BIJU S., S/O G.SADASIVAN v. TAHSILDAR, KARUNAGAPPALLY TALUK OFFICE, KARUNAGAPALLY AND BANK OF INDIA

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **FRIDAY, THE 7TH DAY OF OCTOBER 2016/15TH ASWINA, 1938** **WP(C).No. 23701 of 2016 (K)** **----------------------------** ## **PETITIONER(S): -------------** **BIJU S., S/O.G.SADASIVAN, AGED 41 YEARS, RESIDING AT SADALAYAM, VENGARA POST, THODIYOOR, KARUNAGAPPALLY, KOLLAM DISTRICT.** ## **BY ADV. SRI.R.KISHORE** **RESPONDENT(S):** **--------------** **1. TAHSILDAR, KARUNAGAPPALLY TALUK OFFICE, KARUNAGAPALLY.** ## **2. BANK OF INDIA,** **PANMANA BRANCH, REPRESENTED BY ITS MANAGER.** **R1 BY SENIOR GOVERNMENT PLEADER SRI.T.K.ARAVINDAKUMAR BABU R2 BY ADV. SRI.JAWAHAR JOSE, SC, BANK OF INDIA** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 28-09-2016 THE COURT ON 07-10-2016, DELIVERED THE FOLLOWING:** **msv/** ## **WP(C).No. 23701 of 2016 (K) ----------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS** - **-----------------------** - **EXHIBIT-P1 TRUE COPY OF THE NOTICE DATED 15.03.2016 ISSUED BY THE RESPONDENT TO THE PETITIONER.** - **EXHIBIT-P2 THE TRUE COPY OF THE JUDGMENT DATED 23.05.2016 PASSED BY THIS HONOURABLE COURT IN WPC.16908/2016** - **EXHIBIT-P3 THE TRUE COPY OF THE ORDER DATED 27.06.2016 PASSED BY THE 1ST RESPONDENT IN PROCEEDINGS NO.B10-4287/16.** - **EXHIBIT-P4 THE TRUE COPY OF THE COUNTER AFFIDAVIT FILED BY THE 2ND RESPONDENT HEREIN IN WPC.4201/2016** ## **RESPONDENT(S)' EXHIBITS** - **-----------------------** - **EXT.R2(a): TRUE COPY OF THE LOAN APPLICATION SUBMITTED BY THE PETITIONER FOR M/S. G.S.CONSTRUCTION.** - **EXT.R2(b): TRUE COPY OF THE COVERING LETTER SUBMITTED BY THE PETITIONER ALONG WITH EXHIBIT R2(a) APPLICATION.** - **EXT.R2(c): TRUE COPY OF THE MINUTES OF THE MEETING OF THE ZONAL LEVEL CREDIT COMMITTEE OF THE RESPONDENT BANK DTD.8.3.2014.** - **EXT.R2(d): TRUE COPY OF THE NOTIFICATION DTD.23.4.2015 OF THE RESERVE BANK OF INDIA.** **//TRUE COPY//** **P.S.TO JUDGE** **Msv/** ## **SHAJI P. CHALY, J.** ----------------------------------------------- ## **W.P.(C). No.23701 of 2016 ----------------------------------------------Dated this the 7[th] day of October, 2016** ## **JUDGMENT** This writ petition is filed by the petitioner seeking to quash Ext.P1 revenue recovery proceedings and Ext.P3 order issued by the 1[st] respondent and other consequential orders thereupon and for other related reliefs. 2. Material facts for the disposal of the writ petition are as follows; on 22.4.2016, petitioner was served with Ext.P1 demand notice dated 15.3.2016 issued by the 1[st] respondent under Section 34 of the Kerala Revenue Recovery Act demanding an amount of Rs.55,00,000/- towards arrears of loan dues. However, Ext.P1 notice does not specify the details of the loan or the authority to whom the petitioner is liable to pay the amount demanded and the said notice does not disclose the date on which the arrears fell due, or the interest or the property about to be proceeded or the necessary particulars. Such a vague and unclear notice is malafide and illegal and is made with an ulterior motive to defeat the petitioner's statutory rights and to grab his W.P.(C). No.23701 of 2016 2 property. In that circumstances, petitioner has approached this court by filing W.P.(C) No.16908/2016 and as per Ext.P2 judgment dated 23.5.2016, permitted the petitioner to raise objection to Ext.P1 notice within one week from the date of receipt of a copy of the judgment and till such time a decision is taken, recovery proceedings were kept in abeyance. 3. Accordingly, petitioner preferred objection to the 1[st] respondent on 3.7.2016 and the 1[st] respondent by Ext.P3 order dismissed the objection holding that, the same is unsustainable under law. So also it is contended that for realization of the amount, 2[nd] respondent had initiated proceedings under the SARFAESI Act against the property of the petitioner, which is pending consideration before the Debt Recovery Tribunal. Challenging the proceedings thereunder, petitioner preferred W.P.(C) No.4201/2016 before this court and the counter affidavit filed by the 2[nd] respondent is produced as Ext.P4. According to the petitioner, proceedings and measures initiated by the 1[st] respondent under the Revenue Recovery Act and Ext.P3 order issued by the 1[st] W.P.(C). No.23701 of 2016 3 respondent is unsustainable under law and facts. It is in this background seeking appropriate orders against Exts.P1 and P3, petitioner has approached this court. 4. Second respondent has filed a counter affidavit denying the contentions, allegations and statements and demands made by the petitioner. It is also stated that, petitioner, a Civil Contractor by profession, on 25.01.2013, as proprietor of M/s. G.S. Constructions availed a cash credit loan of Rs.32,00,000/- from the bank. The said credit facility was later increased to Rs.47,00,000/- on 8.3.2014. petitioner in his status as the proprietor of the concern has also availed a term loan of Rs.5,00,000/- and also a bank guarantee for Rs.10,00,000/- from the bank. The said credit facilities were granted by creating equitable mortgage of an extent of 55.10 cents of property in Thodiyur Village belonging to the petitioner. The said credit facilities were granted to the petitioner as advances to micro and small enterprises, evident from Ext.R2(a) loan application and Ext.R2(b) covering letter submitted by the petitioner. The credit facilities increased by W.P.(C). No.23701 of 2016 4 the Zonal Level Credit Committee of the bank is evident from Ext.R2(c). Petitioner was irregular in repayment of loan amount and accordingly account was classified as NonPerforming Asset (NPA) on 30.9.2015. Bank has simultaneously proceeded to recover the loan; (1) under the SARFAESI Act and, (2) under the provisions of the Kerala Revenue Recovery Act, since there is no embargo created in proceedings simultaneously under the above statutes. It was thus Ext.P1 notice was issued under Section 34 of the Kerala Revenue Recovery Act. The recovery proceedings under the SARFAESI Act was challenged by the petitioner in W.P.(C) No.4201/2016 and Ext.P4 is the counter affidavit filed by the bank in the said case. This court disposed the said case on 24.2.2016 directing the petitioner to pay the total outstanding arrears of Rs.53,76,293/- in 11 equated monthly installments from 18.3.2016. In the said judgment, the bank is left free to proceed with the recovery of entire dues, if the petitioner commits default in paying one installment. Petitioner has not complied with the directions in the said judgment and so the W.P.(C). No.23701 of 2016 5 bank reserves its right to proceed under the SARFAESI Act as per the directions in the judgment. It is also submitted, the proprietary concern of the petitioner is a small enterprise under the heading 'rendering of service' as per Section 7(1)(b) (ii) of the Micro, Small and Medium Enterprises Development Act,2006. The classification of enterprises as micro, small and medium, is on the basis of the amount of investment made in the enterprise as per Section 7 of the said Act. Any advance made to a small enterprise is an advance made in the proprietary sector, as per the notification of the Reserve Bank of India dated 23.4.2015, evident from Ext.R2(d). Therefore, the proceedings initiated for recovery under the Kerala Revenue Recovery Act is maintainable by virtue of SRO No.1465/1987 issued under the Kerala Revenue Recovery Act. Therefore, it is prayed that, the writ petition has no merit and the same is liable to be dismissed. 5. At the time of hearing this writ petition, learned counsel for the respondent bank pointed out that, Exr.R2(d) notification is not the correct notification in order to deal with W.P.(C). No.23701 of 2016 6 the case advanced by the petitioner and has produced a notification dated 20.7.2012 issued by the Reserve Bank of India. 6. Heard learned counsel for the petitioner, learned Senior Government Pleader and learned counsel appearing for the bank, perused the documents on record and the pleadings put forth by the respective parties. 7. The question to be decided is whether there is any legal infirmity in Ext.P1 notice issued under Section 34 of the Kerala Revenue Recovery Act. According to the learned counsel for the petitioner, Ext.P1does not contain the details of the property proceeded with and the details of the loan sought to be recovered. Admittedly, Ext.P1 is issued in a statutory format, wherein the details to be furnished are contained thereunder. Apparently it is seen that, the details of the loan or the details of the property is not referred to therein. However, the amount to be recovered is discernible from the said document. The thrust of the contention advanced by the learned counsel for petitioner is that, since W.P.(C). No.23701 of 2016 7 the required details is absent from Ext.P1, the recovery proceedings initiated against the petitioner itself is bad. As I have pointed out, it is true, certain details are not provided. On a reference to Section 34 of the Kerala Revenue Recovery Act, it is clear, Section 34 deals with, only a demand notice demanding the defaulter to pay the amount before effecting any attachment. Section 34 of the Kerala Revenue Recovery Act reads thus: “34. Demand to be served prior to attachment of land: (1) Before the Collector of the authorised officer proceeds to attach the immovable property of the defaulter, he shall cause a written demand to be served upon the defaulter specifying the name of the defaulter, the amount of the arrear of public revenue due on land for which the attachment is being made, the date on which such arrear fell due, the interest on the arrear and the amount of the batta due to the persons who serve the demand and such other particulars as may be prescribed, and the time allowed for payment which shall not be less than seven days from the date of service of the demand. (2) If within the time prescribed under subsection (1) the defaulter objects to the claim of arrears wholly or in part, the Collector or the W.P.(C). No.23701 of 2016 8 authorised officer, as the case may be shall inquire into the objection and record a decision before proceeding to attach the immovable property of the defaulter.” 8. On a reading of Section 34, it is specific and unambiguous, it is a notice prior to the attachment, which statutorily requires the authority to raise the demand against the defaulter. As stated above, the details of the property is not mentioned thereunder. However, petitioner has filed objection to the same and Ext.P3 order is passed by the 1[st] respondent, in which it is clarified that, an amount of Rs.55,00,000/- is due from the petitioner with 12.50% interest and also clarifying that requisition is made by the 2[nd] respondent. Petitioner is not having a case that, petitioner has taken any loan from any other bank thus enabling the petitioner to misunderstand, or properly understanding the recovery initiated by the 1[st] respondent. If the petitioner has a case that, petitioner has availed loan from different banks and he is unable to identify the nature of recovery initiated by the 1[st] respondent, things would be different. Moreover, W.P.(C). No.23701 of 2016 9 consequent to the clarification made in Ext.P3 order by the 1[st] respondent and since the petitioner has approached twice before this court, and Ext.P2 judgment is rendered, reveals that, the subject matter of challenge raised by the petitioner was almost of the similar nature in which liberty was provided to the petitioner to challenge the action by filing objection and contesting the proceedings and it was thereupon Ext.P3 order was passed. 9. Therefore, viewed in that circumstances, even though, there are certain lapses on the part of the 1[st] respondent in mentioning details of the property fully in accordance with the statutory requirement, it cannot be said that, petitioner was in any way prejudiced consequent to the non-mentioning of the property in Ext.P1 demand, especially due to the fact, it is only a demand prior to the attachment of the property. Moreover, there is no difficulty for the petitioner to assume that, since the loan was availed by mortgaging the property belonging to the petitioner the course of action of the 1[st] respondent in future will be to attach the property mortgaged W.P.(C). No.23701 of 2016 10 by the petitioner. That apart Ext.P3 is only demanding the petitioner to make the payment within a time frame, failing which, the property of the petitioner will be attached in due course. 10. While considering the question of statutory requirement under Section 34 demand, a survey of Section 36 of the Revenue Recovery Act is important, which deals with mode of attachment of the property. Section 36 read thus: “36. Mode of attachment:- (1) The attachment shall be effected by affixing a notice thereof to some conspicuous part of the immovable property to be attached and by serving a copy on the defaulter. The notice of attachment shall also be published. The notice shall specify the name of the defaulter, the amount of arrear of public revenue due on land, the interest thereon, the date on which such arrear became due and such other particulars as may be prescribed, and shall set forth that unless the arrear with the interest thereon and the cost of process be paid within the date therein mentioned,the immovable property concerned will be brought to sale in due course of law. W.P.(C). No.23701 of 2016 11 (2) The attachment of any immovable property shall become effective from the date on which the notice under sub-section (1) was affixed on the property. 11. On a reading of the said provision, it s specific and clear, while attaching the property, it is a mandatory requirement that, the entire details of the defaulted amount of public revenue due on land, the date on which such arrear became due and such other particulars required thereunder are notified. Therefore, it can be seen that, there is an opportunity for the petitioner while effecting the attachment to understand the entire details with respect to the property proceeded under sale. The said issue comes only if the petitioner is not making the payment as demanded under Section 34. In that view of the matter, I am of the considered opinion that, it can never be said that, there is any material injury caused to the petitioner by not making the details of the property under Section 34 demand made by the 1[st] respondent. 12. Yet another contention advanced by the learned counsel for the petitioner at the time of argument is with respect to the W.P.(C). No.23701 of 2016 12 power of the 1[st] respondent to initiate action under the Kerala Revenue Recovery Act. The discussion made above shows that, it was on the basis of the requisition made by the 2[nd] respondent, 1[st] respondent proceeded by invoking the provisions of the Kerala Revenue Recovery Act and particularly by virtue of SRO No.1465/1987. However, the petitioner has also a contention that, the said notification will not take care of the loans and advances provided to the petitioner by the 2[nd] respondent bank. In that regard, learned counsel for the 2[nd] respondent bank invited my attention to the additional documents produced along with the memo dated 29.9.2016 and brought my attention specifically to a category under priority sector which read among other categories in clause (ii) micro and small enterprises. Therefore, it is the contention of the learned counsel that, the action initiated by the 1[st] respondent will squarely come under the notification issued under Section 71 of the Kerala Revenue Recovery Act. Moreover, learned counsel has invited my attention to clause 2.1.2. -- service enterprises W.P.(C). No.23701 of 2016 13 which read thus: “Bank loans up to Rs.1 Crore per unit to Micro and Small Enterprises engaged in providing or rendering of services and defined in terms of investment in equipment under MSMED Act, 2006.” 13. Therefore, according to the learned counsel, the entire action initiated by the 1[st] respondent on the basis of the requisition made by the 2[nd] respondent is in accordance with law. I find force in the said contention advanced, especially when referring to the notification of the Reserve Bank of India specified above. Moreover, it is an admitted fact, the proprietary concern of the petitioner is a micro and small enterprises. Therefore, the contention raised by the petitioner in that regard cannot be sustained under law. 14. Yet another question raised by the learned counsel for the petitioner is with respect to the simultaneous proceedings initiated by the 2[nd] respondent bank under the SARFAESI Act. Learned counsel for the petitioner contended that, as per the principles of doctrine of election, the 2[nd] respondent has to choose the remedies available to it and the W.P.(C). No.23701 of 2016 14 2[nd] respondent is not at liberty to exercise the power available to recover the amount by simultaneous proceedings against the petitioner. To meet the said contention, learned counsel for 2[nd] respondent has invited my attention to the judgment of the Apex Court in **Mathew Varghese v. Amritha Kumar and others** [ (2014) 5 SCC 610] and specifically referred to paragraph 45 which reads thus: “A close reading of Section 37 shows that the provisions of the SARFAESI Act or the Rules framed thereunder will be in addition to the provisions of the RDDB Act. Section 35 of the SARFAESI Act states that the provisions of the SARFAESI Act will have overriding effect notwithstanding anything inconsistent contained in any other law for the time being in force. Therefore, reading Sections 35 and 37 together, it will have to be held that in the event of any of the provisions of the RDDB Act not being inconsistent with the provisions of the SARFAESI Act, the application of both the Acts, namely, the SARFAESI Act and the RDDB Act, would be complementary to each other. In this context reliance can be placed upon the decision in Transcore v. Union of India. In para 64, it is stated as under after referring to Section 37 of the SARFAESI Act: W.P.(C). No.23701 of 2016 15 “64....According to American jurisprudence, 2d. Vol.25.p.652, if in truth there is only one remedy, then the doctrine of election does not apply. In the present case, as stated above, the NPA Act is an additional remedy to the DRT Act. Together they constitute one remedy and therefore, the doctrine of election does not apply. Even according to Snell's Principles of Equity (31[st] Edn.,p.119), the doctrine of election of remedies is applicable only when there are two or more co-existent remedies available to the litigants at the time of election which are repugnant and inconsistent. In any event, there is no repugnancy nor inconsistency between the two remedies, therefore, the doctrine of election has no application. (emphasis added)”. 15. On a perusal of the provisions of the SARFAESI Act and the Kerala Revenue Recovery Act, it is clear, there are no prohibition created under the aforesaid Acts to proceed against the defaulter simultaneously. Needless to say, 2[nd] respondent is entitled only to the amounts due to it and whatever amounts recovered under the provisions of the respective legislation, is to be adjusted against the total loan outstanding. Therefore, till such time, petitioner has a case W.P.(C). No.23701 of 2016 16 that, consequent to the simultaneous action amounts are recovered and adjustments are not given, the petitioner cannot contend that, the simultaneous action has caused any material prejudice to the petitioner. Therefore, I am of the considered opinion that the said ground raised by the petitioner also cannot be sustained under law. 16. Moreover, this is the 3[rd] round of litigation before this court by the petitioner. Petitioner has no case that, pursuant to the direction issued by this court in W.P.(C) No.4201/2016, petitioner has paid any amount to the 2[nd] respondent even though there was a specific direction to remit the said amount in 11 equated monthly installments as contended by the respondents in its counter affidavit, which is not at all disputed by the petitioner by filing a reply. Moreover, the details of the property, the amounts due and all material facts necessary for identifying the situation is disclosed in Ext.P4 counter affidavit filed by the bank. In the 3[rd] round of litigation also, in my considered opinion, without making any payment to the 2[nd] respondent bank, speaks in W.P.(C). No.23701 of 2016 17 volume the nature, character and conduct of the petitioner. The facts and circumstances revealed that the sole attempt of the petitioner is to protract the payment due to the 2[nd] respondent back by resorting to such actions. For the foregoing discussions, I am of the considered opinion that, petitioner has not made out any case warranting interference of this court under Article 226 of the Constitution of India. Resultantly, writ petition fails and the same is dismissed. Sd/- **SHAJI P. CHALY JUDGE** smv 01.10.2016