M/S Vineeth Cashew Processing Pvt. Ltd. and others v Punjab National Bank and others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **FRIDAY, THE 8TH DAY OF AUGUST 2014/17TH SRAVANA, 1936** ## **WP(C).No. 20424 of 2014 (C)** **---------------------------CMP.NO. 4743/2014 OF CHIEF JUDICIAL MAGISTRATE COURT, KOLLAM ------------------------** ## **PETITIONER(S):** **--------------------------** **1. M/S. VINEETH CASHEW PROCESSING PVT. LTD., REPRESENTED THROUGH ITS MANAGING DIRECTOR, C.VISWANATHAN @ CHELLAPPA VISWANATHAN,AGED 54, S/O.LATE N.C.PILLAI, SUB PLOT NO.3, PLOT NO.1050/4234, 1049/3022/4235,UNIT 30,LEKSHMI SAGAR, BHUVANESWAR-751006, ORISSA STATE, NOW RESIDING AT CHERUKUNNATHU PADINJATTATHIL HOUSE NO.331, THEKKUMBHAGAM, CHAVARA SOUTH.P.O., KOLLAM-691 584.** **2. C.VISWANATHAN @ CHELLAPPA VISWANATHAN, S/O.N.C.PILLAI, MANAGING DIRECTOR, M/S.VINEETH CASHEW PROCESSING PVT.LTD., SUB PLOT NO.3, PLOT.NO.1050/4234,1049/3022/4235,UNIT 30, LEKSHMI SAGAR, BHUVANESWAR-751006, ORISSA STATE, NOW RESIDING AT CHERUKUNNATHU PADINJATTATHIL HOUSE NO.331, THEKKUMBHAGAM, CHAVARA SOUTH.P.O., KOLLAM-691 584.** **3. MRS.SHEEJA SREEDHARAN,AGED 48, W/O.C.VISWANATHAN, DIRECTOR, M/S. VINEETH CASHEW PROCESSING PVT. LTD., RESIDING AT CHERUKUNNATHU PADINJATTATHIL, HOUSE NO.331, SOUTH.P.O., KOLLAM-691 584.** ## **BY ADV. SRI.K.SUBASH CHANDRA BOSE** **RESPONDENT(S):** **----------------------------** **1. PUNJAB NATIONAL BANK, STATION SQUARE BRANCH, BHUBANESWAR-751001, ORISSA REPRESENTED BY THE AUTHORISED OFFICER, SRI.NAGAMANI SATHYANARAYAN PRASAD, CHIEF MANAGER.** **2. THE CHAIRMAN-CUM MANAGING DIRECTOR, PUNJAB NATIONAL BANK, PNB HOUSE-7, PHIKAJI CAMA PALACE, NEW DELHI-110 066** **3. ASST. GENERAL MANAGER, PUNJAB NATIONAL BANK, STATION SQUARE BRANCH, BHUBANESWAR-751001** **BY SRI.SANTHEEP ANKARATH, SC, PUNJAB NATIONAL BANK** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 08-08-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **sts** ## **WP(C).NO.20424/2014** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** - **P1 COPY OF THE REPRESENTATION DATED 28/9/2012 SUBMITTED BY THE 2ND PETITIONER TO RESPONDENTS.** - **P2 COPY OF THE REPRESENTATION DATED 19/10/2012 GIVEN TO THE DEPUTY GENERAL MANAGER AND OTHERS.** - **P3 COPY OF THE 13(2) NOTICE ISSUED UNDER SARFAESI ACT DATED 30/10/2012** - **P4 COPY OF THE REMINER LETTER DATED 20/11/2012** - **P5 COPY OF THE LETTER OF THE BANK DATED 21/11/2012 RECEIVED BY THE 2ND PETITIONER ON 17/12/2012** - **P6 COPY OF THE LETTER DATED 5/12/2012 SUBMITTED BY THE PETITIONERS.** - **P7 COPY OF THE REPRESENTATION DATED 7/12/2012 GIVEN TO THE DEPUTY GENERAL MANAGER LETTER DATED 7/12/2012** - **P8 COPY OF THE LETTER DATED 12/12/2012 ISSUED BY THE BANK TO THE PETITIONERS.** - **P9 COPY OF THE REPRESENTATION DATED 27/12/2012 (REPLY NOTICE) TO 13(2) NOTICE** - **P10 COPY OF THE POSSESSION NOTICE ISSUED UNDER SECTION 13(4) OF THE SARFAESI ACT DATED 31/12/2012** - **P11 COPY OF THE REPLY DATED 31/12/2012 GIVEN TO THE REPRESENTATION OF PETITIONER IN RESPONSE TO 13(2) NOTICE REPLY DATED 27/12/2012** - **P12 COPY OF THE SECTION 13(2) NOTICE DATED 24/1/2013 WITH RESPECT TO KILIKOLLUR PROPERTY** - **P13 COPY OF THE ORDER DATED 15/1/2013 AND ALLIED PAPERS OF ORISSA HIGH COURT** - **P14 COPY OF THE SALE NOTICE DATED 15/6/2013 PUBLISHED IN SUNDARY TIMES OF INDIA DATED 16/6/2013** - **P15 COPY OF THE ORDER DATED 5/2/2014 IN WP(C).NO.16108/2013 AND OTHER WRIT PETITIONS OF THE HON'BLE HIGH COURT OF ORISSA.** - **P16 COPY OF THE PUBLICATION MADE BY THE RESPONDENT BANK IN THE TIMES OF INDIA NEWSPAPER DATED 27/2/2014** - **P17 COPY OF THE AUCTION NOTICE PUBLISHED IN THE MATHRUBHOOMI DAILY DATED 27/2/2014** - **P18 COPY OF THE ORDER DATED 24/04/2014 OF DRT CUTTACK** **2/-** **-2-** ## **WP(C).NO.20424/2014** - **P19 COPY OF THE AFFIDAVIT FILED BY THE 2ND PETITIONER IN PURSUANCE TO DRT ORDER DATED 24/04/2014** - **P20 COPY OF THE AFFIDAVIT FILED BY THE BANK DATED 13/05/2014** - **P21 COPY OF THE ORDER DATED 14/7/2014 IN SA.NO.29 OF 2014** - **P22 COPY OF THE AUCTION NOTICE PUBLISHED IN MATHRUBHOOMI DAILY NEWSPAPER DATED 5/7/2014** - **P23 COPY OF THE ORDER DATED 22/7/2014 OF THE DRT CUTTACK** - **P24 COPY OF THE ADVOCATE NOTICE DATED 23/7/2014 RECEIVED BY THE 3RD PETITIONER ON 24/7/2014** - **P25 COPY OF THE ADVOCATE NOTICE ISSUED IN PURSUANCE OF THE ORDER IN CMP.NO.4743/2014 BY THE CJM, KOLLAM RECEIVED BY THE 2ND PETITIONER ON 26/7/2014** - **P26 COPY OF THE ADVOCATE NOTICE ISSUED IN PURSUANCE OF THE ORDER IN CMP.NO.4742/2014 BY THE CJM, KOLLAM RECEIVED BY THE 2ND PETITIONER ON 29/7/2014** - **P27 COPY OF THE AFFIDAVIT AND PETITION IN CMP.NO.4744/2014 BEFORE THE CHIEF JUDICIAL MAGISTRATE COURT, KOLLAM** - **P28 COPY OF THE AFFIDAVIT AND PETITION IN CMP.NO.4743/2014 BEFORE THE CHIEF JUDICIAL MAGISTRATE COURT, KOLLAM** - **P29 COPY OF THE AFFIDAVITS AND PETITIONS IN CMP.NO.4742/2014 BEFORE THE CHIEF JUDICIAL MAGISTRATE COURT, KOLLAM.** ## **RESPONDENT'S EXHIBITS: NIL** **/TRUE COPY/** ## **P.A.TO.JUDGE** **sts** ## **K. VINOD CHANDRAN, J. ===================== W.P.(C) No. 20424 of 2014 ====================== Dated this the 8[th] day of August, 2014** ## **J U D G M E N T** The petitioners, respectively a private limited Company, its Managing Director and his wife, who is also a Director, are aggrieved by the proceedings initiated for recovery of debts due to the respondent Bank; proceeded with under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), 2002. The petitioner in fact, challenges Exts.P24, P25 and P26, notices issued by the various Commissioners, appointed by the Chief Judicial Magistrate Court, Kollam for taking possession of three items of property situated within the District of Kollam. The brief facts necessary for the disposal of the Writ Petition are that, the petitioner, who is a permanent resident of Bhubaneswar availed a loan from the 1[st] respondent Bank to carry on the business of the private limited Company. Default having W.P.(C) No. 20424 of 2014 **2** been committed, the Bank initiated recovery proceedings under the SARFAESI Act, which was challenged by the petitioner before the DRT Cuttack. 2. The learned Counsel for the petitioner contends that due to fluctuations in the market, the business fell into bad times and the petitioner was unable to repay the loans availed. Though the dues at that point of time was around Rs.43crores, the security available with the Bank was only to the extent of Rs.41crores. The petitioner hence voluntarily offered five items of property in Bhubaneswar, three items in Kerala and two items in Andhra Pradesh to the respondent Bank and entrusted the title deeds with the respondent Bank, specifically for the purpose of getting release of the mortgaged properties, so as to sell those properties and clear off the dues. The petitioners' specific contention is that, no security interest has been created in the properties subsequently handed over and the entrustment of title deeds, subsequently, does not amount to a mortgage by deposit of title deeds. W.P.(C) No. 20424 of 2014 **3** 3. The learned Counsel for the respondent Bank however, would submit that, the petitioner has filed a Securitisation Application against the SARFAESI proceedings initiated by the respondent Bank before the DRT Cuttack. The petitioners also had approached the High Court of Orissa, time and again for interdiction of the proceedings initiated by the respondent Bank. Despite the High Court having granted conditional orders, none of such conditions were complied with by the petitioners. With respect to one of the properties now proceeded against within the State of Kerala, it is submitted that the petitioner had moved an application before the DRT Cuttack in the pending Securitisation Application numbered as SA. No.29 of 2014, to permit the petitioner to sell the same to a third party, who was offering Rs.3crores for the said property. The respondent Bank objected to the proposal since according to them the property would fetch Rs.3,75,00,000/-. 4. The DRT directed the petitioners to enter into W.P.(C) No. 20424 of 2014 **4** private negotiations and arrive at a reasonable figure as consideration for the sale of the said property. Nothing has fructified on that count till date. The learned Counsel for the petitioner would counter the submissions of the respondent Bank, pointing out that, despite three e-auctions conducted, the respondent Bank could not obtain the price quoted by it for the property. The fact remains that petitioners' application is pending consideration and it is for the petitioners to move the DRT for effecting private sale of the said property situated in Kerala. 5. In any event, it is to be noticed that, the petitioner has initiated proceedings as permitted under the SARFAESI Act by filling Securitisation Application against the proceedings taken by the Bank before the DRT Cuttack. Admittedly, the petitioners are within the jurisdiction of the said DRT and so are the respondents herein. The Chief Judicial Magistrate Court, Kollam assumes jurisdiction only with respect to the three properties situated within Kollam by virtue of the specific powers conferred under Section 14 W.P.(C) No. 20424 of 2014 **5** of the SARFAESI Act. The powers conferred on the Chief Judicial Magistrate Court is only to aid the taking into possession of the properties on any obstruction being caused and no adjudication as such is contemplated by Section14 of the Act. The DRT Cuttack being seized of the matter and having jurisdiction over both the petitioners and the respondents as also the transactions, the legality of the proceedings against the properties even within the State of Kerala, would properly arise within the jurisdiction of the said Tribunal. 6. As far as the proceedings initiated by Exts.P24, P25 and P26, it is submitted by the learned Counsel for the respondent Bank that, one of the properties is scheduled to be taken over on today and the other two properties are scheduled to be taken over respectively on 18.08.2014 and 28.08.2014. The petitioner having moved the jurisdictional DRT, this Court declines jurisdiction under Article 226 of the Constitution of India to the petitioner. Since all the matters raised herein, are to be agitated before the DRT W.P.(C) No. 20424 of 2014 **6** Cuttack, as has been held by the Hon'ble Supreme Court in **[AIR 2010 SC 3413] United Bank of India v. Satyawati Tondon and others and [(2011) 2 SCC 782] Kanaiyalal Lalchand Sachdev and others v. State of Maharashtra and others.** There is an effective alternate remedy, which has been invoked by the petitioners and there would be no warrant for invoking Article 226 of the Constitution of India. In such circumstance, this Court would not venture to enter into any finding on the rival contentions raised by the parties. The parties shall be reserved their liberty to agitate all contentions before the DRT, Cuttack. The Writ Petition hence stands closed, without prejudice. Parties left to suffer their costs. ## **K. VINOD CHANDRAN, JUDGE** SB W.P.(C) No. 20424 of 2014 **7**