 2016 and further on 04th April, 2016. In course of said dates, the petitioner proposed terms of settlement which was ultimately not worked out as was not acceptable to respondent-Bank.
2. The learned advocates for the parties advanced arguments contesting the petition for final consideration of the controversy and the following order was passed on 07th April, 2016.
"Heard learned advocate Mr. A. M. Parekh for the petitioner and learned senior counsel Mr. Sudhir Nanavati assisted by learned advocate Mr. Bhavesh Choksi in extenso.
2. Both the learned advocates consented and requested the Court to take up the main petition for final consideration. Therefore, keeping Civil Application pending, main petition was taken up and learned advocates for the parties were heard.
3. Learned advocates have stated that they have completed their pleadings and have concluded their submissions.
4. Reserved for orders."
3. The challenge in the main Special Civil Application is addressed to order dated 17th September, Page 2 of 12 HC-NIC Page 2 of 12 Created On Wed Apr 13 01:16:07 IST 2016 C/SCA/1843/2016 CAV JUDGMENT 2015/17th October, 2015 passed by the District Magistrate, Ahmedabad under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SERFAESI Act) whereby the respondent-Bank was given the police assistance for the purpose of taking possession of the mortgaged property being Flat No.203, 2nd Floor, Tower 2, Devnandan Infinity, Survey No.266/2+3+4, Final Plot No.281, T.P. No.21 at Motera, Taluka Sabarmati, Ahmedabad.
3.1 The authorized officer of the respondent- HDFC Bank had applied before the District Magistrate, seeking to take possession of the property in the process of the actions taken under the SERFAESI Act. The petitioner questioned the legality of the order of the District Magistrate on the ground inter alia that because a person in possession and occupation of the property in question in capacity of holder of agreement to sell with possession from the original owners and that the order under Section 14 of the Act came to be passed by the District Magistrate at the instance of Bank, by by-passing his rights and without affording him the necessary opportunity.
3.2 The sequence of events and facts leading to the application under Section 14 of the Act, moved by the Bank and culminating into impugned order may be outlined.
(i) On 29th November, 2011 an agreement to sell was executed between the original owner-developer and Page 3 of 12 HC-NIC Page 3 of 12 Created On Wed Apr 13 01:16:07 IST 2016 C/SCA/1843/2016 CAV JUDGMENT Mrs.Manjeet Kaur and Mr.Sandeep Harjit Singh followed by execution of sale deed dated 28th June, 2012.
(ii) On 20th November, 2011 said Mrs.Manjeet Kaur and Mr.Sandeep Harjit Singh entered into a loan agreement with the Bank for subject premises. On 07th July, 2012 they were put in possession by the original developer.
(iii) On 18th February, 2014 said Mrs.Manjeet Kaur and Mr.Sandeep Harjit Singh entered into an agreement to sell with Jyotsanaben Yograjsinh Chudasama and Geetaba Vanrajsinh Chudasama for subject premises. The pendency of loan was mentioned therein.
(iv) On 28th February, 2014 Mrs.Manjeet Kaur and Mr.Sandeep Harjit Singh executed a power of attorney in favour of Joytsnaben Yograjsinh Chudasama and Geetaba Vanrajsinh Chudasama wherein also pendency of loan is clearly mentioned.
(v) Jyotsnaben Yograjsinh Chudasama and Geetaba Vanrajsinh Chudasama executed an agreement to sell in favour of the petitioner-Sonali Sunil Bhanushali on 26th July, 2014 in capacity as power of attorney holder of abovenamed original owners. On 03rd July, 2014 the petitioner-intending purchaser gave a public notice in daily newspaper inviting objections.
(vi) On 27th August, 2014 the Bank issued notice under Section 13(2) of the SERFAESI Act.
(vii) On 30th August, 2014 the petitioner Page 4 of 12 HC-NIC Page 4 of 12 Created On Wed Apr 13 01:16:07 IST 2016 C/SCA/1843/2016 CAV JUDGMENT instituted a Suit for specific performance of agreement to sell dated 26th June, 2014.
(viii) On 23rd September, 2014 the applicant issued a demand notice in newspaper.
(ix) On 25th September, 2014 said Joytsnaben Yograjsinh Chudasama and Geetaba Vanrajsinh Chudasama replied to above-mentioned demand notice.
(x) On 07th October, 2014 in reply thereof, the Bank also sent a letter to Jyotsnaben and Geetaba specifically requesting them to pay as per demand notice, or else applicant-Bank shall have no other option but to take further necessary steps as per the SERFAESI Act.
4. Learned advocate Mr.A.M. Parekh for the petitioner tried to raise various contentions. He submitted that procedure for taking possession was not followed. In any view when the petitioner was not heard by the Magistrate, such opportunity ought to have been given to her. It was also insisted that the Bank did not comply with the requirement of making certain factual averments in its application under Section 14 of the Act. Learned advocate for the petitioner relied on the decisions in (i) Dena Bank Vs The District Magistrate being Letters Patent Appeal No.877 of 2008 decided on 10th July, 2009, (ii) Consumer Protection And Analytic Committee Vs State of Gujarat being Writ Petition (PIL) No.68 of 2012 decided on 11th October, 2012, (iii) Kotak Mahindra Bank Limited Vs Balaram Cements Limited [2011 (1) GCD Page 5 of 12 HC-NIC Page 5 of 12 Created On Wed Apr 13 01:16:07 IST 2016 C/SCA/1843/2016 CAV JUDGMENT 793] and (iv) Authorised Officer, Canara Bank Vs Sulay Traders through Bipin Kantilal Vakta [2010 (1) GLR 770]. With reference to the said decisions, it was submitted by him inter alia that the conditions precedent for exercise of powers and the modalities for exercise of powers were required to be satisfied, and that such essentials were not observed. All these submissions are not needed to be gone into and have not been gone into by this Court, leaving it open for the petitioner to raise all those contentions before the alternative forum if petitioner opts to avail such remedy, to be considered by the said forum strictly in accordance with law.
4.1 On the other hand, learned senior counsel Mr.S.I. Nanavati assisted by learned advocate Mr.Choksi highlighted the facts of the case to submit that the petitioner suppressed material facts from this Court, that he was well aware of the transaction between the original owner and the Bank and also that the Bank was claiming dues against the original owner- the borrower. It was submitted that even as the Bank was willing to consider the proposal for scheduling the total dues payable to the Bank, however since the petitioner is not ready to pay the total dues of the Bank, Bank cannot accept the proposal to its financial detriment. He pointed out that the dues claimed by the Bank as on 30th April, 2016 is figures at Rs.48,31,209/- comprised of (i) outstanding loan amount being Rs.33,69,517/-; (ii) overdue EMIs of Rs.08,80,558/-; (iii) additional interest amount being Rs.01,52,593/- and (iv) incidental charges being Page 6 of 12 HC-NIC Page 6 of 12 Created On Wed Apr 13 01:16:07 IST 2016 C/SCA/1843/2016 CAV JUDGMENT Rs.04,28,541/-. It was submitted that in any case, Suit was instituted and an alternative remedy is also available to the petitioner.
5. In the proceedings before the learned District Magistrate since none appeared pursuant to the notice issued, it was ordered to affix the notice on the property-premises in question. As per the said order passed on 29th June, 2015, notice dated 14th May, 2015 came to be affixed on the subject matter property. The property in question is admittedly in possession of the present petitioner. In that view, it cold be submitted that notice of the proceedings under Section 14 before the District Magistrate having been affixed on the property, the petitioner who is in possession, cannot disclaim the knowledge thereof and therefore also the knowledge of proceedings before the District Magistrate. It was submitted that despite that the petitioner did not appear, thereafter petitioner cannot subsequently complain about notice not given and/or opportunity not afforded.
5.1 The original owners executed power of attorney in favour of said Jyotsnaben Yograjsinh Chudasama and Geetaba Vanrajsinh Chudasama in which existence of Bank dues were clearly mentioned. The present petitioner claims to be the purchaser from the said person who acted on the basis of the power of attorney. Therefore it was sought to be contended that it was hardly a believable stand by the petitioner that she was unaware about the claim of the Bank; the knowledge in that regard has to be attributed to the Page 7 of 12 HC-NIC Page 7 of 12 Created On Wed Apr 13 01:16:07 IST 2016 C/SCA/1843/2016 CAV JUDGMENT petitioner.
5.2 While on reading of the facts, thus the submission of learned senior counsel that the petitioner was within the know of the unpaid dues of the Bank could not be brushed aside lightly, there was yet another aspect staring on the face of merits, the petitioner has instituted Special Civil Suit No.592 of 2014 for specific performance against the original owners Manjeet Kaur and Sandeep Harjit Singh as well as against abovenamed Jyotsnaba Gograjsinh and Geetaba Vanrajsinh Chudasama in respect of the property in question. The Suit was instituted on 30th August, 2014. It was instituted within three days of Notice under Section 13(2) by the Bank issued as 27th August, 2014. In the Suit Exhibit 5 application was filed by the petitioner-plaintiff. Learned 3rd Additional Senior Civil Judge, Ahmedabad Rural, Mirzapur, granted injunction by his order dated 26th December, 2014 directing to maintain status quo with regard to the suit property-being the very property subject matter of the impugned order by the District Magistrate under Section 14 of the SERFAESI Act. The said fact was not noticed by the Court at the time of issuance of Notice and having been brought to notice in course of the hearing, there is no reason that this aspect weigh entirely against the petitioner.
6. Apart from the above, there is no gainsaying that the petitioner has got an alternative statutory remedy of filing an Appeal under Section 17 of the SERFAESI Act before the Debts Recovery Tribunal. The Page 8 of 12 HC-NIC Page 8 of 12 Created On Wed Apr 13 01:16:07 IST 2016 C/SCA/1843/2016 CAV JUDGMENT impugned order under Section 14 of the Act constitute a stage at Section 13(4) and/or the stage at post- Section 13(4) of the Act. An efficacious remedy is available to the petitioner before the Tribunal who has powers to pass interim as well as final orders.
6.1 In Authorised Officer, Indian Overseas Bank Vs Ashok Saw Mill [(2009) 8 SCC 366], the Apex Court held that remedy by way of appeal under Section 17 is available not only upto the stage referable to Section 13(4), but even in respect of measures taken post- 13(4) stage. In the present case, the stage at which the petitioner is beset with, is such stage. The petitioner is aggrieved person for the purpose of Section 17 of the Act. In Kanaiyalal Lalchand Sachdev Vs State of Maharashtra [(2011) 2 SCC 782], the Supreme Court has stated that the measures under Section 14 constitutes the action taken after the stage of Section 13(4) and a remedy of appeal under Section 17 would be available. In that case, refusal by the High Court to entertain the writ petition was held to be fully justified.
6.2 The submission of learned advocate for the petitioner that the petitioner is purchaser under agreement to sell and therefore not being a borrower, cannot avail the remedy of Appeal is devoid of substance. On a plain reading of Section 17 of the Act which provides a remedy of Appeal, its language is wide enough when it provides that any aggrieved person including the borrower may file Appeal. Therefore not only the borrower but any person who feels aggrieved Page 9 of 12 HC-NIC Page 9 of 12 Created On Wed Apr 13 01:16:07 IST 2016 C/SCA/1843/2016 CAV JUDGMENT and who has the cause to assert his rights in respect of action on part of the Bank or Financial Institution under the Act, is entitled to prefer Appeal and invoke jurisdiction of Debts Recovery Tribunal.
6.3 In Union of India Vs Satyawati Tondon [AIR 2010 SC 3413], the Apex Court observed to held as under.
"There is another reason why the impugned order should be set aside. 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(1). 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." (para 17) 6.3.1 It was further observed, "Both, the Tribunal and the Appellate Tribunal are empowered to pass interim orders under Section 17 and 18 and are required to decide the matters within a fixed time schedule. It is thus evident that the remedies available to an aggrieved person under the SARFAESI Act are both expeditious and effective. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a 19 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 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, 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 10 of 12
HC-NIC Page 10 of 12 Created On Wed Apr 13 01:16:07 IST 2016 C/SCA/1843/2016 CAV JUDGMENT (Para 17) 6.4 In relation to commercial disputes and matters, the remedy before the alternative forum specially created under the special statute has to be necessarily resorted to before a party can be permitted to invoke the extra-ordinary jurisdiction and writ powers of this Court under Article 226 of the Constitution. In such matters, the normal rule of relegating the party to the alternative remedy and not allowing the approaching to the High Court straightway would require a steadfast adherence.
6.5 The above proposition draws support from the following observations of the Apex Court in Satyawati Tondon (supra), in which the view was highlighted thus, "It is true that the rule of 20 exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance. 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 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. Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters." (Para 18) Page 11 of 12 HC-NIC Page 11 of 12 Created On Wed Apr 13 01:16:07 IST 2016 C/SCA/1843/2016 CAV JUDGMENT
7. As a result, this petition is not entertained and dismissed, relegating the petitioner to the remedy of Appeal before the Debts Recovery Tribunal which may be resorted to by the petitioner, if advised.
8. It is clarified that if the petitioner avails the remedy, this order shall not be an influencing factor and the Debts Recovery Tribunal shall consider and decide the Appeal of the petitioner in accordance with law and on its own merits.
9. Special Civil Application No.1843 of 2016 stands dismissed.
10. In view of the dismissal of the main petition, Civil Application No.2578 of 2016 does not survive and stands disposed of accordingly.
(N.V.ANJARIA, J.) FURTHER ORDER At this stage, learned advocate for thept Mr.A.M. Parekh prays for stay of this order. Learned advocate for the respondent-Bank opposed the prayer.
In the facts and circumstances of the case, request for stay the present order is hereby rejected.
(N.V.ANJARIA, J.) Anup Page 12 of 12 HC-NIC Page 12 of 12 Created On Wed Apr 13 01:16:07 IST 2016