Subhash Kumar v. Authorized Officer, ICICI Bank Ltd. and ICICI Home Finance Company Limited

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** # **PRESENT** ## **THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR** ## **&** ## **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** ## **TUESDAY, THE 14[TH] DAY OF JUNE 2022 / 24TH JYAISHTA, 1944** ## **WA NO. 698 OF 2022** [AGAINST THE JUDGMENT IN WP(C) NO.27095/2020 DATED 5-4-2022 OF THE LEARNED SINGLE JUDGE] ## **APPELLANT/PETITIONER:** SUBHASH KUMAR, AGED 40, S/O. KUTTAN, AGED 38, THERUPARAMBIL HOUSE, PAZHANIVILA, KUNNUMKULAM, TRICHUR. BY ADVS. SRI. ARUN BABU SRI. G.HARIPRASAD ## **RESPONDENTS:** - 1 AUTHORIZED OFFICER, ICICI BANK LTD., DELMA COMPLEX, OPP. CO-OPERATIVE HOSPITAL, SHORNUR ROAD, TRICHUR, KERALA-680 001. - 2 ICICI HOME FINANCE COMPANY LIMITED, REPRESENTED BY THE ZONAL DEBT MANAGER, PUSHPAMANGALAM ESTATE, EDAPPALLY, ERNAKULAM-682 024. ## BY ADV. SRI. PRADEESH CHACKO THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 14.06.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WA:698/2022 -:2:- ## **JUDGMENT** Dated this the the 14[th] day of June, 2022 ## **S. Manikumar, CJ** Being aggrieved by the dismissal of W.P.(C) No.27095/2020, by judgment dated 5.4.2022, instant writ appeal is filed by the writ petitioner, for a direction to the respondents to provide an opportunity of hearing while considering Exhibit-P2 representation dated 30.11.2020 submitted by him to the respondents, for settling the entire debt in installments. 2. Brief facts leading to the filing of the instant appeal are that appellant/writ petitioner secured a mortgage loan of Rs.15 lakhs from the Authorised Officer, ICICI Bank Ltd., Trichur, 1[st] respondent, in the year 2008, for which, a property having an extent of 3 Ares 84 Sq. metres, comprised in Re-Survey No.9/14 situated in Chavakkad Village was the secured asset. On default to repay the loan, proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) were initiated by the respondents against the appellant, and the said secured asset was sold in auction on 27.09.2016 to one Mr. K.V.Rajan, for an WA:698/2022 -:3:- amount of Rs.20,55,000/-. Since the sale certificate could not be issued for the liabilities subsisting in the property in question, it is contended that the respondent bank recalled the auction proceedings and repaid the amounts spent by the auction purchaser. Thereafter, the property is in the possession of the secured creditor. 3. Appellant has also stated that in a pending litigation between the writ petitioner and respondent bank before the Sub Court, Thrissur viz., O.S. No.231/2020, the bank has preferred Exhibit-P1 claim petition, I.A. No.1/2020 dated 7.1.2020, admitting the fact of recalling the earlier auction. In such circumstances, the appellant has submitted Exhibit-P2 representation dated 30.11.2020 to the respondent bank, seeking to settle the liability in respect of the secured asset. However, the respondents are not considering the same even though no fresh sale proceedings under the SARFAESI Act, 2002 have been initiated. 4. Appellant has further stated that challenging the sale proceedings initiated by the bank, he had earlier preferred W.P.(C) No.9912/2017 and by judgment dated 09.10.2017 (Exhibit-P3), a learned single Judge of this court dismissed the writ petition as infructuous, since the sale had already taken place. WA:698/2022 -:4:- 5. It is submitted that the said sale proceedings have now been recalled by the respondents. Left with no other alternative and efficacious remedy, appellant has filed the subject writ petition seeking the following reliefs: - “(i) Issue a writ of mandamus or any other writ, directing the respondents 1 and 2 to consider Exhibit P2 representation by allowing the petitioner to settle the entire loan liability in installments. - (ii) Issue a writ of mandamus directing the 2[nd] respondent to five sufficient time to clear off the liability in installments.” 6. After considering the submission of the learned counsel for the respondents that petitioner/appellant herein had not approached the Tribunal against the auction proceeding and that the auction, which took place in 2016, was already confirmed, and possession has also been handed over to the auction purchaser, by the impugned judgment, writ court dismissed the writ petition, holding that the reliefs now claimed are redundant and cannot be granted. 7. Being aggrieved, instant _intra_ court appeal is filed by the writ petitioner, _inter alia_ , contending that Exhibit-P1 claim petition was filed by the respondent categorically stating that because of the attachment in the above case by this Court, the bank was unable to register the sale certificate and hence, the bank recalled the auction proceedings by WA:698/2022 -:5:- repaying the amounts spent by the auction purchaser. That apart, it is contended that the learned single Judge has failed to appreciate the written averment filed by the bank during January, 2020, in a pending civil proceeding. 8. Appellant has further contended that writ court has dismissed the writ petition on the mere submission of the respondent bank that auction was concluded and possession of the property was handed over, when Exhibit-P1 clearly proved that the auction had been recalled. If the auction was recalled and property is now in the possession of respondent bank, the bank is duty bound to dispose of Exhibit-P2 representation submitted by the appellant, on merits and the learned single Judge did not consider that legal point. 9. _Per contra_ , the respondents have filed a detailed statement dated 13.06.2022. 10. Heard Mr. Haripasad, learned counsel for the appellant, and Mr. Pradeesh Chacko, learned standing counsel for the respondents, and perused the material available on record. 11. Exhibit-P1 is the affidavit filed in I.A. No.1 of 2020 in I.A. No.1790 of 2010 in O.S. No.231 of 2010 pending on the file of WA:698/2022 -:6:- Subordinate Judge's Court at Ernakulam, wherein, at paragraph 10, it is stated by the 1[st] respondent that the said attachment was issued after the mortgage being created with the claimant bank; that by the act of creating mortgage with the claimant bank for the loan facility, the claimant was made a secured creditor; that the said mortgage was created even before the order of attachment was passed by this Hon'ble Court; that because of the attachment in the above case, the bank was unable to register the sale certificate, and hence, the bank recalled the auction proceeding by repaying the amount spent by the auction purchaser. 12. That apart, in the petition dated 7.1.2020, filed before the Subordinate Judge's Court, under Order XXXVIII Rule 9 and Section 151 of the Code of Civil Procedure to lift/withdraw the attachment, [ExhibitP1(5)], the respondent bank has prayed that the Sub Court be pleased to adjudicate the right/claim of the petitioner in the matter, and lift the attachment over the property having an extent of 3 Ares 84.00 Sq. M comprised in Re-Sy. No.9/14 situated in Chavakkad Desom, Chavakkad Village, Thrissur District, ordered in the above case, otherwise, the claimant would be put to much hardship and loss. WA:698/2022 -:7:- 13. However, when this writ appeal came up for further hearing, it was submitted that the averment made in I.A. No.1 of 2020 in I.A. No.1790 of 2010 in O.S. No.231 of 2010 on the file of the Subordinate Judge's Court, Ernakulam, that auction was withdrawn, was a mistake, but it was actually not done. Statement of the respondent bank dated 13.06.2022 to that effect is filed, wherein it was contended thus: “A. Since the appellant has committed default of the loan availed by him, by mortgaging the property in question, the bank issued pre-sale notice dated 17.07.2015. However, there was no response from the part of the appellant to clear the liability, and therefore, the bank initiated proceedings to conduct sale of the secured asset. Auction was published in The New Indian Express and Mangalam newspapers on 30.05.2016 and 20.07.2016 respectively, and as there was no bidders in the said two auctions, third auction was held on 27.09.2016, wherein the reserved price of the property was fixed at Rs. 20,50,000/- . B. The aforesaid property was sold in auction sale on 27.09.2016 to Mr. K. V. Rajan, Kaithakkat House, Near Odat Temple, Guruvayoor P.O, Kerala-680101, for an amount of Rs.20,55,000/-. The auction purchaser remitted the entire amount, within the specified time, and thereafter, when the bank tried to register the sale certificate, in the name of Mr. K. V. Rajan, it was found that the property was attached by WA:698/2022 -:8:- the order of Sub Court, Thrissur in I.A. No. 1790/2010 in O.S. 231/2010. C. The attachment was issued by the Sub Court, Thrissur, after creating mortgage by the bank, on 19.09.2008. The bank could not register the sale certificate, due to the attachment effected in the above case by the Sub Court, Thrissur. The bank has thereafter filed a claim petition bearing No. 1/2020 in O.S. No.231/2010 before the Sub Court, Thrissur, to adjudicate the right of the claim petitioner/respondent bank and to lift the attachment over the aforementioned property. The said petition is now posted to 30.06.2022 before the Sub Court, Thrissur. D. The appellant had earlier approached this Court by filing W.P.(C) No. 9912/2017, which was dismissed as infructuous, without prejudice to the right of the appellant to impugn the auction proceedings before the Debt Recovery Tribunal, if so advised. The petitioner did not file any application before the Debt Recovery Tribunal challenging the auction proceedings. Thereafter, the appellant has filed W.P.(C) No. 27095/2020, which was dismissed by the impugned judgment. E. The appellant now approached this Court based on the averments made in para 10 of Exhibit P1 affidavit filed by the bank before the Sub Court, Thrissur, that the bank has recalled the auction proceedings by repaying the amount spent by the auction purchaser, which was an inadvertent WA:698/2022 -:9:- typographical error occurred, while submitting the petition before the Sub Court, Thrissur. It is further stated therein that the aforementioned property is given possession to the auction purchaser Mr. K. V. Rajan and the respondent bank are not in possession of the said property. The bank cannot accept any amount from the petitioner to return the property to him as the same is already sold in auction. The said matter was also submitted before the writ court while disposing of the W.P.(C) No. 27095/2020 by the impugned judgment. In such circumstances, the respondents prayed for dismissal of the writ appeal.” ## 14. Exhibit-P2 is the representation submitted by the appellant to the respondents dated 30.11.2020, requesting to settle the loan obtained by him. Said representation is extracted hereunder: “From, Subash Kumar P.K., Theruparambil House, Mangad P.O., Kunnamkulam. To ## 1. The Authorised Officer, ICICI Bank Ltd. zonal Office, Pushpamangalam Estate, Edappaly, Kochi-682024. 2. Branch Manager, ICICI Ltd., Delma Complex Opposite co-operative Hospital Shornur Road, Sir, Sub:- Request for settlement loan. Ref:- Loan Account NHTHR00000763145. WA:698/2022 -:10:- I have availed a mortgage loan for an amount of 15 Lakh rupees which had to be paid back in 258 installments. As the loan was defaulted the property-3.84 Ares of property comprised in Resurvey No.9/14 of Chavakkad village was sold under the provisions of SARFAESI Act. The property was bought by one K.V.Rajan. But due to the fact that the sales certificate could not be registered and hence the bank recall the auction proceedings by repaying the auction purchase. I would like to close the said loan liability by means of mutually agreeable repayment schedule which is not less than 5 installments. I hope owing to this financially depressive situation owing to this Covid-19, your goodself may grant me a feasible arrangement for closing the said loan. Dated this 30[th] day of December, 2020 Yours faithfully Subash Kumar P.K. Date: 30/11/2020 Place: Thrissur” 15. Material on record discloses that appellant has earlier approached this Court by filing W.P.(C) No.9912/2017, wherein the challenge was with respect to the sale of secured asset. Taking note of the submission of learned standing counsel for the respondent bank that pursuant to the proceedings under SARFAESI Act, 2002, the secured asset has already been sold to a purchaser and details of the purchaser will be furnished to the learned counsel for the petitioner, writ court, by judgment 09.10.2017, dismissed the writ petition as infructuous, without prejudice to the right of the petitioner to impugn the auction proceedings before Debt Recovery Tribunal, if so advised. WA:698/2022 -:11:- Appellant has not availed the opportunity given, instead filed W.P.(C) No.27095/2020, which was dismissed by the impugned judgment. 16. The issue relates to the consequential proceedings pending before the learned Sub Court, Thrissur in I.A. No.1/2020 filed by the Authorised Officer, ICICI Bank Ltd., Thrissur, respondent No.1, under Order XXXVIII Rule 9 and Section 151 of the Code of Civil Procedure to lift/withdraw the attachment. In the statement dated 13.06.2022, the respondent bank has explained the position, which we deem it fit to accept. The issue with respect to entertaining a writ petition against the proceedings initiated under the SARFAESI Act, 2002 has been considered by the Hon'ble Supreme Court in the following decisions: (i) In **Authorised Officer, State Bank of Travancore and Another v. Mathew K.C.** 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 tax payers expense. Such loan does not become the property of the person taking the loan, but retains its character of WA:698/2022 -:12:- 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 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 WA:698/2022 -:13:- 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 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.” (ii) In **ICICI Bank Ltd. v. Umakanta Mohapatra and Others,** [2018 (13) SCALE 724], the Hon'ble 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.” WA:698/2022 -:14:- In the light of the above discussion and decisions, we are of the considered view that there is no error in the judgment of the learned single Judge dated 05.04.2022, warranting interference in appeal. Writ appeal fails and accordingly, it is dismissed. Sd/- **S. MANIKUMAR CHIEF JUSTICE** Sd/- **SHAJI P. CHALY JUDGE** Krj //TRUE COPY// P.A. TO C.J.