Kuruvila Mathew K. v. Canara Bank

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN** **MONDAY, THE 07TH DAY OF DECEMBER 2020 / 16TH AGRAHAYANA, 1942** ## **WP(C).No.21983 OF 2020(W)** ## **PETITIONER:** **KURUVILA MATHEW K., AGED 53 YEARS S/O. MATHUKUTTY, KUNNATHIL HOUSE, CHENGALAM SOUTH P.O., KOTTAYAM DISTRICT.** **BY ADVS. SRI.N.K.KARNIS SRI.LATHEESH SEBASTIAN** ## **RESPONDENTS:** **1 CANARA BANK, REPRESENTED BY ITS REGIONAL MANAGER, REGIONAL OFFICE, TEMPLE ROAD, KOTTAYAM-686001. 2 THE AUTHORIZED OFFICER, UNDER THE SARFAESI ACT, CANARA BANK, REGIONAL OFFICE, TEMPLE ROAD, KOTTAYAM-686001. 3 THE BRANCH MANAGER, CANARA BANK, KOTTAYAM BRANCH, TEMPLE ROAD, KOTTAYAM-686001.** **R1-3 BY ADV. SRI.M.GOPIKRISHNAN NAMBIAR R1-3 BY ADV. SRI.K.JOHN MATHAI R1-3 BY ADV. SRI.JOSON MANAVALAN R1-3 BY ADV. SRI.KURYAN THOMAS R1-3 BY ADV. SRI.PAULOSE C. ABRAHAM R1-3 BY ADV. SRI.RAJAKRISHNAN. K R1-3 BY ADV. SMT.PARVATHY KOTTOL** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 07.12.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** WP(C)No.21983 of 2020 2 ## **JUDGMENT** The petitioner along with his wife availed three loans from Kottayam Branch of the 1[st] respondent Bank. The 3[rd] respondent is the Branch Manger of Kottayam Branch. The petitioner has filed this writ petition under Article 226 of the Constitution of India, seeking a writ of certiorari to quash Ext.P1 notice dated 12.02.2020 issued under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and Ext.P2 notice dated 24.09.2020 issued under Section 13(4) of the said Act, 2002 by the 2[nd] respondent Authorised Officer (wrongly stated as Exts.P2 and P3 in relief No.1). The petitioner has also sought for a writ of mandamus commanding the respondents to re-schedule the loan Nos.1523261005207, 15236050011685 and 1523773017702 availed by the petitioner on such terms as fixed by this Court; and a writ of mandamus commanding the respondents to regularise the loan Nos.1523261005207, 15236050011685 and 1523773017702 availed by the petitioner on such terms as fixed by this Court by paying the defaulted arrears in installments. WP(C)No.21983 of 2020 3 2. On 19.10.2020, when this writ petition came up for admission, the learned Standing Counsel for Canara Bank sought time to get instructions. 3. A statement has been filed on behalf of the respondents. Paragraphs 2 to 5 of that statement read thus; “2. It is submitted that the present statement is filed with the limited purpose to bring on record the liability of the petitioner towards the Bank, pursuant to which Exts.P1 and P2 notices has been issued by the respondents. The writ petition has been filed by the petitioner seeking to restructure the loan accounts availed by him or to regularise the said loans. 3. At the very outset it is submitted that the petitioner has availed 4 loans from the respondents and not 3 as stated in the writ petition. The details of the loan account and its outstanding amount are given hereinbelow. |SI.<br>No.|Nature of<br>Loan|Account No.|NPA|Outstanding<br>amount as on<br>30.10.2020| |---|---|---|---|---| |1.|MSME (OD)|1523261005207|27.12.2019|1,08,44,665.00| |2.|MSME<br>(Term loan)|1523773017702|27.12.2019|1,84369.00| |3.|Personal<br>loan|1523605011685|27.12.2019|30,83,060.00| |4.|Education<br>loan|1523651017859|Regular|1,45,000.00| |Total amount outstanding||||1,41,12,094.00| WP(C)No.21983 of 2020 4 4. It is submitted that the loan accounts of the petitioner cannot be restructured as per Ext.P4 circular issued by the Reserve Bank of India as the restructuring from MSME is available only for loan accounts classified as 'Standard'. The MSME loans of the petitioner has already been classified as a Non-Performing Asset. 5. Regarding the prayer of the petitioner to regularize the loans, the same would not be possible as one of the MSME loan availed by the petitioner is in OD facility and OD facility cannot be regularized by the respondents. Another MSME loan of the petitioner which is in the nature of the term loan cannot be regularized as the entire account of the petitioner has been declared as NPA and recalled on 27.07.2020.” 4. Today, when this writ petition is taken up for consideration, along with I.A.No.2 of 2020 the petitioner has placed on record Ext.P5 request dated 24.11.2020 made before the 3[rd] respondent Branch Manager, seeking an opportunity to settle the entire dues by availing One Time Settlement. 5. Heard the learned counsel for the petitioner and also the learned Standing Counsel for Canara Bank, representing the respondents. 6. The main challenge made in this writ petition is WP(C)No.21983 of 2020 5 against Exts.P1 and P2 notices issued by the 2[nd] respondent Authorised Officer, invoking the provisions under Sections 13(2) and 13(4) of the SARFAESI Act, on account of the default committed by the petitioner in effecting repayment. The three loan accounts in relation to which Exts.P1 and P2 notices have already been issued by the 2[nd] respondent Authorised Officer have been classified as Non-Performing Assets on 27.12.2019. 7. 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/- 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 Non-Performing 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 WP(C)No.21983 of 2020 6 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 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. 8. 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 WP(C)No.21983 of 2020 7 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 against the 1[st] respondent guarantor without making efforts for recovery of its dues from the 2[nd] respondent borrower. 9. 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 WP(C)No.21983 of 2020 8 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 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 rigour 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 WP(C)No.21983 of 2020 9 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. 10. 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 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 WP(C)No.21983 of 2020 10 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 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 WP(C)No.21983 of 2020 11 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. 11. 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. Undoubtedly, it is within the discretion of the High Court to grant relief under Article 226 of the Constitution of India, despite WP(C)No.21983 of 2020 12 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. 12. 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 WP(C)No.21983 of 2020 13 procedure or has resorted to 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. 13. In the light of the law laid down by the Apex Court in the decisions referred to supra, the petitioner is not entitled to invoke the writ jurisdiction of this Court under Article 226 of the Constitution of India to challenge Exts.P1 and P2 notices issued under the provisions of Sections 13(2) and 13(4) of the SARFAESI Act, on the grounds stated in this writ petition, in view of the statutory remedy available under that Act. WP(C)No.21983 of 2020 14 14. The learned counsel for the petitioner would confine to the reliefs sought for in this writ petition as one directing for the consideration of Ext.P5 request made before the 3[rd] respondent, seeking an opportunity to settle the entire dues by availing One Time Settlement. 15. The learned Standing Counsel for Canara Bank would submit that the 3[rd] respondent shall consider and take appropriate decision on Ext.P5 request made by the petitioner, within a time frame to be prescribed by this Court. 16. Having considered the submissions made by the learned counsel on both sides, this writ petition is disposed of by directing the 3[rd] respondent to consider and pass appropriate order on Ext.P5 request made by the petitioner for One Time Settlement, in order to settle the dues in the loan transactions in question, as expeditiously as possible, at any rate, within a period of two weeks from the date of receipt of a certified copy of this judgment, after affording the petitioner and his wife, who are the borrowers, an opportunity of being heard. 17. In **State of U.P. v. Harish Chandra [(1996) 9 SCC** WP(C)No.21983 of 2020 15 **309]** the Apex Court held that no mandamus can be issued to direct the Government to refrain from enforcing the provisions of law or to do something which is contrary to law. In **Bhaskara Rao A.B. v. CBI [(2011) 10 SCC 259]** the Apex Court reiterated that, generally, no Court has competence to issue a direction contrary to law nor can the Court direct an authority to act in contravention of the statutory provisions. The courts are meant to enforce the rule of law and not to pass the orders or directions which are contrary to what has been injected by law. 18. Therefore, the direction contained in this judgment to the 3[rd] respondent Branch Manager is for taking an appropriate decision on the request made by the petitioner in Ext.P5, strictly in accordance with law, taking note of the relevant statutory provisions and also the law on the point. No order as to costs. Sd/- **ANIL K. NARENDRAN JUDGE** **yd** WP(C)No.21983 of 2020 16 ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE SECTION 13(2) NOTICE ISSUED BY THE 2ND RESPONDENT DATED 12/02/2020.** **EXHIBIT P2 TRUE COPY OF THE SECTION 13(4) NOTICE ISSUED BY THE 2ND RESPONDENT DATED 24/09/2020. EXHIBIT P3 TRUE COPY OF THE REPRESENTATION OF THE PETITIONER DATED 30/09/2020. EXHIBIT P4 TRUE COPY OF THE CIRCULAR ISSUED BY THE RESERVE BANK OF INDIA DATED 06/08/2020. EXHIBIT P5 TRUE COPY OF THE REPRESENTATION OF THE PETITIONER DATED 24.11.2020** ## **RESPONDENTS' EXHIBITS:NIL** ## **TRUE COPY** **P.A. TO JUDGE**