The South Indian Bank Ltd. vs Asharaf M.S

## **`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 19[TH] DAY OF DECEMBER 2022 / 28TH AGRAHAYANA, 1944 ``` ## **`WA NO. 1765 OF 2022`** - **`AGAINST THE ORDER WP(C) 9031/2022 OF HIGH COURT OF KERALA`** - **`APPELLANT/S:`** - **`1 THE SOUTH INDIAN BANK LTD. REGISTERED OFFICE, T.B. ROAD, MISSION QUARTERS, THRISSUR- 680 001 REPRESENTED BY ITS MANAGING DIRECTOR & CEO`** - **`2 THE BRANCH MANAGER, SOUTH INDIAN BANK LIMITED, THRISSUR MAIN BRANCH, XXV/2149, P.B. NO. 81, ROUND SOUTH. THRISSUR, PIN- 680 001`** - **`3 THE AUTHORIZED OFFICER, SOUTH INDIAN BANK LIMITED, REGIONAL OFFICE, THRISSUR, PLATINUM JUBILEE BUILDING, CIVIL LANE ROAD, AYYANTHOLE, THRISSUR- 680 003`** - **`BY ADVS.`** - **`MOHAN JACOB GEORGE P.V.PARVATHY (P-41) REENA THOMAS NIGI GEORGE`** ## **`RESPONDENT/S:`** - **`1 ASHARAF M.S AGED 42 YEARS AGED 42 YEARS, S/O. SIDIQUE, RESIDING AT VALIYIL HOUSE, PILLAKAD, KOTTAPADI P.O., THRISSUR DISTRICT PIN- 680 505`** - **`2 ADVOCATE RAJALAKSHMI K.S., ADVOCATE COMMISSIONER, C/O. ADVOCATE SMITHA P.C., EXPRESS BUILDING, LALOOR ROAD, ELTHURUTHY P.O., THRISSUR-680 001`** ``` BY ADVS. ANOOP KRISHNA, P.CHANDRASEKHAR(K/185/1984) C.V.MANUVILSAN(K/279-G/2001) O.A.ANJU(K/000515/2018) REGIMOL M.K.(K/213/2018) ANAND SANKAR(K/000657/2018) FARHAN M.M.(K/001692/2019) RANI MADHU(K/001834/2019) AJESH K. ANTONY(K/41/2022) ``` ``` THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 19.12.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` W. A. No. 1765 of 2022 -2- ## **J U D G M E N T** ## S. Manikumar, C. J. ## On 29.11.2022, we passed the following order:- “Before the writ court, the petitioner in W.P.(C)No.9031 of 2022 has sought for the following reliefs: “I. Declare that the learned Chief Judicial Magistrate, Thrissur, who did pass an Order of appointing an Advocate Commissioner to evict the Petitioner and his family from the Property, is duty bound to hear the affected parties, whose right to property under Article 300A is been deprived of, while solidly passing an Order in a petition under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and thereby direct the Advocate Commissioner so appointed to hand over the vacant possession to the Bank and non-issuance of such a Notice before passing the Order of Eviction under Section 14 of the SARFAESI Act, is illegal, irrational and procedurally improper, which would perse invalidate the Order of the CJM. II. Call for all records leading to the issuance of EXHIBIT P4 and the Order of learned CJM, Thrissur mentioned in EXHIBIT P4 which according to the 4[th] Respondent, is passed in MC No. 18/2021 of the Hon'ble Chief Judicial Magistrate Court, Thrissur appointing the 4[th] Respondent to evict the Petitioner from his property, without Notice; and to quash the same by way of issuance of a Writ of Certiorari. W. A. No. 1765 of 2022 -3- III. Issue a Writ in the nature of mandamus or any other appropriate Writ, Direction or Order directing the learned CJM, Thrissur, to issue Summons/Notice to the Petitioner, in MC No. 18/2021 and pass a new Order, only after providing a reasonable opportunity of being heard to the Petitioner and till such time all coercive steps against the Petitioner may be kept in abeyance. IV. Issue a direction to the respondent/Bank by permitting the Petitioner to regularise the loan account by permitting the Petitioner to pay the entire arrears of Rs.35,32,000/- (Thirty five lakhs and thirty two thousand) in 20 Equal Monthly Installments and direct the Respondents to Keep all further proceedings pursuant to EXHIBIT P4 in abeyance, till the time allowed by this Hon'ble Court for making the payment of entire by way of 20 EMIs over.” 2. Short facts leading to the filing of the writ petition are as under: 2.1. The petitioner availed a loan amount of Rs.85 Lakh as overdraft for his personal purposes from the respondent bank as facility namely Overdraft against Property (ODAP), for which the landed property belonging to the deceased father of petitioner having an extent of 16.37 Cents situated in Re. Sy No:159/1 of Pookkodu Village of Chavakkadu Taluk of Thrissur District, together with the building, was given as security. 2.2. Since there was default in repayment of three consecutive monthly EMI, which was fixed at the rate of Rs.85,000/- per month, the secured asset in the bank loan was declared as Non-Performing Asset by the Bank and consequently, W. A. No. 1765 of 2022 -4- the Bank had issued a demand notice under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI). Thereafter, the Advocate Commissioner appointed by the Chief Judicial Magistrate Court, Thrissur, issued a letter dated 22.01.2022, to one of the sisters of the writ petitioner for handing over the vacant possession of the writ petitioner’s property. It was in the said background, the writ petition was filed. 3. After hearing the arguments of the learned counsel appearing for the parties, writ court, vide order dated 24.11.2022 in W.P.(C)No.9031 of 2022, directed restoration of the possession of the residential house of the writ petitioner on conditions. For brevity, the said order is reproduced: “Having heard the learned counsel appearing for the petitioner and the learned counsel appearing for the respondent bank it is directed that the petitioner shall clear the overdue amount of Rs.34,00,000/- in two equal monthly installments payable on or before 26-112022 and 30-12-2022. On payment of the first installment on or before 26-11-2022, the possession of the residential house of the petitioner shall be restored to the petitioner. The petitioner shall also submit the documents that may be required by the bank for renewing the overdraft facility along with the second installment on 30-12-2022. Post on 03-01-2023.” Being aggrieved, instant writ appeal is filed. 5. From the material on record, it could be deduced that another KCC limit availed in the name of Shanija Asharaf, wife W. A. No. 1765 of 2022 -5- of the 1[st] respondent/writ petitioner, had become NPA on 30.09.2021 and the 1[st] respondent was a guarantor to the aforesaid loan. In the securitisation proceedings initiated in the aforesaid account, the same was settled by the 1[st] respondent by way of a onetime settlement for an amount of Rs.110 lakhs. 5. Attention of this court was also invited to paragraph No.9 of the statement of facts, which reads thus: “9. It is humbly submitted that the validity of the sanction for the ODAP facility had expired and the entire outstanding was overdue in the aforesaid account and regularization was not possible. The present balance outstanding is Rs.1.19 Crores with further interest at 10.15% per annum with monthly rests and penal interest at 2% per annum from 01.11.2022 as well as costs thereon. The KCC limit mentioned above in this appeal on being settled under a one-time settlement had adversely affected the credibility and CIBIL rating of the Writ Petitioner. As per the norms of the bank the appellants are not in a position to allow continuance of ODAP limit even if the writ petitioner brings the account within the limit due to the CIBIL delinquencies. It is also submitted that the account had turned NPA on 28.09.2019 and since then the loan account is a huge burden onthe balance sheet of the Bank, the Bank has no other remedy other than to proceed with the recovery proceedings already initiated. Handing over repossession of the property is putting the clock back to the original position and causing the Bank to initiate the SARFAESI proceedings from the very beginning. It may be noted that the Hon'ble Single Judge has not held that the proceedings initiated by the Bank under the W. A. No. 1765 of 2022 -6- SARFAESI is bad or vitiated by any illegality or impropriety. Hence the repossession ordered is liable to be interdicted by this Hon'ble Court. It is also submitted that the physical possession is taken after two years and eleven months from the date of NPA. The account was defaulted from the very beginning itself. The loan was availed in March 2018 on the condition that interest has to be serviced as and when debited. The writ Petitioner has serviced the interest for the months of March, April & May 2018 belatedly on 28.06.2018 only. The accounts slipped into NPA status within 18 months from the date of availment. It is also submitted that consequent to the settlement of the KCC facility under the OTS the properties mortgaged were released by the Bank to the writ Petitioner. The Hon'ble Supreme Court had repeatedly held that the filing of writ petition under Article 226 without availing the alternate remedy under Section 17 of SARFAESI Act before the Debts Recovery Tribunal is improper and has held that the writ petition itself is not maintainable. In the recent decision in Varimadugu Obi Reddy Vs B.Sreenivasulu & others reported in MANU/SC/1495/2022 in paragraph Nos. 32 to 34, the Apex court had again deprecated the practice of entertaining the writ application under Article 226 of the Constitution without exhausting the alternate statutory remedy available under the law.” 6. That apart, relying on a recent decision of the Hon’ble Supreme Court in **Varimadugu Obi Reddy v. B. Sreenivasulu and Others** reported in MANU/SC/1495/2022 (Civil Appeal No.8470 of 2022 dated 16.11.2022), Mr. Mohan Jacob George, learned counsel for the Bank submitted that the Hon’ble Supreme Court has deprecated the practice of entertaining the writ petition W. A. No. 1765 of 2022 -7- against the SARFAESI proceedings without exhausting the alternative statutory remedy available under the law. Paragraph Nos.32, 33 and 34 of the said judgment are extracted hereunder: “32. The order of the Tribunal dated 1st August, 2019 was an appealable order under Section 18 of the SARFAESI Act, 2002 and in the ordinary course of business, the borrowers/person aggrieved was supposed to avail the statutory remedy of appeal which the law provides under Section 18 of the SARFAESI Act, 2002 in the absence of efficacious alternative remedy being availed, there was no reasonable justification tendered by the respondent borrowers in approaching the High Court and filing writ application assailing order of the Tribunal dated 1st August, 2019 under its jurisdiction under Article 226 of the Constitution without exhausting the statutory right of appeal available at its command. 33. This Court in the judgment in United Bank of India vs. Satyawati Tondon & Others, was concerned with the argument of alternative remedy provided under the SARFAESI Act, 2002 and dealing with the argument of alternative remedy, this Court had observed that where an effective remedy is available to an aggrieved 2(2010) 8 SCC 110 person, the High Court ordinarily must insist that before availing the remedy under Article 226 of the Constitution, the alternative remedy available under the relevant statute must be exhausted. Paras 43, 44 and 45 of the said judgment are relevant for the purpose and are extracted below: “43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies W. A. No. 1765 of 2022 -8- 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. In our view, 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 legislations enacted by Parliament and State Legislatures for recovery of such dues are a 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, the 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. 44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution 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 or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution. 45. 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 W. A. No. 1765 of 2022 -9- ## particular legislation contains a detailed mechanism for redressal of his grievance.” 34. In the instant case, although the respondent borrowers initially approached the Debts Recovery Tribunal by filing an application under Section 17 of the SARFAESI Act, 2002, but the order of the Tribunal indeed was appealable under Section 18 of the Act subject to the compliance of condition of pre-deposit and without exhausting the statutory remedy of appeal, the respondent borrowers approached the High Court by filing the writ application under Article 226 of the Constitution. We deprecate such practice of entertaining the writ application by the High Court in exercise of jurisdiction under Article 226 of the Constitution without exhausting the alternative statutory remedy available under the law. This circuitous route appears to have been adopted to avoid the condition of predeposit contemplated under 2nd proviso to Section 18 of the Act 2002.” 7. Considering the facts involved in this case and the judgment cited, prima facie, we are of the view that the issues raised in the writ appeal have to be adjudicated. Hence the writ appeal is admitted. 8. Mr. C.V. Manuvilsan, learned counsel takes notice for respondent No.1. There shall be an interim stay of the impugned order dated 24.11.2022 in W.P.(C)No.9031 of 2022.” ## 2. On this day, when the matter came up for hearing, Mr. Mohan W. A. No. 1765 of 2022 -10- Jacob George, learned counsel for the appellant Bank, submitted that auction notice has been issued. 3. Mr. P. Chandrasekhar, learned counsel for the 1[st] respondent, submitted that his client needs some more time for payment. 4. Having regard to the grounds raised, we are inclined to set aside the impugned order dated 24.11.2022 in W. P. (C) No. 9031 of 2022. Accordingly, writ appeal is allowed, leaving open the liberty of the writ petitioner to raise his contentions before the writ court. **Sd/S. MANIKUMAR CHIEF JUSTICE** **Sd/SHAJI P. CHALY JUDGE** Eb ///TRUE COPY/// P. A. TO JUDGE W. A. No. 1765 of 2022 -11- ## **`APPENDIX OF WA 1765/2022`** ``` RESPONDENT ANNEXURES ANNEXURE R1(A)A TRUE COPY ORDER DATED 17.03.2022 IN WP(C) NO. 9031 OF 2022 OF THIS HONOURABLE COURT. ANNEXURE R1(B)TRUE COPY OF RECEIPT DATED 30.03.2022 ISSUED BY THE APPELLANT BANK. ANNEXURE R1(C)TRUE COPY OF ORDER DATED 07.04.2022 IN WP(C) NO. 9031 OF 2022. ```