Usha; Ratheesh Chandran; and Rathi K. v. Canara Bank; Union of India; Neelakandan Nair

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE A.M.BADAR** ## **TUESDAY, THE 16TH DAY OF MARCH 2021 / 25TH PHALGUNA, 1942** ## **WP(C).No.6689 OF 2021(I)** ## **PETITIONERS:** |**1**|**USHA**| |---|---| ||**AGED 55 YEARS**| ||**W/O. LATE K.RAMACHANDRAN PILLAI AND RESIDING AT**| ||**KAVANAT THODIYIL, KIZHAKKETHIL, KANNIMEL, KILIKOLLOOR**| ||**P.O., KOLLAM DISTRICT, PIN-691 004.**| |**2**|**RATHEESH CHANDRAN**| ||**AGED 37 YEARS**| ||**S/O. LATE K.RAMACHANDRAN PILLAI AND RESIDING AT**| ||**KAVANAT THODIYIL, KIZHAKKETHIL, KANNIMEL, KILIKOLLOOR**| ||**P.O., KOLLAM DISTRICT, PIN-691 004.**| |**3**|**RATHI K.**| ||**AGED 23 YEARS**| ||**D/O. LATE K.RAMACHANDRAN PILLAI, NOW RESIDING AT**| ||**CHANDRODAYAM, VISHNUPURAM, NEAR BHARAT GAS GODOWN,**| ||**MALAYANKEEZH P.O., THIRUVANANTHAPURAM-695 571.**| ||**BY ADVS.**| ||**SRI.K.JAGADEESCHANDRAN NAIR**| ||**SRI.J.KRISHNAKUMAR**| ||**SRI.JIJO JOSEPH**| ## **RESPONDENTS:** **1 THE CANARA BANK A.R.M. IIND FLOOR, SHENOY CHAMBERS, SHANMUGHAM ROAD, ERNAKULAM, COCHIN-682031 REPRESENTED BY ITS CHIEF MANAGER. 2 UNION OF INDIA REPRESENTED BY DEPUTY SECRETARY, MINISTRY OF LAW AND COMPANY AFFAIRS, NEW DELHI, PIN-110 001, 4TH FLOOR, A WING, SHASTRI BHAVAN, NEW DELHI. 3 NEELAKANDAN NAIR S/O. KRISHNAN NAIR, AND RESIDING AT DOOR NO.JNN. A- 4A, VIGNESWAR, JAWAHAR NAGAR, KAVADIAR POST, THIRUVANANTHAPURAM-695 003.** **WP(C).No.6689 OF 2021(I)** **2** ## **ASGI- SRI. P.VIJAYAKUMAR** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 16.03.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C).No.6689 OF 2021(I)** **3** ## **JUDGMENT** ## **Dated this the 16th day of March 2021** Heard the learned counsel for the petitioner. The learned counsel for the petitioner submits that the respondent Canara Bank is conducting sale of the secured assets by resorting to the provisions of Section 13(4) of the SARFAESI Act. This is being done under the e- auction. 2. The learned counsel for the petitioner further argued that the respondent-Canara Bank had demanded an amount of Rs.100 Crores which is already paid. It is further argued that an amount of Rs.7.15 Crores was demanded, but an amount of Rs.7.59 crores was actually paid to the respondent Bank. It is further argued that the respondent Bank had also demanded an amount of Rs.10.93 crores in the year March, 2005 and an amount of Rs.7.42 crores was paid to the said Bank. It is further argued that in the year 2017, an amount of Rs.4.19 lakhs was paid to the respondent Canara Bank. 3. The learned counsel for the petitioner relied on judgment in the matter of Mhadagonda Ramgonda Patil Vs. Shripal Balwant Rainade & Others reported in ((1988) 3 SCC 298) and contended that rule of Damdupat is an equitable rule debarring the creditor to recover at any given time, the amount of interest which is in excess of the **WP(C).No.6689 OF 2021(I)** **4** principal amount due at the time. With this, it is argued by the learned counsel for the petitioner that 100% amount has been paid to the Canara Bank as interest and nothing is now due and therefore, the loan account needs to be closed. 4. With this, the learned counsel appearing for the petitioner prayed that the e-auction sought to be conducted by the respondent Bank be stayed. 5. I have considered the submissions so advanced. 6. Reliefs sought in the petition as seen from the prayer clause is as under. (a) Debt Recovery Tribunal, Ernakulam may be directed to fix the redemption price by examining the account by appointing an auditor by the DRT Ernakulam. (b) The respondent-Bank may be prevented by a writ of prohibition or other appropriate writ, order or direction from selling the property pending the disposal of O.A.89/2005 and this writ petition on 17.03.2021 as per Ext.P10. (c) Debt Recovery Tribunal, Ernakulam may be directed to dispose of O.A. No.89/2005 after considering all the contentions raised in a short time frame fixed by this Hon'ble Court. ## 7. The interim relief sought reads thus: For the reasons stated in the writ petition (C) and the accompanying affidavit thereto, it is most respectfully prayed that this Hon'ble Court may be pleased to stay the sale proclaimed to be conducted by 1[st] respondent on 17.03.2021 by E-auction on-line, pending disposal of this WP(C). 8. What is sought to be argued by the learned counsel for the **WP(C).No.6689 OF 2021(I)** **5** petitioner makes it clear that the respondent Canara Bank is taking action under the SARFAESI Act for recovery of debt, it being a secured creditor. What is sought to be sold is secured asset. Following are the observations of the Hon'ble Apex Court in the matter of Authorized Officer, SBT & Another Vs. Mathew K.C. Reported in 2018 (3) SCC 85. 5. ….... The discretionary jurisdiction under Article 226 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 under Article 226 of the Constitution ought not to be entertained if alternate statutory remedies are available, except in cases falling within the well defined exceptions as observed in Commissioner of Income Tax and Others vs. Chhabil Dass Agarwal, 2014 (1) SCC 603, as follows: “15. Thus, while it can be said that this Court has recognised some exceptions to the rule of alternative remedy 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, the proposition laid down in Thansingh Nathmal case, Titaghur Paper Mills case and other similar judgments that the 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 has been taken itself contains a mechanism for redressal of grievance still holds the field. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation.” ## **Paragraphs 9 to 15** 9. Even prior to the SARFAESI Act, considering the alternate **WP(C).No.6689 OF 2021(I)** **6** remedy available under the DRT Act it was held in Punjab National Bank vs. O.C. Krishnan and others, (2001) 6 SCC 569, that :- “6. The Act has been enacted with a view to provide a special procedure for recovery of debts due to the banks and the financial institutions. There is a hierarchy of appeal provided in the Act, namely, filing of an appeal under Section 20 and this fast-track procedure cannot be allowed to be derailed either by taking recourse to proceedings under Articles 226 and 227 of the Constitution or by filing a civil suit, which is expressly barred. Even though a provision under an Act cannot expressly oust the jurisdiction of the court under Articles 226 and 227 of the Constitution, nevertheless, when there is an alternative remedy available, judicial prudence demands that the Court refrains from exercising its jurisdiction under the said constitutional provisions. This was a case where the High Court should not have entertained the petition under Article 227 of the Constitution and should have directed the respondent to take recourse to the appeal mechanism provided by the Act.” 10. In Satyawati Tandon (supra), the High Court had restrained further proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the SARFAESI Act, the availability of remedy to the aggrieved undern Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal, the object and purpose of the legislation, it was observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available holding :- “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 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 **WP(C).No.6689 OF 2021(I)** **7** 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. **==> picture [80 x 7] intentionally omitted <==** 55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection.” 11. In Union Bank of India and another vs. Panchanan Subudhi, 2010 (15) SCC 552, further proceedings under Section 13(4) were stayed in the writ jurisdiction subject to deposit of Rs.10,00,000/leading this Court to observe as follows : “7. In our view, the approach adopted by the High Court was clearly erroneous. When the respondent failed to abide by the terms of one-time settlement, there was no justification for the High Court to entertain the writ petition and that too by ignoring the fact that a statutory alternative remedy was available to the respondent under Section 17 of the Act.” 12. The same view was reiterated in Kanaiyalal Lalchand Sachdev and others vs. State of Maharashtra and others, 2011 (2) SCC 782 observing: “23. In our opinion, therefore, the High Court rightly dismissed the petition on the ground that an efficacious remedy was available to the appellants under Section 17 of the Act. It is well settled that ordinarily relief under Articles **WP(C).No.6689 OF 2021(I)** **8** 226/227 of the Constitution of India is not available if an efficacious alternative remedy is available to any aggrieved person. (See Sadhana Lodh v. National Insurance Co. Ltd.; Surya Dev Rai v. Ram Chander Rai and SBI v. Allied Chemical Laboratories.)” 13. In Ikbal (supra), it was observed that the action of the Bank under Section 13(4) of the ‘SARFAESI Act’ available to challenge by the aggrieved under Section 17 was an efficacious remedy and the institution directly under Article 226 was not sustainable, relying upon Satyawati Tandon (Supra), observing : “27. No doubt an alternative remedy is not an absolute bar to the exercise of extraordinary jurisdiction under Article 226 but by now it is well settled that where a statute provides efficacious and adequate remedy, the High Court will do well in not entertaining a petition under Article 226. On misplaced considerations, statutory procedures cannot be allowed to be circumvented. 28…….In our view, there was no justification whatsoever for the learned Single Judge to allow the borrower to bypass the efficacious remedy provided to him under Section 17 and invoke the extraordinary jurisdiction in his favour when he had disentitled himself for such relief by his conduct. The Single Judge was clearly in error in invoking his extraordinary jurisdiction under Article 226 in light of the peculiar facts indicated above. The Division Bench also erred in affirming the erroneous order of the Single Judge.” 14. A similar view was taken in Punjab National Bank and another vs. Imperial Gift House and others, (2013) 14 SCC 622, observing:- “3. Upon receipt of notice, the respondents filed representation under Section 13(3-A) of the Act, which was rejected. Thereafter, before any further action could be taken under Section 13(4) of the Act by the Bank, the writ petition was filed before the High Court. 4. In our view, the High Court was not justified in entertaining the writ petition against the notice issued under **WP(C).No.6689 OF 2021(I)** **9** Section 13(2) of the Act and quashing the proceedings initiated by the Bank.” 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 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. 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 exercising its discretion to grant stay in such matters. **WP(C).No.6689 OF 2021(I)** **10** 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 Corpn. v. Registrar of Trade Marks and Harbanslal Sahnia v. Indian Oil Corpn. Ltd. and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order.” 9. In the light of this law laid down by the Hon'ble Supreme Court, this Court cannot interfere in the action taken by the respondent under the SARFAESI Act in auctioning the secured asset for recovery of an amount due from the debtor by the secured creditor. So far as the other reliefs are concerned, the petitioner is free to persuade the learned DRT, Ernakulam to expedite the disposal of the Original Application No.89/2005 and the learned DRT is expected to decide the said application as per its turn considering the pendency of matters before him. Similarly, the petitioner can move to the learned DRT for other relief which are sought in the instant petition. In this view of the matter, the petition is devoid of merit and the same is rejected. ## **Sd/-** **A.M.BADAR** Nsd //true copy// PA to Judge **JUDGE** **WP(C).No.6689 OF 2021(I)** **11** ## **APPENDIX** **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1 THE COPY OF DEATH CERTIFICATE OF K.RAMACHANDRAN PILLAI DATED 7.7.2017. EXHIBIT P2 TRUE COPY OF THE PLAINT IN THE SUIT O.S.NO.449 OF 2004 IN THE PADMANABHPURAM MUNSIFF'S COURT DATED 7.9.2004. EXHIBIT P3 TRUE COPY OF JUDGMENT IN WPC 32274/2004 DATED 24.11.2004 BEFORE THE HONOURABLE HIGH COURT OF KERALA. EXHIBIT P4 THE COPY OF I.A.327/2006 DATED 4TH FEBRUARY 2006 FILED BY THE DECEASED RAMACHANDRAN PILLAI. EXHIBIT P5 TRUE COPY OF THE JUDGMENT DATED 20.1.2014 IN S.A.NO.18 OF 2008 IN THAT CASE. EXHIBIT P6 TRUE COPY OF THE PETITION DATED 23.7.2010 REFERRED TO IN EXHIBIT P5 JUDGMENT IN S.A.18 OF 2008 AS I.A.NO.2010/2010 WITHOUT ANNEXURES. EXHIBIT P7 TRUE COPY OF I.A.1423/2015 FOR APPOINTING AUDITOR DATED 3.8.2005. EXHIBIT P8 TRUE COPY OF THE REDEMPTION APPLICATION IA NO.2733/2015 DATED 19.10.2015 WITHOUT ANNEXURES. EXHIBIT P9 TRUE COPY OF THE I.A.458/2006 IN OA 89/2005 DATED 10.3.2006. EXHIBIT P10 TRUE COPY OF PUBLICATION OF THE SALE OF ALL THE PROPERTIES IN O.A.89/2005 PUBLISHED IN THE WEB SITE DATED 8.2.2021 FOR E-AUCTION ON LINE DATED SALE NOTICE DATED 8.2.2021 SALE TO BE HELD ON 17.3.2021. EXHIBIT P11 TRUE COPY OF THE OFFER OF ONE TIME SETTLEMENT MADE BY THE BANK DATED 29.9.2016. EXHIBIT P12 TRUE COPY OF THE LETTER ISSUED BY THE PUBLIC INFORMATION OFFICER OF CANARA BANK TO RAMACHANDRAN PILLAI DATED 22.5.2008** **WP(C).No.6689 OF 2021(I)** **12** **ADMITTING THAT ECGC CLAIM OF RS.7,42,15,155/- WAS RECEIVED BY THE BANK ON 28.3.2006.**