Noorudheen Shah v. The Authorized Officer, The South Indian 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** **THURSDAY, THE 27TH DAY OF FEBRUARY 2020 / 8TH PHALGUNA, 1941** ## **WA.No.358 OF 2020** ## **AGAINST THE ORDER/JUDGMENT IN WP(C) 561/2020(U) OF HIGH COURT OF KERALA** ## **APPELLANT/PETITIONER:** **NOORUDHEEN SHAH AGED 50 YEARS S/O. KUNJUMON, AMBALATH HOUSE, THALIKULAM P.O., CHAVAKKAD TALUK, THRISSUR DISTRICT-680 569.** **BY ADV. SRI.E.A.BIJUMON** ## **RESPONDENT/RESPONDENT:** **THE AUTHORIZED OFFICER THE SOUTH INDIAN BANK LTD., REGIONAL OFFICE, SOUTH ROUND, THRISSUR-680 001.** **R1 BY ADV. SRI.K.K.CHANDRAN PILLAI (SR.) R1 BY ADV. SMT.S.AMBILY R1 BY ADV. SRI.SAJI THOMAS R1 BY ADV. SMT.NAMITHA NAMBIAR R1 BY ADV. SHRI.MICKY THOMAS** ## **OTHER PRESENT:** **SRI.K.K.CHANDRAN PILLAI(SR.) AND SMT.AMBILY.S , SC FOR BANK** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 27.02.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** WA.No.358 OF 2020 2 ## **JUDGMENT** **Dated this the 27th day of February 2020** ## **S.Manikumar, CJ.** Instant writ appeal is filed against the judgment issued by a learned Single Judge of this Court dated 03.02.2020 in W.P. (C)No.561/2020. ## 2. Short facts leading to the appeal are as follows: “The appellant is the petitioner in Writ petition No. 561/2020. The appellant approached this Honorable Court filing above Writ Petition seeking relief of direction to the respondent bank to consider the settlement process and allow the petitioner to settle the loan liability within three months, within 31.03.2020, for the ends of justice. The Appellant/petitioner mortgaged seven items of properties for two loans and availed 850 Lakhs availed on 29.05.2015. The Appellant/petitioner is made proper remittance till the end of 2017. The respondent in 2018 initiated proceedings under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Appellant/petitioner approached this Honorable Court challenging the Securitization proceedings through writ petition No. 10186/2018. The writ petition was disposed off directing the petitioner to pay off the overdue Rs. 1,15,00,000/- (Rupees WA.No.358 OF 2020 3 One Crore Fifteen Lakhs only) in 10 installments commencing from 15.05.2018. The Appellant/petitioner remitted an amount of Rs.1,28,30,805/- remitted to the loan account in three months from the date of Judgment. The applicant made remittance as per the direction of the Honourable Court and the respondent bank did not regularize the loan account. As and when the respondent bank not regularized the loan account after remitting the amounts the Appellant/petitioner approached this Honourable Court filing Writ petition No. 8662/2019 and the disputes between the parties are squarely in the factual realm, this Honourable Court directed the Appellant/petitioner to approach the Debt Recovery Tribunal, the judgment was passed on 25.03.2019. The Appellant/Petitioner filed S.A (Securitization Application) No. 138/2019 and the same was dismissed as on 24.08.2019. Then after the petitioner filed writ petition No. 561/2020 seeking time to settle the liability till 31.03.2020 and this Honourable Court disposed of the writ petition directing the petitioner to invoke the statutory alternative remedy filing Appeal under Section 18 before the DRAT, Chennai. The Appellant is only seeking time till the end of March 2020 to settle the entire liability, hence this writ appeal is filed.” 3. Writ Court, after considering the rival submissions and taking note of the facts and circumstances of the case, closed the writ petition on 03.02.2020, giving liberty to the petitioner to raise all his grounds subject to the law of limitation, by filing a requisite statutory appeal in terms of Section 18 of the WA.No.358 OF 2020 4 ## SARFAESI Act. ## 4. Being aggrieved, instant writ appeal is filed on the following grounds: - “A. The learned single judge ought to have considered the volume of amount involved and the circumstance of the appellant for the time being. Hence more time ought to have been granted by the learned single judge to the appellant so as to salvage their property. Now the respondent bank will take physical possession of the properties at any time. Hence interference of this Hon'ble Court in the above matter is highly necessary. - B. The procedure adopted by the respondent bank to the extent of fastening liability for the amounts that is due in respect of the recovery proceedings initiated at the instance of the respondents is arbitrarily, unjust, individual required to be interfered by this Hon'ble Court. - C. It is submitted that the appellant seeks indulgence since the appellant is willing to liquidate the liability if reasonable time is provided so as to salvage the property. Therefore it is for the respondents to provide time rather than initializing the securitization proceedings. - D. It is submitted that interference is warranted against the illegality, against the arbitrariness at the instance of the respondents but the learned Single Judge lost site of the contentions raised by the appellant but in a hypertechnical manner dismissed the prayer. WA.No.358 OF 2020 5 - E. It is submitted that since the actions are violative of Article 14 of the Constitution of India interference in the matter is warranted. - F. There is substantial injury caused by the illegal act of the respondents thus requiring interference by this Hon'ble Court. - G. The learned single judge ought not to have taken note of the cause of action and the circumstance in which writ petition is filed. - H. The learned single judge ought to have seen that as far as the bank is concerned, an amount of more than rupees fifty lakhs is already paid and taking in to consideration the appellant's situation if they lose their property, they could have granted time for the repayment of the amount due which the appellant is ready and willing to pay if they gets a breathing time on humanitarian ground. Instead the respondent bank has initiated and gone with securitization proceedings without showing leniency. - I. At any rate in the prevailing situation the learned single judge ought to have granted at least a breathing time to the appellant/petitioners.” 5. Heard both sides. 6. It is contended that the judgment passed by the learned Single Judge is clearly contrary to the dictum laid down by the Hon'ble Apex Court in **Authorised Officer, State Bank of Travancore and another v. Mathew K.C.** reported in WA.No.358 OF 2020 6 ## **(2018) 3 SCC 85.** Relevant portions cited by the learned counsel read 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 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 Satyawati Tandon (supra), 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 WA.No.358 OF 2020 7 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, Whirlpool Corpn. v. Registrar of Trade Marks and Harbanslal Sahnia v. Indian Oil Corpn. Ltd. and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order.” 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 be considered sufficient justification to have declined interference. 17. 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 WA.No.358 OF 2020 8 filed, stay/modification could be sought of the interim order cannot be considered sufficient justification to have declined interference. 18. We cannot help but disapprove the approach of the High Court for reasons already noticed in Dwarikesh Sugar Industries Ltd. vs. 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.” 7. In a catena of decisions, Honourable Supreme Court has held that ordinarily the relief under Articles 226 or 227 of the Constitution of India is not available if an efficacious alternative remedy is available to any aggrieved person. In **United Bank of India v. Satyawati Tondon and others [(2010) 8 SCC 110]** , 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 WA.No.358 OF 2020 9 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 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 WA.No.358 OF 2020 10 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.” 8. In **Civil Appeal Nos.10243-10250 of 2018 [ICICI Bank Ltd. & Ors. v. Umakanta Mohapatra and Ors. (2019) 13 SCC 497]** , by order dated 5.10.2018, the Honourable 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. In the light of the above decisions, there is no error in the impugned judgment. Accordingly, this writ appeal is dismissed. ## **Sd/-** ## **S.MANIKUMAR** ## **CHIEF JUSTICE** ## **Sd/-** ## **SHAJI P.CHALY** **JUDGE** shgx