Mithun Babu P.S. and Geetha Gopinadhan v City Union Bank Ltd.

# **`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 17[TH] DAY OF AUGUST 2022 / 26TH SRAVANA, 1944 WA NO. 1141 OF 2022 ``` ``` AGAINST THE JUDGMENT IN WP(C) 8735/2022 OF HIGH COURT OF KERALA DATED 20.5.2022 ``` ## **`APPELLANTS/PETITIONERS:`** ``` 1MR.MITHUN BABU P.S., AGED 43 YEARS,S/O.SUDHEER BABU P.S., RESIDING AT PANIKKASSERY HOUSE, KUNDRALUR,ENGANDIYUR,THRISSUR-680016. 2MRS.GEETHA GOPINADHAN, W/O.SUDHEER BABU P.S., RESIDING AT PANIKKASSERY HOUSE, KUNDRALUR,ENGANDIYUR,THRISSUR-680016. ``` ``` BY ADVS. K.J.MANU RAJ RAVI KRISHNAN K.VINAYA JOBY JOSEPH (THRISSUR) ``` ## **`RESPONDENTS / RESPONDENTS:`** ``` 1CITY UNION BANK LTD., REPRESENTED BY ITS BRANCH MANAGER, THRISSUR BRANCH,29/722/1,A.R.TOWERS, OPPOSITE TO THIRUVAMBADI TEMPLE, SHORNUR ROAD,THRISSUR-680022. 2THE AUTHORIZED OFFICER, CITY UNION BANK LTD., CREDIT RECOVERY AND MANAGEMENT DEPARTMENT,'NARAYANA', ADMINISTRATIVE OFFICE,NO.24-B, GANDHI NAGAR,KUMBAKONAM,TAMILNADU-612 001. ``` ``` THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 17.08.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` _**W.A.1141/2022**_ 2 ## J U D G M E N T ## Dated this the 17[th] day of August, 2022 ## S. Manikumar, CJ. Before the writ court, appellant/writ petitioner has sought for the following relief: “issue a writ of mandamus to the 1[st] respondent to permit the petitioners to clear the liability by 50 installments in Overdraft Account No.512020010024482, loan account No.501812080070702 and account No.501912090016061 on the files of City Union Bank Ltd., Thrissur Branch.” 2. Short facts leading to filing of the writ petition are as under: 2.1. The petitioners are running a business unit under the name and style “Sidhartha Trade Lines" at Kuriyachira, Thrissur. The petitioners had availed three loan facilities from the Thrissur branch of City Union Bank. Petitioners altogether availed a loan of Rs. 37,25,000/. In addition to that a gold loan was also granted to the petitioners by the bank. 2.2. During the Covid pandemic, the business of the petitioners suffered a huge loss and the respondents initiated proceedings under the SARFAESI Act, 2002. The 2[nd] respondent has issued a sale notice dated 11.2.2022 proposing to conduct _**W.A.1141/2022**_ 3 the sale of secured assets on 29.3.2022. The business of the petitioners have been revived and petitioners agreed to pay substantial amount to the respondents. However the 1[st] respondent is not permitting the petitioners to clear the loan account and release 111.95 grams (13.9 sovereigns) of gold ornaments. If the gold ornaments are released the petitioners can pay atleast Rs.4,00,000/- towards the total liability and the respondents can regularize the account. However, the respondents were insisting the petitioners to pay the entire amount before the proposed sale. Hence the writ petition seeking direction. 3. After considering the averments and in particular, submission of learned counsel for the petitioners therein that they are confining themselves only to an opportunity for repaying the outstanding amount in instalments and also the submission made on behalf of the Bank that the writ petitioners have an outstanding amount under three loans for Rs.41,66,298/and further submission that despite the recovery proceedings being initiated, no amount has been paid, writ court, vide judgment in W.P(C).No.8735 of 2022 dated 20.5.2022, ordered thus: _**W.A.1141/2022**_ 4 “5. Having regard to the circumstances of the case and the situation now prevailing, apart from the submissions made as recorded above, I am of the view that the petitioners can be granted an opportunity to repay the outstanding amount in '18' instalments. 6. Accordingly, there will be a direction to the respondent bank to accept repayment of the entire outstanding amount of Rs.41,66,298/- along with bank charges from the petitioners on the following conditions: - (i) The outstanding amount of Rs.41,66,298/- shall be repaid in '18' equated monthly instalments. - (ii) The first instalment shall be paid on or before 24.06.2022 and the remaining instalments shall be paid on or before the 24th day of the succeeding months. - (iii) In the event of default of any one instalment, the respondent bank shall be entitled to proceed in accordance with law. - (iv) In order to enable the petitioners to repay the entire amounts, all coercive proceedings shall be kept in abeyance. The writ petition is disposed of as above.” 4. Being aggrieved, instant writ appeal is filed on the grounds inter alia that the value of the property is more than Rupees One Crore, whereas, in the auction notice dated 22.7.2022 issued by the City Union Bank Ltd., the reserve price fixed is only Rs.45,00,000/-. Further contention has been made that classification of the account as non performing (NP) and symbolic possession of the properties of the appellants is done _**W.A.1141/2022**_ 5 by violating the provision of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 and the rules made thereunder. 5. Appellants have also contended that the account statement produced by the appellants would show that total principal loan amount is only Rs.37,25,000/- and that the amount to be paid by the appellants as per the tender cum auction sale notice is Rs.39,61,477/- as on 9.2.2022. As sale of the mortgaged property is fixed on 18.8.2022 and in the above said circumstances, appellant prayed for indulgence. 6. Per contra, Mr.K.P. Sujesh Kumar, learned Standing Counsel for respondents 1 and 2 submitted that earlier a sale notice dated 9.2.2022 was issued. He further submitted that though as per the decisions of Hon’ble Apex Court, no writ petition is maintainable as against recovery proceedings initiated on the basis of SARFAESI Act, 2002, still on the basis of the submissions advanced by the learned counsel for the petitioners therein, before the writ court in W.P(C). No.8735 of 2022, indulgence was granted, directing payment in instalments. 7. He further added that despite indulgence, not even one instalment amount is paid and by invoking clause 3 of the _**W.A.1141/2022**_ 6 directions contained in paragraph 6 of the judgment in W.P(C). No.8735 of 2022, bank has issued a fresh sale notice dated 22.7.2022. For the above said reasons, he prayed for dismissal of the writ appeal. 8. Heard learned counsel for the parties and perused the pleadings and material on record. 9. As stated supra, though the appellants have raised various contentions in W.P(C). No.8735 of 2022, for the relief of writ of mandamus directing the Bank to permit the petitioners/ appellants to clear the liability by 50 instalments, writ court, by exercising its discretion under Article 226 of the Constitution of India, has permitted the appellants/petitioners to pay the amount in 18 equated monthly instalments. 10. At this juncture, it is relevant to extract paragraph No.2 of the judgment in W.P(C). No.8735 of 2022 dated 20.5.2022 wherein the petitioners have confined the relief to an opportunity for repaying the outstanding amount in instalments : “2. During the course of hearing, petitioners have confined the relief to an opportunity for repaying the outstanding amount in instalments.” _**W.A.1141/2022**_ 7 11. While that be the position, it is not open to the appellants to advance arguments as regards classification of the accounts as nonperforming asset and also the quantum of amount claimed by the bank. 12. Repeatedly, the Hon'ble Supreme Court has held that writ petitions as against proceedings initiated under the SARFAESI Act, 2002 should not be entertained. On the aspect of filing writ petition against the SARFAESI proceedings, it is useful to refer few decisions: (i) 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 _**W.A.1141/2022**_ 8 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:- “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**_ , [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 _**W.A.1141/2022**_ 9 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. 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.” (ii) In **ICICI Bank Ltd. v. Umakanta Mohapatra and Others,** [2018 (13) SCALE 724], the Hon'ble 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.” ## Despite the same, writ court has exercised its discretion. _**W.A.1141/2022**_ 10 13. Yet another aspect to be taken note of by this court is that sale notice is dated 22.7.2022. If the reserve price is not properly fixed by the Bank, it is always open to the appellants to challenge the same, by filing an application under Section 17 of the SARFAESI Act, 2002. 14. When statute contemplates a procedure to challenge the recovery proceedings in the manner, as prescribed, the same cannot be allowed to be deviated, by extending time for payment and seek for deferment of sale proceedings initiated on the basis of sale notice dated 22.7.2022. In the light of the above discussion and decisions, we are not inclined to interfere with the impugned judgment. Writ appeal is, therefore, dismissed. Sd/S. Manikumar, Chief Justice Sd/Shaji P. Chaly, Judge sou. _**W.A.1141/2022**_ 11 ## APPENDIX ## PETITIONER’S EXHIBITS ANNEXURE 1 : A TRUE COPY OF THE RE-TENDER CUM AUCTION SALE NOTICE DATED 22.7.2022 ISSUED BY THE CITY UNION BANK LTD.