M/S Jemsons Starch and Derivatives Chemical Industrial Estate and Stanley Ponmala John v State Bank of India

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** # **PRESENT** # **THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR** **&** **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **FRIDAY, THE 28TH DAY OF FEBRUARY 2020 / 9TH PHALGUNA, 1941** ## **WA.No.373 OF 2020** **AGAINST THE JUDGMENT IN WP(C) 35983/2019(W) OF HIGH COURT OF KERALA DATED 17.2.2020** ## **APPELLANT/PETITIONERS IN WPC:** **1 M/S.JEMSONS STARCH AND DERIVATIVES CHEMICAL INDUSTRIAL ESTATE, PLOT NO.8 AND 9, AROOR, ALAPPUZHA - 688534, REPRESENTED BY ITS MANAGING PARTNER STANLY PONMALAI JOHN. 2 MR.STANLEY PONMALAI JOHN AGED 63 YEARS S/O.LATE N.JOHN MATHEW, RESIDING AT 28/1, 811, PANORAMA NAGAR, AMALA BHAVAN ROAD, KADAVANTHARA, KOCHI-682020.** **BY ADV. SRI.C.P.RAVIKUMAR** ## **RESPONDENT/RESPONDENT:** **STATE BANK OF INDIA, REGIONAL BUSINESS OFFICE-2, 8TH FLOOR, SHANMUGHAM ROAD, KOCHI BY ITS AUTHORIZED OFFICER AND CHIEF MANAGER-682031.** **SRI JITHESH MENON.M,STANDING COUNSEL, SRI. BRIJESH R. NAIR** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 28.02.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** _**W.A.373/2020**_ 2 ## JUDGMENT Dated this the 28[th] day of February, 2020 ## S. Manikumar, CJ Challenge in this appeal is to the correctness of the judgment in W.P(C). No.35983 of 2019 dated 7.6.2019. The judgment reads thus: “Petitioner has challenged the notice issued under Section 13(2) of the SARFAESI Act. In my view, the writ petition is prima facie premature as the remedy under the Act is to file reply. In case any reply is filed, the bank is required to pass an order under Sub Section 3(a) of Section 13 of the SARFAESI Act. 2. Learned counsel for the petitioner submits that, a reply has been given indicating the handicapedness as well as some proposal. Since no coercive measures under Section 13(4) or Section 14 of the Act is initiated by the bank, petitioner at this stage does not have any cause of action to approach the Debt Recovery Tribunal under Section 17 of the Act. The bank shall pass orders in terms of Section 3(a) of Section 13, in accordance with law. With the aforementioned observations, the writ petition stands dismissed.” ## 2. Short facts leading to writ petition are as under: The 1[st] petitioner had availed cash credit facility from the respondent bank, at the time of commencement of the business which was _**W.A.373/2020**_ 3 renewed from time to time. According to the appellant, repayment towards the said account was regular and that there was no default whatsoever, all these years. The business of the firm was profitable till recently and now facing financial problems due to economic recession faced throughout the country, due to flood, demonetization and GST. Further, large amounts are outstanding from various dealers to the tune of more than Rs.30 Lakhs for a long time, beyond the credit period. The respondent bank through its Chief Manager and Authorized Officer has issued a notice under Section 13 of the SARFAESI Act, 2002 threatening to initiate actions through Ext.P3, which states that unless an aggregate amount of Rs.98,16,249/- is not remitted within 60 days, the respondent bank will initiate further proceedings under the Act. Before the writ court, appellant submitted that they were ready and willing to pay the balance amount, after regularising the same. The appellants sought time for repayment of the same. Hence the appellant prayed the court to grant some time for repayment of the defaulted amount after regularising the same in monthly instalments. 3. Before the writ court, appellant sought for a certiorari to quash notice dated 10.12.2019 issued under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI). Writ petition was dismissed. Aggrieved by the same, instant appeal is filed. _**W.A.373/2020**_ 4 4. Heard Mr. C.P. Ravikumar, learned counsel for the appellant. Also heard Mr. Jithesh Menon, learned Standing Counsel for the respondent Bank. 5. Material on record discloses that during the pendency of the writ petition, responding to the notice issued under Section 13(2) of SARFAESI Act, 2002, appellant has sent Annexure-2 reply on 21.1.2020 to Assistant General Manager, Stress Asset ManagementRecovery, State Bank of India, Perumanur, Kochi. 6. As rightly observed, writ petition filed against notice issued under Section 13(2) of SARFAESI Act, 2002 is not maintainable and is premature. Let us consider a few decisions on the aspect of entertaining a writ petition: (i) In United Bank of India v. Satyawati Tondon and others [(2010) 8 SCC 110 - AIR 2010 SC 3413], the High Court restrained further proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the SARFAESI Act, availability of remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal, object and purpose of the legislation, Honourable Apex Court observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available, “43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective _**W.A.373/2020**_ 5 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. In our view, 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 legislations enacted by Parliament and State Legislatures for recovery of such dues are a 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, the 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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection.” (ii) In ICICI Bank Ltd. v. Umakanta Mohapatra and Others reported in 2018 (13) SCALE 724, the Hon'ble Supreme Court reaffirmed the legal position that High Court has no _**W.A.373/2020**_ 6 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." 7. Mr. Jithesh Menon leaned counsel for the Bank submitted that there is no such branch in Perumanoor, Kochi. Therefore, the appellant may be directed to submit the reply under Section 13 (3A) of SARFAESI Act, to the correct address. 8. Section 13 (3A) of SARFAESI ACT, 2002 Act reads thus : ## 13. Enforcement of security interest - (3) The notice referred to in sub-section (2) shall give details of the amount payable by the borrower and the secured assets intended to be enforced by the secured creditor in the event of non-payment of secured debts by the borrower. (3A) If, on receipt of the notice under subsection (2), the borrower makes any representation or raises any objection, the secured creditor shall consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate within one week of receipt of such representation or objection the reasons for non-acceptance of the representation or objection to the borrower: PROVIDED that the reasons so communicated or the _**W.A.373/2020**_ 7 likely action of the secured creditor at the stage of communication of reasons shall not confer any right upon the borrower to prefer an application to the Debts Recovery Tribunal under section 17 or the Court of District Judge under section 17A.” 9. Inasmuch as files are relocated and there is no branch at Perumanoor, Kochi and taking note of the submission of learned counsel for the Bank, appellant is at liberty to submit a reply under Subsection (3) of Section 13 of the SARFAESI Act, 2002, within one week from the date of receipt of a copy of this judgment. The bank is at liberty to act in accordance with law. Sd/S. Manikumar, Chief Justice Sd/Shaji P. Chaly, Judge sou. _**W.A.373/2020**_ 8 ## **APPENDIX** ## **PETITIONER'S EXHIBITS** **ANNEXURE 1 TRUE COPY OF THE NOTICE DATED 6.1.2020 ANNEXURE 2 TRUE COPY OF THE REPLY DATED 21.1.2020 RESPONDENTS' EXHIBITS : NIL**