Govindan Nair v. Board of Directors of Indian Overseas Bank & Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **TUESDAY, THE 21ST DAY OF FEBRUARY 2017/2ND PHALGUNA, 1938** ## **WP(C).No. 5875 of 2017 (H) ---------------------------** ## **PETITIONER :** **---------------------** **GOVINDANNAIR, AGED 62 YEARS, S/O.RAMAN PILLAI, RESIDENT OF B-11, SREE LAKSHMI APARTMENTS, V.P.ROAD SARASWAT COLONY, DOMBIVALI (EAST), MUMBAI-421 201** ## **BY ADV. SRI.P.BIJIMON** **RESPONDENT(S): ---------------------------** **1. THE BOARD OF DIRECTORS OF INDIAN OVERSEAS BANK, REPRESENTED BY ITS CHAIRMAN & MANAGING DIRECTOR, 763 ANNA SALAI, CHENNAI-600 002** ## **2. INDIAN OVERSEAS BANK,** - **REPRESENTED BY ITS BOARD OF DIRECTORS, 763 ANNA SALAI, CHENNAI-600 002** **3. AUTHORIZED OFFICER, INDIAN OVERSEAS BANK, BREACH CANDY BRANCH, 65/67, MAZDA MANSION, BHULABHAI DESAI ROAD, BREACH CANDY, MUMBAI-400 026. (IN HIS OFFICIAL CAPACITY).** **4. CHIEF MANAGER, INDIAN OVERSEAS BANK, BREACH CANDY BRANCH, 65/67, MAZDA MANSION, BHULABHAI DESAI ROAD, BREACH CANDY, MUMBAI-400 026 (IN HIS OFFICIAL CAPACITY).** **5. MR.DAVINDER KUMAR PURI, CHIEF MANAGER, INDIAN OVERSEAS BANK, BREACH CANDY BRANCH, 65/67, MAZDA MANSION, BHULABHAI DESAI ROAD, BREACH CANDY, MUMBAI-400 026 (IN HIS PERSONAL CAPACITY)** **2/-** **-2-** ## **WP(C).NO.5875/2017** **6. THE CHAIRMAN AND MANAGING DIRECTOR, INDIAN OVERSEAS BANK, 763 ANNA SALAI, CHENNAI-600 002** **7. THE GENERAL MANAGER, INDIAN OVERSEAS BANK, MAKER TOWER "E" V FLO, CUFFE PARADE, MUMBAI-400 005** ## **8. APPROVED SERVICE PROVIDER,** - **INDIAN OVERSEAS BANK, FLAT NO.102, AMRUTHA APARTMENTS, PLOT.20, MOTI NAGAR, HYDERABAD-500 018** ## **9. EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LTD.,** - **EXPRESS TOWERS, 10TH FLOOR, NARIMAN POINT, MUMBAI-400 021** ## **10. THE GOVERNOR,** - **RESERVE BANK OF INDIA, CENTRAL OFFICE BUILDING, SHAHIDBHAGAT SINGH ROAD, MUMBAI-400 001** ## **11. THE SECRETARY,** - **DEPARTMENT OF FINANCIAL SERVICES, (BANKING), JEEVAN DEEP BUILDING, PARLIAMENT STREET, NEW DELHI-110 001** **12. THE SUPERINTENDENT OF POLICE, ALAPPUZHA.** **13. DISTRICT MAGISTRATE, THANE, MUMBAI.** **14. THE SENIOR SUPERINTENDENT OF POLICE, DOMBIVALI (EAST), MUMBAI-421 201** ## **15. THE STATE OF KERALA,** - **REPRESENTED BY CHIEF SECRETARY TO GOVERNMENT OF KERALA, SECRETARIAT, THIRUVANANTHAPURAM (DT), KERALA (ST)-695 001** **16. THE STATE OF MAHARASHTRA, REPRESENTED BY CHIEF SECRETARY TO GOVERNMENT OF MAHARASHTRA, SECRETARIAT, MANTRALAYA, MUMBAI-421 201** **17. ADV. SHIJIMOL.M.C., ADVOCATE COMMISSIONER, DISTRICT COURT, ALAPPUZHA, KERALA STATE.** **3/-** **-3-** ## **WP(C).NO.5875/2017** **18. THE TAHSILDAR, NEAR MAHATMA PHULE POLICE CHOWK, MURBAAD ROAD, KALYAN (WEST), PIN-421 301** ## **19. THE TAHSILDAR, CHENGANNOOR.** **R2 TO R8 BY STANDING COUNSEL SRI.SUNIL SHANKAR R11 BY ASSISTANT SOLICITOR GENERAL SRI.N.NAGARESH R12,R15 & R19 BY GOVT PLEADER SRI.MATHEW GEORGE VADAKKEL** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 21-02-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **sts** ## **WP(C).No. 5875 of 2017 (H) ----------------------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS** ## **---------------------------------------** - **EXT.P1 THE COPY OF THE NOTICE PURPORTEDLY UNDER SECTION 13(2) OF THE SARFAESI ACT, 2002 DATED 5.11.2015, WHICH IS NEVER EVER SERVED TO THE COMPANY/PURPORTED GUARANTOR/PETITIONER** - **EXT.P2 THE COPY OF INITIAL DEMAND NOTICE DATED 24.7.2015, WHICH WAS ISSUED HASTILY WITH CASUAL ATTITUDE AND MALA FIDE INTENTIONS,WAS WITHDRAWN SUBSEQUENTLY** - **EXT.P3 THE COPY OF THE LETTER DATED 20.10.2015 ISSUED BY THE AUTHORISED OFFICER OF THE RESPONDENT BANK INTIMATING THE WITHDRAWAL OF DEMAND NOTICE AND POSSESSION OF PROPERTY LETTER** - **EXT.P4 THE COPY OF LETTER DATED 26.10.2015 TO THE RESPONDENT BANK BY THE COUNSEL OF THE COMPANY DEMANDING INFORMATION** - **EXT.P5 THE COPY OF REPLY DATED 5.11.2015 BY THE RESPONDENT BANK TO THE COUNSEL FO THE COMPANY DENYING INFORMATION** - **EXT.P6 THE COPY OF THE NOTICE PURPORTEDLY UNDER SECTION 13(4) OF THE SARFAESI ACT,2002 DATED 3.2.2016 WHICH IS NEVER EVER SERVED TO THE COMPANY/PURPORTED GUARANTOR/PETITIONER** - **EXT.P7 THE COPY OF THE POSSESSION NOTICE PUBLISHED FOR THE E-AUCTION OF THE SCHEDULED PROPERTIES, DATED 1.3.2016, AND 15.1.2016 WHICH IS NEVER EVER SERVED TO THE COMPANY/PURPORTED GUARANTOR/PETITIONER** - **EXT.P8 THE COPY OF THE LETTER DATED 9.3.2015 TO THE RESPONDENT BANK BY THE COMPANY** - **EXT.P9 MASTER CIRCULAR PRUDENTIAL NORMS ON INCOME RECOGNITION, ASSET CLASSIFICATION, PROVISIONING & OTHER RELATED MATTERS NO.RBI/2004-05/286 UBD.IP.MC. NO.15/12.05.05/2004-05 DATED, DECEMBER 2, 2004 (UPDATED UP TO JUNE 30, 2004)** - **EXT.P10 RBI/2014-15/73 DBR. NO. CID.BC.57/20.16.003/2014-15 DATED, JULY 1, 2014 (UPDATED UP TO JANUARY 07,2015)** **EX.P11 THE TYPED COPY OF THE PROCEEDINGS (A-DIARY) HELD BEFORE DRT-1 ERNAKULAM ON 27.12.2016 ADJOURNING THE MATTER TO 5.1.2017 AND DIRECTING THE RESPONDENT BANK TO FILE COUNTER AFFIDAVIT, IF ANY, ON OR BEFORE 30.12.2016** **EXT.P12 COPY OF THE WRIT OF COMMISSION DATED 23.11.2016 IN CMP NO.3666/16 IN MC NO.395/16 BY THE LD.CJM, ALAPPUZHA BY WHICH THE ADVOCATE COMMISSION WAS APPOINTED** - **EXT.P13 THE COPY OF THE NOTICE ISSUED BY THE ADVOCATE COMMISSIONER FOR THE POSSESSION OF THE PETITIONER'S PROPERTIES DATED NIL** **2/-** **-2-** ## **WP(C).NO.5875/2017** - **EXT.P14 THE COPY OF THE EX PARTE ORDER DATED 19.11.2016 BY LD. DISTRICT MAGISTRATE, THANE** - **EXT.P15 TYPED COPY OF THE PROCEEDINGS OF DRT-II DATED 5TH JANUARY,2017 IN SA 233/16** - **EXT.P16 A COPY OF THE NOTICE DATED 3.1.17 PUBLISHED IN FREE PRESS JOURNAL DATED 3.1.17 BY WHICH THE RESIDENTIAL PROPERTY AT VENMONEY, CHENGANNUR IS PUT FOR E-AUCTION SALE TO BE CONDUCTED ON 8.2.17** - **EXT.P17 THE COPY OF THE PROCESS/ORDER DATED 7.2.2017 ISSUED BY THE MANDAL ADHIKARI, DOMBIVALI(W) DIST. THANE.** **RESPONDENT(S)' EXHIBITS:** **NIL** **------------------------------------------** **/TRUE COPY/** **P.A.TO JUDGE** **sts** ## K. Vinod Chandran, J ---------------------------------------W.P.(C).No.5875 of 2017-H ----------------------------------------Dated this the 21[st] day of February, 2017 ## **JUDGMENT** The petitioner had filed an identical writ petition [W.P.(C) No.1477 of 2017] against the proceedings initiated by the 4[th] respondent-Bank for recovery of total outstanding dues in a credit facility under the SARFAESI Act against the mortgaged properties of the petitioner. At the earlier instance, the petitioner had taken up two contentions in the arguments addressed, as to the petitioner being entitled to a set off, which could be agitated only if an Original Application is filed by the respondent-Bank under The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 [for brevity “RDDB Act”]. It was contended that an application, provided under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [for brevity “SARFAESI Act”] to the Debts Recovery Tribunal [for brevity “DRT”] against proceedings initiated under Section 13(4), would not be a - 2 - WP(C) No.5875 of 2017 remedy to agitate the said claim of set off and the Bank having initiated SARFAESI proceedings alone, the petitioner is rendered helpless with no remedy to agitate his contention of set off. A declaration was also sought, in the aforesaid circumstance, that a suit would be maintainable. 2. On the admission of the learned Counsel appearing for the petitioner himself, this Court found that there was a civil suit initiated by the petitioner before the Mumbai City Civil Court. The petitioner's apprehension was that the same would not be entertained, since the Bank has raised a preliminary objection of maintainability. It was also disclosed that the petitioner had filed a Securitisation Application [for brevity “SA”] in the DRT against the proceedings initiated by the Bank, under Section 13(4) and before the Chief Judicial Magistrate, Alappuzha, under Section 14; to take possession of a property situated within the State of Kerala, which was admittedly mortgaged in favour of the respondent-Bank. This Court found that the petitioner could claim a set off in the Original Application filed by the Bank before the DRT, Mumbai and also could challenge the proceedings under the SARFAESI Act, against WP(C) No.5875 of 2017 - 3 - the mortgaged property lying within the State of Kerala, before the DRT, Ernakulam. The claim of set off already having been taken before the Mumbai Civil Court; any adverse order there would have to be agitated before the jurisdictional High Court. Leaving open such remedies, the writ petition was closed. 3. When this present writ petition came up for admission, it was argued that there was a different cause of action insofar as the respondent-Bank having proceeded with the steps to take possession of a property lying within the jurisdiction of the District Magistrate, Thane under Section 14 of the SARFAESI Act. It is submitted that an application is filed in the SA; pending before the DRT, Ernakulam, which is posted to today the 20[th] . However the pleadings and the learned Counsel for the petitioner, assert that the petitioner does not consider the remedy to be _of 'any avail to him' (sic)_ and that the ' _denial of equity and justice at the hands of the DRT is fait accompli' (sic)._ There is nothing stated to reveal the reasons for such broad assumptions and immediately it has to be noticed that no copies have been produced in the writ petition, of such an application or SA No. 233/2016 said to have been already WP(C) No.5875 of 2017 - 4 - filed before the DRT Ernakulam; one proceeding alone of which is seen produced as Exhibit P15 in the writ petition. This obviously was after the order of the CJM, Alappuzha and the District Magistrate, Thane. 4. It was argued that since one of the properties is situated within the State of Kerala and there was also a SA filed against the proceedings taken against that property under Section 14 before the DRT, Ernakulam, the petitioner should be permitted to challenge the order of the District Magistrate, Thane also before the DRT, Ernakulam. Reliance is placed on _**Mardia Chemicals Ltd. v. Union of India**_ **[(2004) 4 SCC 311]** and specifically paragraph 59, in which it was held by the Hon'ble Supreme Court that a proceeding under Section 17 of the SARFAESI Act before the DRT against an action under Section 14 of the Act would be akin to institution of a suit. In such circumstance, the petitioner being the _dominus litis_ , is entitled to invoke the remedy before any of the forums in whose jurisdiction any one of the cause of action arises. Hence, a direction is sought to the DRT to entertain the challenge made against the proceedings issued by the District Magistrate, WP(C) No.5875 of 2017 - 5 - Thane. However without a copy of the SA this Court is unable to find any challenge having been made before the DRT, Ernakulam and if made then it is for the DRT to first consider the same, which order could be challenged appropriately. 5. On the arguments put forth by the learned Counsel, this Court also looked into the Judges Papers with respect to the earlier writ petition [WP(C) No.1477 of 2017]. This Court is surprised to note that the present writ petition but for minor changes, is a verbatim reproduction of the earlier writ petition. Exhibits P1 to P16 are those produced in the earlier writ petition itself. The additional Exhibit in the instant writ petition is Exhibit P17; a true copy of the process/order dated 07.02.2017 issued by the Mandal Adhikari, Dombivali (W), Dist.Thane; which is a direct consequence of Exhibit P14 order. The statement of facts upto paragraph 51 is verbatim reproduction. From paragraph 52 onwards, the subsequent facts with respect to the suit filed before the Mumbai City Civil Court and the proceedings taken by the Bank before the DRT, Mumbai; which were already placed before this Court at the earlier instance, though not specifically pleaded in that writ petition, are detailed; which also WP(C) No.5875 of 2017 - 6 - find a place in the judgment passed. Exhibit P17 is the only additional document placed in the present writ petition. Grounds “A” to “Q” are similar in both the writ petitions. Hence, there is no fresh ground urged before this Court in the second writ petition. The reliefs prayed for are again as in the earlier writ petition with only the prayers (j), (z) and (aa) in the earlier writ petition being absent. The present writ petition contains prayers (a) to (y) and (aa) to (hh). The interim reliefs prayed for as (a) to (d) are the interim reliefs (a), (b), (d) and (f) in the earlier writ petition. . 6. Be that as it may, the contention of the petitioner, relying on _**Mardia Chemicals Ltd.**_ ( _supra_ ) is that the petitioner is the _dominus litis and would be_ entitled to choose the forum where all or any of the cause of action arises. In this context, Section 17 of the SARFAESI Act has to be looked into. Section 17 (1) provides for an application to the DRT against any measure taken by the respondent-Bank to enforce the security interest under Section 13 (4) and (1A) provides for the filing of an application before the DRT within whose jurisdiction the cause of action wholly or in part arises . In the present case, admittedly the properties situated in the State WP(C) No.5875 of 2017 - 7 - of Maharashtra and the State of Kerala have been mortgaged. The transaction occurred in Mumbai and the petitioner is also a resident of Mumbai, as is seen from the address of the petitioner. The business, for which the credit facility was availed, was also carried on from Mumbai. The Bank initiated proceedings under the SARFAESI Act at Mumbai and served it on the petitioner at Mumbai. The mortgaged property in the State of Kerala was proceeded against under Section 14 before the jurisdictional CJM, against which a SA was filed under Section 17 before the DRT, Ernakulam. The simultaneous action of the respondent-Bank in proceeding against the properties mortgaged, which is situated in Mumbai, was before the District Magistrate, Thane. The order of the DM, Mumbai, Exhibit P14 dated 19.11.2016 is prior to the order of the CJM, Alappuzha at Exhibit P12 dated 23.11.2016. Both these were also also produced in the earlier writ petition. There was no contention taken at that point of time that the petitioner had attempted a SA under Section 17 before the DRT at Ernakulam against Exhibit P14 order of the DM, Thane. As noticed earlier this Court is in the dark as to the nature of the proceedings initiated before the DRT, WP(C) No.5875 of 2017 - 8 - Ernakulam and the contentions raised there. This Court would have called for further details but for the fact that an identical writ petition filed earlier was closed and the petitioner cannot be heard in an identical writ petition when there is no fresh cause of action. 7. As noticed above, the present writ petition filed is a verbatim reproduction of the earlier writ petition. No fresh cause of action arises from the facts pleaded, grounds raised or the reliefs sought. The Exhibits too are similar to those produced earlier with the exception of Exhibit P17. Exhibit P17 is a document in Marathi; which this Court has attempted to translate through a person conversant with the language and the general purport of the same is as follows: “Orders have been passed to confiscate the property of Sri.Govindan Nair, B-11, Lakshmi Apartments, V.P.Road, Saraswat Colony, Dombivali (East), Thane - 421 201 and to hand over the possession of the property to the Indian Overseas Bank, Mumbai. Hence, it is requested that the assistance of a police officer and a lady police officer may be made available (to give effect to the above said attachment, as per the orders), at 2.00 p.m. On 22.02.17”. - 9 - WP(C) No.5875 of 2017 This is a consequence of Exhibit P14 order and cannot be said to be a fresh cause of action. Any measure taken by the secured creditor under Section 13 (4) of the Act can be challenged under Section 17, and such measures are those provided under clause (a) to (d) of sub-section (4) of Section 13. At first blush the measures provide an independent cause of action and cannot be clubbed together. The proceedings taken before the CJM, Alappuzha and that taken before the DM, Thane are independent measures. But this Court would not say finally on the same since that has first to be urged before the DRT. The present writ petition, is not maintainable since an identical writ petition filed earlier was closed leaving liberty to agitate all contentions before the appropriate forum and the argument addressed here was never addressed before Court at that instance. The said contention too could be agitated before the appropriate forum. The writ petition is dismissed for reason of an identical writ petition having been dismissed earlier. ## **Sd/-** K.Vinod Chandran Judge. vku/- [ true copy ]