Unnimoideen Shafi v. Deputy Tahsildar (RR) Ernad Taluk Malappuram; Village Officer Thiruvali Village, Malappuram; Canara Bank represented by its Manager Edavanna Branch

W.P.(C). No.36814 of 2022 1 ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** # **PRESENT** ## **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **WEDNESDAY, THE 22[ND] DAY OF FEBRUARY 2023 / 3RD PHALGUNA, 1944** ## **WP(C) NO. 36814 OF 2022** ## **PETITIONER:** **UNNIMOIDEEN SHAFI AGED 45 YEARS PROPRIETOR, M/S.MADEENA WOOD INDUSTRIES,SON OF HAMZA, PULATHKALATHIL HOUSE, PANDIYAD, KARAKUNNU P.O., MALAPPURAM, PIN - 676123 BY ADVS. S.EASWARAN K.V.RAJESWARI P.MURALEEDHARAN (IRIMPANAM)** ## **RESPONDENTS:** - **1 DEPUTY THASILDAR(RR) ERANAD TALUK, MALAPPURAM, PIN - 676122** - **2 VILLAGE OFFICER THIRUVALI VILLAGE, MALAPPURAM, PIN - 676123** - **3 CANARA BANK REPRESENTED BY ITS MANAGER EDAVANNA BRANCH, EDAVANNA MALAPPURAM, PIN - 676123 BY ADVS. R3 BY SANTHOSH PETER, STANDING COUNSEL R1 & R2 BY SRI.RAJEEV JYOTHISH GEORGE, GOVERNMENT PLEADER** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON** **22.02.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C). No.36814 of 2022 2 ## **JUDGMENT** ## **Dated this the 22[nd] day of February, 2023** This writ petition is filed by the proprietor of M/s.Madeena Wood Industries seeking to quash Exhibits P3 to P7 notices issued under sections 7 & 34 of the Kerala Revenue Recovery Act, 1968, hereinafter called, “KRR Act, 1968”. The basic material facts for the disposal of the writ petition are as follows: 2. The unit of the petitioner is registered as a Micro, Small and Medium Enterprises (MSME). The said establishment has availed various credit facilities from M/s.Canara Bank, Edavanna Branch, Malappuram District. Towards the security of credit facilities, an equitable mortgage was created by depositing the title deeds relating to 50 cents of landed property in Re-Sy No.129 pt., Block No.75, Thiruvali Amsom Desom, Nilambur Taluk, Malappuram District. According to the petitioner, the loan was being repaid regularly; however, due to reasons beyond the control of the petitioner **,** the account became a Non Performing Asset (NPA) on 22.6.2022 and the bank issued Exhibit P2 notice dated 2.8.2022 invoking section 13(2) of the Securitisation and Reconstruction W.P.(C). No.36814 of 2022 3 of Financial Assets and Enforcement of Securities Interest Act, 2002, hereinafter called, “SARFAESI Act, 2002”. 3. While so, the bank approached the Deputy Tahsildar (RR) Malappuram – the 1[st] respondent, and initiated proceedings under the provisions of the Kerala Revenue Recovery Act, 1968. The case projected by the petitioner is that the 3[rd] respondent bank is not entitled to invoke the provisions of the KRR Act, 1968 since the cumulative debt to be recovered is more than Rs.20 lakhs, which is guided by the provisions of the SARFAESI Act, 2002. It is further submitted that by virtue of the provisions of section 18 r/w. section 34 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, hereinafter called, “the Act, 1993”, no authority other than the Debt Recovery Tribunal can exercise jurisdiction to recover the amount due to a bank, if it exceeds Rs.20 lakhs. 4. Therefore, it is contended that the respondents are incompetent to invoke the provisions of the KRR Act, 1968 and consequent to which, the notices issued under the KRR Act, 1968 is ab initio void. It is further pointed out that it is to tide over the difficulties faced by the banking and other financial institutions in recovering loans that the Act, 1993 and the SARFAESI W.P.(C). No.36814 of 2022 4 Act, 2002 are enacted and a special tribunal is constituted for the expeditious adjudication and recovery of debts due to the banks and financial institutions. 5. That apart, it is submitted that the Tribunal is vested with ample powers under section 17(1) of the Act, 1993 to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institutions. Section 18 of the Act, 1993 creates a bar of jurisdiction, which specifies that on and from the appointed day, no court or other authority shall be entitled to exercise any jurisdiction, powers or authority (except the Supreme Court and a High Court exercising jurisdiction under Articles 226 and 227 of the Constitution) in relation to the matters specified in section 17 of Act, 1993. 6. Therefore, the basic contention advanced by the petitioner is that by virtue of the above said provisions of the Act, 1993, the bank has to necessarily approach the Tribunal for recovery of debts due to them by filing applications. It is also stated that since the bank has already invoked the jurisdiction of the Tribunal as provided under the Act, 1993 and the SARFAESI Act, 2002, it is precluded from invoking the provisions of the KRR Act, 1968. 7. I have heard learned counsel for petitioner Sri.S.Easwaran, learned W.P.(C). No.36814 of 2022 5 Standing Counsel for Bank Sri.Santhosh Peter, learned Government Pleader Sri.Rajeev Jyothish George and perused the pleadings and materials on record. 8. The contentions put forth by the bank is that the cumulative amount covered by Exhibits P3 to P7 notices is above Rs.20 lakhs and the total amount due is Rs.1,13,29,462.94/- as per Exhibit P2 demand notice issued under section 13(2) of the SARFAESI Act, 2002. This question was considered by a learned Single Judge of this Court in **Sam J. Mathews and Others v. Deputy Tahsildar (RR) Taluk Office, Thalapally, Trichur and Others** [2019(4)KHC 105=2019(3)KLT 641=ILR 2019(3)Ker.587]. The learned Single Judge in **Sam J. Mathews** (supra) has taken into account the principles of law evolved by the Apex Court in various judgments and has arrived at the following conclusions: “17. Therefore, viewed from the afore perspective, it is clear that if any dispute is raised with respect to a debts, as defined by the RDB Act, namely, which is more than Rs.10 lakhs, an adjudication on it can only be done by the DRT under the RDB Act and not by the District Collector under the RR Act. Obviously, therefore, the provisions of S.34(2) of the RR Act would stand in conflict with the afore provisions of the RDB Act and resultantly, cannot be availed of by the Banks. The case of the SARFAESI Act stands on a different pedestal because this is a special Act, brought in subsequent to the RDB Act intended to provide a special W.P.(C). No.36814 of 2022 6 mechanism, whereby the Banks can recover debts through the methods specified therein and under the adjudicatory processes that are well defined through its provisions. Thus, even assuming that, in an abstract manner, one views the RR Act to be a mere mechanism for recovery, it would still be of no avail to Banks and Financial Institutions because such recovery, as long as it entails a component of adjudication, would certainly have to yield to the provisions of Ss.17, 18, 19 & 34 of the RDB Act. 18. I must also record that, I have drawn my opinion as above fully inspired and guided by the unmistakable views of the Hon'ble Supreme Court in Allahabad Bank (supra), relating to these issues, which, available in paragraph 23 thereof, are extracted below in order to enable a full reading; “23. Even in regard to “execution”, the jurisdiction of the Recovery Officer is exclusive. Now a procedure has been laid down in the Act for recovery of the debt as per the certificate issued by the Tribunal and this procedure is contained in Chapter V of the Act and is covered by Sections 25 to 30. it is not the intendment of the Act that while the basic liability of the defendant is to be decided by the Tribunal under Section 17, the banks/financial institutions should go to the civil court or the Company Court or some other authority outside the Act for the actual realisation of the amount. The certificate granted under Section 19(22) has, in our opinion, to be executed only by the Recovery Officer. No dual jurisdictions at different stages are contemplated. Further, Section 34 of the Act gives overriding effect to the provisions of the RDB Act. That section reads as follows: W.P.(C). No.36814 of 2022 7 “34.(1) Act to have overriding effect.-- (1) save as provided under subsection (2), the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act. (2) The provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of, the Industrial Finance Corporation Act, 1948 (15 of 1948), the State Financial Corporations Act, 1951 (63 of 1951), the Unit Trust of India Act, 1963 (52 of 1963), the Industrial Reconstruction Bank of India Act, 1984 (62 of 1984) and the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986). The provisions Section 34(1) clearly state that the RDB Act overrides other laws to the extent of “inconsistency”. In our opinion, the prescriptions of an exclusive Tribunal both for adjudication and execution is a procedure clearly inconsistent with realisation of these debts in any other manner. 19. These views were again noticed by the Hon'ble Supreme Court in Unique Butyle (supra) and their Lordships had the following to say, specifically with respect to the question if the Uttar Pradesh Public Moneys (Recovery of Dues) Act, 1972, which is a similar, if not identical statute as the RR Act, is protected under the RDB Act and as to if its provisions can be utilised by the Bank to recover debts more than Rs.10 lakhs: “9. Section 34 of the Act consist of two parts. Sub-section (1) deals W.P.(C). No.36814 of 2022 8 with the overriding effect of the Act notwithstanding anything in consistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than the Act. Sub-section (1) itself makes an exception as regards matters covered by sub-section (2). The U.P. Act is not mentioned therein. The mode of recovery of debt under the U.P. Act is not served under the said provision i.e., sub-section (2) which is of considerable importance so far as the present case is concerned. Even a bare reading therein makes it clear that it is intended to be in addition to and not in derogation of certain statutes; one of which is the Financial Act. In other words, a bank or a financial institution as the option or choice to proceed either under the Act or under the modes of recovery permissible under the Financial Act. To that extent, the High Court's conclusions quoted above were correct. Where the High Court went wrong is by holding that the proceeding under the U.P. Act were permissible. The U.P. Act deals with the separate modes of recovery and such proceedings are not relatable to proceedings under the Financial Act.” 20. Thus, cannot be any further cause for speculation on the aspects involved in these cases, since the Hon'ble Supreme Court has, in the above two binding precedents, dispelled it without any trace of doubt. 21. When the law remains established in the afore manner, the axiomatic question is whether the judgments of two other learned Judges of this Court in M/s. Lakshmi Enterprises (supra) and M/s. Amrutha Oils (supra) need to be followed. A reading of M/s. Lakshmi Enterprises (supra), renders it clear that the learned Judge was dealing with a situation where the Bank took the contention that Recovery W.P.(C). No.36814 of 2022 9 processes under RDB Act and the RR Act are independent of each other and therefore, that they are entitled to invoke any one of them at their option. The question as to the manner of adjudication of the debt was never considered by the learned Judge and the answer given therein is only with respect to the specific query posed by the Bank in the context of the facts and circumstances involved. 22. Similarly, in M/s. Amrutha Oils (supra), a careful reading of the said judgment would show that there were no disputes on facts therein and the debt was virtually admitted. It is solely in such scenario that the learned Judge delivered judgment without having to enter into any of these issues in detail; and resultantly, therefore, the views in it can only be seen to be confined to the parameters of the specific undisputed facts noticed by the learned Single Judge. 23. Irrefragably, therefore, the seemingly contrary views and conclusions in M/s. Lakshmi Enterprises (supra) or M/s. Amrutha Oils (supra) cannot constrain me in any manner; particularly when they are not in conformity with the declarations in Allahabad Bank (supra) and Unique Butyle (supra). As the necessary denouement, since in all these cases the respondentBanks are proceeding for recovery of debts which are more than Rs.10 lakhs, I allow these Writ Petitions and direct the concerned Authorities under the Revenue Recovery Act to cease all further action as per the impugned requisitions made to them; but leave full liberty to the Banks to invoke and pursue remedies under the RDB Act in terms of the afore observations. Needless to say, nothing contained in this judgment shall be construed to mean that the Banks cannot invoke the SARFAESI Act, which they W.P.(C). No.36814 of 2022 10 certainly are entitled to do, in terms of law. 9. Taking into account the imperative provisions of law discussed above, I am in respectful agreement with the judgment rendered by the learned Single Judge in **Sam J. Mathews** (supra); in spite of the fact that the revenue recovery notices are issued under the KRR Act, 1968 by splitting the loan amounts below Rs.20 Lakhs. This is so, because for the different financial advances made by the bank to the petitioner, the mortgage is a composite one. The said issue is guided by section 67-A of the Transfer of Property Act, 1882 dealing with mortgagee when bound to bring one suit on several mortgages; which specifies that a mortgagee who holds two or more mortgages executed by the same mortgagor in respect of each of which, he has a right to obtain same kind of decree under section 67 and who sues to obtain such decree on any one of the mortgages, shall, in the absence of a contract to the contrary, be bound to sue on all the mortgages in respect of which the mortgage-money has become due. 10. Having assimilated the factual and legal situation so, there is no doubt in my mind that the petitioner is entitled to succeed in the writ petition; consequently I hold that the recovery action initiated by the 3[rd] respondent W.P.(C). No.36814 of 2022 11 bank through the revenue authorities as per the provisions of the KRR Act, 1968, is illegal and arbitrary; and therefore, Exhibits P3 to P7 notices issued under sections 7 and 34 of the KRR Act, 1968 are quashed. Writ petition is allowed accordingly. Sd/- smv **SHAJI P.CHALY JUDGE** W.P.(C). No.36814 of 2022 12 ## **APPENDIX OF WP(C) 36814/2022** |**PETITIONER'S EXHIBITS**|| |---|---| |**Exhibit P1**|**COPY OF THE SANCTION LETTER DATED 20-1-21**| |**ExhibitP2**|**COPY OF THE DEMAND NOTICE DATED 2-8-22 ISSUED**| ||**UNDER SECTION 13(2) OF THE SECURITISATION ACT**| |**ExhibitP3**|**COPY OF THE DEMAND NOTICE ALONG WITH ATTACHMENT**| ||**NOTICE DATED 3-11-2022 ISSUED BY THE 1ST**| ||**RESPONDENT**| |**Exhibit P4**|**COPY OF THE DEMAND NOTICE DATED 3-11-2022**| ||**ISSUED BY THE 1ST RESPONDENT**| |**ExhibitP5**|**COPY OF THE ATTACHMENT NOTICE DATED 4-11-2022**| ||**ISSUED BY THE 1ST RESPONDENT**| |**ExhibitP6**|**COPY OF THE DEMAND NOTICE DATED 3-11-2022**| ||**ISSUED BY THE 1ST RESPONDENT**| |**ExhibitP7**|**COPY OF THE ATTACHMENT NOTICE DATED 4-11-2022**| ||**ISSUED BY THE 1ST RESPONDENT**|