Saju T v. The Authorized Officer, Canara Bank (W.A. No. 279 of 2021)

W.A. No. 279/2021 : 1 : IN THE HIGH COURT OF KERALA AT ERNAKULAM ## PRESENT THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR & THE HONOURABLE MR. JUSTICE SHAJI P.CHALY MONDAY, THE 08TH DAY OF FEBRUARY 2021 / 19TH MAGHA,1942 ## WA.No.279 OF 2021 AGAINST THE JUDGMENT DATED 13.01.2021 IN WP(C) 863/2021(G) OF HIGH COURT OF KERALA ## APPELLANT/PETITIONER: SAJU T, AGED 43 YEARS, S/O. THAJUDEEN A., FATHIMA MANZIL, SECULAR NAGAR-39, KILIKOLLOOR, KOLLAM – 691 004. BY ADV. SRI.HARISH GOPINATH ## RESPONDENT/RESPONDENT: THE AUTHORISED OFFICER, CANARA BANK, SME, KOLLAM BRANCH, AYATHIL, KALLUMTHAZHAM P.O., KOLLAM – 691 004. ## SRI.M.GOPIKRISHNAN NAMBIAR THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 08.02.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.A. No. 279/2021 : 2 : ## **Dated this the 8[th] day of February, 2021.** ## ## **S. MANIKUMAR,CJ.** The appellant, who is engaged in the business of processing raw cashew nuts, has filed this writ appeal challenging the judgment dated 13.01.2021 in W.P.(C) No. 863 of 2021. ## 2. Facts leading to the writ appeal are as follows: The appellant has availed two loans, i.e., an overdraft facility and a term loan. But, due to sudden change in the tax structure and unpredicted lock down due to Covid-19, the appellant was compelled to stop the business. The appellant has suffered a huge loss and accordingly, he was compelled to cancel the lease of the factory. Now, the appellant is ready to repay the loan amounts to get his loan accounts regularised. But, the respondent Bank is not ready to give a reasonable time to repay the overdue amount to regularise the loan account. 3. Before the writ court, the petitioner has challenged Ext.P1 demand notice dated 30.09.2020 and Ext.P2 possession notice dated 07.01.2021 issued under Sections 13(2), and 13(4) of the SARFAESI Act, 2005 taking the symbolic possession of the property, which was W.A. No. 279/2021 : 3 : mortgaged with the Bank for availing the loan. 4. After considering the rival submissions made across the Bar, writ court, as per judgment dated 13.01.2021, dismissed the writ petition holding thus: “5. The writ petition is virtually challenging the demand notice under Section 13(2) of the SARFAESI Act and consequential steps taken for possession of the secured assets. Therefore, in the light of the observations of the Hon'ble Apex Court in the matter of Authorized Officer, State Bank of Travancore and another vs. Mathew K.C (2018(1) KLT 784), the petition as framed and filed is not maintainable as the remedy lies elsewhere. The writ petition is accordingly dismissed. However, if the petitioner makes an appropriate application for clearing all overdue amount and for regularisation of the loan amount, the respondent bank may consider the same in accordance with law, if so advised.” 5. Appellant has contended that the learned single Judge ought to have found that the appellant is not a wilful defaulter and there was no diversion of funds. The respondent Bank chose to declare the appellant's loan account as NPA illegally without even giving a notice to the appellant only to invoke the provisions of the SARFAESI Act, 2002. Several requests made to the respondent for extending the time period to the appellant for repayment were not considered on merits W.A. No. 279/2021 : 4 : at all. It is also contended that the Bank through its arbitrary and unreasonable actions squeezed the credit of the appellant and strangled the business of the appellant as if the respondent had an adverse interest. It is also contended that the learned single Judge ought to have found that Ext.P1 notice was issued by the Bank without considering the present circumstances prevailing due to COVID-19 pandemic and ignoring various schemes to rehabilitate industries. It is further contended that the learned single Judge ought to have found that the fact that the petitioner's account turned NPA only on 29.02.2020 and that as the petitioner's industry is falling under the definition of MSME it is entitled to the benefit of Emergency Credit Line Guarantee Scheme (ECLGS) and had confined his relief only for a month's time to regularise his loan account. 6. Heard the learned counsel on both sides, apart from perusing the materials on record. 7. Repeatedly, the Hon'ble Supreme Court has held that writ petitions as against proceedings initiated under the SARFAESI Act, 2002 should not be entertained. Reference can be made to a few decisions of the Hon'ble Supreme Court on that aspect. In **Authorised Officer, State Bank of Travancore and Another v. Mathew K.C.** W.A. No. 279/2021 : 5 : reported in **(2018) 3 SCC 85** , at paragraphs 15 to 18, the Hon'ble Supreme Court held 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 exparte 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 taxpayers 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 **United Bank of India v. Satyawati Tondon and others** [AIR 2010 SC 3413], 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 W.A. No. 279/2021 : 6 : 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 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**_ , [1969 AIR 556, 1969 SCR (1) 518], _**Whirlpool Corpn. v. Registrar of Trade Marks**_ [(1998) 8 SCC 1], and _**Harbanslal Sahnia v. Indian Oil Corpn. Ltd.**_ [AIR 2003 SC 2120] and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order.” (emphasis supplied) 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. We cannot help but disapprove the approach of the High Court for reasons already noticed in **Dwarikesh Sugar Industries Ltd. v. 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 W.A. No. 279/2021 : 7 : 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.” 18. The impugned orders are therefore contrary to the law laid down by this Court under Art.141 of the Constitution and unsustainable. They are therefore set aside and the appeal is allowed.” 8. In Civil Appeal Nos.10243-10250 of 2018 **[ICICI Bank Ltd.** **v. Umakanta Mohapatra and Others]** , 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. 9. In **K.C.Mathew's** case, Hon'ble Apex Court in unequivocal terms held that a writ petition challenging proceedings initiated under the SARFAESI Act, 2002 is not maintainable, in the light of the alternate remedy provided under the statute .Therefore we do not find any jurisdictional error or other legal infirmities in the judgment W.A. No. 279/2021 : 8 : impugned justifying interference in an intra court appeal filed under section 5 of the Kerala High Court Act. 10. However, we deem it fit to observe that even without challenging the notices issued under Sections 13(2) and 13(4) of the SARFAESI Act, 2005, it is always open to the appellant to approach the respondent Bank with a request to regularise the loan account. At this juncture, we also make it clear that the order, if any, is passed on such representation adverse to the appellant, that would not enable the appellant to approach this Court again by a writ petition, since such an action is impermissible in law. Writ appeal fails and it is accordingly dismissed. sd/- **S. MANIKUMAR, CHIEF JUSTICE.** sd/- **SHAJI P. CHALY, JUDGE.** _Rv_