Govindan Namboothiri v. Authorized Officer, Federal Bank Ltd. and Another

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE A.M.BADAR** **MONDAY, THE 22ND DAY OF FEBRUARY 2021 / 3RD PHALGUNA, 1942** ## **WP(C).No.2743 OF 2021(P)** ## **PETITIONER/S:** **GOVINDAN NAMBOOTHIRI, AGED 60 YEARS, S/O.VISHNU NAMBOOTHIRI, CHANDRAMANA ILLAM, OACHIRA P.O., KOLLAM 690 562** **BY ADVS. SHRI.E.N.VISHNU NAMBOODIRI SRI.P.REJINARK SRI.NARAYANAN P POTTY SRI.M.K.SASEENDRAN (MELEL) SRI.P.SANKARAN NAMPOOTHIRI** ## **RESPONDENT/S:** **1 THE AUTHORISED OFFICER, FEDERAL BANK LTD., LCRD/MAVELIKKARA DIVISION, 1ST FLOOR, PADINJARETHALAKKAL, CHERIYAN CHAMBERS, MAVELIKKARA, ALAPPUZHA, PIN 690 101** **2 THE ASSISTANT VICE PRESIDENT, FEDERAL BANK LTD., THODIYOOR BRANCH, THODIYOOR NORTH P.O., KOLLAM 690 523 3 THRIVIKRAMAN POTTY N., PROPRIETOR, M/S. SURYA ASSOCIATES, S/O.NARAYANAN POTTY, VANCHIYOOR ILLAM, SRP MARKET P.O., PIN 690 539 R1-2 BY ADV. SRI.SUNIL SHANKER R1-2 BY ADV. SMT.K.ARUNDHATHI R3 BY ADV. SRI.M.P.RAMNATH R3 BY ADV. SRI.P.RAJESH (KOTTAKKAL) R3 BY ADV. SEI.M.VARGHESE VARGHESE R3 BY ADV. SMT.S.SANDHYA R3 BY ADV. SRI.BEPIN PAUL R3 BY ADV. SRI.SHALU VARGHESE R3 BY ADV. SRI.S.DEEPAK R3 BY ADV. SRI.ANTONY THARIAN R3 BY ADV. SHRI.ARJUN S.** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 22.02.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C).No.2743 OF 2021** **2** ## **JUDGMENT** **Dated this the 22nd day of February 2021** **Heard all parties. The petitioner is a guarantor. The 3[rd] respondent had taken a financial assistance from the 1[st] and 2[nd] respondents bank. Security interest in the came to be created for obtaining financial assistance.** **2. Learned Counsel for the petitioner who happens to be a guarantor, limited his argument by contending that the respondent Nos.1 and 2 should be restrained from causing atrocities or waste in the property and condition of the property should not be changed. He argued that the petitioner has placed on record documents at Exts.P1, P2 and P8 showing that the property in question is an agricultural property. Learned Counsel for the petitioner rests his** **arguments with this contention.** **3. It is now relevant to place on record the arguments of the learned Counsel for the 3[rd]** **WP(C).No.2743 OF 2021** **3** **respondent loanee. Learned Counsel for the 3[rd] respondent argued that the said notice for sale of the secured asset was firstly issued on 08.11.2019 and thereafter, another sale notice was issued on 14.01.2020 (Ext.P5). This notice at Ext.P5 is only 28 days notice and not a clear 30 days notice as envisaged by law. It is further argued by learned Counsel for the 3[rd] respondent that no 30 days notice was served on the parties as per requirement of Rule** **8 of the Security Interest (Enforcement) Rules. It is further submitted by learned Counsel for the 3[rd] respondent that the subject property is an agricultural land, and as such, it is not covered by the SARFAESI Act and therefore, the action taken by the 1[st] and 2[nd] respondents is** _**perse**_ **illegal.** **4. Learned Counsel for the 1[st] and 2[nd] respondents opposed the petition by contending that the 1[st] sale notice was challenged by filing the Securitization Application, wherein, no stay has been granted and that the respondents Nos.1 and 2 are disputing the fact that the secured asset is an agricultural land.** **WP(C).No.2743 OF 2021** **4** ## **5. The prayer made in this petition reads thus:** _**i) Quash Exhibits P3 and P5 notices and further proceedings pursuant to then as they are not within the limits of the power conferred by the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act and connected Rules:**_ _**ii) Direct the Hon'ble Debt Recovery Tribunal, Ernakulam to decide the issue regarding the legal existence Exhibit P3 and P5 notices and to stay all further proceedings in pursuance to the said notices till a final decision in Exhibit P4 proceeding, in case if this Hon'ble finds that the Debt Recovery Tribunal has jurisdiction to proceed with Exhibit P4 proceedings.**_ _**iii) Grant such other reliefs as this Honourable Court may deem fit and proper in the facts and circumstances of the case.**_ **6. It is thus clear that the guarantor who happens to be the petitioner, is challenging the action taken by the secured creditor under the SARFAESI Act before this Court. The Hon'ble Apex** **WP(C).No.2743 OF 2021** **5** **Court in the matter of** _**Authorized Officer, State Bank of Travancore and another**_ vs. _**Mathew K.C**_ (2018(1) KLT 784) _the petition as framed and filed is not maintainable as the remedy lies elsewhere. No further case of indulgence is shown in the light of availability of alternate and most efficacious remedy under the SARFAESI Act._ _5. ….... The discretionary jurisdiction under Article 226 is not absolute but has to be exercised judiciously in the given facts of a case and in accordance with law. The normal rule is that a writ petition under Article 226 of the Constitution ought not to be entertained if alternate statutory remedies are available, except in cases falling within the well defined exceptions as observed in Commissioner of Income Tax and Others vs. Chhabil Dass Agarwal, 2014 (1) SCC 603, as follows:_ _“15. Thus, while it can be said that this Court has recognised some exceptions to the rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an_ **WP(C).No.2743 OF 2021** **6** _order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal case, Titaghur Paper Mills case and other similar judgments that the High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation.”_ _9. Even prior to the SARFAESI Act, considering the alternate remedy available under the DRT Act it was held in Punjab National Bank vs. O.C. Krishnan and others, (2001) 6 SCC 569, that :-_ _“6. The Act has been enacted with a view to provide a special procedure for recovery of debts due to the banks and the financial institutions. There is a hierarchy of appeal provided in the Act, namely, filing of an appeal under Section 20 and this fast-track procedure cannot be allowed to be derailed either by taking recourse to proceedings under_ **WP(C).No.2743 OF 2021** **7** _Articles 226 and 227 of the Constitution or by filing a civil suit, which is expressly barred. Even though a provision under an Act cannot expressly oust the jurisdiction of the court under Articles 226 and 227 of the Constitution, nevertheless, when there is an alternative remedy available, judicial prudence demands that the Court refrains from exercising its jurisdiction under the said constitutional provisions. This was a case where the High Court should not have entertained the petition under Article 227 of the Constitution and should have directed the respondent to take recourse to the appeal mechanism provided by the Act.”_ _10. In Satyawati Tandon (supra), the High Court had restrained further proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the SARFAESI Act, the availability of remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal, the object and purpose of the legislation, it was observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available holding :-_ **WP(C).No.2743 OF 2021** **8** _“43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute._ **==> picture [80 x 6] intentionally omitted <==** **WP(C).No.2743 OF 2021** **9** _55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection.”_ _11. In Union Bank of India and another vs. Panchanan Subudhi, 2010 (15) SCC 552, further proceedings under Section 13(4) were stayed in the writ jurisdiction subject to deposit of Rs.10,00,000/- leading this Court to observe as follows :_ _“7. In our view, the approach adopted by the High Court was clearly erroneous. When the respondent failed to abide by the terms of one-time settlement, there was no justification for the High Court to entertain the writ petition and that too by ignoring the fact that a statutory alternative remedy was available to the respondent under Section 17 of the Act.”_ **WP(C).No.2743 OF 2021** ## **10** _12. The same view was reiterated in Kanaiyalal Lalchand Sachdev and others vs. State of Maharashtra and others, 2011 (2)_ _SCC 782 observing:_ _“23. In our opinion, therefore, the High Court rightly dismissed the petition on the ground that an efficacious remedy was available to the appellants under Section 17 of the Act. It is well settled that ordinarily relief under Articles 226/227 of the Constitution of India is not available if an efficacious alternative remedy is available to any aggrieved person. (See Sadhana Lodh V. National Insurance Co. Ltd; Surya Dev Rai v. Ram Chander Rai and SBI v. Allied Chemical Laboratories.)”_ _13. In Ikbal (supra), it was observed that the action of the Bank under Section 13(4) of the ‘SARFAESI Act’ available to challenge by the aggrieved under Section 17 was an efficacious remedy and the institution directly under Article 226 was not sustainable, relying upon Satyawati Tandon (Supra), observing :_ _“27. No doubt an alternative remedy is not an absolute bar to the exercise of extraordinary jurisdiction under Article 226 but by now it is well settled that where_ **WP(C).No.2743 OF 2021** **11** _a statute provides efficacious and adequate remedy, the High Court will do well in not entertaining a petition under Article 226. On misplaced considerations, statutory procedures cannot be allowed to be circumvented._ _28…….In our view, there was no justification whatsoever for the learned Single Judge to allow the borrower to bypass the efficacious remedy provided to him under Section 17 and invoke the extraordinary jurisdiction in his favour when he had disentitled himself for such relief by his conduct. The Single Judge was clearly in error in invoking his extraordinary jurisdiction under Article 226 in light of the peculiar facts indicated above. The Division Bench also erred in affirming the erroneous order of the Single Judge.” 14. A similar view was taken in Punjab National Bank and another vs. Imperial Gift House and others, (2013) 14 SCC 622, observing:“3. Upon receipt of notice, the respondents filed representation under Section 13(3-A) of the Act, which was rejected. Thereafter, before any further action could be taken under Section 13(4) of_ **WP(C).No.2743 OF 2021** **12** _the Act by the Bank, the writ petition was filed before the High Court._ _4. In our view, the High Court was not justified in entertaining the writ petition against the notice issued under Section 13(2) of the Act and quashing the proceedings initiated by the Bank.”_ _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_ **WP(C).No.2743 OF 2021** ## _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 Satyawati Tandon (supra), has also not been kept in mind before passing the impugned interim order:-_ _“46. It must be remembered that stay of an action initiated by the State and/or its 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, Whirlpool Corpn. V. Registrar of Trade Marks and Harbanslal Sahnia v. Indian_ **WP(C).No.2743 OF 2021** **14** _Oil Corpn. Ltd. and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order.”_ _17. We cannot help but disapprove the approach of the High Court for reasons already noticed in Dwarikesh Sugar Industries Ltd. vs. Prem Heavy Engineering Works (P) Ltd.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.”_ ## **7. In the case in hand, undisputedly, the 1[st] sale** **WP(C).No.2743 OF 2021** **15** **notice was issued on 08.11.2019, Ext.P3, for the proposed sale which was to take place on 20.12.2019. This sale notice, Ext.P3, which is challenged in this petition is also pending adjudication before the learned Debt Recovery Tribunal in S.A.No.390/2019 filed by the petitioner. Learned Debt Recovery Tribunal has not granted any stay to the proposed sale in the Securitization Application, which is still pending adjudication. Consequently, the 3[rd] sale notice dated 14.01.2021, Ext.P5, is issued by the secured creditor and the 3[rd] lot of the property is sold out in pursuant to this sale notice, Ext.P5. That sale is reportedly confirmed on 11.02.2021.** **8. The question whether the secured assets comprises of agricultural land or not is pending adjudication in S.A.No.390/2019. Respondents Nos.1 and 2 are categorically disputing the fact that the secured asset is agricultural property exempted from the operation of SARFAESI Act. This disputed question of facts cannot be gone into in the writ jurisdiction by this Court. Subsequent sale notice and** **WP(C).No.2743 OF 2021** **16** **action taken there under by the secured creditor is a consequential action in pursuant to the 1[st] sale notice, Ext.P3, dated 08.11.2019 as well as the demand notice issued under Section 13(2) of the SARFAESI Act. In other words, what is impugned in this petition is the steps taken by the secured creditor for enforcement of the security interest under the SARFAESI Act. The Securitization Application challenging the steps taken by the secured creditor is already pending before learned Debt Recovery Tribunal.** **In this view of the matter, the petitioner as framed and filed is not maintainable as alternative efficacious remedy is already available to the petitioner. The petition is therefore, dismissed.** **Sd/-** **A.M.BADAR** **JUDGE** **uu** **23.2.2021** **WP(C).No.2743 OF 2021** **17** ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF CERTIFICATE ISSUED BY AGRICULTURAL OFFICER, OACHIRA DATED 24.4.2018.** **EXHIBIT P2 TRUE COPY OF CERTIFICATE ISSUED BY VILLAGE OFFICER, OACHIRA DATED 15.11.2018.** **EXHIBIT P3 TRUE COPY OF NOTICE DATED 8.11.2019 ISSUED BY THE 1ST RESPONDENT.** **EXHIBIT P4 TRUE COPY OF S.A.NO.390/2019 FILED BEFORE THE DEBTS RECOVERY TRIBUNAL, ERNAKULAM.** **EXHIBIT P5 TRUE COPY OF NOTICE DATED 14.1.2021 ISSUED BY THE 1ST RESPONDENT.** **EXHIBIT P6 TRUE COPY OF JUDGMENT IN W.P.(C) NO.23792/2018 DATED 5.10.2018 OF THIS HON'BLE COURT.** **EXHIBIT P7 TRUE COPY OF JUDGMENT IN CIVIL APPEAL NO.6645/2018 OF HON'BLE SUPREME COURT.** **EXHIBIT P8 TRUE COPY OF NOTICE DATED 4.8.2016 ISSUED BY THE 1ST RESPONDENT**