Canara Bank v. Dilmax Traders & Others (OP(Crl).472/21)

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE K.HARIPAL** **WEDNESDAY, THE 1[ST] DAY OF DECEMBER 2021 / 10TH AGRAHAYANA, 1943 OP(CRL.) NO. 472 OF 2021** **CRMP 1716/2018 OF CHIEF JUDICIAL MAGISTRATE ,THRISSUR** ## **PETITIONERS/RESPONDENTS:** - **1 DILMAX TRADERS, REPRESENTED BY PROPRIETOR K R SUDARSAN, BYEPASS ROAD, MINALOOR, THRISSUR-680581.** - **2 K R SUDRSAN, AGED 47 YEARS S/O RGHAVAN, KOCHUMALAYIL HOUSE, PARLIKKAD, MINALOOR, THRISSUR-680581.** - **3 MRS. GEETHA T S., AGED 42 YEARS W/O SUDARSAN, KOCHUMALAYIL HOUSE, PARLIKKAD, MINALOOR, THRISSUR-680581.** **BY ADVS.A.S.DILEEP** **P.BINOD SUSEELA DILEEP SUDEEP ARAVIND PANICKER** ## **RESPONDENT/PETITIONER:** ## **CANARA BANK** **ATHANI SME BRANCH REPRESENTED BY ITS AUTHORISED OFFICER, & CHIEF MANAGER, CANARA BANK, WADAKKANCHERRY BRANCH, THRISSUR-683585.** **BY ADVS.** **SALIHA BEEVI P.A SWATHI JAYARAJ** ## **SC - SRI. V.B.HARI NARAYANAN** **THIS OP (CRIMINAL) HAVING COME UP FOR ADMISSION ON 26.11.2021, THE COURT ON 01.12.2021 DELIVERED THE FOLLOWING:** O.P.(Crl).472/21 2 ## **JUDGMENT** This is an original petition filed under Article 227 of the Constitution of India seeking the following reliefs: - i. Call for the entire records in CMP 1716/2018 before CJM Thrissur and those leading to Exs.P1 and P5 orders and quash the same by declaring and issuing appropriate order or direction holding them to be illegal and arbitrary; - ii. Issue directions or any appropriate order or direction, to the Hon'ble Chief Judicial Magistrate to pass necessary orders or directions to recall Ext.P1 order appointing the Advocate Commissioner and instructing that the Commission Warrant shall be kept in abeyance and not be executed until further orders; - iii.Issue directions or appropriate order or direction to the respondent to desist from initiating any action to take actual physical possession of the secured assets until further orders; - iv. Grant such other reliefs as may be prayed for by the petitioner and which this Hon'ble Court may deem fit and proper in the facts and circumstances of the case, including costs. 2. Petitioners are respondents in Crl.M.P. 1716 of 2018 on the file of the Chief Judicial Magistrate's Court, Thrissur. It is the common case that they had availed a cash credit loan from the respondent bank in 2012 and the limit of cash credit was Rs.1,10,00,000/-. According to them, this limit was secured by property having an extent of 9.75 cents in Minaloor village, Thalappilly taluk, Thrissur and the 2[nd] petitioner has another property O.P.(Crl).472/21 3 measuring 4.19 cents in survey 27/2 part of Minaloor village, Thalappilly taluk in Thrissur district in the names of the 2[nd] and 3[rd] petitioners jointly. The petitioners 2 and 3 also availed a housing loan of Rs.8 lakhs from the respondent bank, which was secured by separate property measuring 6.79 cents in survey 26/part in Minaloor village, Thalappilly taluk in the names of petitioners 2 and 3. According to them, they were repaying the amount promptly but some default has occurred and later it was regularised. However, on 21.10.2016 notice was issued under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, hereinafter referred to as the SARFAESI Act, against which they filed W.P(C). No.41077 of 2016. Thereafter they were allowed to clear the instalments and on 18.05.2017 an amount of Rs.3,20,000/- was paid by them and thus the account was regularised and it became a performing account with outstanding balance below the sanctioned limit. They had made a further payment of Rs.12 lakhs on 12.03.2019 and filed W.P.(C). No.6743 of 2019 for regularising the account instalments. While so, the bank initiated proceedings under O.P.(Crl).472/21 4 Sections 13(4) and 14 of the SARFAESI Act in respect of the above properties on the basis of a notice issued under Section 13(2) purportedly on 20.07.2017 and moved the court of the Chief Judicial Magistrate, Thrissur with Crl.M.P. 1716 of 2018 under Section 14 of the SARFAESI Act, seeking to dispossess the petitioners from the properties and to take physical possession of the same. Thus the Chief Judicial Magistrate issued Ext.P1 order on the basis of the Ext.P2 application filed by the respondent bank. 3. The petitioners contend that the entire proceedings initiated by the bank are illegal, incorrect and with inadequate facts, that they filed Ext.P4 objections. However, without considering the legitimate objections raised by the petitioners by Ext.P5 order the learned Chief Judicial Magistrate rejected the objections of the petitioners and found that the proceedings initiated against them are maintainable. According to the petitioners, Ext.P5 order is illegal and unsustainable and was passed in a mechanical manner without application of mind. The Court has seriously erred in holding that the petition was maintainable. The Magistrate has a statutory responsibility to satisfy O.P.(Crl).472/21 5 himself as to the veracity, legality and validity of the contentions made. But such contentions were not properly assessed by the Magistrate and based on misleading statements produced before it, the Court was finding that the proceedings are maintainable. There is no legal basis for finding the proceedings maintainable. Before passing such an order the Court should have satisfied itself that the bank is a secured creditor and two items of properties, that is 1.07 ares of land and 2.75 ares of land were registered with the Central Registry set up under Section 20 of the SARFAESI Act as required under Section 23 of the Act. So long as that was not made clear the security interest is not enforcible under the SARFAESI Act. The Court was moved without disclosing this material fact and without stating the true facts, falsely stating that they had complied with the provisions of the SARFAESI Act. According to the petitioners, no valid and enforcible security interest had been created in favour of the bank. The 3[rd] respondent had not deposited any title deed in respect of the properties nor had she authorised anyone to make such a deposit and in the absence of an equitable mortgage, no security interest can be created O.P.(Crl).472/21 6 or extended to her share of 50% title, ownership and possession. So, the sum and substance of the grounds of the petitioners is that no security interest is created and therefore the proceedings are bad. 4. I heard the learned counsel for the petitioners as well as the learned counsel for the respondent bank. 5. According to the learned counsel, the third petitioner is only a guarantor that she had not created any equitable mortgage and still ignoring that valid ground the Magistrate is proceeding under Section 14 of the SARFAESI Act, which is illegal. 6. Referring to paragraph 9 of Ext.P5 order the learned counsel pointed out that even though the learned Magistrate was convinced that no equitable mortgage was created, since Ext.P1 was passed on the impression that such a mortgage was created, the court cannot make a review and on that technical aspect alone the petitioners are proceeded against. Therefore, according to him, Exts.P1 and P5 are liable to be interfered with. Alternatively, the learned counsel submitted that if the Court suggests repayment in instalments, they are prepared to make payment. O.P.(Crl).472/21 7 7. On the other hand, the learned Standing Counsel for the bank has opposed granting any relief to the petitioners. Even they opposed an interim order to be passed in favour of the petitioners on condition of directing the petitioners to make some payment initially, towards the amounts due. According to him, the very writ petition is not maintainable since alternate efficacious remedies are available to the petitioner. In this connection, he relied on the decision reported in **Anto v. State of Kerala** . **[2019 (3) KLT SN 11 (C.No.15)]** Referring to the judgment of this Court in W.P(C). No.6743 of 2019 he pointed out that, earlier when a similar petition was filed by the petitioners challenging the validity of the notice issued under Section 14 of the SARFAESI Act, this Court had rejected their prayer and allowed them to pay an amount of Rs.10 lakhs within a short period and the balance amount in 15 instalments. But they did not make any such payment; instead, they preferred an appeal and W.A.No.1498 of 2021 stands dismissed on 19[th] November 2021. Referring to CERSAI registration of property, producing a document the learned counsel pointed out that Kochumalayil house in survey number 26/part stands mortgaged and O.P.(Crl).472/21 8 thus the petitioners have moved this Court suppressing material facts. The learned counsel also pointed out that in the light of the judgment of this Court in W.P(C) No. 6743 of 2019 and the judgment of the Division Bench in the writ appeal, the right of the petitioners to approach this Court stands foreclosed. According to him, the petitioners have approached this Court without bona fides; earlier though they had made two securitisation applications before the Debts Recovery Tribunal, one was dismissed and the other was withdrawn and only thereafter such an instalment facility was granted by this Court. 8. After hearing counsel on both sides, I am also convinced that the petitioners have not moved this Court in good faith. Earlier, twice or thrice they have moved this Court challenging the proceedings initiated by the respondent bank against the petitioners when they had defaulted repayment of the money. Now more than Rs.1,00,40,000/- is due to the bank from the petitioners. It is admitted that they had availed a cash credit loan of Rs.1.10 crore for business purposes and a housing loan of Rs.8 lakhs from the bank. Even though O.P.(Crl).472/21 9 they wanted to say that the proceedings initiated are illegal, after making payments the non performing accounts have become performing accounts and that the third petitioner had not made any equitable mortgage in favour of the bank. According to the learned counsel, even though the court was convinced, on technical reasons the objections were overruled, which cannot be accepted in right earnest. 9. It has come out that at least twice or thrice the petitioners had moved this Court challenging the proceedings initiated against them under Section 14 of the SARFAESI Act. When W.P(C). 6743 of 2019 was taken up, in the light of the deliberations made across the bar, the Court had allowed the petitioners to make payment of an amount of Rs.10 lakhs on or before 27.03.2019 and the balance amount in 15 equal monthly instalments commencing from 30.04.2019. But instead of complying the conditions the petitioners were preferring appeal against the same which was also dismissed by a Division Bench of this Court. The appeal court has noticed that such an instalment facility could have been granted only after confirming O.P.(Crl).472/21 10 the regularity of the notice issued against them or rejecting the plea of the petitioners challenging the legality and correctness of the notice. Even though it cannot be inferred from the judgment dated 12.03.2019 that such concessions were granted as offered by the petitioners, still it is quite patent that it was based on a consensus reached across the bar that the order was passed. Whatever it may be, after the said judgment the petitioners did not make any payment and therefore the present contentions challenging the legality and correctness of Exts.P1 and P5 orders of the learned Magistrate cannot be upheld. 10. Secondly, as rightly pointed out by the learned counsel for the respondent bank, an order passed by the learned Magistrate is susceptible to challenge under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal. Ignoring such a statutory right available to them, they have approached this Court under Article 227 of the Constitution, which, in the circumstances, cannot be approved. 11. The contention of the petitioners that no equitable mortgage has been created cannot be accepted in right earnest. Of course, Exts.P6 and P7 CERSAI reports indicate that no property of the O.P.(Crl).472/21 11 third petitioner has been mortgaged. But a document produced by the respondent indicates that Kochumalayil house bearing No.VI/140A comprised in survey 26/part stands mortgaged with the bank. Whatever it may be, so long as alternate remedies are available to the petitioners, they are not entitled to get any relief from this Court. The original petition is devoid of merits and is only to be dismissed. Dismissed. No costs. Sd/- **K. HARIPAL JUDGE** okb/29.11 //True copy// P.S. to Judge O.P.(Crl).472/21 12 ## **APPENDIX OF OP(CRL.) 472/2021** ## **PETITIONER EXHIBITS** |**Exhibit P1**|**TRUE COPY OF ORDER DATED 13.03.2018 OF CJM**| |---|---| ||**THRISSUR IN CR.M P 1716/2018.**| |**Exhibit P2**|**COPY OF PETITION CRL M P 1706/2018 DATED**| ||**06.03.2018 FILED BY THE RESPONDENT BEFORE CJM**| ||**THRISSUR UNDER SECTION 14 OF SARFAESI ACT.**| |**Exhibit P3**|**COPY OF AFFIDAVIT DATED 06.03.2018 FILED BY**| ||**THE RESPONDENT IN SUPPORT OF PETITION CRL MP**| ||**1716/2018 UNDER SECTION 14 OF SARFAESI ACT**| ||**BEFORE CJM THRISSUR.**| |**Exhibit P4**|**TRUE COPY OF OBJECTION DATED 21.09.2021 FILED**| ||**BY CJM THRISSUR IN CR.M.P 1716/2018.**| |**Exhibit P5**|**TRUE COPY OF ORDER DATED 16.10.2021 PASSED BY**| ||**CJM THRISSUR IN CRL M. P .1716/2018.**| |**Exhibit P6**|**TRUE COPY OF REPORT DATED 12.07.2021 ISSUED**| ||**BY THE CERSAI.**| |**Exhibit P7**|**TRUE COPY OF REPORT DATED 12.07.2021 ISSUED**| ||**BY THE CERSAI.**| |**Exhibit P8**|**COPY OF LETTER DATED25.02.2021 ISSUED BY THE**| ||**RESPONDENT TO THE SECOND PETITIONER.**| |**Exhibit P9**|**COPY OF STATEMENT OF ACCOUNT IN THE NAME OF**| ||**FIRST RESPONDENT TO THE 1ST PETITIONER.**| |**Exhibit P10**|**COPY F NOTICE DATED 20.07.2017 ISSUED BY THE**| ||**RESPONDENT TO THE PETITIONERS PURPORTEDLY**| ||**UNDER SN.13(2) OF SARFAESI ACT.**| |**Exhibit P11**|**TRUE COPY OF THE NOTICE ISSUED BY THE**| ||**ADVOCATE COMMISSIONER VISHNU .C .NAIR ON**| ||**10.11.2021.**|