Delhi High Court - Orders
Saroj Kapoor & Ors vs New Habitat Housing Finance And ... on 18 November, 2021
Author: Prateek Jalan
Bench: Prateek Jalan
$~39 (2021 Cause List)
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 13030/2021 & CM APPL. 41087/2021(for stay)
SAROJ KAPOOR & ORS. ..... Petitioners
Through:
Mr. Navin Kumar Singh,
Advocate.
versus
NEW HABITAT HOUSING FINANCE
AND DEVELOPMENT LIMITED & ORS. ..... Respondents
Through: Ms. Stuti Gupta, Advocate for R-1.
Mr. Ravi Prakash, CGSC with
Mr. Varun Agarwal, Advocate for
R-2.
CORAM:
HON'BLE MR. JUSTICE PRATEEK JALAN
ORDER
% 18.11.2021 The proceedings in the matter have been conducted through video conferencing.
CM APPL. 41088/2021(for exemption) Exemptions allowed, subject to all just exceptions. This application stands disposed of.
W.P.(C) 13030/2021 & CM APPL. 41087/2021(for stay)
1. Issue notice. Ms. Stuti Gupta, learned counsel, accepts notice on behalf of respondent No. 1-New Habitat Housing Finance and Development Limited. Notice to other respondents is not required in view of the order that I propose to pass.
2. The petitioners assail various measures taken by respondent No. 1 under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ["SARFAESI Act"] in respect Signature Not Verified Digitally signed By:SHITU NAGPAL Signing Date:18.11.2021 20:18:42 W.P.(C) 13030/2021 Page 1 of 8 of their property [Entire Third Floor with terrace and above, of the free hold property bearing No. L-11/50, situated at Lajpat Nagar, New Delhi- 110024 measuring about 100 sq. yards] ["the property"]. In particular, relief is sought against a notice under Section 13(2) of the Act dated 05.04.2021, notice under Section 13(4) of the Act dated 26.06.2021, order passed by the Chief Metropolitan Magistrate under Section 14 of the Act dated 26.10.2021 and a notice of the Receiver appointed by the CMM dated 30.10.2021. By the said notice, the learned Receiver has indicated that she proposes to take possession of the property on 23.11.2021 at 11:00 A.M.
3. The petitioners have filed Securitisation Application ["SA"] No. 99/2021 before the Debts Recovery Tribunal ["DRT"]-I, Delhi which remains pending. They have also filed interlocutory application in the said SA challenging subsequent actions taken by the respondent No. 1. However, the proceedings have not been taken up for hearing as the DRTs in Delhi are, at present, non-functional for want of Presiding Officers. It is in these circumstances, that the petitioners have been compelled to approach this Court under Article 226 of the Constitution.
4. As all the three DRTs in Delhi are without Presiding Officers, several petitions have been filed in this Court seeking similar reliefs. Although some petitions under Article 226 were entertained, it was thereafter brought to the notice of the Court that the Debts Recovery Appellate Tribunal ["DRAT"] is empowered to transfer the applications/petitions to another functional DRT within the jurisdiction of the DRAT on the ground of urgency, in exercise of the powers conferred by Section 17(7) of the SARFAESI Act read with Section 17A(2) of the Signature Not Verified Digitally signed By:SHITU NAGPAL Signing Date:18.11.2021 20:18:42 W.P.(C) 13030/2021 Page 2 of 8 Recovery of Debts and Bankruptcy Act, 1993 ["RDB Act"]. Several orders were passed by the DRAT, Delhi transferring proceedings from the DRTs in Delhi to the DRT, Jaipur, which is the only functional DRT within the jurisdiction of the DRAT, Delhi. This Court also disposed of petitions under Article 226 with liberty to the petitioners to approach the DRAT, Delhi for such relief.
5. However, the aforesaid course has now been rendered impossible by virtue of the fact that the learned Chairperson of the DRAT, Delhi has also demitted office on 30.10.2021 in terms of a notification dated 29.10.2021, issued by the Department of Financial Services, Ministry of Finance, Government of India.
6. The question to be considered in these circumstances is whether it would be appropriate to entertain the present proceedings on merits, or for this Court to exercise the power under Section 17(7) of the SARFAESI Act read with Section 17A(2) of the RDB Act, which read as follows:-
Section 17(7) of the SARFAESI Act -
"17- Right to Appeal-
(7) Save as otherwise provided in this Act, the Debts Recovery Tribunal shall, as far as may be, dispose of application in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and the rules made thereunder."
Section 17A(2) of the RDB Act -
17A - Power of Chairperson of Appellate Tribunal xxxx xxxx xxxx (2) The Chairperson of an Appellate Tribunal having jurisdiction over the Tribunals may, on the application of Signature Not Verified Digitally signed By:SHITU NAGPAL Signing Date:18.11.2021 20:18:42 W.P.(C) 13030/2021 Page 3 of 8 any of the parties or on his own motion after notice to the parties, and after hearing them, transfer any case from one Tribunal for disposal to any other Tribunal"
7. It is clear from the above that the Chairperson of the DRAT has jurisdiction to transfer a case from one DRT under his/her jurisdiction to another DRT. In the present situation where the office of the Chairperson of DRAT, Delhi is also vacant, this Court has taken the view that exercise of such power by this Court would be the appropriate course, as the petitioners' ordinary statutory remedy has been rendered unavailable for reasons beyond its control. Enabling a party to invoke that remedy is preferable to entertaining the case on merits in writ proceedings. Orders to this effect have been passed inter alia in W.P.(C) 12125/2021 [Shrim Industries And Ors. vs. Bank of Baroda And Anr.] and W.P.(C) 12595/2021 [Smt. Kamlesh vs. Indian Overseas Bank] on 10.11.2021.
8. Although the existence of an alternative remedy is not an absolute bar to the exercise of jurisdiction under Article 226, this Court has relied upon the judgments of the Supreme Court which make it clear, particularly in the context of proceedings under the SARFAESI Act, that the writ jurisdiction should rarely be exercised.
9. In United Bank of India vs. Satyawati Tondon and Others (2010) 8 SCC 110, the Court held as follows:-
"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, Signature Not Verified Digitally signed By:SHITU NAGPAL Signing Date:18.11.2021 20:18:42 W.P.(C) 13030/2021 Page 4 of 8 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.
xxxx xxxx xxxx
45. It is true that the rule of 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.
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 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. 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 [AIR 1969 SC 556] , Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8 SCC 1] and Harbanslal Sahnia v. Indian Oil Corpn. Ltd. [(2003) 2 SCC 107] and some other Signature Not Verified Digitally signed By:SHITU NAGPAL Signing Date:18.11.2021 20:18:42 W.P.(C) 13030/2021 Page 5 of 8 judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order."
(Emphasis supplied.)
10. The observations in Satyawati Tondon (supra) have been followed by the Supreme Court inter alia in Authorized Officer, State Bank of Travancore and Another vs. Mathew K.C. (2018) 3 SCC 85 [paragraphs 5, 9 to 15], and the recent judgment in C. Bright vs. District Collector and Others (2021) 2 SCC 392 [paragraph 22].
11. I am of the view that the transfer of proceedings in the present case also to a functional DRT would be consistent with this approach of the Supreme Court, rather than entertaining the proceedings under Article 226 of the Constitution.
12. As the physical possession of the property is intended to be taken on 23.11.2021, Mr. Navin Kumar Singh, learned counsel for the petitioners seeks some interim protection. He submits that the SARFAESI Act is not applicable in the present case at all as the petitioners herein were not the "borrowers", in respect of the loan in question. It is also his submission that the mortgage itself was invalid. Ms. Gupta, on the other hand, submits that the petitioner no. 1 was, in fact, a co-applicant of the loan in question and had also placed the mortgage in favour of the respondent no.1. She states that in respect of the two loan accounts in question, the total outstanding is in the region of ₹65 lakhs and a sum of approximately ₹15 lakhs is overdue.
13. I am of the view that the contentions of the parties on merits are required to be adjudicated by the DRT rather than by this Court. However, in order to enable the petitioners to avail of their statutory Signature Not Verified Digitally signed By:SHITU NAGPAL Signing Date:18.11.2021 20:18:42 W.P.(C) 13030/2021 Page 6 of 8 remedies, some interim protection is required to be granted to the petitioners from dispossession of their residential premises subject to a without prejudice deposit being made.
14. In these circumstances, the writ petition is disposed of with the following directions:-
a. The Securitisation Application No. 99/2021 pending before the DRT-I, Delhi, and pending interlocutory applications therein, are transferred from the DRT-I, Delhi to the DRT, Jaipur. b. The Registrar, DRT-I, Delhi, is directed to transmit the records of the said securitization application and pending interlocutory application(s) to the DRT, Jaipur digitally. c. Mr. Navin Kumar Singh is also directed to coordinate with the Registrar, DRT, Jaipur to transmit the digital record of the aforesaid case of the DRT, Jaipur, if so permitted. d. The proceedings be listed before the DRT, Jaipur on 30.11.2021 at 2:00 PM for directions/hearing. The DRT, Jaipur will permit the parties to appear online [through video conferencing], if they so request.
e. The DRT, Jaipur is directed to hear the petitioners' case, at least on the question of interim relief, and pass appropriate orders as expeditiously as possible, and latest by 10.12.2021. f. Subject to any orders passed by the DRT, Jaipur, in terms of the aforesaid directions, the Receiver is directed to defer the proceedings for taking physical possession of the property until 13.12.2021 at 12:00 Noon. The Receiver will not be required to give any further notice to the petitioners for taking of possession of Signature Not Verified Digitally signed By:SHITU NAGPAL Signing Date:18.11.2021 20:18:42 W.P.(C) 13030/2021 Page 7 of 8 the property, subject to any orders passed by the DRT, Jaipur on the petitioners' application(s) in terms of this order.
g. The petitioners are directed not to create any third-party interests in the title or possession of the property, and to maintain status quo with regard to the character of the property.
15. The aforesaid order is subject to deposit of a sum of ₹ 2 lakhs by the petitioners with the respondent No. 1 by 23.11.2021, and a further sum of ₹ 3 lakhs by 07.12.2021. The aforesaid amounts will be deposited and accepted without prejudice to the rights and contentions of the parties and subject to the orders that may be passed by the DRT, Jaipur.
16. In the event the first installment is not deposited by 22.11.2021, the Receiver will be at liberty to take possession on 23.11.2021 at 11:00 AM. In the event the second installment is not deposited, the Receiver may take possession upon 48 hours' notice to the petitioners.
17. It is made clear that this Court has not entered into the merits of the case of the parties, which will be adjudicated by the DRT, Jaipur in accordance with law.
18. The writ petition, alongwith the pending applications, is disposed of in terms of aforesaid directions.
PRATEEK JALAN, J NOVEMBER 18, 2021 'bp'/ Signature Not Verified Digitally signed By:SHITU NAGPAL Signing Date:18.11.2021 20:18:42 W.P.(C) 13030/2021 Page 8 of 8