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Ms Nature Cure And Yoga Trust Through Its ... vs Union Of India Through Its Secretary & ... on 11 November, 2021

Author: Prateek Jalan

Bench: Prateek Jalan

                  $~85 (2021 Cause List)
                  *     IN THE HIGH COURT OF DELHI AT NEW DELHI

                  +        W.P.(C) 12661/2021

                      MS NATURE CURE AND YOGA TRUST
                      THROUGH ITS SECRETARY                               ..... Petitioner
                                        Through: Mr. Naveen Nath, Senior Advocate
                                                     with Mr. Rahul Jain, Advocate.
                                                versus
                      UNION OF INDIA THROUGH
                      ITS SECRETARY & ORS.                            ..... Respondents
                                        Through: Mr. Vijay Joshi, Advocate for R-1
                                                     and R-2.
                                                     Mr. Sanjay Gupta, Mr. Ateev
                                                     Mathur, Mr. Amol Sharma and Ms.
                                                     Jagriti Ahuja, Advocates for
                                                     HDFC Bank.
                  CORAM:
                  HON'BLE MR. JUSTICE PRATEEK JALAN
                                  ORDER

% 11.11.2021 The proceedings in the matter have been conducted through hybrid mode [physical and virtual hearing].

CM APPL. 39828/2021 (for exemption) Exemption allowed, subject to all just exceptions. This application stands disposed of.

CM APPL. /2021 (to be numbered; filed vide Diary No. 99251/2021)

1. This application has been filed by the writ petitioner seeking to place on record an amended memo of parties.

2. In the original memo of parties, the Union of India ["the Union"] has been impleaded through the Ministry of Finance and the Ministry of Micro, Small and Medium Enterprises as the respondent Nos. 1 and 2 respectively. The Reserve Bank of India ["RBI"] has been impleaded as Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:12.11.2021 13:13:25 W.P.(C)12661/2021 Page 1 of 10 the respondent No.3. The entire petition, however, concerns measures taken by HDFC Bank Limited ["the Bank"] against the petitioner under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ["SARFAESI Act"] in respect of the properties of the petitioner (Residential flat no.17, fourth floor admeasuring 1400 sqfts, block-1, situated at Lawyers CGHS Ltd, Manu Apartment, built up on plot no.6, Mayur Vihar Phase-1, New Delhi- 110091 and Property land area admeasuring 1.5 acres i.e 7260 sq yards situated at CGHS Gandhi Nidhi, Patparganj, Delhi-110091) ["the properties"].

3. By way of the amended memo of parties, the Bank is sought to be impleaded as the respondent No.4.

4. Issue notice. Mr. Sanjay Gupta, learned counsel, accepts notice on behalf of the Bank.

5. Mr. Gupta submits that he has no objection to the impleadment of the Bank. The prayer to this effect is, therefore, accepted.

6. However, I am unable to find any reason for impleadment of the Union or the RBI in this dispute. The respondent Nos. 1 to 3 are, therefore, deleted from the array of parties and the Bank is to be treated as the sole respondent.

7. Further amended memo of parties be filed within two days.

8. The application is disposed of.

W.P.(C) 12661/2021 & CM APPL. 39829/2021 (for directions)

1. Issue notice. Mr. Sanjay Gupta, learned counsel, accepts notice on behalf of HDFC Bank Limited ["the Bank"].

2. The petitioner seeks recourse against proceedings taken by the Bank under the SARFAESI Act in respect of the following properties:-

a. Residential flat no.17, fourth floor admeasuring 1400sqfts, block-1, situated at Lawyers CGHS Ltd, Manu Apartment, built up on plot no.6, Mayur Vihar Phase-1, New Delhi-110091. b. Property land area admeasuring 1.5 acres i.e 7260 sq yards situated at CGHS Gandhi Nidhi, Patparganj, Delhi-110091.

3. The properties were admittedly given by the petitioner as security for certain credit facilities taken by it from the Bank. In view of the petitioner's default in repayment, the Bank commenced proceedings under the SARFAESI Act. By an order dated 21.10.2021, under Section 14 of the SARFAESI Act, the Chief Metropolitan Magistrate has appointed a Receiver over the properties with a direction to take physical possession thereof. The Receiver has issued a notice dated 29.10.2021, proposing to take the possession of the properties on 14.11.2021 and 16.11.2021.

4. The petitioner has challenged the same by filing an Interlocutory Application vide diary No. 1064/2021 dated 09.11.2021 before the Debts Recovery Tribunal-III, Delhi ["DRT-III, Delhi'] in Securitisation Application No. 84/2020, which was filed by it and remains pending before the DRT-III, Delhi. However, the said application was not taken up for hearing in view of the fact that DRTs in Delhi are not functioning at present, for want of Presiding Officers. It is in these circumstances that the petitioner has been compelled to approach this Court under Article 226 of the Constitution.

5. 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 of the Constitution were entertained, it was thereafter brought to the notice of the Court that the Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:12.11.2021 13:13:25 W.P.(C)12661/2021 Page 3 of 10 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 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 DRT, Jaipur, which is the only functional DRT within the jurisdiction of the DRAT, Delhi. This Court also disposed of petitions under Article 226 of the Constitution with liberty to the petitioners to approach the DRAT, Delhi for such relief.

6. 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.

7. 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 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"

8. 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 petitioner's 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.

9. Although the existence of an alternative remedy is not an absolute bar to the exercise of jurisdiction under Article 226 of the Constitution, 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.

10. 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 Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:12.11.2021 13:13:25 W.P.(C)12661/2021 Page 5 of 10 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.

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 Signature Not Verified matters. Of course, if the petitioner is able to show that its Digitally Signed By:SHITU NAGPAL Signing Date:12.11.2021 13:13:25 W.P.(C)12661/2021 Page 6 of 10 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 judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order."

(Emphasis supplied.)

11. 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].

12. 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.

13. Mr. Naveen Nath, learned Senior Counsel for the petitioner, submits that the physical possession of the properties are to be taken on 14.11.2021 and 16.11.2021. He, therefore, seeks some interim protection. He submits that the petitioner has made a proposal for settlement of overdue amounts on 09.11.2021. Mr. Nath and Mr. Gupta draw my attention to the fact that the amount claimed in the demand notice under Section 13(2) of the SARFAESI Act, which was issued by the Bank on 25.02.2020 is to the tune of ₹ 13.73 Crores. In the writ petition, the petitioner has delineated two alternative proposals for settlement of the amount (at page Nos. 7 and 8 of the writ petition) in the following terms:-

" PROPOSAL I Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:12.11.2021 13:13:25 W.P.(C)12661/2021 Page 7 of 10

1. To repay the Principal amount outstanding as on date, i.e. Rs.9,69,59,250.00 and the Overdraft amount of Rs.3,68,86,102.25 totalling Rs.13,38,45,352.25 in full and final settlement of the Accounts in the following manner :

(i) On 15.11.2021 _ Rs.5.00 crores

(ii) On 15.12.2021 _ Rs.2.00 crores

(iii) On 15.01.2022 _ Rs.2.00 crores

(iv) On 15.02.2022 _ Rs.2.00 crores

(v) On 15.03.2021 _ Rs.2.00 crores ______________ Total _ 13,00 cores An amount of Rs.38.45 lakhs may be waived off.

OR PROPOSAL II As per the Demand Notice sent on 25.01.2020, the outstanding dues were Rs.13,73,15,458/- including OD, and interests As per the Statement dated 27.10.2021 of HDFC Bank the total outstanding amount of Term loans was Rs.12,81,34,080 (without OD).The overdue amount of OD as on 31.10.2021 is Rs.3,68,86,102.25. Thus the total outstanding comes to Rs. 16,50,20,182.25.

The Petitioner may be allowed to pay the differential amount of Rs. 2,77,04,724 to regularise the Term loan Accounts and may be allowed a period of three months' time to clear the overdue amount in the Over Draft Account."

14. The contention of Mr. Gupta is that the writ petition suffers from material suppression of facts and the petitioner is not entitled to any interim relief. However, I am of the view that in order to enable the petitioner to invoke its statutory remedies, some interim protection is required to be granted, subject to a substantial deposit being made.

15. For the reasons aforesaid, the writ petition is disposed of with the following directions:-

a. The Securitisation Application filed by the petitioner before the DRT-III, Delhi, being SA No. 84/2020, and pending applications therein, are transferred from the DRT-III, Delhi to DRT, Jaipur.

b. The Registrar, DRT-III, Delhi, is directed to transmit the records of the said Securitisation Application and pending Interlocutory Applications to DRT, Jaipur digitally. c. Learned counsel for the petitioner is also directed to coordinate with the Registrar DRT, Jaipur, to transmit the digital records of the aforesaid case to the DRT, Jaipur, if so permitted.

d. The proceedings be listed before the DRT, Jaipur for directions/hearing on 17.11.2021 at 2:00 PM. DRT, Jaipur will permit the parties to appear online, if they so request. e. DRT, Jaipur is directed to hear the petitioner's case at least on the question of interim relief, and pass appropriate orders, as expeditiously as possible, and latest by 30.11.2021. f. Subject to any other orders passed by the DRT, Jaipur in terms of the aforesaid directions, the Receiver appointed by the order of the CMM dated 21.10.2021 is directed to defer the proceedings for taking physical possession of the properties until 03.12.2021 at 11:00 AM and 04.12.2021 at 11:00 AM. The Receiver will not be required to give any further notice to the petitioner for taking of possession of the properties on the aforesaid dates, subject to any orders passed by the DRT, Jaipur on the petitioner's application(s) Signature Not Verified in terms of this order.

g. The aforesaid order is subject to deposit of a sum of ₹ 5 Crores by the petitioner with the Bank by 15.11.2021, as stated in the proposal mentioned at page 7 of the writ petition. The petitioner will also deposit a further sum of ₹ 2 Crores by 30.11.2021.

h. 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.

i. The petitioner is directed not to create any third-party interests in the title or possession of the properties, and to maintain status quo with regard to the character of the properties.

16. It is made clear that this Court has not entered into the merits of the petitioner's case and the aforesaid order is passed only to enable the petitioner to invoke its statutory remedies.

17. The writ petition, alongwith the pending application, is disposed of with these directions.

PRATEEK JALAN, J NOVEMBER 11, 2021 'vp'/ Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:12.11.2021 13:13:25 W.P.(C)12661/2021 Page 10 of 10