Union Bank of India, Palakkad Main Branch v. Sri N.K. Karnis

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR** **&** **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY FRIDAY, THE 14TH DAY OF FEBRUARY 2020 / 25TH MAGHA, 1941 WA.No.275 OF 2020 AGAINST THE ORDER/JUDGMENT IN WP(C) 1179/2020(V) OF HIGH COURT OF KERALA** ## **APPELLANT/S:** **1 UNION BANK OF INDIA, PALAKKAD MAIN BRANCH, LAKSHMI RESIDENCY, SULTHANPET, COIMBATORE ROAD, PALAKKAD 678 001. REP BY ITS AUTHORISED OFFICER UNDER THE SARFAESI 2 BRANCH MANAGER, UNION BANK OF INDIA, PALAKKAD MAIN BRANCH, LAKSHMI RESIDENCY, SULTHANPET, COIMBATORE ROAD, PALAKKAD 678 001. BY ADVS. SRI.A.S.P.KURUP, SC, UBI SRI.SADCHITH.P.KURUP : K.B.BABY SAROJA, AGED 65 YEARS, W/O.LATE P J RADHAKRISHNAN, LAKSHMI NIVAS, YAKKARA ROAD, PALAKKAD DISTRICT 678 001.** ## **RESPONDENT/S:** **SRI.N.K.KARNIS** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 14.02.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.A.No.275/2020 2 ## **JUDGMENT** ## **Dated this the 14[th] day of February 2020** ## **S.Manikumar, CJ.** Challenge in this appeal is to an interim order dated 10.02.2020 in W.P.(C).1179 of 2020 by which the writ court extended interim stay of the proceedings on deposit of 50 lakhs. For brevity the order dated₹ 10.02.2020 is extracted hereunder: “The learned counsel for the petitioner submits on instruction from his client that in order to ward off the liability of the Bank, another property being not subject matter of mortgage has already been sold for an amount of 9.5 crores. The petitioner is willing to₹ compromise with the matter and seeks one month time to pay the balance amount. Post this matter after one month with a rider that the interim order is extended in case the petitioner pays another amount of 50₹ lakhs. It is made clear that in case the payment is not made, the interim stay granted by this Court shall deem to be vacated.” 2. Short facts leading to the appeal is ## hereunder: The appellants are the respondents and respondent is the petitioner in WPC No.1179/2020. The respondent W.A.No.275/2020 3 had approached this Hon'ble Court seeking installment facility to pay off the entire outstanding loan amount due in the loan accounts on or before 15.2.2020. In an earlier round of litigation, the relief of further time to pay off the arrears was declined. In spite of this, the respondent again approached this Hon'ble Court and ignoring the objections raised by the appellants in continuation of the interim order, a learned single judge has granted an order in favour of the respondent on 10.2.2020 whereby the appellants have been interdicted from further proceeding ahead with the measures under the Securitisation Act, 2002. 3. It is contended that the order passed by the learned single judge is clearly contrary to the dictum laid by the Honourable Apex Court in **Authorised** **Officer, State Bank of Travancore and others Vs. Mathew K.C. [AIR 2018 SC 676] = [(2018) 3 SCC 85]** . In the instant case, the learned single judge had gone a further step ahead and extended the interim order by granting a stay for more than the period sought for by the party in the writ petition itself. Challenging this order granted by the learned single judge the present writ appeal is filed. 4. Grounds raised by the appellants in this writ W.A.No.275/2020 4 appeal are stated hereunder: “2. It is submitted that the learned single judge went totally wrong in invoking the discretionary jurisdiction vested under Article 226 of the Constitution of India in a commercial matter wherein a sum of more than Rs.7 Crores is due from the respondent. 3. It is submitted that even the relief sought for by the respondent in the writ petition was to grant time up to 15.2.2020 to wipe out the entire liability due to the bank. The present interim order granted by the learned single judge by keeping the writ petition pending has virtually granted a relief to the respondent over and above the relief which is prayed for by the respondent in the writ petition itself. 4. It is submitted that the learned single judge has passed the impugned order which goes clearly contrary to the dictum laid by the Honourable Apex Court which interdicts interference by the courts under Article 226 of the Constitution of India in respect of matters relating to the proceedings under the Securitisation Act. 5. The learned single judge ought not to have passed the impugned order without even considering the strong objection raised by the bank for extension of any further benefit to the respondent and the learned single judge has also lost sight of the earlier round of litigation wherein the relief sought for by the respondent for grant of time was declined. 6. It is submitted that the learned single judge ought to have refrained from exercise of W.A.No.275/2020 5 jurisdiction under Article 226 in view of the effective alternate remedy available to the respondent and the impugned order goes contrary to the parameters prescribed or exercise of discretionary jurisdiction under Article 226 of the Constitution of India. 7. It is submitted that unwarranted exercise of discretionary jurisdiction in commercial matters including the Securitisation Act, being strongly deprecated by the Honourable Apex Court, especially with regard to the frivolous litigations, the learned single judge ought not to have passed the impugned order interdicting further proceedings by the bank.” 5. Added further, inviting attention of this Court to the judgment reported in **Mathew K.C** (supra) **,** Mr.Sadjith P.Kurup, learned counsel for the appellant submitted that writ petition ought not have been entertained and that interim order should not be granted. Relevant portions quoted by the learned counsel read as under: “16. 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 ex-parte interim orders can W.A.No.275/2020 6 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 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 _**Satyawati Tandon**_ (supra), 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 W.A.No.275/2020 7 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, Whirlpool Corporation. v. Registrar of Trade Marks and Harbanslal Sahnia v. Indian Oil Corporation. Ltd. and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order.” 17. 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. 18. 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 Anr.** MANU/SC/0639/1997 **,** 1997 (6) SCC 450, observing :- “32. When a position, in law, is well settled as a result of judicial pronouncement of this Court, it W.A.No.275/2020 8 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.” 6. Per contra, Mr.Karnis, learned counsel for the respondent submitted that advance amount alone has been received for the sale of another property, not subject matter of the mortgage and that if the respondent is given ten days time she would settle the entire amount payable to the bank. 7. Heard the learned counsel for the parties and perused materials on record. In **K.C.Mathew's case** , Hon'ble Apex Court stated that writ petition against proceedings initiated against SARFAESI Act, 2002 is not maintainable, in the light of the alternate remedy provided for under the statute. It is also made clear W.A.No.275/2020 9 that “in financial matters grant of _ex parte_ 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.” Following the decision in **K.C.Mathew's case** , we are not inclined to interfere with the interim order passed by the writ court. Accordingly, interim order and extension of the same are vacated. Writ appeal is allowed. Though Mr.N.K.Karnis, learned counsel for the respondent prayed that liberty may be granted to settle the matter, the learned counsel for the appellant bank submitted that request for one time settlement has already been denied by the bank. ## **Sd/-** ## **S.MANIKUMAR CHIEF JUSTICE** DG **Sd/SHAJI P.CHALY JUDGE**