O.P.(Criminal) No. 63 of 2017 (Kerala High Court) - A Marine Industries Munambam & Others v UCO Bank

O.P(Crl.).No.63/2017 1 ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE SUNIL THOMAS** **TUESDAY, THE 17TH DAY OF MARCH 2019 / 27TH PHALGUNA, 1940** **OP(Crl.).No.63 OF 2017(Q)** **AGAINST THE ORDER/JUDGMENT IN CRMP 3075/2016 OF CHIEF JUDL.MAGISTRATE, ERNAKULAM** ## **PETITIONER/S:** - **1 A MARINE INDUSTRIES MUNAMBAM, PALLIPORT P.O., ERNAKULAM 683515, REPRESENTED BY ITS PROPRIETOR, P.T.FRANCIS, PANACKKAL HOUSE, PALLIPORT, ERNAKULAM.** - **2 MS.A.MARINE EXPORTS DOOR NO.1/625, MARKET ROAD, MUNAMBAM, PALLIPORT, ERNAKULAM, REPRESENTED BY ITS PROPRIETOR, P.T.FRANCIS, PANACKKAL HOUSE, PALLIPORT, ERNAKULAM.** - **3 FRANCIS P.T. PANACKKAL HOUSE, PALLIPORT, ERNAKULAM.** - **4 BINSY FRANCIS PANACKKAL HOUSE, PALLIPORT, ERNAKULAM.** **BY ADV. SMT.K.P.SANTHI** ## **RESPONDENT/S:** - **1 UCO BANK REPRESENTED BY THE CHIEF MANAGER, M.G.ROAD, ERNAKULAM-682016.** - **2 BRANCH MANAGER UCO BANK, MUNAMBAM BRANCH, PALLIPORT, ERNAKULAM683515.** **R1 BY ADV. SRI.DEEPAK JOY.K.** **THIS OP (CRIMINAL) HAVING BEEN FINALLY HEARD ON 01-03-2019, THE COURT ON 17-03-2020 DELIVERED THE FOLLOWING:** O.P(Crl.).No.63/2017 2 ## **JUDGMENT** **Dated this the 17[th] day of March 2020** Petitioners 1 and 2 herein are proprietary concerns and the petitioners 3 and 4 are its partners. According to the petitioners, the second petitioner was sanctioned a loan of Rs. 90,00,000/- for export packing credit by the first respondent bank. Properties of the firm were given as security. In relation to the consignment made to an overseas purchase in 2013, dispute arose between the petitioners and the first respondent. Consequent to the above dispute, the amount payable under the loan transaction was not remitted by the petitioners. The bank threatened to declare the loan account as NPA and to attach the property given as security. Faced with this threat, the second petitioner filed OS No.152/2016 before the Sub Court, Ernakulam claiming damages from the bank. The suit is stated to be pending. Petitioners also filed SA No.311/2016 before the DRT Ernakulam challenging the securitisation proceedings initiated under the Securitisation and Reconstruction Financial Assets and Enforcement Security Interest Act 2002 ( SARFAESI Act). The above proceedings were initiated by the bank demanding recovery of O.P(Crl.).No.63/2017 3 Rs. 1,09,50,000/- due under the packing credit facility and the loan account which was declared as NPA. It was seen from the records that pursuant to the above proceedings, notice of possession of security was also issued by the bank. In S .A.No.311/2016, relief sought was to set aside the possession notice and to declare that the petitioners were not liable to re-pay an amount of Rs.45,00,000/towards the packing credit facility. An order of status quo was granted in the above suit till 26/8/2016. On that day, the bank appeared and the case was posted for counter. No specific order was passed extending the stay. 2. In the meanwhile, the bank moved the Judicial Chief Magistrate, Ernakulam and filed Crl.M.P.No.3075/2016 for appointment of an advocate commissioner to take possession of the property offered as security. On getting information about, the petitioners moved DRT seeking stay, but no interim stay was granted. Again the bank moved the Chief Judicial Magistrate and filed CMP No. 99/2017 and obtained an order directing the Advocate Commissioner to take possession. Thereafter, the petitioners filed CMP Nos.172/2017 before the Chief Judicial Magistrate to recall the order in CMP No.99/2017. The case was adjourned and posted to 21/1/2017 for objections. The proceedings of the court below as seen from the A diary indicates as follows; “ Heard. CMP allowed. O.P(Crl.).No.63/2017 4 For objection CMP No.162/17 to 21/1/2017”. 3. On 23/1/2017, the bank took possession of 11.886 cents of land with factory building and office . Though certified copies of the order in CMP No.99/2017 and CMP No. 3075/2016 were sought, they were not issued. Contending that action of the bank in taking possession of the factory premise and buildings was illegal and also contending that the CJM ought not have passed an order on 7/1/2016 permitting the bank to take possession of the premises since the matter was subjudice, the original petition was filed. The relief sought in the original petition was to direct the Chief Judicial Magistrate to issue certified copies of the order dated 7/1/2017 in Crl.M.P.No.3075/2016 and the order in CMP No.99/2017. Further relief sought was to declare the action of the bank in taking possession of 11.886 cents of land was void and to direct the bank to return the possession of land. 4. The respondent bank appeared and filed a detailed counter affidavit. In the counter affidavit it was contended that the original petition was not maintainable. It was contended that in SA No.31/2016 what was challenged was only section 13(4) notice under the Act and not the actual possession. It was contended that seeking the stay of the SARFAESI proceedings, the petitioners had moved the High Court by filing W.P.(C) No.14370/2016 and sought O.P(Crl.).No.63/2017 5 stay of the proceedings till the disposal of CC No.117/2014. The above petition was dismissed holding that the Consumer Court has no jurisdiction to decide a commercial transaction. W.A.No.1024/2016 was filed by the petitioners challenging the dismissal of the writ petition. When the writ petition was about to be dismissed, the petitioner withdrew the writ petition, it was alleged. 5. Petitioner had moved O.S.No.152/2015 before the Sub Court, Ernakulam and SA No.311/2016 before the DRT. Ext.P10 interim order was obtained by the petitioner misleading the DRT that section 13 (2) notice was issued only in respect of Rs.1,09,50,000/and not against recovery of Rs.45,31,508/- and Rs.5,81,685/-. In fact, separate notices were issued for recovery of both. Copy of the notices were produced along with the counter affidavit. Ext.P10 discloses that counsel had contended that notices were not issued in respect of the above claims and that section 13(2) notice was issued only in relation to the recovery of money of Rs. 1,09,00,000/-. Status quo order was granted only upto 26/8/2016. Though another stay petition was filed, DRT was not inclined to grant it. Attempt was made to obtain a stay of SARFAESI proceedings from the Consumer Redressal Forum, Trivandrum which was also not successful. It was contended that the Chief Judicial Magistrate, before passing the impugned order, had granted sufficient time to the O.P(Crl.).No.63/2017 6 petitioners to find out whether there was a chance of settlement. It was contended that the proceedings initiated before the Consumer Forum was a clear case of collusion between the petitioners and the buyer. It was contended that the respondent bank was not liable to pay any amount in respect of the disputes between the petitioners and their client. 6. Yet another contention set up by the bank was that the petitioners were entitled to seek their reliefs under section 17 of the SARFAESI Act. Any interference by the CJM was not contemplated under section 17 of the SARFAESI Act, since taking of actual possession under section 14 was a stage under section 13 (4) of the SARFAESI Act. No adjudication was warranted in the above proceedings. It was contended that if the petitioners were aggrieved, they had an efficacious and alternative remedy under section 17 of the SARFAESI Act. It was contended that the first and 4[th] petitioners had not challenged the SARFAESI Action within the statutory period and hence their relief was barred. Regarding the relief of reconveyance of the property, which was taken possession of the bank, it was contended that the restoration of the possession can be granted only by the DRT under section 17 (3) (b) of the Act. 7. Essentially, the contention set up by the petitioners were three fold. It was contended that the property taken possession of O.P(Crl.).No.63/2017 7 was their valuable property worth about Rs. 3 Crores. Yet another contention was that O.S.No.152/2016 was pending before the Sub Court, Ernakulam. Complaint of the petitioner as S.A.No.311/2016 was pending before the Consumer Disputes Redresal Commission. If the reliefs sought in the above proceedings were granted, there would not have been any liability to pay any amount. Consequently, SARFAESI proceedings initiated was without jurisdiction. Another contention set up was that the A Diary of the DRT showed that CMP was allowed. The matter was taken cognizance by the DRT. Hence, in the meanwhile, CJM should not have ordered taking possession of the property, which was subjudice. 8. One of the relief sought was for a direction to the court below to issue certified copy. At this length of time, I do not think that any such relief is to be granted. 9. Regarding the grievance based on Ext.P13, evidently proceedings in A diary indicated that no interim order was granted in CMP No.172/2017. There could not have any interim order when the CMP itself was posted for objection to 21/1/2017. In fact no interim order was passed by the DRT. In the absence of any interdiction, the Chief Judicial Magistrate was well within his jurisdiction to grant reliefs sought. This is in accordance with the decision of this court in _**Sasi and Another v. Housing Development Finance**_ O.P(Crl.).No.63/2017 8 _**Corporation Ltd. And Others (2010 KHC 779)**_ . It was held that under section 17 of the SARFAESI Act, jurisdiction of the Magistrate was very limited and there was no power, competence or jurisdiction to deal with the merits of the case. The Magistrate should consider only whether the application has been preferred for taking possession of the secured assets by secured creditor and whether the secured asset was situated within the area of the jurisdiction of the concerned Magistrate. 10. It was seen that the steps were initiated by the petitioners against the proceedings. Petitioners had already approached DRT. He had moved this court seeking identical reliefs. That was unsuccessful and even the Writ Appeal did not end in favour of the petitioners. Same relief is now sought in this original petition. 11. The specific contention of the respondents was that the petitioners have got alternate efficacious remedy under section 17 of the SARFAESI Act.The Hon'ble Supreme Court in _**G.M.Sri.Siddeshwara Co-operative Bank Ltd. And Another v. Ikbal and Others (2013 KHC 4656)**_ had held that in a proceeding under Section 13 (4) of SARFAESI Act and section 17 of the DRT Act, when the statute provides efficacious and adequate remedy, High Court cannot entertain a petition under Article 226 of the Constitution of India. This was reiterated in the subsequent decision O.P(Crl.).No.63/2017 9 in _**Standard Chartered Bank v. V.Noble Kumar and Others (2013 KHC 4703)**_ . In _**Devi Ispat Ltd. And Another v. State Bank of India and Others (2014 KHC 4262)**_ , the Hon'ble Supreme Court held that when there is a statutory mechanism, the writ petition filed bypassing that mechanism was not sustainable and the High Court shall refrain from interfering in the said proceedings. Similar view was expressed by the Andhra High Court in _**T.R.Jewellery and Another v. State Bank of India and Another (2016 KHC 3192)**_ . 12. The specific contention of the petitioners wasthat ,in the light of the Consumer Court Proceedings which had seized of the basic issue of liability, the DRT should not have ordered possession of the property, does not appear to be completely sustainable. According to the respondent, such proceedings were not legally sustainable before DRT since it related to commercial transaction. Learned counsel for the petitioners relied on the decision of this court in _**Ghaziabad Development Authority v. Union of India and Another (2000 KHC 1235)**_ , wherein it was held that when there was a breach of a commercial contract, Consumer Protect Act cannot apply. This was reiterated in _**Corporation Bank and Another v. Navi J.Shah (2000 KHC 1003).**_ I find considerable force in the contention set up by the respondents, in the light of the above decision. O.P(Crl.).No.63/2017 10 Having considered the above facts, I feel that no relief can be granted to the petitioners. Petitioners have to work out their reliefs before the appropriate authorities. The original petition fails and is dismissed. ## **Sd/-** **SUNIL THOMAS** dpk **JUDGE** O.P(Crl.).No.63/2017 11 ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** - **EXHIBIT P1TRUE COPY OF THE SANCTION LETTER OF THE 2ND RESPONDENT.** - **EXHIBIT P2TRUE COPY OF THE LETTER DATED 20/06/2013 OF THE SHIPPING COMPANY.** - **EXHIBIT P3TRUE COPY OF THE LETTER DATED 22/06/2013 OF THE PETITIONER TO THE 1ST RESPONDENT.** - **EXHIBIT P4TRUE COPY OF THE LETTER DATED 08/07/2013 OF THE 1ST RESPONDENT.** - **EXHIBIT P5TRUE COPY OF THE LETTERS DATED 24/07/2013 OF THE 1ST RESPONDENT.** - **EXHIBIT P6TRUE COPY OF THE LETTERS DATED 21/02/2014 OF THE 1ST RESPONDENT.** - **EXHIBIT P7TRUE COPY OF THE LETTER DATED 24/05/2013 OF THE 1ST RESPONDENT.** - **EXHIBIT P8TRUE COPY OF THE COMPLAINT NO.117 OF 2014 FILED BEFORE THE KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION.** - **EXHIBIT P9TRUE COPY S.A.NO.311 OF 2016 (WITHOUT EXHIBITS) OF THE DEBT RECOVERY TRIBUNAL, ERNAKULAM.** - **EXHIBIT P10TRUE COPY OF THE ORDER DATED 05/08/2016 IN S.A.NO.311 OF 2016.** - **EXHIBIT P11TRUE COPY OF THE C.M.P.NO.172 OF 207 FILED BY THE PETITIONER.** - **EXHIBIT P12TRUE COPY OF THE OBJECTION FILED BY THE BANK.** - **EXHIBIT P13TRUE COPY OF THE EXTRACT OF A DIARY PROCEEDINGS.** - **EXHIBIT P14TRUE COPY OF THE PHOTOGRAPH SHOWING THE SEAL OF THE BANK.** - **EXT.R1(j) : COPY OF THE LETTER DATED 3/12/2015 ISSUED TO THE PETITIOENR BY THE RESPONDENT BANK.** **EXT.R1(K) : COPY OF THE LETTER DATED 4/3/2016 ISSUED TO THE PETITIONER** O.P(Crl.).No.63/2017 12 ## **BY THE RESPONDENT BANK** **EXT.R1(i) : COPY OF THE THE LETTER DATED 10/11/2016 ISSUED TO THE PETITIONER BY THE RESPONDENT BANK** **EXT.R1(M): COPY OF THE RULE UNDER URC 1995 REV 522** **EXT.R1(N) : COPY OF THE ECGC LETTER DATED 11/7/2013 ISSUED TO THE PETITIOENR BY THE ECGC** **EXT.R1 (O) COPY OF THE LETTER DATED 8/7/2013 ISSUED TO THE PETITIONER BY THE RESONDENT BANK.** **EX5.R1(P). COPY OF THE LOAN AGREEMENT DATED 5/9/2011** **EXT.R1(Q) :COPY OF THE LOAN AGREEMENT DATED 3/5/2014** **EXT.R1(R): COPY OF THE PURCHASE ORDER DATED 22/3/2013 ISSUED BY M/S. BKK GRANDE** **EXT.R1(S) : COPY OF THE LETTER OF INSTRUCTION DATED 30/4/2013 ISSUED BY THE ORIGINAL PETITIOENRS.** **EXT.R1(T): COPY OF THE COLLECTION DOCUMENT NO.13901314COOO3 DATED 30/4/2013.** **EXT.R1(U) COPY OF THE RECEIPT ISSUED BY THE DHL COURIER SERVICE DATED 30/4/2013.** **ET.R1(V): COPY OF THE COMPLAINT FILED BY THE ORIGINAL PETITIONERS BEFORE THE STATE COMMSSION FORUM** ## **EXT.R1(W): COPY OF THE BILL OF EXCHANGE** **EXT.R1(X): COPY OF THE LETTER ISSUED BY THE ORIGINAL PETITIOENRS DATED 23/5/2013** **EXT.R1(Y) COPY OF THE LETTER ISSUED BY ECGC DATED 11/7/2013.** **ET.R1(Z): COPY OF THE REPLY DATED 21/2/2014 ISSUED BY THE BANK** **EXT.R1(AA) COPY OF THE PETITION FILED BY THE ORIGINAL PETITIONER TO DELETE THE PURCHASE FROM THE PARTY ARRAY BEFORE THE STATE CONSUMER FORUM.** **EXT.R1(AB): COPY OF THE E-MAIL AND SWIFT MESSAGE** **EXT.R1(AC): COPY OF THE E-MAIL AND SWIFT MESSAGE** **EXT.R1(AD): COPY OF THE E-MAIL AND SWIFT MESSAGE.** **EXT.R1(AE): COPY OF THE E-MAIL AND SWIFT MESSAGE.** **EXT.R1(AF): COPY OF THE E-MAIL AND SWIFT MESSAGE** **EXT.R1(AG): COPY OF THE E-MAIL AND SWIFT MESSAGE** **EXT.R1(AH) COPY OF THE SA NO. 311/2016 ALONG WITH DOCUMENTS FILED BY THE ORIGINAL PETITIONER.** O.P(Crl.).No.63/2017 13 **EXT.R1(AI) COPY OF THE WRITTEN STATEMENT ALONG WITH DOCUMENT FILED BY THE BANK.** **EXT.R1(AJ) COPY OF THE ADDITIONAL WRITTEN STATEMENT FILED BY THE BANK.**