Dennis Joseph S/O Joseph v. Kerala State Co-operative Bank Ltd.

WA.No. 297 OF 2021 -1- ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR** ## **&** **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **WEDNESDAY, THE 10TH DAY OF FEBRUARY 2021 / 21ST MAGHA,1942** ## **WA.No.297 OF 2021** ## **AGAINST THE JUDGMENT IN WP(C) 28650/2020(E) OF HIGH COURT OF KERALA** ## **APPELLANT/S:** **DENNIS JOSEPH S/O.JOSEPH, EROORIKKAL HOUSE, KOODARNJI P.O., KOZHIKODE 673 604.** **BY ADV. SRI.E.NARAYANAN** ## **RESPONDENT/S:** **1 THE KERALA STATE CO-OPERATIVE BANK LTD. RECOVERY SECTION, KALLAI ROAD, PALAPPURAM P.O., KOZHIKODE 673 002.** **2 THE AUTHORIZED OFFICER THE KERALA STATE CO-OPERATIVE BANK LTD., KALLAI ROAD, PALAPPURAM P.O., KOZHIKODE 673 002.** ## **OTHER PRESENT:** ## **SRI. GILBERT GEORGE CORREYA SC FOR RESPONDENTS** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 10.02.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** WA.No. 297 OF 2021 -2- ## **J U D G M E N T** Dated this the 10[th] day of February, 2021 ## S. Manikumar, C. J. Instant writ appeal is filed challenging the judgment dated 13.01.2021 in W.P. (C) No. 28650 of 2020, whereby, the writ court declined to grant the reliefs sought for. 2. Material on record discloses that, petitioner had availed a business loan of Rs. 30,00,000/-, from the Kerala State Co-operative Bank Ltd., Thiruvambadi branch, Kozhikode. According to the appellant, after availing the loan, initially, the petitioner was prompt in repaying the monthly installments. However, later, due to Covid – 19 pandemic, there occurred loss in business, causing heavy financial stringency, and also due to some personal grievances, petitioner could not repay the loan amount. 3. The Recovery Section, Kerala State Co-operative Bank Ltd., Kozhikode, the 1[st] respondent, through the Authorized Officer, Kerala State Co-operative Bank Ltd., Kozhikode, the 2[nd] respondent, issued ## WA.No. 297 OF 2021 -3- Ext. P1 notice dated 03.09.2020, under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. On receipt of Ext. P1 notice dated 03.09.2020, petitioner submitted Ext. P2 representation dated 27.10.2020, before the Manager, Kerala State Co-operative Bank Ltd., Thiruvambadi branch, Kozhikode, seeking settlement of the principle amount, by way of one time settlement. It is the contention of the petition that, the Bank has declined the request of the petitioner, giving a breathing time, to pay off the liability. ## 4. The reliefs sought for in the writ petition are as follows:- “1. Issue a writ of Mandamus or other appropriate writ, order or direction directing the respondents to keep in abeyance all further proceedings pursuant to Ext.P1 till such period as directed by this Honourable Court. 2. Issue such orders as deem fit by this Honourable Court enabling the petitioner to pay off the liability mentioned in Exhibit P1.” 5. Considering the rival submissions and going through the material on record, writ court held thus:- “3. I have considered the submissions so advanced. The WA.No. 297 OF 2021 -4- term of loan expired in the year 2016 and the outstanding amount is more than 37,00,000/-. The petitioner is challenging notice at Ext.P1 which is issued under Section 13(2) of the SARFAESI Act. Thus the petitioner is challenging the steps taken by the secured creditor for recovery of debt. There is alternate and most efficacious remedy of approaching the DRT for challenging the steps action taken by the secured creditor for recovery of loan. Though the learned counsel for the petitioner is stating at the bar that he is not challenging the action under the SARFAESI Act, the entire pleadings and reliefs sought makes it clear that the main challenge is the action taken under the SARFAESI Act. The petition is therefore not maintainable in the light of judgment of the Hon'ble Supreme Court in the matter of **Authorized Officer, State Bank of Travancore and another vs. Mathew K.C ((2018) 3 Supreme Court Cases 85) (DB)** . The petition is accordingly dismissed. However the petitioner may approach the respondent Bank for which payment of entire amount of loan with overdue interest and other charges and the respondent Bank may consider the same, if so advised according to law.” 6. Aggrieved by the judgment in W. P. (C) No. 28650 of 2020 dated 13.01.2021, instant appeal is filed, _inter alia,_ on the following grounds:- ## A. The loan due to the respondent could not be remitted within WA.No. 297 OF 2021 -5- time, for reasons beyond the control of the appellant. The loss in business, and other related family issues, had adversely affected the life of the appellant. - B. The appellant is ready and willing to pay and discharge the debt towards the respondent. The appellant requires some breathing time to raise the amount required for settlement. In the meanwhile, if the respondent takes coercive steps and initiate auction proceedings, it will cause irreparable loss and hardship to the appellant and his family members. - C. Stand of the respondent bank that (i) giving a 5% reduction on the existing interest, (ii) reduction of a sum of Rs.91,606 and (iii) thus clear the liability by 10-12-2020 is so inhuman, and a proposal which the appellant cannot abide by, especially due to the present pandemic situation. - D. Learned Single Judge ought to have considered the willingness of the appellant to pay off the loan arrears in instalments. 7. The Hon'ble Supreme Court has held that, writ petitions, as against proceedings initiated under the SARFAESI Act, 2002, should WA.No. 297 OF 2021 -6- not be entertained. On that aspect, reference can be made to a few decisions of the Hon'ble Apex Court. In **Authorised Officer, State Bank of Travancore and Another v. Mathew K.C.** reported in **(2018) 3 SCC 85** , at paragraphs 15 to 18, the Hon'ble Supreme Court held as under: “15. It is the solemn duty of the Court to apply the correct law without waiting for an objection to be raised by a party, especially when the law stands well settled. Any departure, if permissible, has to be for reasons discussed, of the case falling under a defined exception, duly discussed after noticing the relevant law. In financial matters grant of ex-parte interim orders can have a deleterious effect and it is not sufficient to say that the aggrieved has the remedy to move for vacating the interim order. Loans by financial institutions are granted from public money generated at the tax payers expense. Such loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as entrustment by the public. Timely repayment also ensures liquidity to facilitate loan to another in need, by circulation of the money and cannot be permitted to be blocked by frivolous litigation by those who can afford the luxury of the same. The caution required, as expressed in **United Bank of India v. Satyawati Tondon and others** [AIR 2010 SC 3413], has also not been kept in mind before passing the impugned interim order:- **==> picture [312 x 30] intentionally omitted <==** WA.No. 297 OF 2021 -7- 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**_ , [1969 AIR 556, 1969 SCR (1) 518], _**Whirlpool Corpn. v. Registrar of Trade Marks**_ [(1998) 8 SCC 1], and _**Harbanslal Sahnia v. Indian Oil Corpn. Ltd.**_ [AIR 2003 SC 2120] 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) 16. The writ petition ought not to have been entertained and the interim order granted for the mere asking without assigning special reasons, and that too without even granting opportunity to the Appellant to contest the maintainability of the writ petition and failure to notice the subsequent developments in the interregnum. The opinion of the Division Bench that the counter affidavit having subsequently been filed, stay/modification could be sought of the interim order cannot be considered sufficient justification to have declined interference. 17. We cannot help but disapprove the approach of the High Court for reasons already noticed in **Dwarikesh Sugar Industries Ltd. v. Prem Heavy Engineering Works (P) Ltd.** WA.No. 297 OF 2021 -8- ## **and Another** , [(1997) 6 SCC 450], observing :- “32. When a position, in law, is well settled as a result of judicial pronouncement of this Court, it would amount to judicial impropriety to say the least, for the subordinate courts including the High Courts to ignore the settled decisions and then to pass a judicial order which is clearly contrary to the settled legal position. Such judicial adventurism cannot be permitted and we strongly deprecate the tendency of the subordinate courts in not applying the settled principles and in passing whimsical orders which necessarily has the effect of granting wrongful and unwarranted relief to one of the parties. It is time that this tendency stops.” 18. The impugned orders are therefore contrary to the law laid down by this Court under Art.141 of the Constitution and unsustainable. They are therefore set aside and the appeal is allowed.” 8. In Civil Appeal Nos. 10243-10250 of 2018 **[ICICI Bank Ltd.** **v. Umakanta Mohapatra and Others]** , by order dated 05.10.2018, the Honourable Apex Court reaffirmed the legal position that, High Court has no jurisdiction to entertain writ petitions under Article 226 of the Constitution of India, relating to matters coming under the purview of SARFAESI Act, 2002, where a statutory remedy is available by filing an application under Section 17 of the said Act. 9. In **K. C. Mathew's** case stated supra, Hon'ble Apex Court held that writ petition challenging the proceedings initiated against WA.No. 297 OF 2021 -9- SARFAESI Act, 2002, is not maintainable, in the light of the alternate remedy provided under the statute. In the light of the decisions stated supra, we are not inclined to interfere with the judgment in W.P(C). No. 28650 of 2020 dated 13.01.2021. Writ Appeal fails and it is dismissed. **Sd/-** **S.MANIKUMAR CHIEF JUSTICE** **Sd/-** **SHAJI P.CHALY** **JUDGE** Eb ///TRUE COPY/// P. A. TO JUDGE