M/S Ayurvedic Trading Agencies v. Canara Bank, Kodungalloor Branch

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN** **MONDAY, THE 21ST DAY OF DECEMBER 2020 / 30TH AGRAHAYANA, 1942** ## **WP(C).No.24381 OF 2020(W)** ## **PETITIONERS:** - **1 M/S.AYURVEDIC TRADING AGENCIES DOOR NO.XIV 349, SRINGAPURAM, KODUNGALLOOR, THRISSUR DISTRICT, REP. BY MANAGING PARTNER VIKRANTH T.P., AGED 57 YEARS, S/O.C.I.JANAKI, THALAMITTATH HOUSE, ANIYIL, EDAVANAKKAD - 682 502.** - **2 VIKRANTH T.P. AGED 57 YEARS S/O.C.I.JANAJI, THALAMITTATH HOUSE, ANIYIL, EDAVANAKKAD - 682 502.** - **3 VINODKUMAR T.P. AGED 55 YEARS S/O.C.I.JANAKI, THALAMITTATH HOUSE, ANIYIL, EDAVANAKKAD - 682 502.** - **BY ADV. SRI.P.K.SAJEEV** ## **RESPONDENTS:** - **1 CANARA BANK KODUNGALLOOR BRANCH, CHANDRIKA COMPLEX, CHANTHAPPURA, KODUNGALLOOR, THRISSUR DISTRICT - 680 664. REP. BY THE BRANCH MANAGER.** - **2 THE AUTHORISED OFFICER CANARA BANK, KODUNGALLOOR BRANCH, CHANDRIKA COMPLEX, CHANTHAPPURA, KODUNGALLOOR, THRISSUR DISTRICT - 680 664.** **R1-R2 BY ADV. SRI.M.GOPIKRISHNAN NAMBIAR R1-R2 BY ADV. SRI.K.JOHN MATHAI R1-R2 BY ADV. SRI.JOSON MANAVALAN R1-R2 BY ADV. SRI.KURYAN THOMAS R1-R2 BY ADV. SRI.PAULOSE C. ABRAHAM R1-R2 BY ADV. SRI.RAJA KANNAN** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 21.12.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** WP(C).No.24381 OF 2020(W) 2 ## **JUDGMENT** The petitioners, who availed cash credit facility from Kodungalloor Branch of the 1[st] respondent Bank, originally in the year 1992 for Rs.2,50,000/-, which was renewed in the year 2011, for Rs.30,00,000/-, have filed this writ petition under Article 226 of the Constitution of India, seeking a writ of mandamus commanding the respondents to regularise/renew the cash credit facility by giving 6 months time to pay the overdues as on date. The petitioners have also sought for a writ of mandamus commanding the respondents to permit them to repay the entire amount outstanding in 60 equal monthly installments considering COVID-19 pandemic situation. The document placed on record as Ext.P1 is a recall notice issued by the 1[st] respondent, which is one dated 03.09.2019. That was followed by Ext.P2 notice dated 11.10.2019 issued by the 2[nd] respondent authorised officer, invoking the provisions under sub-section (2) of Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for brevity 'the SARFAESI Act'). 2. On 10.11.2020, when this writ petition came up for admission, the learned Standing Counsel for the 1[st] respondent WP(C).No.24381 OF 2020(W) 3 Bank sought time to get instructions and file statement. ## 3. A statement has been filed on behalf of the respondents on 02.12.2020. Paragraphs 2 to 4 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 Exhibit P2 notice has been issued by the respondent. The writ petition has been filed by the petitioner seeking to regularise/renew the cash credit facility by giving 6 months' time for them to repay the overdue amount or to repay the entire outstanding amount in 60 monthly installments. 3. At the very outset it is submitted that the petitioner had availed Cash Credit Loan (OD facility) from the respondents on 22.06.2011. The account was categorised as NPA on 30.06.2019. The total outstanding due from the petitioner as on 25.11.2020 is Rs.34,94,718.34. 4. As far as the relief for the payment of the amounts for regularisation is concerned, the same would not be possible as the loan availed by the petitioner is an OD facility and OD facility cannot be regularised by the respondents. With respect to payment of the entire outstanding due in installments it is submitted that if the petitioner remits 25% of the outstanding amount, i.e., Rs.8,73,679.585 within 15 days and the remaining amount to be paid in 3 months, the Bank is willing to grant him further time of 6 months to clear the remaining amount.” 4. On 15.12.2020, when this writ petition came up for WP(C).No.24381 OF 2020(W) 4 consideration, after arguing for some time, the learned counsel for the petitioners sough adjournment in order to get instructions as to whether the petitioners are prepared for the suggestion made by the respondents in Ext.P2. 5. Today, when the case is taken up for consideration, it is submitted by the learned Standing Counsel for the respondent bank that an application has already been filed to correct the mistake crept in the last sentence of para 4 of the statement dated 02.12.2020 by deleting the words _“the bank is willing to grant him further time of 6 months to clear the remaining amount”_ . 6. Heard the learned counsel for the petitioners and also the learned Standing Counsel for the Bank, representing the respondents. 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- WP(C).No.24381 OF 2020(W) 5 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 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 WP(C).No.24381 OF 2020(W) 6 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 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 WP(C).No.24381 OF 2020(W) 7 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 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 WP(C).No.24381 OF 2020(W) 8 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 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 WP(C).No.24381 OF 2020(W) 9 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 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 WP(C).No.24381 OF 2020(W) 10 **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 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 WP(C).No.24381 OF 2020(W) 11 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 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 WP(C).No.24381 OF 2020(W) 12 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. The learned counsel for the petitioners would submit that the petitioners may be granted at least one month's time for payment of 25% of the outstanding amount, i.e., Rs.8,73,679.585. 14. The learned Standing Counsel for the Bank would submit that the Bank is prepared to grant 15 days time to the petitioners for remitting 10% of the outstanding amount and a further period of 15 days for 15% of the outstanding amount, on condition that the petitioners shall pay the remaining amount (75%) within 3 months. Having considered the submissions made by the learned counsel on both sides, this writ petition is disposed of by permitting the petitioners to pay off 25% of the total dues amounting to Rs.34,94,718.34 as on 25.11.2020, i.e., Rs.8,73,679.585, by paying 10% of the total dues within 15 days from this date and 15% of the total dues within a further period of 15 days. WP(C).No.24381 OF 2020(W) 13 Thereafter, the petitioners shall pay the balance dues (75%) together with future interest in three equal monthly installments payable on or before 27.02.2021, 31.03.2021 and 30.04.2021 respectively. In case the petitioners commit default in paying any one of the above installments, the respondents will be free to proceed further with the recovery proceedings initiated against them. JV Sd/- **ANIL K.NARENDRAN JUDGE** WP(C).No.24381 OF 2020(W) 14 ## **APPENDIX** **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1** **TRUE COPY OF THE RECALL NOTICE DATED 03/09/2019 ISSUED BY THE 1ST RESPONDENT TO THE 3RD PETITIONER.** **EXHIBIT P2** **TRUE COPY OF THE NOTICE DATED 11/10/2019 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 13(2) OF SARFAESI ACT TO THE PETITIONERS.**