Vinu Thomas v. South Indian Bank Limited & Others

# **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ``` THE HONOURABLE MR. JUSTICE GOPINATH P. ``` # **`THURSDAY, THE 15[TH] DAY OF DECEMBER 2022 / 24TH AGRAHAYANA, 1944 OP (DRT) NO. 393 OF 2022`** # **`IN SA (DIARY NO. 1305/2022/SA) ON THE FILES BEFORE THE DEBT RECOVERY TRIBUNAL-I, ERNAKULAM`** ## **`PETITIONER:`** ``` VINU THOMAS AGED 44 YEARS, SON OF MR. THOMAS, RESIDING AT KOONATHAN HOUSE, OKKAL (PO), ERNAKULAM DISTRICT, PIN – 683 553. ``` ``` BY ADVS. SHAJI CHIRAYATH JIJI M. VARKEY M.K.SAFEELA BEEVI SAVITHA GANAPATHIYATAN M.M.SHAJAHAN BHOOMIKA SAJAN ``` ## **`RESPONDENTS:`** ``` 1SOUTH INDIAN BANK LIMITED REGISTERED OFFICE, "SIB HOUSE" T.B ROAD, MISSION QUARTERS, THRISSUR DISTRICT, PIN – 680 001. REPRESENTED BY ITS MANAGING DIRECTOR. 2BRANCH MANAGER SOUTH INDIAN BANK LIMITED, POST BOX NO. 6, ALIKKAL SHOPPING COMPELX, M.C ROAD, KALADY (PO), ERNAKULAM, PIN – 683 574. 3AUTHORISED OFFICER/CHIEF MANAGER SOUTH INDIAN BANK LIMITED, REGIONAL OFFICER, 5/950, CHIRIST NAGAR, AKP JUNCTION, IRINJALAKUDA (PO), THRISSUR, PIN – 680 125. ``` 2 O.P.(DRT)No.393/2022 ``` 4C.C JOSE AGED 57 YEARS, SON OF MR. CHAKKUNNI, CHIEF MANAGER & AUTHORISED OFFICER/ CHIEF MANAGER SOUTH INDIAN BANK LIMITED, REGIONAL OFFICER, 5/950-C&D, CHIRIST NAGAR, AKP JUNCTION, IRINJALAKUDA (PO), THRISSUR DISTRICT, PIN – 680 125. BY ADVS. K.K.JOHN SUNIL SHANKAR A VIDYA GANGADHARAN(K/000424/2020) SANDHRA.S(K/001610/2021) ``` ``` THIS OP (DEBT RECOVERY TRIBUNAL) HAVING COME UP FOR ADMISSION ON 15.12.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` 3 O.P.(DRT)No.393/2022 ## **C.R.** ## **JUDGMENT** The petitioner has approached this Court challenging Ext.P2 order passed in an un-numbered Securitisation Application, rejecting the Securitisation Application on the ground that it is barred by limitation. The undisputed facts are that the Chief Judicial Magistrate Court, Ernakulam, had issued an order under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act), for taking physical possession of the secured asset. The Advocate Commissioner had issued a notice on 29-07-2022, requiring the applicant to handover the vacant possession of the property within a period of 14 days. Pursuant to the said notice, the petitioner filed a Securitisation Application under Section 17 of the SARFAESI Act on 14-09-2022, and the same has been rejected on the ground that the Securitisation Application was not filed within a period of 45 days from 29-07-2022. According to the Tribunal, the application was delayed and was out of time by two days. 4 O.P.(DRT)No.393/2022 2. The learned counsel appearing for the petitioner states that the period of limitation cannot be counted from 29-07-2022. It is submitted that even on the completion of 14 days from 29-07-2022, the petitioner has a cause of action to file the Securitisation Application, as the threat of dispossession is imminent. It is submitted that the taking of physical possession of the secured asset is a cause of action in itself and therefore, the Tribunal ought not to have mechanically decided that cause of action arose on 29-07-2022 and not thereafter. It is submitted that the limitation would not commence from the date of issuance of notice by the Advocate Commissioner. It is contended that, in the present case, there is a continuing cause of action. 3. The learned counsel appearing for the respondent Bank submits with reference to the judgment of the Supreme Court in **Varimadugu Obi Reddy v. Sreenivasulu, 2022 (6) KLT OnLine 1125 (SC)** , that Ext.P2 order is an appealable order under Section 18 of the SARFAESI Act and therefore the petitioner cannot seek to bypass the statutory remedy and approach this Court under 5 O.P.(DRT)No.393/2022 Article 227 of the Constitution of India. It is submitted that the period of limitation would commence from 29-07-2022 and the petitioner was clearly out of time by two days to file the Securitisation Application. He contended that the petitioner should have filed the Securitisation Application on or before 12-09-2022, but the same was filed only on 14-09-2022. It is also submitted that the liabilities of the petitioner are huge. He does not dispute the fact that on the Advocate Commissioner actually taking possession of the secured asset, the petitioner will have a cause of action to approach the Tribunal. In other words, according to the respondent Bank, on physical possession being actually taken, an application could be filed within 45 days from the date of taking possession. 4. Having heard the learned counsel appearing for the petitioner and the learned counsel appearing for the respondent Bank, I am of the view that the petitioner is entitled to succeed. On each of the days after the issuance of the notice by the Advocate Commissioner, the petitioner had a cause of action to move before the Debts Recovery 6 O.P.(DRT)No.393/2022 Tribunal and therefore, the limitation could not have been counted from the date of issuance of the notice by the Advocate Commissioner. In **Sami K. v Branch Manager, Bank of India and others, 2011 (3) KHC 414** , this Court held : “6. At the outset, I would note that although the Supreme Court has upheld the constitutional validity of the Act, it cannot be gainsaid that the Act is a very harsh legislation, which results in very disastrous consequences to the owner of the property against which a measure under S.13(4) of the Act has been taken. That being so, the provisions regarding the remedies provided for persons aggrieved by such action should be construed liberally. No doubt, the Supreme Court has categorically held that no application / appeal would lie against any action taken by the financial institution prior to taking a measure under S.13(4). Therefore, the right to resort to remedies under S.17 would arise only when any one of the measures contemplated under S.13(4) or thereafter is initiated, is his contention. I am of opinion that it is not necessary for an aggrieved person to wait till actual or symbolic possession is taken by the financial institution before resorting to the remedy as provided under S.17. Take for example, a case where a person against whom proceedings under the securitization proceedings have been initiated, has a case that he was not a party to the loan transaction at all, but by fraud or forgery, he has been made a borrower or a surety. In such cases, it would be nothing but sheer injustice to say that he has to wait till the financial institution takes possession and throws 7 O.P.(DRT)No.393/2022 him out into the street before he can resort to the only remedy available to him under law, which is filing of an application / appeal under S.17 of the Act. I am of opinion that the rigour of the provisions of the Act should not be taken to that extreme extent to deny even the right of appeal under S.17, which is the only remedy provided to an aggrieved person against a measure under S.13(4). This is all the more so since the Supreme Court has time and again held that High Courts should not ordinarily entertain writ petitions challenging proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and should relegate the parties to the remedy by way of appeal under S.17 of the Act before the Debt Recovery Tribunal. I am of opinion that despite the vehement protestations of counsel for the banks, particularly by the Union Bank of India, going by the decisions of the Supreme Court, the very fact of the financial institutions approaching the Magistrate under S.14 itself would constitute a measure under S.13(4) of the Act, against which an appeal can be filed by the aggrieved person before the Tribunal under S.17. Counsel for the banks point out that in the decisions of Mardia Chemicals Case & Transcore case (supra), the Supreme Court has held that only when a measure under S.13(4) is actually taken, an appeal would lie. No doubt, that is the legal position. But the question is when exactly a measure under S.13(4) can be stated to be actually taken. I am not inclined to accept the contention of the counsel for the banks that, that would only be when possession is actually taken by the financial institution. Any measure under S.13(4) would constitute a cause of action for filing an appeal under S.17. The mere decision of the financial institution to approach the Magistrate under S.14 8 O.P.(DRT)No.393/2022 would also constitute a measure under S.13 (4). Reliance by the learned counsel for the Union Bank of India on the Division Bench decision of this Court in Muhammed Ashraf's case (supra) is misplaced, according to me. That decision only says that no appeal would lie against an order of the Magistrate under S.14 or the action of the Commissioner appointed by the Magistrate to take possession. That decision does not say that the action of the bank in approaching the Magistrate under S.14 would not constitute a measure under S.13(4).” I am in complete agreement with the view taken by this Court in **Sami K. (supra)** that the provisions should be construed liberally. The law is harsh. The Bank is the claimant, the judge and the executioner. The contention of the learned counsel for the respondent that the cause of action arises on the date of issuance of notice by the Advocate commissioner and not thereafter during the period of notice, cannot be accepted. This is more so as the learned counsel appearing for the respondent Bank does not dispute that the petitioner will have a cause of action after the physical possession of the secured asset is actually taken by the Advocate Commissioner. In **Roshan Narayanan C.S. v Authorized Officer, Central Bank of India and Another,** 9 O.P.(DRT)No.393/2022 ## **2017 (3) KHC 617** , this court held: “Further, to deny the borrower access to the DRT at that stage, questioning the step taken by the secured creditor to get physical possession, would tantamount to ignoring the constitutional right available to him under Art. 300A of the Constitution of India. Deferring legal access to a stage after he has been dispossessed would render meaningless his right under Art. 300A, a right that is now seen as an integral facet of one's right to life under Art. 21 of the Constitution. ” In light of the above decisions, I am of the view that on each of the days after the issuance of notice by the Advocate Commissioner, the petitioner has a cause of action to move the Debts Recovery Tribunal. 5. The contention of the learned counsel for the respondent relying on the decision of the Supreme Court in **Varimadugu Obi Reddy (supra)** , where the Court deprecated the practice of entertaining writ application by the High Court in the exercise of jurisdiction under Article 226 of the Constitution without exhausting the alternative statutory remedy available under the law, cannot be accepted. This is not a writ petition under Article 226 of the 10 O.P.(DRT)No.393/2022 Constitution of India. It is a petition filed under Article 227 of the Constitution of India. In **Raj Shri Agarwal @ Ram Shri Agarwal v. Sudheer Mohan, 2022 (7) KHC 270 (SC)** , the Supreme Court held as follows: - “There is a difference and distinction between the entertainability and maintainability. The remedy under Article 227 of the Constitution of India available is a constitutional remedy under the Constitution of India which cannot be taken away. In a given case the Court may not exercise the power under Article 227 of the Constitution of India if the Court is of the opinion that the aggrieved party has another efficacious remedy available under the CPC. However, to say that the writ petition under Article 227 of the Constitution of India shall not be maintainable at all is not tenable.” It is settled law that the power under Article 227 of the Constitution may be exercised when there is grave injustice or failure of justice and when “(i) the Court or the Tribunal has assumed a jurisdiction which it does not have (ii) has failed to exercise a jurisdiction which it does have, such failure occasioning a failure of justice and (iii) the jurisdiction though available is being exercised in a manner which tantamounts to overstepping the limits of jurisdiction…” [See **Raveendran Pilla P. and Others v.** 11 O.P.(DRT)No.393/2022 **State of Kerala and Others, 2021 (1) KHC 38 &Deepak v. Govardhanan Nair, 2021 (6) KLT 708]. In Shiv Shankar Dal Mills v. State of Haryana and others (1980) 2 SCC 437** ; Justice Krishna Iyer (speaking for the bench) famously held :- “Nor is it palatable to our jurisprudence to turn down the prayer for high prerogative writs, on the negative plea of “alternative remedy”, since the root principle of law married to justice, is ubi jus ibi remedium.” I, therefore, reject the respondent’s plea of an alternate remedy. I am convinced that Ext.P2 constitutes a failure on the part of the Tribunal to exercise a jurisdiction vested in it. The original petition is allowed and Ext.P.2 is quashed. The Tribunal is directed to number the Securitisation Application and decide the matter in accordance with the law. The proceedings initiated against the petitioner shall be kept in abeyance till 10.1.2023 to enable the petitioner to move the Tribunal for interim relief. I make it clear that I have not expressed any opinion on the merits of the matter, and it will be open to the Tribunal to decide the matter in 12 O.P.(DRT)No.393/2022 accordance with the law. **Sd/GOPINATH P. JUDGE** ats 13 O.P.(DRT)No.393/2022 ## **`APPENDIX OF OP (DRT) 393/2022`** ``` PETITIONER EXHIBITS ``` ``` Exhibit P1COPY OF THE SECUIRTISATION APPLICATION (DIARY NO. 1305/2022/SA) ON THE FILES BEFORE THE DEBT RECOVERY TRIBUNAL-I, ERNAKULAM Exhibit P2COPY OF THE ORDER IN SECUIRTISATION APPLICATION (DIARY NO. 1305/2022/SA) ON THE FILES BEFORE THE DEBT RECOVERY TRIBUNAL-I, ERNAKULAM ``` ``` Exhibit P3COPY OF THE CERTIFIED COPY OF THE ORDER IMPUGNED ORDER DATED 29TH SEPTEMBER 2022 IN SECUIRTISATION APPLICATION (DIARY NO. 1305/2022/SA) ON THE DEBT RECOVERY TRIBUNAL-I, ERNAKULAM ``` ``` Exhibit P4TRUE COPY OF THE SAID PROCEEDINGS IN MISCELLANEOUS CASE NO. 287 OF 2022 ON THE FILES OF THE ADDITIONAL CHIEF JUDICIAL MAGISTRATE COURT (SPECIAL COURT FOR THE TRAIL OF CRIMINAL CASES AGAINST SITTING AND FORMERS MPS/MLAS OF THE STATE), ERNAKULAM ```