Subaida v. The Authorised Officer General Manager in Charge, Canara Bank, Kozhikode, and Canara Bank Vatakara Branch, Rep. by the Manager, Canara Branch, Badagara Main Branch, Kozhikode

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN** **MONDAY, THE 23RD DAY OF NOVEMBER 2020 / 2ND AGRAHAYANA, 1942** ## **WP(C).No.22500 OF 2020(J)** ## **PETITIONER :** **SUBAIDA AGED 63 YEARS ADITHYA GOLD, D/O.KUNHAMMAED, CHAMAKANDIYIL HOUSE, CHORODE PO., VATAKARA TALUK** **BY ADV. SMT.K.REEHA KHADER** ## **RESPONDENTS:** **1 THE AUTHORISED OFFICER GENERAL MANAGER IN CHARGE, CANARA BANK, KOZHIKODE-673 101 2 CANARA BANK VATAKARA BRANCH, REP. BY THE MANAGER, CANARA BRANCH, BADAGARA MAIN BRANCH, KOZHIKODE.673 001 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 R1-2 BY ADV. SMT.PARVATHY KOTTOL** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23.11.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** -2- WP(C).No.22500 OF 2020(J) ## **JUDGMENT** The petitioner has filed this writ petition under Article 226 of the Constitution of India, seeking a writ of mandamus commanding the 2[nd] respondent Bank to refrain from taking possession and selling the property offered as security, in public auction. The petitioner has also sought for an order directing the 2[nd] respondent Bank to permit her to pay the balance amount in monthly instalments and also to regularise the loan account. 2. Going by the averments in the writ petition, the petitioner stood as guarantor for a credit loan of Rs.90,00,000/- availed for the business of her family friend, for which the property owned by her was given as security. The document marked as Ext.P1 is a certificate issued by the Standing Disability Assessment Board as per which, the petitioner is having permanent disability of 30%. On account of the default in repayment, the Bank initiated recovery proceedings by issuing notice under sub-section (2) of Section 13 of the Securitisation & Reconstruction of Financial Assets & -3- WP(C).No.22500 OF 2020(J) Enforcement of Security Interest Act, 2002. The document marked as Ext.P2 is a notice issued by the respondent Bank under sub-section (2) of Section 13 of the said Act, whereby the petitioner being the guarantor of the loan, was required to pay a sum of Rs.1,04,36,232.90. 3. On 22.10.2020, when this writ petition came up for admission, the learned Standing Counsel for Canara Bank sought time to get instructions. 4. On 30.10.2020, when this writ petition came up for consideration, the learned Standing Counsel for the Bank, on instructions, submitted that the petitioner is one among the partners of the firm 'Adithya Gold'. 5. A statement has been filed on behalf of the respondents opposing the reliefs sought for in this writ petition. Paragraphs 2 to 4 of the said statement read thus; “2. It is submitted that the present statement is filed with the limited purpose to bring on record the liability of the Petitioner towards the Bank, pursuant to which Exhibit P2 notice has been issued by the Respondents. The writ petition has been filed by the Petitioner seeking to regularise the loan availed by the Petitioner. -4- WP(C).No.22500 OF 2020(J) 3. It is submitted that the Petitioner is a partner of Adithya Gold and the loan was availed by the partners for Adithya Gold. As against security, the bank requires Personal Guarantee of each of the partner. Resultantly, the Petitioner is a guarantor to the loan. The loan availed in the name of Adithya Gold is an Overdraft facility for a limit of 1 year, which can be extended by the parties. The loan had been availed by Adithya Gold on 03.10.2018. As on 30.10.2020, the outstanding amount of the loan is Rs.10435974.90. The account has been classified as NPA on 30.12.2019. 4. The Respondents cannot regularise the loan of Adithya Gold since it's in nature of an Overdraft facility. The Petitioner being a guarantor is liable to pay the outstanding amount for and on behalf of Adithya Gold.” 6. Heard the learned counsel for the petitioners and also the learned Standing Counsel for the respondents. 7. The pleadings and materials on record would show that the overdraft facility availed by the partnership firm is classified as Non-Performing Asset (NPA) with effect from 20.12.2019. On the account of default in repayment, the 1[st] respondent Authorised Officer issued Ext.P2 notice dated 13.10.2020, invoking the provisions under sub-section (2) of Section 13 of the Act. As per the statement filed on behalf of -5- WP(C).No.22500 OF 2020(J) the respondents, the petitioner is a partner of the firm. As on 30.10.2020, the total amount outstanding is Rs.1,04,35,974.90 and the account cannot be regularised, since it is an overdraft facility. 8. In **Prestige Lights Limited v. State Bank of India [(2007) 8 SCC 449]** , the Apex Court reiterated that a prerogative remedy is not a matter of course. Therefore, in exercising extraordinary power, a writ court will indeed bear in mind the conduct of the party who is invoking such jurisdiction. If the applicant does not disclose full facts or suppresses relevant materials or is otherwise guilty of misleading the court, the court may dismiss the action without adjudicating the matter. The rule has been evolved in larger public interest to deter unscrupulous litigants from abusing the process of court by deceiving it. The very basis of the writ jurisdiction rests in disclosure of true, complete and correct facts. If the material facts are not candidly stated or are suppressed or are distorted, the very functioning of the writ courts would become impossible. -6- WP(C).No.22500 OF 2020(J) 9. In **Prestige Lights' case (supra)** the Apex Court held further that, under Article 226 of the Constitution of India, the High Court is exercising discretionary and extraordinary jurisdiction. Over and above, a Court of Law is also a Court of Equity. It is, therefore, of utmost necessity that when a party approaches a High Court, he must place all the facts before the Court without any reservation. If there is suppression of material facts on the part of the applicant or twisted facts have been placed before the court, the writ court may refuse to entertain the petition and dismiss it without entering into merits of the matter. Paragraphs 33 and 34 of the said judgment read thus: **“33** . It is thus clear that though the appellant-Company had approached the High Court under Article 226 of the Constitution, it had not candidly stated all the facts to the Court. The High Court is exercising discretionary and extraordinary jurisdiction under Article 226 of the Constitution. Over and above, a Court of Law is also a Court of Equity. It is, therefore, of utmost necessity that when a party approaches a High Court, he must place all the facts before the Court without any reservation. If there is suppression of material facts on the part of the -7- WP(C).No.22500 OF 2020(J) applicant or twisted facts have been placed before the Court, the Writ Court may refuse to entertain the petition and dismiss it without entering into merits of the matter. **34** . The object underlying the above principle has been succinctly stated by Scrutton, L.J., in **R v. Kensington Income Tax Commissioners, [(1917) 1 KB 486 : 86 LJ KB 257 : 116 LT 136 (CA)]** , in the following words: "It has been for many years the rule of the Court, and one which it is of the greatest importance to maintain, that when an applicant comes to the Court to obtain relief on an ex parte statement he should made a full and fair disclosure of all the material facts - facts, not law. He must not misstate the law if he can help it - _the court is supposed to know the law. But it knows nothing about the facts_ , and the applicant must state fully and fairly the facts, and the penalty by which the Court enforces that obligation is that if it finds out that the facts have not been fully and fairly stated to it, the Court will set aside, any action which it has taken on the faith of the imperfect statement." (Emphasis supplied) ## 10. In **Dhananjay Sharma v. State of Haryana and** **others (1995) 3 SCC 757** the Apex Court held that filing of false affidavit, or making false statement on oath in courts -8- WP(C).No.22500 OF 2020(J) aims at striking a blow at the Rule of Law and no court can ignore such conduct which has the tendency to shake public confidence in the judicial institutions, because the very structure of an ordered life is put at stake. It would be a great public disaster if the fountain of justice is allowed to be poisoned by anyone resorting to filing of false affidavits or giving of false statements and fabricating false evidence in a court of law. 11. It is well settled that, a litigant who invokes the extraordinary jurisdiction of this Court under Article 226 of the Constitution must come with clean hands and clean objects. The judicial proceedings are sacrosanct, and no person would be allowed to abuse the judicial process, particularly, in public law remedy. In writ proceedings, the court places implicit faith on the parties and their pleadings, as it does not indulge in any fact finding or roving enquiry of what has been asserted. Since Article 226 of the Constitution of India espouses equity jurisprudence, a litigant who has approached the Court with unclean hands, without disclosing full facts, is not entitled for -9- WP(C).No.22500 OF 2020(J) any reliefs. 12. In the instant case, the petitioner filed this writ petitoin with an averment that she stood as guarantor for a credit loan for Rs.90,00,000/- availed for the business of her family friend. In the writ petition, the petitioner has suppressed the fact that she is one among the partners of the firm “Adithya Gold'. The petitioner, who has approached this Court with unclean hands, is not entitled for any relief under Article 226 of the Constitution of India. 13. 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 Non-Performing 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 -10- WP(C).No.22500 OF 2020(J) 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 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. 14. In **Satyawati Tondon** , on the question as to whether the appellant Bank could have issued notices to the -11- WP(C).No.22500 OF 2020(J) 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 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. 15. In **Satyawati Tondon** , on the challenge made against the notice to the 1[st] respondent guarantor under sub- -12- WP(C).No.22500 OF 2020(J) 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 subsection (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 subsection (4) of Section 13 or Section 14. Both, the Tribunal and the Appellate Tribunal are empowered to pass interim 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 -13- WP(C).No.22500 OF 2020(J) 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. 16. 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 -14- WP(C).No.22500 OF 2020(J) 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 selfimposed 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 projects of public importance and disables them from discharging their constitutional and -15- WP(C).No.22500 OF 2020(J) 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. 17. In **Commissioner of Income Tax v. Chhabil Das Agarwal [(2014) 1 SCC 603]** the Apex Court held that non- -16- WP(C).No.22500 OF 2020(J) entertainment of a writ petition under Article 226 of the Constitution of India when an efficacious alternative remedy is 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. 18. 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 -17- WP(C).No.22500 OF 2020(J) 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 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. -18- WP(C).No.22500 OF 2020(J) 19. In this writ petition, the petitioner has not challenged Ext.P2 demand notice issued by the respondent Bank. In view of the law laid down in the decisions referred to supra, challenge against such a demand notice cannot be entertained in a writ petition filed under Article 226 of the Constitution. Therefore, the petitioner cannot seek an order restraining the respondents from proceeding further under the provisions of Section 13 of the Act, in respect of an overdraft facility, which was been classified as NPA as on 30.12.2019. In the result, this writ petition fails and the same is accordingly dismissed. **Sd/-** ## **ANIL K.NARENDRAN, JUDGE** AV/23/11 -19- WP(C).No.22500 OF 2020(J) ## **APPENDIX** **PETITIONER'S/S EXHIBITS: EXHIBIT P1 THE CERTIFICATE ISSUED BY THE GOVERNMENT TALUK HOSPITAL NADAPURAM EXHIBIT P2 NOTICE ISSUED BY THE BANK DATED 13/10/2020**