V.V Joseph and Raju Joseph v. Kerala State Co-Operative Bank and Power Grid Corporation of India Ltd

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE A.M.BADAR** **THURSDAY, THE 18TH DAY OF MARCH 2021 / 27TH PHALGUNA, 1942** ## **WP(C).No.6988 OF 2021(W)** ## **PETITIONERS:** **1 V.V JOSEPH AGED 64 YEARS S/O. VARKEY, VALIYANIKKAL HOUSE, KUPPAYAKKODE P.O, KOZHIKODE 673 580** **2 RAJU JOSEPH, AGED 34 YEARS S/O. V.V JOSEPH, VALIYANIKKAL HOUSE, KUPPAYAKKODE P.O, KOZHIKODE 673 580** **BY ADVS. SRI.BENOJ C AUGUSTIN SRI.TITTO THOMAS SMT.P.PARVATHY** ## **RESPONDENTS:** **1 KERALA STATE CO-OPERATIVE BANK, (FORMER KOZHIKODE DISTRICT CO-OPERATIVE BANK LTD) P.B NO. 503, CHALAPURAM P.O, KOZHIKODE, REPRESENTED BY ITS AUTHORIZED OFFICER.** **2 DEPUTY GENERAL MANAGER, POWER GRID CORPORATION OF INDIA LTD, AREEKODE P.O, UGRAPURAM, ERNAD TALUK, MALAPPURAM DISTRICT 676 505** **SC, BANK- SRI. P.C.SASIDHARAN, SC POWER GRID CORPN.SRI. PRAVEEN K. JOY ID CORTN.-SRI** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 18.03.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C).No.6988 OF 2021(W)** **2** ## **JUDGMENT** ## **Dated this the 18th day of March 2021** ## The petition is with the following prayers. _“(i) Issue a writ of certiorari or any other appropriate writ, order or direction to quash Ext.P4 order._ _(ii) Issue a writ of mandamus or any other appropriate writ to stay all the proceedings initiated by the 1[st] respondent bank against the property of the petitioners._ _(iii) Issue a writ of mandamus or any other appropriate writ order or direction directing the 1[st] respondent to permit the petitioners to pay an amount of Rs.20,000/- per month towards the amount due to the 1[st] respondent bank till the disposal of CRP No.191/2018 or in the alternative, permit the petitioners to pay the outstanding liability due to the 1[st] respondent bank in 30 monthly instalments._ _(iv) Issue such other writ order or direction which this Hon'ble Court may deem fit and proper in the facts and circumstances of this case. “_ 2. Heard the learned counsel for the petitioners. He argued that the petitioners had availed loan from the 1[st] respondent Bank to the tune of Rs.20,00,000/- by mortgaging the landed property wherein the residential building is located. The tenure of the loan ended on 04/09/2018. According to the learned counsel for the petitioners, the 2[nd] respondent had drawn a 400KV line through the property. The inadequate compensation in respect of drawing the electric line through the property was awarded. The appeal was preferred by the 1[st] petitioner before the District Court and accordingly, award for Rs.33,32,094/- along with 9% interest came to be passed against the 2[nd] respondent – Power Grid Corporation of India Ltd. That award has been challenged before this Court in CPR No. 191/2018 and there is no stay to the said award. Thus, **WP(C).No.6988 OF 2021(W)** **3** the petitioners are entitled for an amount of about Rs.55 lakhs from the 2[nd] respondent- Power Grid Corporation of India Ltd. With this, it is argued that the petitioners would pay the amount of loan in instalments and this Court can also direct the 2[nd] respondent to directly pay the amount under the award to the 1[st] respondent for satisfying its debt. The petitioners, therefore, prayed that the communication at Ext.P5 be stayed till disposal of the instant petition. 3. The learned counsel for the 1[st] respondent secured creditor argued that contract entered into by the 1[st] respondent was with petitioners and the 1[st] respondent secured creditor has no privity of contract with the 2[nd] respondent – Power Grid Corporation of India Ltd. According to the 1[st] respondent, loan was taken by petitioners on 04/09/2015 and term of that loan has already expired on 03/09/2018. The recalled amount is more than Rs.33 lakhs and as of now, the Advocate Commissioner had issued notice for taking possession of the secured assets as per the provisions of the SARFAESI Act. 4. I have considered the submissions so advanced and perused the materials placed before me. Undisputedly, on 04/09/2015, petitioners had availed loan of Rs.20 lakhs by mortgaging the house property. On the own admission of the petitioners, duration of that loan expired on 04/09/2018. Ext.P4 is the order passed by the learned CJM, Kozhikode, under Section 14 of the SARFAESI Act. That order shows that on **WP(C).No.6988 OF 2021(W)** **4** 29/12/2017, demand notice under Section 13(2) of the SARFAESI Act was issued to the petitioners directing them to deposit the required amount of loan within 60 days. The said notice was not complied, and as such, the matter proceeded further and that is how, the learned CJM on 28/01/2020 has passed the order at Ext.P4 appointing the Advocate Commissioner to take physical possession of the secured asset. Accordingly it is seen that notice at Ext.P5 came to be issued by the learned Advocate Commissioner for taking possession. 5. The petitioners have challenged these steps initiated by the secured creditor by resorting to the provisions of the SARFAESI Act. 6. Following are the observations of the Hon'ble Supreme Court in the matter of **Authorized Officer, State Bank of Travancore and another vs. Mathew K.C ((2018) 3 Supreme Court Cases 85) (DB).** 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 **WP(C).No.6988 OF 2021(W)** **5** 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.” 9. Even prior to the SARFAESI Act, considering the alternate 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.” **WP(C).No.6988 OF 2021(W)** **6** 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 under 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 226of 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 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. * * * 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 **WP(C).No.6988 OF 2021(W)** **7** 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 onetime 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 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 **WP(C).No.6988 OF 2021(W)** **8** 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 Section 13(2) of the Act and quashing the proceedings initiated by the Bank.” **WP(C).No.6988 OF 2021(W)** **9** 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. Of course, if the petitioner is able to **WP(C).No.6988 OF 2021(W)** **10** 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.” 17. We cannot help but disapprove the approach of the High Court for reasons already noticed in Dwarikesh Sugar Industries Ltd. vs. Prem Heavy Engineering Works (P) Ltd. and Another, 1997 (6) SCC 450, observing :- **“** 32. When a position, in law, is well settled as a result of judicial pronouncement of this Court, it 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.” 7. It is seen that term of the loan has already expired. The petitioners are praying for grant of 30 instalments for repaying the loan, the term of which has already been expired way back in the year 2018 itself. Thus, what is sought to be prayed is regularization of the loan, of which, the term has already been expired. The matter is a contractual matter between the petitioners and the 1[st] respondent. The petitioners **WP(C).No.6988 OF 2021(W)** **11** were already having benefit of repayment of loan by instalments. The term of the loan had expired. Thus, grant of further instalments for regularizing the loan as per the contract entered into between the parties is exclusively in province of the 1[st] respondent and this Court cannot interfere in such matters. 8. So far as the steps initiated by the 1[st] respondent secured creditor are concerned, this Court has no jurisdiction to interfere into the same in the light of the judgment of the Hon'ble Apex Court in the matter of **Authorized Officer, State Bank of Travancore and another vs. Mathew K.C (supra).** 9. The petitioners can pursue for realisation of the dues under the award passed against the 2[nd] respondent by following due process of law. However, on that pretext, rights of the secured creditor who is not concerned with the debtor of the petitioners cannot be curtailed or interfered with. In this view of the matter, the petition is devoid of merit and the same is accordingly dismissed. ## **Sd/-** ## **A.M.BADAR** Nsd //true copy// PA to Judge ## **JUDGE** **WP(C).No.6988 OF 2021(W)** **12** ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF ORDER DATED 13-10-2017 IN O.P NO. 313/2009 BEFORE THE DISTRICT COURT, KOZHIKODE** **EXHIBIT P2 TRUE COPY OF CRP NO 191/2018 BEFORE THIS HON'BLE COURT** **EXHIBIT P3 TRUE COPY OF THE MC 35/2020 DATED 22-12020** **EXHIBIT P4 TRUE COPY OF THE ORDER DATED 28-01-2020 IN MC NO. 35/2020 OF THE CHIEF JUDICIAL MAGISTRATE, KOZHIKODE APPOINTNG AN ADVOCATE COMMISSIONER** **EXHIBIT P5 TRUE COPY OF THE NOTICE FILED BY ADVOCATE COMMISSIONER DATED 10-03-2021 ALONG WITH LEGIBLE WORDS**