Satheesh Babu and Jayalekshmi J. v. The Authorised Officer, Canara Bank, Pathiyoor Branch and The Branch Manager, Canara Bank, Pathiyoor Branch

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN** **FRIDAY, THE 04TH DAY OF DECEMBER 2020 / 13TH AGRAHAYANA, 1942** ## **W.P.(C) No.22930 OF 2020(M)** ## **PETITIONERS:** |**1**||**SATHEESH BABU,**| |---|---|---| |||**AGED 45 YEARS, S/O. GOPALAKRISHNAN NAIR,**| |||**EVOOR SOUTH, KEERIKKAD P.O.,**| |||**ALAPPUZHA,PIN-690 572.**| |**2**||**JAYALEKSHMI.J.,**| |||**AGED 36 YEARS, W/O. SATHEESH BABU,**| |||**AROORTHARAYIL,**| |||**EVOOR SOUTH, KEERIKKAD P.O.,**| |||**ALAPPUZHA,PIN-69 572**| |||**BY ADV. SRI.P.R.JAYASANKAR**| |**ENTS**|**:**|| |**1**||**THE AUTHORISED OFFICER,**| |||**CANARA BANK, PATHIYOOR BRANCH,**| |||**SRI LAKSHMI COMPLEX, H.NO.WARD 10, 649A,**| |||**KAREELAKULANGARA P.O., PATHIYOOR,**| |||**ALAPPUZHA-690 572.**| |**2**||**THE BRANCH MANAGER,**| |||**CANARA BANK, PATHIYOOR BRANCH,**| |||**SRI LAKSHMI COMPLEX, H.NO.WARD 10, 649A,**| |||**KAREELAKULANGARA P.O., PATHIYOOR,**| |||**ALAPPUZHA-690 572.**| |||**R1-2 BY ADV. SRI.M.GOPIKRISHNAN NAMBIAR**| |||**R1-2 BY ADV. SRI.K.JOHN MATHAI**| |||**R1-2 BY ADV. SRI.JOSON MANAVALAN**| |||**R1-2 BY ADV. SRI.KURYAN THOMAS**| |||**R1-2 BY ADV. SRI.PAULOSE C. ABRAHAM**| |||**R1-2 BY ADV. SRI.RAJA KANNAN**| ## **RESPONDENTS:** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 04.12.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** -2- ## **W.P.(C) No.22930 OF 2020(M)** ## **JUDGMENT** The 1[st] petitioner, who is stated to be a Cable TV operator and the 2[nd] petitioner, who is the wife of the 1[st] petitioner, availed housing loan for Rs.8,00,000/- from the 2[nd] respondent Bank on 08.11.2014 and another loan for Rs.5,00,000/- on 10.08.2015, by mortgaging their property having an extent of 4.60 Acres in Karthikapally Village, agreeing to repay the loan in 180 monthly installments of Rs.14,000/- each. Since there is default in repayment, the Bank initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for brevity 'the SARFAESI Act') and in such circumstances, the petitioners are before this Court in this writ petition seeking a writ of mandamus commanding the respondents to keep in abeyance any legal steps initiated against the petitioners and permit them to regularise the loan on fair terms, as fixed by this Court. 2. On 30.10.2020, when this writ petition came up for consideration, the learned Standing Counsel for the respondent Bank sought time to get instructions. 3. A statement has been filed on behalf of the respondents by the learned Standing Counsel. Paragraphs 3 and 4 of that -3- ## **W.P.(C) No.22930 OF 2020(M)** ## statement reads thus; "3. At the very outset it is submitted that the Petitioner has availed 4 loan from the Respondents. The details of the loan account and its outstanding amount are given herein below. |Sl.<br>No.|Nature of<br>Loan|Account Name|NPA|Outstanding<br>amount as on<br>04.11.2020| |---|---|---|---|---| |1|HOUSING<br>LOAN|1699619021791|07/01/2018|9,28,358.97| |2|HOUSING<br>LOAN|1699619021804|07/01/2018|5,93,746.61| |Total amount outstanding||||15,22,105.58| 4. It is submitted that accounts have been classified as NPA on the aforesaid dates and the account has been recalled by the Bank. Therefore, restructing or regularization would not be possible at this stage of proceedings. The Petitioner shall have to clera the entire outstanding of Rs.15,22,105.58." 4. On 23.11.2020, when this writ petition came up for ## consideration, this Court passed the following order; "The learned counsel for the petitioner would submit that the petitioners are prepared to remit the entire overdues in monthly instalments, for which they require a reasonable time. In support of the said submission, the learned counsel would place reliance on Ext.P2 treatment certificate. The learned Standing Counsel for the respondent Bank would point out that the account in question has been classified as NPA in the year 2018 and therefore, the Bank is not in a position to regularise the loan account, on the petitioner clearing the overdues in monthly instalments. It is also pointed out that Ext.P2 treatment certificate is one dated 30.03.2018. The learned counsel for the petitioners would submit that since the respondent Bank is not ready to regularise the loan ## **W.P.(C) No.22930 OF 2020(M)** -4- account, the petitioners are prepared to pay off the entire dues in monthly instalments, with future interest, for which they require a reasonable time. The learned Standing Counsel for the respondent Bank seeks time to get instructions." 5. Heard the learned counsel for the petitioners and also the learned Standing Counsel for the respondent Bank. 6. In **United Bank of India v. Satyawati Tondon [(2010) 8 SCC 110]** the Apex Court was dealing with a case in which the appellant Bank sanctioned a term loan of Rs.22,50,000/- in favour of the 2[nd] respondent M/s.Pawan Color Lab, in November, 2004. In that loan transaction the 1[st] respondent stood as guarantor, by mortgaging her property. Since repayment of the loan was highly irregular, the loan account was classified as NonPerforming Asset (NPA). The appellant Bank issued notice under sub-section (2) of Section 13 of the Act requiring the borrower and the 1[st] respondent guarantor requiring them to pay Rs. 23,22,972/along with future interest and incidental expenses. The said notice was followed by an application before the District Magistrate, Allahabad under Section 14 of the Act seeking assistance to take possession of the secured asset, which was allowed by order dated 25.08.2008, and noticed dated 21.01.2009 issued by the appellant ## **W.P.(C) No.22930 OF 2020(M)** -5- Bank under sub-section (4) of Section 13 of the Act. Faced with the imminent threat of losing the mortgaged property, the 1[st] respondent filed writ petition before the High Court of Judicature at Allahabad. The Division Bench of the High Court did not even advert to the plea of the appellant Bank that the writ petition should not be entertained because an effective alternative remedy was available to the writ petitioner under Section 17 of the Act and passed an interim order restraining the appellant Bank from taking action in furtherance of notice issued under sub-section (4) of Section 13 of the Act. 7. In **Satyawati Tondon** , on the question as to whether the appellant Bank could have issued notices to the 1[st] respondent guarantor under sub-sections (2) and (4) of Section 13 of the Act and filed an application under Section 14, without first initiating action against the 2[nd] respondent borrower for recovery of the outstanding dues, the Apex Court noticed that the said question is no more _res integra_ in view of the law laid down in **Bank of Bihar Ltd. v. Damodar Prasad [AIR 1969 SC 297]** that, it is the duty of the surety to pay the decretal amount. On such payment he will be subrogated to the rights of the creditor under Section 140 of ## **W.P.(C) No.22930 OF 2020(M)** -6- the Indian Contract Act, and he may then recover the amount from the principal. The very object of the guarantee is defeated if the creditor is asked to postpone his remedies against the surety. Therefore, the High Court completely misdirected itself in assuming that the appellant Bank could not have initiated action against the 1[st] respondent guarantor without making efforts for recovery of its dues from the 2[nd] respondent borrower. 8. In **Satyawati Tondon** , on the challenge made against the notice to the 1[st] respondent guarantor under sub-section (4) of Section 13 of the Act and also the order of the District Magistrate under Section 14 of the Act, the Apex Court held that, if the 1[st] respondent had any tangible grievance against the notice issued under sub-section (4) of Section 13 of the Act or the action taken under Section 14, then she could have availed remedy by filing an application under sub-section (1) of Section 17. The expression 'any person' used in sub-section (1) of Section 17 is of wide import. It takes within its fold, not only the borrower but also guarantor or any other person who may be affected by the action taken under sub-section (4) of Section 13 or Section 14. Both, the Tribunal and the Appellate Tribunal are empowered to pass interim **W.P.(C) No.22930 OF 2020(M)** -7- orders under Section 17 and Section 18 and are required to decide the matters within a fixed time schedule. It is thus evident that the remedies available to an aggrieved person under the Act are both expeditious and effective. Unfortunately, the High Court overlooked the settled law that it will ordinarily not entertain a petition under Article 226 of the Constitution of India 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. 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 legislation enacted by Parliament and State Legislature for recovery of such dues are 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, 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. ## **W.P.(C) No.22930 OF 2020(M)** -8- 9. In **Satyawati Tondon** the Apex Court held that, the powers conferred upon the High Court under Article 226 of the Constitution of India to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III of the Constitution or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, the court cannot be oblivious of the rules of self-imposed restraint evolved by the Apex Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance. 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 ## **W.P.(C) No.22930 OF 2020(M)** -9- 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 on the financial health of such bodies/ institutions, which 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 [AIR 1969 SC 556]** , **Whirlpool Corporation v. Registrar of Trade Marks, Mumbai [(1998) 8 SCC 1]** and **Harbanslal Sahnia v. Indian Oil Corporation Ltd. [(2003) 2 SCC 107]** and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass appropriate interim order. 10. In **Commissioner of Income Tax v. Chhabil Das Agarwal [(2014) 1 SCC 603]** the Apex Court held that nonentertainment of a writ petition under Article 226 of the Constitution of India when an efficacious alternative remedy is **W.P.(C) No.22930 OF 2020(M)** -10- available is a rule and self-imposed limitation. It is essentially a rule of policy, convenience and discretion rather than a rule of law. Undoubtedly, it is within the discretion of the High Court to grant relief under Article 226 of the Constitution of India, despite the existence of alternative remedy. However, High Court must not interfere if there is an adequate efficacious alternative remedy available to the petitioner and he has approached the High Court without availing the same, unless he has made out an exceptional case warranting such interference or there exists sufficient ground to invoke the extraordinary jurisdiction under Article 226. 11. In **Authorised Officer, State Bank of Travancore v. Mathew K.C. [(2018) 3 SCC 85]** the Apex Court reiterated that the discretionary jurisdiction under Article 226 of the Constitution of India is not absolute but has to be exercised judiciously in the given facts of a case and in accordance with law. The normal rule is that a writ petition under Article 226 of the Constitution of India ought not to be entertained if alternative statutory remedies are - available, except in cases falling within the well defined exceptions as observed in **Chaabil Das Agarwal [(2014) 1 SCC 603]** _,_ i.e., where the statutory authority has not acted in accordance with the provisions of the enactment in question or in defiance of the ## **W.P.(C) No.22930 OF 2020(M)** -11- fundamental principles of judicial procedure or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice. After referring to the law laid down in **Thansingh Nathmal [AIR 1964 SC 1419]** and **Titaghur Paper Mills Company Ltd. [(1983) 2 SCC 433]** the Apex Court held that High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of contains a mechanism for redressal of grievance. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation. 12. During the course of arguments, the learned counsel for the petitioners would submit that the petitioners are prepared to pay a sum of Rs.1,50,000/- within a period of one month and on such payment being made, the Bank may be directed to consider their request for One Time Settlement. 13. The learned Standing Counsel for the Bank would point out that the total amount outstanding as on 04.11.2020 in the loan accounts in question comes to Rs.15,22,105.58. Since the petitioners are not prepared to pay a substantial portion of their ## **W.P.(C) No.22930 OF 2020(M)** -12- dues, within a reasonable time, the respondent Bank cannot agree either to regularise the loan account or to offer installment facility. If the petitioners want to settle the dues by availing One Time Settlement, they can approach the 2[nd] respondent with a proper request, which shall be considered, in accordance with the existing norms. 14. The learned counsel for the petitioners would submit that the petitioners shall approach the 2[nd] respondent Bank, with a request for One Time Settlement. 15. In view of the law laid down by the Apex Court in the decisions referred to supra, this Court cannot, in exercise of writ jurisdiction under Article 226 of the Constitution of India, interfere with the recovery proceedings initiated by the respondent Bank, under the provisions of the SARFAESI Act. Since the petitioners propose to move a request before the 2[nd] respondent, to avail One Time Settlement, in order to clear the entire dues in the loan accounts in question, it is for them to make such a request within a period of one week, in which event the 2[nd] respondent shall consider the same and take an appropriate decision on that request, with notice to the petitioners and after affording them an opportunity of being heard, within a further period of three weeks. ## **W.P.(C) No.22930 OF 2020(M)** -13- 16. In **State of U.P. v. Harish Chandra [(1996) 9 SCC 309]** the Apex Court held that no mandamus can be issued to direct the Government to refrain from enforcing the provisions of law or to do something which is contrary to law. In **Bhaskara Rao** **A.B. v. CBI [(2011) 10 SCC 259]** the Apex Court reiterated that, generally, no Court has competence to issue a direction contrary to law nor can the Court direct an authority to act in contravention of the statutory provisions. The courts are meant to enforce the rule of law and not to pass the orders or directions which are contrary to what has been injected by law. 17. Therefore, the direction contained in this judgment to consider the request to be made by the petitioners for One Time Settlement, strictly in accordance with law. The writ petition is disposed of as above. No order as to costs. Sd/- **ANIL K. NARENDRAN JUDGE** bpr -14- ## **W.P.(C) No.22930 OF 2020(M)** ## **APPENDIX** ## **PETITIONERS' EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE LOAN STATEMENT FROM 26.06.15 TO 23.09.2020 OF CANARA BANK IN LOAN A/C.NO.1699619021791.** **EXHIBIT P1(A) TRUE COPY OF THE LOAN STATEMENT FROM 26.06.15 TO 23.09.2020 OF CANARA BANK IN LOAN A/C.NO.1699619021804.** **EXHIBIT P2 TRUE COPY OF THE TREATMENT CERTIFICATE ISSUED BY THE CONSULTING DOCTOR DATED 30.03.2018. EXHIBIT P3 TRUE COPY OF THE NOTICE UNDER SEC 13(2) OF SARFAESI ACT 2002, ISSUED TO THE PETITIONER BY THE 2ND RESPONDENT DATED 13.08.2018. EXHIBIT P4 TRUE COPY OF THE PAYMENT SLIP PROVING REMITTANCE TO LOAN ACCOUNT DATED 23.9.2020. EXHIBIT P5 TRUE COPY OF THE POSSESSION NOTICE ISSUED BY CANARA BANK DATED 16.10.2020.** **RESPONDENTS' EXHIBITS: NIL**