M/S. IndusInd Bank v State of Kerala and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE** **FRIDAY, THE 18TH DAY OF NOVEMBER 2016/27TH KARTHIKA, 1938** **WP(C).No. 33897 of 2015 (J) ----------------------------** ## **PETITIONER:** ## **-----------** **M/S.INDUSIND BANK, RAMABHAVAN, PARUTHELIPALAM, TOLL JUNCTION, EDAPPALLY, KOCHI-24, REP. BY ITS AUTHORISED OFFICER AND CHIEF MANAGER (LEGAL), BISIN K.S., AGED 41, S/O. SANKARAN.** ## **BY ADV. SRI.VARGHESE C.KURIAKOSE** **RESPONDENTS:** ## **------------** **1. STATE OF KERALA, REP. BY SECRETARY, DEPT. OF CIVIL SUPPLIES, SECRETARIAT, TRIVANDRUM-695001.** **2. THE CONSUMER DISPUTES REDRESSAL FORUM, KOTTAYAM.** **3. MOLLY ABRAHAM, PATHIKKAL HOUSE, KADAYANICADU P.O. ULLAYAM, KOTTAYAM-686550.** **R1 & R2 BY GOVERNMENT PLEADER SMT.M.M.JASMIN R3 BY ADV. SRI.T.M.ABDUL LATHEEF** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 18-11-2016 ALONG WITH WPC.38192/2015 & CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **mbr/** ## **WP(C).No. 33897 of 2015 (J) ----------------------------** ## **APPENDIX** **PETITIONER(S)' EXHIBITS: ----------------------EXHIBIT P1TRUE PHOTOSTAT COPY OF THE ORDER IN CMP.2056/15 APPOINTING THE ADVOCATE AS COMMISSIONER PASSED BY CHIEF JUDICIAL MAGISTRATE COURT, KOTTAYAM. EXHIBIT P2TRUE PHOTOSTAT COPY OF THE JUDGMENT DATED 24-07-2015 IN WPC NO. 22242/2015 PASSED BY THIS HONOURABLE COURT. EXHIBIT P3TRUE PHOTOSTAT COPY OF THE LAWYER NOTICE WAS ISSUED DATED 10-09-2015. EXHIBIT P4TRUE PHOTOSTAT COPY OF THE REPLY GIVEN ON 22-09-2015 BY THE PETITIONER. EXHIBIT P5TRUE PHOTOSTAT COPY OF THE COMPLAINT GIVEN BY THE 3RD RESPONDENT BEFORE THE 2ND RESPONDENT. RESPONDENT(S)' EXHIBITS: NIL ----------------------//TRUE COPY//** **P.S. TO JUDGE** **mbr/** ## **A.M. SHAFFIQUE, J.** ## **-------------------------------------** W.P.(C) Nos.33897 & 38192 of 2015, 276, 2129, 3118, 3712, 3713 & 25977 of 2016 -------------------------------------Dated this the 18[th ] day of November, 2016 ## **JUDGMENT** These writ petitions concern almost similar issue except for slight change of facts as far as W.P.(C) No.25977 of 2016 and 38192 of 2015. 2. First I shall deal with W.P.(C) No.25977 of 2016. This writ petition is filed by legal heir of one Nigesh C.P., who expired on 6.3.2014. He is a borrower of certain amounts from M/s.Sundaram BNP Paribas Home Finance Ltd (hereinafter referred to as “the secured creditor”). While availing the financial facility, he had also taken an insurance policy from one M/s.Kotak Mahindra Old Mutual Life Insurance Ltd. The premium was paid to the secured creditor and on that basis, the policy has also been issued. As per the policy conditions, if he dies during the period W.P.(C) 33897 & conn.cases -2- covered by the policy, the amount received shall be adjusted towards the loan account. Petitioner submits that petitioner being the mother of the deceased had signed the claim form and it was given to the Insurance Company, at the instance of the Bank Manager. Petitioner thereafter did not hear anything in the matter. Hence the petitioner issued a lawyer's notice, asking the secured creditor to return the title deed. Since there was no positive response, she filed a complaint viz; C.C.No.421 of 2015 before the Consumer Dispute Redressal Forum, Kannur (hereinafter referred to as “CDRF”) seeking for a direction to return all the documents mortgaged by her son Nigesh C.P. and to pay her the outstanding amount due under the Life Insurance Policy and also to pay compensation for mental agony and other hardship. 3. In the meantime, the secured creditor being aggrieved by the direction issued by the CDRF, had approached this Court by filing W.P.(C) No.38192 of 2015. W.P.(C) 33897 & conn.cases -3- The main contention urged is that after the death of the original borrower, notice under Section 13 (2) was issued to the legal heirs on 1.6.2015, as no objection was raised by any of the legal heirs, the possession notice was issued on 15.10.2015 as Ext.P2. In the meantime, Ext.P5 order was passed by the CDRF in I.A.No.327 of 2015, restraining the secured creditor from proceeding against the scheduled property until further orders. The secured creditor therefore challenges the order passed by the CDRF seeking for dismissal of the said complaint. 4. The other writ petitions are filed by the secured creditor in separate cases by which complaints had been filed against the secured creditors by different parties before the CDRF after the issuance of notice under Section 13 (2) of the SARFAESI Act. 5. The Insurance Company has filed a counter affidavit in W.P.(C) No.38192 of 2015 stating that they had issued a notice of repudiation in regard to the claim of the W.P.(C) 33897 & conn.cases -4- petitioner and the said fact was intimated to the secured creditor as well as to Mrs.C.Saranya, the co-borrower. 6. Learned counsel for the petitioner in W.P.(C) No.25977 of 2015 submits that the petitioner was not aware about the repudiation of the claim. It is submitted that the policy was taken at the instance of the secured creditor and it was their obligation to inform the petitioner about the repudiation, if any, and if the repudiation was not brought to the notice of the petitioner earlier, sufficient steps would have been taken to challenge the same. It is therefore contended that the Bank as well as the Insurance Company is responsible for delaying the matter and they should be mulcted with the liability to pay the amount involved under the policy. 7. Learned counsel appearing for the secured creditor in the case submits that insofar as the claim had been repudiated by the Insurance Company, petitioner had become liable to pay the balance amount due from the W.P.(C) 33897 & conn.cases -5- borrower since she has succeeded to the property of the deceased. The secured asset was belonging to the deceased and since no amount is forthcoming from the Insurance Company, the legal heirs are liable to pay the same or the Bank is entitled to proceed against the property for recovering the amount and in the meantime, the CDRF has no jurisdiction to entertain a complaint with reference to proceedings taken by the Bank under the SARFAESI Act. Reference is also made to Division Bench's judgment of this Court in **Reghu B. and another v. State Bank of Travancore, Tvm and another [2015 (4) KHC 270]** , wherein this Court held that the Consumer Disputes Redressal Commission has no jurisdiction to stay the recovery proceedings under the SARFAESI Act. 8. Learned counsel appearing for the Insurance Company submits that after receiving the claim form, an enquiry was conducted by the Insurance Company and from the materials available, it was noticed that the deceased W.P.(C) 33897 & conn.cases -6- had not disclosed at the time of taking the policy the existing diseases. Therefore, according to them, there is justification for the Insurance Company to repudiate the liability. 9. Before considering the claim of the petitioner in W.P.(C) No.25977 of 2016, the first question to be considered is whether the CDRF has jurisdiction to entertain complaint after proceedings had been initiated by the secured creditor under the SARFAESI Act. 10. Learned counsel appearing for the petitioner in W.P.(C) No.3118 of 2016 places reliance on the judgment of the Apex Court in **Trans Mediterranean Airways v. Universal Exports [2011 (4) KLT SN 92 (C.NO.75) SC]** , in which the Apex Court held that the CDRF constituted under the Consumer Protection Act can consider any dispute relating to the deficiencies in service and the said Act is in addition to and not in derogation of any other for the time being in force. W.P.(C) 33897 & conn.cases -7- 11. In the Consumer Protection Act, 1986, the Forum has jurisdiction to entertain any complaint relating to the defect in goods or deficiency in service. Section 3 of the Act reads as under: “ **3. Act not in derogation of any other law** .- The provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force.” 12. There cannot be any dispute that in respect of matters coming under the provisions of the Consumer Protection Act, even if other remedies are available, it shall always be open for the consumer as defined under the Act to approach the Consumer Forum. However, SARFAESI Act, is a special enactment which gives power to the secured creditor to take proceeding under the Act without intervention of a Court or Tribunal. Section 13 (1) and (2) reads as under: “ **13. Enforcement of security interest** .- (1) Notwithstanding anything contained in section 69 or W.P.(C) 33897 & conn.cases -8- section 69 A of the Transfer of Property Act, 1882 (4 of 1882), any security interest created in favour of any secured creditor may be enforced, without the intervention of the court or tribunal, by such creditor in accordance with the provisions of this Act. (2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice, failing which the secured creditor shall be entitled to exercise all or any of the rights under sub-section (4).” 13. The SARFAESI Act is a complete code in itself which gives an opportunity to the secured creditor to take possession of the secured asset and effect sale of the property or manage the property without intervention of court. The remedy available to the debtor is initially to file an objection, if there is any illegality or irregularity in the procedure adopted under Section 13 (2) by filing an W.P.(C) 33897 & conn.cases -9- objection, and the statute clearly provides that the secured creditor shall give a reply to the notice as provided under Section 13 (3A). Thereafter, it is always open for the secured creditor to take steps under Section 13 (4). Section 34 prohibits any civil court to entertain any suit or proceedings in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered under the Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act. If there is any illegality or irregularity in respect of any of the measures taken by the authorised officer or secured creditor while taking steps under Section 13 (4), the remedy is available under the statute to prefer appeal before the Debts Recovery Tribunal under Section 17 of the Act. A right has been created and the Forum has also been provided under the statute. There is an express prohibition under Section 34 that no interim W.P.(C) 33897 & conn.cases -10- order of injunction shall be granted against the proceeding taken under the Act. Further Section 35 is a provision which overrides any other law for the time being in force. Section 35 reads as under: ## “ **35. The provisions of this Act to override** **other laws** .- The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.” 14. Having regard to the fact that the statute clearly indicates that the SARFAESI Act overrides other laws which affects the enforcement of the SARFAESI Act, the SARFAESI Act shall prevail over the same. Therefore, in an instance where proceedings are initiated under the SARFAESI Act by issuance of notice under Section 13 (2), thereafter it shall not be open for the CDRF to pass orders preventing the said action by the Bank. In fact, if there is any dispute W.P.(C) 33897 & conn.cases **==> picture [23 x 8] intentionally omitted <==** regarding the measures taken under Section 13 (4) as already indicated proper remedy is available under Section 17 of the Act. 15. In the said circumstances, I am of the view that the CDRF will not have jurisdiction to entertain any complaint in respect of a matter which a secured creditor under the SARFAESI Act had already initiated. 16. Now coming to the claim made by the petitioner in W.P.(C) No.25977 of 2016, insofar as the claim for insurance has already been repudiated, the petitioner's remedy is only to challenge the same in appropriate proceedings. It is not possible for this Court to consider whether there had been any negligence on the part of the Bank or rather the repudiation is illegal in any manner. The question is whether the SARFAESI proceedings can be kept in abeyance merely for the reason that the petitioner was not aware of the repudiation. I do not think so. The fact that as rightly pointed out by the learned counsel for the W.P.(C) 33897 & conn.cases -12- secured creditor, a notice under Section 13 (2) had been issued against the legal heirs of the deceased, when itself it was known that such an amount was legally payable. No objection has been raised. If the petitioner was not aware of the repudiation, the same should have been taken up before the secured creditor at the relevant time. It is also pointed out by the learned counsel for the Insurance Company that there is no obligation on their part in informing the petitioner about the repudiation whereas they have informed the Bank as well as the co-borrower. 17. Be that as it may, taking into account the overall factual situation involved in the matter, I am of the view that the petitioner can be granted some time to challenge the repudiation of the claim. But there is no reason why the SARFAESI proceeding should be kept in abeyance. Accordingly, these writ petitions are disposed of as under: (i) W.P.(C) No.33897 & 38192 of 2015, W.P.(C) W.P.(C) 33897 & conn.cases **==> picture [23 x 9] intentionally omitted <==** Nos. 276, 2129, 3118, 3712, 3713 of 2016 are allowed, declaring that the CDRF has no jurisdiction to entertain the complaints after initiation of proceeding under Section 13 (2). (ii) In W.P.(C) No. 25977 of 2016, petitioner is granted a month's time to challenge the repudiation of the claim for insurance before the appropriate Forum. Until such time, further proceedings under the SARFAESI Act shall be kept in abeyance. **Sd/A.M. SHAFFIQUE JUDGE** Scl/19.11.2016