O.P (DRT) No. 67 of 2022

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** # **PRESENT** **THE HONOURABLE MR.JUSTICE C.S.DIAS** **FRIDAY, THE 9[TH] DAY OF JUNE 2023 / 19TH JYAISHTA, 1945** **OP (DRT) NO. 67 OF 2022** **AGAINST THE PROCEEDINGS IN SA 270/2021 OF DEBT** **RECOVERY TRIBUNAL-I, ERNAKULAM** ## **PETITIONER/APPLICANTS:** 1 SHEFIN.S.YOOSAF AGED 24 YEARS, S/O. SHAJAHAN YOOSAF SAHIB, PROPRIETOR.M/S. AL-SHIFA SUPER SPECIALITY HOSPITAL FOR PILES,50/150-F, EETTICKAL HOUSE, SRI NARAYANA ROAD, EDAPPALLY.P.O, ERNKULAM-682 024. 2 RASHEEDA SHAJAHAN YOOSAF, AGED 53 YEARS, W/O. SHAJAHAN YOOSAF SAHIB, 50/150-F, EETTICKAL HOUSE, SRI NARAYANA ROAD, EDAPPALLY.P.O, ERNKULAM-682 024. 3 SHAJAHAN YOOSAF SAHIB, AGED 59 YEARS S/O.E.A YOOSAF SAHIB,50/150-F, EETTICKAL HOUSE, SRI NARAYANA ROAD, EDAPPALLY.P.O, ERNKULAM-682 024 BY ADVS. Maria Nedumpara GENS GEORGE ELAVINAMANNIL(K/670/2008) ## **RESPONDENT/DEFENDANTS:** 1 INDIAN BANK REP.BY ITS BRANCH MANAGER, KALAMASSERY BRANCH, IST FLOOR, AKKM TOWERS, CUSAT JN. SOUTH . KALAMASSERY, ERNAKULAM-682022., PIN – 680022. 2 THE AUTHORISED OFFICER, INDIAN BANK LTD. STRESSED ASSEST MANAGEMENT BRANCH. 4TH FLOOR, RAM MEENA BUILDINGS, VALANJAMBALAM, ERNAKULAM-682016 BY ADV.S.EASWARAN **THIS OP (DEBT RECOVERY TRIBUNAL) HAVING COME UP FOR ADMISSION ON 02.06.2023, THE COURT ON 9.6.2023 DELIVERED THE FOLLOWING:** **O.P (DRT) No.67 of 2022** **2** ## **C.S.DIAS, J. ============ O.P (DRT) No.67 of 2022 ============== Dated this the 9[th] June, 2023** ## **J U D G M E N T** The original petition is filed under Article 227 of the Constitution of India, inter alia, to quash Ext.P2 notice of intended sale issued by the first respondent Bank under Rule 6(2) & 8(6) of the Security Interest (Enforcement Rules), 2002 read with the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ( in short 'SARFAESI Act'). 2. The relevant facts leading to Ext.P2 are as follows: (i) The first petitioner is the owner of a property having an extent of 13.95 Ares in Edappally Village, Kanayannur Taluk, Ernakulam District along with the ## **O.P (DRT) No.67 of 2022** **3** right of the third petitioner reserved in the title document. (ii) The respondents have alleged that the petitioners had availed various credit facilities, in the form of cash credit, for the working capital and overdraft facility at an aggregate amount of Rs.983.22 lakh. The property mentioned above was given as collateral security. (iii) The petitioners had started a hospital named 'Al-shifa' by spending Rs.8000 lakh. (iv) Due to labour related issues, the hospital had to be closed down. After the Covid-19 pandemic, the petitioners desire to re-start the hospital came to a stand still. (v) Although the petitioners submitted various letters to the first respondent to sanction additional facilities, they illegally classified the Bank Account as a 'Non-Performing Asset'. Later, a notice ## **O.P (DRT) No.67 of 2022** **4** was issued under Section 13 (2) of the Act, which is illegal. The first respondent cancelled the notice and reissued another demand notice, which again is unsustainable in law. The first petitioner filed its written objections to the second demand notice. The first respondent proceeded against the secured asset and have taken possession of the same on 26.10.2021. The demand made by the first respondent is extortionate and unreasonable. (vi) The petitioners have filed SA No.270/2021 (Ext.P1) before the Debt Recovery Tribunal-I, Ernakulam (in short ' Tribunal'). However, as there is no Presiding Officer in the Tribunal, there is no sitting. (vii) In the meantime, the respondents have issued Ext.P2 sale notice, to realise an alleged outstanding liability of Rs. 10,51,26,251.76. (viii) The petitioners have filed I.A No.40/2022 (Ext.P4) to amend Ext.P1 application. The reserve **5** ## **O.P (DRT) No.67 of 2022** price fixed by the respondents is of the lower side when compared to the value fixed in Ext.P5 valuation report. (ix) As there is no sitting in the Tribunal, the petitioners are prevented from exercising their statutory remedies. Hence, the writ petition. 3. Heard; Sri.Mathew.J.Nedumpara, the learned counsel appearing for the petitioners and Sri.S.Easwaran, the learned counsel appearing for the respondents. 4. Sri.Mathew.J.Nedumpara drew the attention of this Court to the provisions of the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act), the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) and the SARFAESI Act and argued that in the light of Sections 7, 9 and 29 of the MSMED Act read with the Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises notification dated 29.5.2015 and the UDYAM Registration **6** ## **O.P (DRT) No.67 of 2022** notification dated 26.6.2020, there is no room for any doubt that the MSMED Act over-rides the provisions of the RDB Act and the SARFAESI Act. Thus, the entire proceedings pursuant to Ext.P2 sale notice are vitiated and unsustainable in law. Consequently, the entire proceedings have to be declared void. He contended that, although the petitioners have not raised the above contention before the Tribunal, the above contention being a pure question of law, the petitioners have filed I.A No.2/2023 in the present original petition, seeking leave to amend the original petition to incorporate additional pleadings and prayers. He placed reliance on the Industries (Development and Regulation) Act, 1951, the decisions of the Hon'ble Supreme Court in **Kotak Mahindra Bank Ltd v. Girnar Corrugators Pvt Ltd [** (2023) 3 SCC 210], **Bank of Rajasthan Ltd v. VCK Shares and Stock Broking Services Ltd** [2022 Livelaw (SC) 941], **7** ## **O.P (DRT) No.67 of 2022** ## **Nimesh Mehta and Anr v. Board of Directors &** **Others [** SLP (C) No.6184/2023] and an unreported decision of the Bombay High Court in W.P(C) No.35792/2022 and connected cases, to fortify his contentions. 5. On the contrary, Sri.S.Easwaran, the learned counsel appearing for the respondents vehemently resisted the writ petition and contended that the writ petition is devoid of any merits or bona fides. It was his contention that, when the writ petition came up for consideration on 27.1.2022, this Court had directed all further coercive proceedings to be kept in abeyance on condition that the petitioners deposit an amount of Rs.1/-crore on or before 28.2.2022. Later, on 8.2.2023, this Court directed the taking over of the physical possession of the secured asset to be deferred by four weeks, on condition that the petitioners deposit a sum of Rs.75 lakh on or before 28.2.2023. Yet, the **8** ## **O.P (DRT) No.67 of 2022** petitioners have complied with the above directions. He also argued that the contentions now argued before this Court, have not been raised before the Tribunal or in the original petition. It is at the eleventh hour that the petitioners have come up with the present plea, that as they are a MSME Enterprise and they are entitled to the benefit of the said Act, which is untenable, and is urged only as a ruse to further procrastinate the recovery proceedings. If the petitioners have such a defence, it is up to them to raise the said contentions before the Tribunal, and not before this Court, that too without a pleading in an original petition filed under Article 227 of the Constitution of India. It is trite, that the MSMED Act does not over-ride the SARFAESI Act. Hence, the writ petition may be dismissed. 6. Indisputably, the petitioners have filed Ext.P1 securitisation application under Section 17 of the **9** ## **O.P (DRT) No.67 of 2022** SARFAESI Act, before the Tribunal, to set aside Ext.P2 sale notice and all further proceedings pursuant to it. 7. It is during the pendency of the said application that the petitioners have approached this Court, inter alia, asserting that the reserve price of the secured asset is abysmally low. Moreover, as there is no Presiding Officer in the Tribunal, the petitioners are left and dry to challenge the high handed and draconian action of the respondents. 8. When the writ petition came up for consideration on 27.1.2022, this Court passed a conditional order of stay of coercive proceedings, directing the petitioners to deposit an amount of Rs.1/- crore before the Tribunal. Again, on 8.2.2023, this Court further directed the petitioners to deposit an amount of Rs.75/- lakh before the Tribunal on or before 28.2.2023. It is conceded that the petitioners have not complied with the directions passed by this Court. **10** ## **O.P (DRT) No.67 of 2022** 9. In **South Indian Bank Ltd vs. Naveen Mathew Philip** (2023 LiveLaw (SC) 320), the Hon'ble Supreme Court after adverting to a myriad of earlier judicial pronouncements rendered under the Act, has categorically declared the law that High Courts shall not, unless in extra ordinary circumstances, interfere with the proceedings initiated under the SARFAESI Act, in writ proceedings under Article 226 of the Constitution of India. 10. There can be no dispute that, the Tribunal has commenced sitting and the petitioners application is pending consideration. Thus, the petitioners can very well ventilate their grievance before the Statutory Forum. 11. The present contention raised in I.A No.2/2023, seeking leave to amend the writ petition is that, as the first petitioner enterprise is a Micro Enterprise covered by the MSMED Act, the petitioners ## **O.P (DRT) No.67 of 2022** **11** are entitled to the benefit of the said Act and the respondents cannot take recourse to the SARFAESI Act and the RBD Act, without exhausting the safeguards provided under the MSMED Act. I am afraid that the said contention is untenable in the instant original petition because the same was never raised and considered by the Tribunal. 12. The power of superintendence of this Court under Article 227 of the Constitution of India is wellsettled in a plethora of precedents. 13. In **Waryam Singh and another v. Amarnath and another** [AIR 1954 SC 215], a Constitutional Bench of the Hon’ble Supreme Court held thus: “14. This power of superintendence conferred by Article 227 is, as pointed out by Harries C.J., in Dalmia Jain Airways Ltd. v. Sukumar Mukherjee [AIR 1951 Cal 193], is to be exercised most sparingly and only in appropriate cases in order to keep the subordinate courts within the bounds of their authority and not for correcting mere errors. xxx xxx **12** ## **O.P (DRT) No.67 of 2022** xxx”. 14. In **Shalini Shyam Shetty & anr. V. Rajendra Shankar Patil** [(2010) 8 SCC 329], the principles in Waryam Singh have been reiterated by the Hon’ble Supreme Court as follows: “49. On an analysis of the aforesaid decisions of this Court, the following principles on the exercise of High Court's jurisdiction under Article 227 of the Constitution may be formulated: (a) A petition under Article 226 of the Constitution is different from a petition under Article 227. The mode of exercise of power by the High Court under these two articles is also different. (b) In any event, a petition under Article 227 cannot be called a writ petition. The history of the conferment of writ jurisdiction on High Courts is substantially different from the history of conferment of the power of superintendence on the High Courts under Article 227 and have been discussed above. **(c) High Courts cannot, at the drop of a hat, in exercise of its power of superintendence under Article 227 of the Constitution, interfere with the orders of tribunals or courts inferior to it. Nor can it, in exercise** **O.P (DRT) No.67 of 2022** **13** **of this power, act as a court of appeal over the orders of the court or tribunal subordinate to it. In cases where an alternative statutory mode of redressal has been provided, that would also operate as a restrain on the exercise of this power by the High Court.** (d) The parameters of interference by High Courts in exercise of their power of superintendence have been repeatedly laid down by this Court. **In this regard the High Court must be guided by the principles laid down by the Constitution Bench of this Court in Waryam Singh [AIR 1954 SC 215] and the principles in Waryam Singh [AIR 1954 SC 215] have been repeatedly followed by subsequent Constitution Benches and various other decisions of this Court.** (e) According to the ratio in Waryam Singh [AIR 1954 SC 215] , followed in subsequent cases, the High Court in exercise of its jurisdiction of superintendence can interfere in order only to keep the tribunals and courts subordinate to it, “within the bounds of their authority”. (f) In order to ensure that law is followed by such tribunals and courts by exercising jurisdiction which is vested in them and by not declining to exercise the jurisdiction which is vested in them. (g) Apart from the situations pointed in (e) and (f), **High Court can interfere in exercise of its power of superintendence when there has been a patent** **O.P (DRT) No.67 of 2022** **14** **perversity in the orders of the tribunals and courts subordinate to it or where there has been a gross and manifest failure of justice or the basic principles of natural justice have been flouted** . (h) **In exercise of its power of superintendence High Court cannot interfere to correct mere errors of law or fact or just because another view than the one taken by the tribunals or courts subordinate to it, is a possible view. In other words the jurisdiction has to be very sparingly exercised.** (i) The High Court's power of superintendence under Article 227 cannot be curtailed by any statute. It has been declared a part of the basic structure of the Constitution by the Constitution Bench of this Court in L. Chandra Kumar v. Union of India [(1997) 3 SCC 261 : 1997 SCC (L&S) 577] and therefore abridgment by a constitutional amendment is also very doubtful. (j) It may be true that a statutory amendment of a rather cognate provision, like Section 115 of the Civil Procedure Code by the Civil Procedure Code (Amendment) Act, 1999 does not and cannot cut down the ambit of High Court's power under Article 227. At the same time, it must be remembered that such statutory amendment does not correspondingly expand the High Court's jurisdiction of superintendence under Article 227. ## (k) **The power is discretionary and has to be** **O.P (DRT) No.67 of 2022** **15** ## **exercised on equitable principle. In an appropriate case, the power can be exercised suo motu.** (l) On a proper appreciation of the wide and unfettered power of the High Court under Article 227, it transpires that the main object of this article is to keep strict administrative and judicial control by the High Court on the administration of justice within its territory. (m) The object of superintendence, both administrative and judicial, is to maintain efficiency, smooth and orderly functioning of the entire machinery of justice in such a way as it does not bring it into any disrepute. **The power of interference under this article is to be kept to the minimum to ensure that the wheel of justice does not come to a halt and the fountain of justice remains pure and unpolluted in order to maintain public confidence in the functioning of the tribunals and courts subordinate to the High Court.** (n) **This reserve and exceptional power of judicial intervention is not to be exercised just for grant of relief in individual cases but should be directed for promotion of public confidence in the administration of justice in the larger public interest whereas Article 226 is meant for protection of individual grievance.** Therefore, the power under Article 227 may be unfettered but its exercise is subject to high degree of judicial discipline pointed out above. 1. **O.P (DRT) No.67 of 2022** **16** (o) An improper and a frequent exercise of this power will be counterproductive and will divest this extraordinary power of its strength and vitality. ## 15. Recently, the Hon’ble Supreme Court in **M/S Garment Craft vs Prakash Chand Goel** [(2022) 4 SCC 181] has held as follows: “15. Having heard the counsel for the parties, we are clearly of the view that the impugned order [Prakash Chand Goel v. Garment Craft, 2019 SCC OnLine Del 11943] is contrary to law and cannot be sustained for several reasons, but primarily for deviation from the limited jurisdiction exercised by the High Court under Article 227 of the Constitution of India. **The High Court exercising supervisory jurisdiction does not act as a court of first appeal to reappreciate, reweigh the evidence or facts upon which the determination under challenge is based. Supervisory jurisdiction is not to correct every error of fact or even a legal flaw when the final finding is justified or can be supported. The High Court is not to substitute its own decision on facts and conclusion, for that of the inferior court or tribunal.** [Celina Coelho Pereira v. Ulhas Mahabaleshwar Kholkar, (2010) 1 SCC 217 : (2010) 1 SCC (Civ) 69] The jurisdiction exercised is in the nature of correctional jurisdiction to set right grave dereliction of duty or flagrant abuse, violation of fundamental principles of law or justice. **The power under Article 227 is exercised sparingly in appropriate cases, like when there is no evidence at all to justify, or the finding is so perverse that no reasonable person can possibly come to such a conclusion that the court or tribunal has come to.** **O.P (DRT) No.67 of 2022** **17** ## **It is axiomatic that such discretionary relief must be exercised to ensure there is no miscarriage of justice** . 16. Explaining the scope of jurisdiction under Article 227, this Court in Estralla Rubber v. Dass Estate (P) Ltd. [Estralla Rubber v. Dass Estate (P) Ltd., (2001) 8 SCC 97] has observed : (SCC pp. 101-102, para 6) “6. The scope and ambit of exercise of power and jurisdiction by a High Court under Article 227 of the Constitution of India is examined and explained in a number of decisions of this Court. **The exercise of power under this article involves a duty on the High Court to keep inferior courts and tribunals within the bounds of their authority and to see that they do the duty expected or required of them in a legal manner. The High Court is not vested with any unlimited prerogative to correct all kinds of hardship or wrong decisions made within the limits of the jurisdiction of the subordinate courts or tribunals. Exercise of this power and interfering with the orders of the courts or tribunals is restricted to cases of serious dereliction of duty and flagrant violation of fundamental principles of law or justice, where if the High Court does not interfere, a grave injustice remains uncorrected. It is also well settled that the High Court while acting under this Article cannot exercise its power as an appellate court or substitute its own judgment in place of that of the subordinate court to correct an error, which is not apparent on the face of the record. The High Court can set aside or ignore the findings of facts of an inferior court or tribunal, if there is no evidence at all to justify or the finding is so perverse, that no reasonable person can possibly come to such a conclusion, which the court or** **18** ## **O.P (DRT) No.67 of 2022** ## **tribunal has come to.”** 16. In the light of the principles laid down in the above authoritative precedents and the undisputed fact that the petitioners have not raised the present contention, that they are entitled to the benefit of the MSMED Act before the Tribunal, I am definitely of the view that it is not for this Court to invoke the power of superintendence under Article 227 of the Constitution of India and quash Ext.P2 notice, that too without there being a foundation in the application filed before the Tribunal. Nonetheless, it would be up to the petitioners to raise the above contention before the Tribunal in accordance with law. 17. I do not find any illegality, infirmity or error in Ext.P2 sale notice,warranting it to be quashed. In the light of the findings rendered above, I am also not inclined to entertain I.A No.2/2023. **19** ## **O.P (DRT) No.67 of 2022** Resultantly, without prejudice to the right of the petitioners to raise all the contentions before the Tribunal, the original petition is dismissed. **Sd/- C.S.DIAS JUDGE** ma/7.6.2023 **O.P (DRT) No.67 of 2022** **20** ## **APPENDIX OF OP (DRT) 67/2022** PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE SECURITIZATION APPLICATION FILED BY THE PETITIONERS AS SA. NO.270/2021 BEFORE THE DEBT RECOVERY TRIBUNAL-I, ERNAKULAM ALONG WITH ANNEXURES. Exhibit P2 TRUE COPY OF THE SALE NOTICE ISSUED BY THE RESPONDENT. Exhibit P3 TRUE COPY OF THE POSTAL COVER RECEIVED BY THE PETITIONERS CONTAINING THE SALE NOTICE ISSUED BY THE RESPONDENTS. Exhibit P4 TRUE COPY OF THE AMENDMENT PETITION WITHOUT ANNEXURES IN I.A.NO.40/2022 IN SA. NO.270/2021. Exhibit P5 TRUE COPY OF THE VALUATION REPORT PREPARED AT THE INSTANCE OF THE PETITIONERS.