Jinsy Sarjas v. Canara Bank

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN** **FRIDAY, THE 11TH DAY OF DECEMBER 2020 / 20TH AGRAHAYANA, 1942** ## **W.P(C) No.3116 OF 2020(L)** ## **PETITIONER:** **JINSY SARJAS, AGED 36 YEARS, S/O.YUNUS, PUTHUKAYIL PUTHIYA MALIEKKAL HOUSE, PULINCHODE, MUTTICHIRA, B.P.ANGADU, MALAPPURAM DISTRICT, PIN-676 102.** **BY ADV. SRI.J.ABHILASH** ## **RESPONDENT:** ## **M/S.CANARA BANK,** **B.P.ANGADI BRANCH, MALAPPURAM DISTRICT REPRESENTED BY ITS AUTHORISED MANAGER-679 001.** **SRI. K.V.ANIL, STANDING COUNSEL** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 11.12.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P(C) No.3116 OF 2020(L) -2- ## **JUDGMENT** The petitioner is the Managing Partner of the firm M/s. S.J. Trading, which availed a business loan for Rs.30,00,000/- from the respondent Bank, in the year 2018, by mortgaging property having an extent of 03.24 Ares situated in Re.Sy. No.372/3 of Thalakattu Village in Malappuram District, as item No.1 and another property having an extent of 2.02 Ares in Re.Sy. No.372/3 of that Village. The petitioner along with the partner of the firm stood as guarantors in the above loan transaction. Since they defaulted repayment, the respondent Bank initiated recovery proceedings, invoking the provisions under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for brevity 'the SARFAESI Act'). The partnership firm along with the petitioner herein and another filed W.P. (C) No.13711 of 2019 before this Court seeking installment facility to pay off the entire dues. That writ petition was disposed of by Ext.P1 judgment dated 17.05.2019. Paragraphs 4 to 7 and also the operative portion of that judgment read thus; “4. The learned counsel appearing for the petitioners submitted that default was occasioned for reasons beyond their control. According to the learned counsel, they are in a position to clear off the entire outstanding dues on or before 31.07.2019 and it is prayed that they be permitted to do so. 5. The learned standing counsel appearing for the respondent W.P(C) No.3116 OF 2020(L) -3- Bank submitted that the total outstanding as on date is Rs.34,20,000/-. It is submitted that the Bank is only interested in realizing the arrears and that too, in an expeditious manner. Keeping the litigation pending for a further period will not be in the best interests of the parties is the submission. 6. Without delving into the merits of the matter and being conscious of the limitations in interfering with proceedings initiated under the SARFAESI Act by the secured creditor, I am inclined to dispose of the matter by granting one more opportunity to the petitioners to clear off the outstanding dues. 7. In such circumstances, I direct the petitioner to pay a sum of Rs.2 lakhs on or before 30.05.2019. Within such date, the petitioner shall obtain the exact details of the amount due, together with interest and other charges. The said amount shall be paid in three equal monthly installments commencing from 20.06.2019 onwards. It is made clear that if any default is committed in making the payment as directed above, the benefit granted to the petitioners under this judgment would stand vacated and the petitioners will be foreclosed from challenging the proceedings taken by the Bank, under the SARFAESI Act before any other forum, including a court of law, and the respondents will be at liberty to proceed against the secured assets of the petitioners.” 2. After Ext.P1, neither the borrower nor the guarantors have chosen to make any payment whatsoever. Therefore, the respondent Bank initiated further proceedings under the provisions of the SARFAESI Act, which has resulted in the issuance of Ext.P2 sale notice dated 27.12.2019. Nearly two months after the W.P(C) No.3116 OF 2020(L) -4- issuance of Ext.P2 sale notice, the petitioner, who is the Managing Partner of the firm, filed this writ petition with the following reliefs; “(a) That this Hon'ble Court be pleased to issue a writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ order or direction under Article 226 of the Constitution of India quashing Exhibit P2 and all the recovery proceedings initiated by respondent under SARFAESI Act, 2002 against the petitioner in respect of loan obtained by the petitioner. (b) That this Hon'ble Court be pleased to issue a writ of Mandamus or a writ in the nature of Mandamus or any other appropriate writ order or direction under Article 226 of the Constitution of India to grant installment facility for three months to the petitioner to wipe off the debt due to the bank.” 3. Heard the learned counsel for the petitioner and also Sri.K.V.Anil, the learned Standing Counsel for the respondent Bank. 4. Ext.P2 sale notice, which is under challenge in this writ petition is one issued by the Authorised Officer of the respondent Bank, invoking the provisions under the SARFAESI Act. 5. In **United Bank of India v. Satyawati Tondon [(2010) 8 SCC 110]** the Apex Court was dealing with a case in which the appellant Bank sanctioned a term loan of Rs.22,50,000/- W.P(C) No.3116 OF 2020(L) -5- in favour of the 2[nd] respondent M/s.Pawan Color Lab, in November, 2004. In that loan transaction the 1[st] respondent stood as guarantor, by mortgaging her property. Since repayment of the loan was highly irregular, the loan account was classified as NonPerforming Asset (NPA). The appellant Bank issued notice under sub-section (2) of Section 13 of the Act requiring the borrower and the 1[st] respondent guarantor requiring them to pay Rs. 23,22,972/- along with future interest and incidental expenses. The said notice was followed by an application before the District Magistrate, Allahabad under Section 14 of the Act seeking assistance to take possession of the secured asset, which was allowed by order dated 25.08.2008, and noticed dated 21.01.2009 issued by the appellant Bank under sub-section (4) of Section 13 of the Act. Faced with the imminent threat of losing the mortgaged property, the 1[st] respondent filed writ petition before the High Court of Judicature at Allahabad. The Division Bench of the High Court did not even advert to the plea of the appellant Bank that the writ petition should not be entertained because an effective alternative remedy was available to the writ petitioner under W.P(C) No.3116 OF 2020(L) -6- Section 17 of the Act and passed an interim order restraining the appellant Bank from taking action in furtherance of notice issued under sub-section (4) of Section 13 of the Act. 6. In **Satyawati Tondon** , on the question as to whether the appellant Bank could have issued notices to the 1[st] respondent guarantor under sub-sections (2) and (4) of Section 13 of the Act and filed an application under Section 14, without first initiating action against the 2[nd] respondent borrower for recovery of the outstanding dues, the Apex Court noticed that the said question is no more _res integra_ in view of the law laid down in **Bank of Bihar Ltd. v. Damodar Prasad [AIR 1969 SC 297]** that, it is the duty of the surety to pay the decretal amount. On such payment he will be subrogated to the rights of the creditor under Section 140 of the Indian Contract Act, and he may then recover the amount from the principal. The very object of the guarantee is defeated if the creditor is asked to postpone his remedies against the surety. Therefore, the High Court completely misdirected itself in assuming that the appellant Bank could not have initiated action W.P(C) No.3116 OF 2020(L) -7- against the 1[st] respondent guarantor without making efforts for recovery of its dues from the 2[nd] respondent borrower. 7. In **Satyawati Tondon** , on the challenge made against the notice to the 1[st] respondent guarantor under sub-section (4) of Section 13 of the Act and also the order of the District Magistrate under Section 14 of the Act, the Apex Court held that, if the 1[st] respondent had any tangible grievance against the notice issued under sub-section (4) of Section 13 of the Act or the action taken under Section 14, then she could have availed remedy by filing an application under sub-section (1) of Section 17. The expression 'any person' used in sub-section (1) of Section 17 is of wide import. It takes within its fold, not only the borrower but also guarantor or any other person who may be affected by the action taken under sub-section (4) of Section 13 or Section 14. Both, the Tribunal and the Appellate Tribunal are empowered to pass interim orders under Section 17 and Section 18 and are required to decide the matters within a fixed time schedule. It is thus evident that the remedies available to an aggrieved person under the Act are both expeditious and effective. Unfortunately, the High Court overlooked W.P(C) No.3116 OF 2020(L) -8- the settled law that it will ordinarily not entertain a petition under Article 226 of the Constitution of India if an effective remedy is available to the aggrieved person and that this rule applies with greater rigor in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. 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 legislation enacted by Parliament and State Legislature for recovery of such dues are 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, 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. 8. In **Satyawati Tondon** the Apex Court held that, the powers conferred upon the High Court under Article 226 of the Constitution of India to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs W.P(C) No.3116 OF 2020(L) -9- including the five prerogative writs for the enforcement of any of the rights conferred by Part III of the Constitution or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, the court cannot be oblivious of the rules of self-imposed restraint evolved by the Apex Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance. 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 W.P(C) No.3116 OF 2020(L) -10- institutions and secured creditors, stay granted by the High Court would have serious adverse impact on the financial health of such bodies/ institutions, which 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 [AIR 1969 SC 556]** , **Whirlpool Corporation v. Registrar of Trade Marks, Mumbai [(1998) 8 SCC 1]** and **Harbanslal Sahnia v. Indian Oil Corporation Ltd. [(2003) 2 SCC 107]** and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass appropriate interim order. 9. In **Commissioner of Income Tax v. Chhabil Das Agarwal [(2014) 1 SCC 603]** the Apex Court held that nonentertainment of a writ petition under Article 226 of the Constitution of India when an efficacious alternative remedy is available is a rule and self-imposed limitation. It is essentially a rule of policy, convenience and discretion rather than a rule of law. W.P(C) No.3116 OF 2020(L) -11- Undoubtedly, it is within the discretion of the High Court to grant relief under Article 226 of the Constitution of India, despite the existence of alternative remedy. However, High Court must not interfere if there is an adequate efficacious alternative remedy available to the petitioner and he has approached the High Court without availing the same, unless he has made out an exceptional case warranting such interference or there exists sufficient ground to invoke the extraordinary jurisdiction under Article 226. 10. In **Authorised Officer, State Bank of Travancore v. Mathew K.C. [(2018) 3 SCC 85]** the Apex Court reiterated that the discretionary jurisdiction under Article 226 of the Constitution of India 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 of India ought not to be entertained if alternative statutory remedies are - available, except in cases falling within the well defined exceptions as observed in **Chaabil Das Agarwal [(2014) 1 SCC 603]** _,_ 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 W.P(C) No.3116 OF 2020(L) -12- invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice. After referring to the law laid down in **Thansingh Nathmal [AIR 1964 SC 1419]** and **Titaghur Paper Mills Company Ltd. [(1983) 2 SCC 433]** the Apex Court held that 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 contains a mechanism for redressal of grievance. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation. 11. The learned Standing Counsel for the respondent Bank would point out that after Ext.P1 judgment, neither the borrower nor the guarantors have chosen to make any payment whatsoever, and it was in such circumstances that the respondent Bank has proceeded further by issuing Ext.P2 sale notice. 12. The learned counsel for the petitioner would submit that due to financial stringency, no payment could be made in terms of Ext.P1 judgment. Now the petitioner, who is the Managing Partner of the firm, is in a position to raise some amount to clear a portion of the dues and for payment of the remaining amount, she requires W.P(C) No.3116 OF 2020(L) -13- time till 31.03.2021. 13. Having considered the submissions made by the learned counsel on both sides, this Court finds that after Ext.P1 judgment, neither the borrower nor the guarantors have chosen to make any payment whatsoever towards the dues in the loan account in question. Having defaulted repayment even after Ext.P1 judgment, the petitioner cannot approach this Court again, in another writ petition filed in individual capacity, seeking interference in the recovery proceedings. 14. In view of the law laid down by the Apex Court in the decisions referred to supra, no interference can be made to Ext.P2 sale notice issued under the provisions of SARFAESI Act, invoking the writ jurisdiction under Article 226 of the Constitution of India, in view of the statutory remedy available under the SARFAESI Act. The present writ petition, which is one filed by the petitioner, after showing the scant regard to the writ issued of this Court in Ext.P1 judgment, can only be termed as an abuse of process of law. In the result, the writ petition fails and the same is accordingly, dismissed. Sd/- **ANIL K. NARENDRAN JUDGE** bpr W.P(C) No.3116 OF 2020(L) -14- ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE JUDGMENT IN W.P.(C)NO. 13711/2019 DATED 17.05.2019. EXHIBIT P2 TRUE COPY OF THE SALE NOTICE ISSUED BY THE RESPONDENT BANK.** **RESPONDENT'S EXHIBITS: NIL**