C.S. Timbers & Others v Bajaj Finance Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE N.NAGARESH** **THURSDAY, THE 29[TH] DAY OF FEBRUARY 2024/10TH PHALGUNA, 1945** **WP(C) NO. 14030 OF 2023** ## **PETITIONERS:** |**1**|**C.S. TIMBERS,**| |---|---| ||**CHANASSERY PAINGODE,**| ||**PUTHENCHIRA P.O.,**| ||**THRISSUR DISTRICT, PIN - 680682,**| ||**REPRESENTED BY ITS PROPRIETOR.**| |**2**|**THARAYIL UPENDRAN URMILA,**| ||**AGED 62 YEARS,**| ||**2/298, CHANASSERY,**| ||**PUTHENCHIRA,**| ||**THRISSUR DISTRICT -680682**| |**3**|**C. MANISH CHANDRAN,**| ||**AGED 41 YEARS**| ||**S/O. CHANDRAN,**| ||**CHANASSERY HOUSE,**| ||**VALLIVATTOM P.O.,**| ||**THRISSUR DISTRICT- 680123**| |**4**|**CHANDRAN C.S.,**| ||**AGED 74 YEARS**| ||**2/298, CHANASSERY,**| ||**PUTHENCHIRA,**| ||**THRISSUR DISTRICT – 680682**| ||**BY ADVS.**| ||**S.VINOD BHAT**| ||**ANAGHA LAKSHMY RAMAN**| ||**GREESHMA CHANDRIKA.R**| W.P.(C) No.14030/2023 : 2 : ## **RESPONDENT:** **BAJAJ FINANCE LTD., HAVING ITS CORPORATE OFFICE AT 4TH FLOOR, SURVEY NO.208/1-B, BEHIND WEIKFIELD IT PARK, VIMAN NAGAR, PUNE-411014 WITH ITS REGIONAL OFFICE AT 4TH FLOOR, DD TRADE TOWERS, KALOORKADAVANTHARA ROAD, ERNAKULAM-682017, REPRESENTED BY ITS AUTHORIZED SIGNATORY.** **BY ADV. SRI.PRADEESH CHACKO** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 29.02.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C) No.14030/2023 : 3 : ## **N. NAGARESH, J.** ````````````````````````````````````````````````````````````` ## W.P.(C) No.14030 of 2023 ````````````````````````````````````````````````````````````` _Dated this the 29[th] day of February, 2024_ ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ Petitioners, who are borrowers of a financial advance from the 1[st] respondent-Bajaj Finance Limited, are seeking to quash Ext.P3 notice issued by the Advocate Commissioner appointed by the Chief Judicial Magistrate's Court, Thrissur under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. 2. The petitioners state that the home loan was obtained from the respondent based on an agreement dated 31.10.2014. The respondent invoked the arbitration clause in the agreement to realise the loan amount from the petitioners. By Ext.P1 Claim Statement, the respondent W.P.(C) No.14030/2023 : 4 : sought to recover approximately ₹1.99 Crore from the petitioners. 3. In the Claim Petition before the Arbitrator, the respondent prayed that the petitioners be directed to handover the possession of the mortgaged residential property owned by petitioners 2 to 4. The petitioners state that the petitioners and family have no other place of abode than the mortgaged property. 4. When arbitration proceedings are pending, the respondent invoked proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and Ext.P3 notice of the Advocate Commissioner appointed under Section 14 of the Act, 2002 is now served on the petitioners, threatening to take physical possession of the property mortgaged by the petitioners. The petitioners apprehend that they will be dispossessed from the residential building where they reside with family. 5. The petitioners submit that any action based on Ext.P3 cannot continue when adjudicatory proceedings are W.P.(C) No.14030/2023 : 5 : on before the Arbitrator. The petitioners would assert that proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 are in the nature of enforcement which has to await adjudicatory proceedings before the Arbitrator. In the circumstances, Ext.P3 is liable to be quashed, contended the petitioners. 6. I have heard the learned counsel for the petitioners and the learned counsel appearing for the respondent. 7. The 1[st] petitioner is the borrower of a loan taken from the respondent as per agreement dated 31.10.2014. Petitioners 2 to 4 are co-borrowers. The loan was a home loan and an amount of ₹1.78 Crore was disbursed to the petitioners. When repayment of loan was defaulted, the respondent invoked the arbitration clause in the agreement dated 31.10.2014 and a Sole Arbitrator was appointed. One of the final reliefs sought for in the Claim Statement filed by the petitioners before the Sole Arbitrator is to direct the W.P.(C) No.14030/2023 : 6 : petitioners to forthwith handover possession of the mortgaged property, which is a residential building of petitioners 2 to 4. 8. The petitioners are challenging a notice issued by the Advocate Commissioner intimating his intention to take physical possession of the property mortgaged as security for the loan amount. Ext.P3 notice has been issued in pursuance of proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. 9. The contention of the petitioners is that since arbitration proceedings which are adjudicatory in nature, are pending, securitisation proceedings which are executory in nature, have to wait till Arbitrator passes an Award. Ext.P3 is therefore unsustainable. The petitioners would contend that there is no strict adherence to the provisions of the Act, 2002 and the Rules made thereunder before issuing Ext.P3 inasmuch as, according to the description in Ext.P3, the petitioners have no property. W.P.(C) No.14030/2023 : 7 : 10. The question arising for consideration is whether the arbitration proceedings initiated by the respondent and securitisation proceedings under the Act, 2002 can proceed simultaneously. By setting up Debts Recovery Tribunals under the RDDB Act, specialised Tribunals came into existence entertaining monetary claims by the Banks and financial institutions. Suits from civil jurisdiction were transferred to the Debts Recovery Tribunal as Tribunal was an alternative to civil court recovery proceedings. 11. The question whether parallel proceedings could go on under the RDDB Act and SARFAESI Act came up for consideration in _**Mathew Varghese v. M. Amrita Kumar and others** [(2014) 5 SCC 610]_ wherein the Hon’ble Apex Court held that SARFAESI Act will be in addition to the provisions of the RDDB Act. A reading of Sections 35 and 37 of the SARFAESI Act would make it clear that in the event of any of the provisions of the RDDB Act not being inconsistent with the provisions of the Securitisation Act, the application of both Acts would be complementary to each W.P.(C) No.14030/2023 : 8 : other. 12. The Hon’ble Apex Court considered the issue of simultaneous proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and arbitration proceedings against the borrower. The Apex Court held that it is trite to say that arbitration is an alternative to the civil proceedings. When a question was raised as to whether the matters which came within the scope and jurisdiction of the Debts Recovery Tribunal under the RDDB Act, could still be referred to arbitration when both parties have incorporated such a clause, the answer was given in the affirmative in _**HDFC Bank Limited v. Satpal Singh Bakshi** [2012 SCC Online Del 4815]._ 13. Even though the parties have opted for the mode of settlement of disputes to an Arbitral Tribunal, the provisions of the SARFAESI Act are remedy in addition to the provisions of the Arbitration Act. SARFAESI Act is intended for liquidation of secured interest through a more expeditious W.P.(C) No.14030/2023 : 9 : procedure. The Arbitration Act and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 are therefore cumulative remedies available to the secured creditors. 14. SARFAESI proceedings are in the nature of enforcement proceedings, while arbitration is an adjudicatory process. If the secured assets are insufficient to satisfy the debts, the secured creditor can proceed against the other asset in execution against the debtor after determination of the pending outstanding amount by a competent forum. Therefore, there is nothing wrong in opting for proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 even when arbitration proceedings are pending. The writ petition is therefore without any legal force and hence it is dismissed. Sd/- **N. NAGARESH, JUDGE** aks/28.02.2024 W.P.(C) No.14030/2023 : 10 : ## **APPENDIX OF WP(C) 14030/2023** **PETITIONER'S EXHIBITS:** **Exhibit P1 THE TRUE COPY OF CLAIM STATEMENT ALONG WITH DOCUMENTS CASE FILED BY THE RESPONDENT.** **Exhibit P2 THE TRUE COPY OF STATEMENT OF DEFENCE FILED BY THE PETITIONERS Exhibit P3 THE TRUE COPY OF THE NOTICE DATED 0104-2023 ISSUED BY ADVOCATE COMMISSIONER APPOINTED BY CHIEF JUDICIAL MAGISTRATE COURT, THRISSUR IN M.C. 168/2023 Exhibit P4 THE TRUE COPY OF ACKNOWLEDGEMENT CARD.**