W.A. Nos. 608 & 623 of 2023

# **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** # **`PRESENT`** ``` THE HONOURABLE THE CHIEF JUSTICE MR.S.V.N.BHATTI ``` ``` & ``` ``` THE HONOURABLE MR.JUSTICE BASANT BALAJI ``` ``` WEDNESDAY, THE 7[TH] DAY OF JUNE 2023 / 17TH JYAISHTA, 1945 ``` ``` W.A. NO.608OF 2023 ``` ``` (AGAINST THE JUDGMENT IN WP(C)3187/2022 OF HIGH COURT OF KERALA) ``` ## **`APPELLANT/WRIT PETITIONER:`** ``` VEERANKUTTY T.M., AGED 52 YEARS, S/O.MOIDEEN, THOPPILTHODI HOUSE, KUMBALAKKODU DESOM, PAZHAYANNOOR VILLAGE, THALAPPILLY TALUK, THRISSUR DISTRICT-, PIN – 680 582. ``` ``` BY ADVS. RENJITH B.MARAR LAKSHMI.N.KAIMAL ARUN POOMULLI PREETHA S CHANDRAN ABHIJITH SREEKUMAR ``` ## **`RESPONDENTS/RESPONDENTS:`** ``` 1THE SECRETARY TO THE GOVERNMENT, REPRESENTED BY THE SECRETARY, DEPT. OF CO-OPERATIVE SOCIETIES, SECRETARIAT, THIRUVANANTHAPURAM, PIN – 695 001 2JOINT REGISTRAR, CO-OPERATIVE SOCIETIES (THRISSUR), CO-OPERATIVE BHAVAN, AYYANTHOLE THRISSUR-680 003 ``` 2 ## _W. A. Nos.608 & 623 / 2023_ - `3 THE GENERAL MANAGER, THRISSUR CO-OPERATIVE BANK, KOVILAKATHUMPADAM, THIRUVMABADY P.O., THRISSUR-680 022` - `4 THE AUTHORISED OFFICER, THE KERALA STATE CO-OPERATIVE BANK, TUDA ROAD, KOVILAKATHUMPADAM, THIRUVAMBADY P.O., THRISSUR, PIN – 680 022` - `5 THE DEPUTY SUPERINTENDENT OF POLICE, DISTRICT CRIME BRANCH, THRISSUR RURAL, DISTRICT COLLECTOR OFFICE BUILDING, AYYANTHOLE, THRISSUR, PIN – 680 003` - `6 SHOUKATHALI, S/O.MOIDU, MELEPPATVALAPPIL HOUSE, NARANIPPUZHA ROAD, CHANGARAMKULAM, MALAPPURAM, PIN – 679 575` - `7 SALIM, S/O.MOIDU, AGED 42 YEARS, MELEPPATVALAPPIL HOUSE, CHALISSERY, PIN – 679 536` - `8 PRADEEP, BANK MANAGER, HEAD OFFICE BRANCH, THRISSUR DISTRICT CO-OPERATIVE BANK, THRISSUR, PIN-680 307` - `9 ANIL PAUL, S/O.PAULOSE, AGED 48 YEARS, MANICHAYITHAN HOUSE, ANGAMALI, PIN – 683 572` - `10 PRASEETHA, AGED 28 YEARS, KANADY HOUSE, MALA, THRISSUR, PIN – 680 732` ## **`OTHER PRESENT:`** ``` ADVS.SRI.P.C.SASIDHARAN – FOR R3; SRI.T.K.VIPIN DAS, SENIOR GOVERNMENT PLEADER ``` ``` THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 07.06.2023, ALONG WITH WA.623/2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` 3 _W. A. Nos.608 & 623 / 2023_ I **`N THE HIGH COURT OF KERALA AT ERNAKULAM`** ``` PRESENT ``` ``` THE HONOURABLE THE CHIEF JUSTICE MR.S.V.N.BHATTI ``` ``` & ``` ``` THE HONOURABLE MR.JUSTICE BASANT BALAJI ``` ``` WEDNESDAY, THE 7[TH] DAY OF JUNE 2023 / 17TH JYAISHTA, 1945 ``` ``` W.A. NO.623OF 2023 ``` ``` OF HIGH COURT OF KERALA) ``` ## **`- APPELLANT/WRIT REVIEW PETITIONER:`** ``` VEERANKUTTY T.M., AGED 52 YEARS, S/O.MOIDEEN, THOPPILTHODI HOUSE, KUMBALAKKODU DESOM, PAZHAYANNOOR VILLAGE, THALAPPILLY TALUK, THRISSUR DISTRICT-, PIN – 680 582 ``` ``` BY ADVS. RENJITH B.MARAR LAKSHMI.N.KAIMAL ARUN POOMULLI PREETHA S CHANDRAN ABHIJITH SREEKUMAR ``` ## **`RESPONDENTS/RESPONDENTS:`** ``` 1THE SECRETARY TO THE GOVERNMENT, REPRESENTED BY THE SECRETARY, DEPT. OF CO-OPERATIVE SOCIETIES, ``` 4 _W. A. Nos.608 & 623 / 2023_ ``` SECRETARIAT, THIRUVANANTHAPURAM, PIN – 695 001 ``` ``` 2JOINT REGISTRAR, CO-OPERATIVE SOCIETIES (THRISSUR), CO-OPERATIVE BHAVAN, AYYANTHOLE, THRISSUR, PIN – 680 003 3THE GENERAL MANAGER, THRISSUR CO-OPERATIVE BANK, KOVILAKATHUMPADAM, THIRUVMABADY P.O., THRISSUR, PIN – 680 022 4THE AUTHORISED OFFICER, THE KERALA STATE CO-OPERATIVE BANK, TUDA ROAD, KOVILAKATHUMPADAM, THIRUVAMBADY P.O., THRISSUR, PIN – 680 022 ``` ``` 5DISTRICT CRIME BRANCH, THRISSUR RURAL, DISTRICT COLLECTOR OFFICE BUILDING, AYYANTHOLE, THRISSUR, PIN – 680 003 6SHOUKATHALI, S/O MOIDU, MELEPPATVALAPPIL HOUSE, NARANIPPUZHA ROAD, CHANGARAMKULAM, MALAPPURAM, PIN – 679,575 7SALIM, S/O MOIDU, AGED 42 YEARS, MELEPPATVALAPPIL HOUSE, CHALISSERY, PIN – 679 536 8PRADEEP, BANK MANAGER, HEAD OFFICE BRANCH, THRISSUR DISTRICT CO-OPERATIVE BANK, THRISSUR, PIN – 680 307 9ANIL PAUL, S/O.PAULOSE, AGED 48 YEARS, MANICHAYITHAN HOUSE, ANGAMALI, PIN – 683 572 10PRASEETHA, AGED 28 YEARS, KANADY HOUSE, MALA, THRISSUR, PIN – 680 732 ``` ``` ADVS.SRI.P.C.SASIDHARAN – FOR R3; SRI.T.K.VIPIN DAS, SENIOR GOVERNMENT PLEADER ``` ``` THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 07.06.2023, ALONG WITH WA.608/2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` 5 _W. A. Nos.608 & 623 / 2023_ ## JUDGMENT _(Dated: 7[th] June, 2023)_ ## Basant Balaji, J. W.A.No.623 of 2023 is filed against the judgment in W.P.(C)No.24960 of 2020 and W.A.No.608 of 2023 is filed against the judgment in W.P.(C)No.3187 of 2022. The appellant is the petitioner in both the writ petitions (parties are referred to as they appeared in the writ petition). Since the issue in both these writ appeals relates to one transaction, the writ appeals are heard together. The reliefs sought for in W.P.(C)No.24960 of 2020 are as follows: - - i. _Issue a writ in the nature of Mandamus or any other appropriate writ, order or direction, commanding respondent No.2 to adjudicate Ext.P15 preferred by the petitioner within a time frame fixed by this Hon’ble Court,_ - ii. _Issue a writ in the nature of Mandamus or any other_ 6 _W. A. Nos.608 & 623 / 2023_ _appropriate writ, order, or direction, commanding respondent No.4 not to proceed with the recoveries in pursuant to Loan No.SL-80008919065/PZR-BR/2020-2021 and Loan No.SL-80011920791, SL-80011921525, SL80011921467/PZR-BR/2020-2021 notices, sanctioned by the 3[rd] respondent bank pending consideration of Ext.P15 by the 2[nd] respondent._ - iii. _Issue any such other writ, order or direction as this Hon’ble Court deems fit and proper considering the circumstances of the case in the interest of justice”._ The reliefs sought for in W.P.(C)No.3187 of 2022 are as ## follows:- - i. _Issue a writ in the nature of certiorari, or any other writ, order or direction, calling for the records of the case leading upto Ext.P16 and quash the same,_ - ii. _Issue a writ in the nature of Mandamus or any other appropriate writ, order, or direction, commanding respondent No.4 not to proceed with the recovery of the petitioner’s property having an extent of 0.0728 Hectare in Sy.No.1155/2 situated at Pazhayannur Village, Thalappilly Taluk, Thrissur District pending consideration of Ext.P15 by the 2[nd] respondent._ - iii. _Issue any such other writ, order or direction as this Hon’ble Court deems fit and proper considering the circumstances of the case in the interest of justice”._ 7 _W. A. Nos.608 & 623 / 2023_ 2. Brief facts necessary for the disposal of these writ petitions are as follows: - The petitioner was working as a motor mechanic in Saudi Arabia from 1983 onwards. He purchased immovable property having an extent of 3.64 Acres comprised in Re-survey No.116/5 of Vadakkethara Village in Thrissur District, a property with a building comprised in Survey No.700, 780 & 781 of Kilimangalam Village and another property having an extent of 18 cents and a shop room on Pazhayannur. He had taken a loan from the Thrissur Co-operative Bank for the construction of a commercial building. The 6[th] respondent approached the petitioner as a purchaser of the land, stating that the bank will advance a loan and that certain formalities need to be completed. On 30.07.2016, the petitioner was inducted as a director of a registered company by the name M/s.MeleppattuMoidu Traders Pvt. Ltd., and the sale 8 _W. A. Nos.608 & 623 / 2023_ consideration was fixed to Rs.4,35,00,000/-. The 6[th] respondent agreed to pay the amount after getting an overdraft in favour of M/s.MeleppattuMoidu Traders, and executed a cheque for Rs.4,35,00,000/- in favour of the petitioner. He after that obtained the signature of the petitioner on different stamp papers, misrepresenting that it is an agreement of sale of his property. When the petitioner enquired about the overdraft facility with the bank, he was made to understand that Rs.10 crores had been sanctioned in favour of the 6[th] respondent, and he has obtained the same. The petitioner’s specific case is that the 6[th] respondent obtained a loan from Thrissur District Co-operative Bank by forging various documents, misrepresenting, and playing various fraud on the petitioner. The petitioner filed complaints against the 6[th] respondent before various Police Authorities. 3. The Thrissur District Co-operative Bank (Head Office), 9 _W. A. Nos.608 & 623 / 2023_ issued a notice dated 30.07.2018 under Section 13(2) of the Securitization & Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘SARFAESI Act’ for short) against the petitioner, 6[th] respondent and one Anil Paul, wherein it is stated that a loan has been availed for Rs.2,80,00,000/- on 07.10.2016 and a total amount due as on 11.12.2017 was Rs.3,17,54,613/-. The petitioner submitted a reply to the notice received on 03.12.2018. The 4[th] respondent sent a reply dated 18.05.2019, in which it is stated that the petitioner, 6[th] respondent, and one Anil Paul submitted an application for working capital overdraft for Rs.10 Crores. Based on the deposit of title deeds of the petitioner’s property the loan was sanctioned. 4. The case of the petitioner is that without conducting an enquiry into the grievance of the petitioner, notice under 10 _W. A. Nos.608 & 623 / 2023_ Section 13(4) of the ‘SARFAESI Act’ is issued, and the property is being taken possession of. The petitioner also filed ARC before the Joint Registrar of Co-operative Society, Thrissur. The ground alleged by the petitioner is that the respondent bank should not proceed with the recovery of the amounts under the ‘SARFAESI Act’ when fraud has been played on the petitioner by giving his property as a mortgaged property. Until the dispute is settled under Section 69 of the Co-Operative Societies Act, the bank should not proceed with the recovery. 5. The learned single Jude dismissed W.P.(C)No.24960 of 2020, holding that the prayer sought in the writ petition is to interdict the recovery proceedings under ‘SARFAESI Act’ until the ARC proceedings are concluded. The learned single Judge went on to hold that it is a well-settled proposition that any proceedings initiated by the bank under the provisions of the ‘SARFAESI Act’, 11 _W. A. Nos.608 & 623 / 2023_ the same has to be challenged before the Debt Recovery Tribunal under Section 17 of the ‘SARFAESI Act’ and not the petitioner under Section 69 of the Kerala Co-operative Societies Act. 6. As far as W.P.(C)No.3187 of 2022 is concerned, the learned single Judge was of the view that what was challenged in the writ petition was to quash Ext.P16, which is an order of the Chief Judicial Magistrate Court, Thrissur, under Section 14 of the ‘SARFAESI Act’, wherein an Advocate Commissioner was directed to take possession and report compliance. Though detailed arguments were raised before the learned single Judge, pointing out that in _Mardia Chemicals Ltd. and others v. Union of India and others (2004 (4) SCC 311),_ when fraud is alleged, the provisions under Section 34 of the Act may not bar the petitioner from contending that entire transaction is vitiated by fraud. Therefore, the proceedings cannot be continued against the petitioner. 12 _W. A. Nos.608 & 623 / 2023_ 7. The learned single Judge after elaborate consideration of the entire facts and circumstances of the case held that the proceedings before the Chief Judicial Magistrate under Section 14 of the ‘SARFAESI Act’ is ministerial in nature and there is no adjudication regarding the rights and liabilities of the parties. Therefore, the petitioner’s remedy lies before the Debt Recovery Tribunal under Section 17 of the ‘SARFAESI Act’. In _Phoenix ARC_ _Pvt. Ltd., v. Vishwa Bharati Vidya Mandir and others [(2022) 5 SCC 345]_ , the Apex Court has held in paragraph 21 as follows: _“ 21 . Applying the law laid down by this Court in Mathew K.C. [State Bank of Travancore v. Mathew K.C., (2018) 3 SCC 85: (2018) 2 SCC (Civ) 41] to the facts on hand, we are of the opinion that filing of the writ petitions by the borrowers before the High Court under Article 226 of the Constitution of India is an abuse of process of the court. The writ petitions have been filed against the proposed action to be taken under Section 13(4). As observed hereinabove, even assuming that the communication dated 13-8-2015 was a notice under Section 13(4), in that case also, in view of the statutory, efficacious remedy available by way of appeal under Section 17 of the SARFAESI Act, the High Court ought_ 13 _W. A. Nos.608 & 623 / 2023_ _not to have entertained the writ petitions. Even the impugned orders passed by the High Court directing to maintain the status quo with respect to the possession of the secured properties on payment of Rs 1 crore only (in all Rs 3 crores) is absolutely unjustifiable. The dues are to the extent of approximately Rs 117 crores. The ad interim relief has been continued since 2015 and the secured creditor is deprived of proceeding further with the action under the SARFAESI Act. Filing of the writ petition by the borrowers before the High Court is nothing but an abuse of process of court. It appears that the High Court has initially granted an ex parte ad interim order mechanically and without assigning any reasons. The High Court ought to have appreciated that by passing such an interim order, the rights of the secured creditor to recover the amount due and payable have been seriously prejudiced. The secured creditor and/or its assignor have a right to recover the amount due and payable to it from the borrowers. The stay granted by the High Court would have serious adverse impact on the financial health of the secured creditor/assignor. Therefore, the High Court should have been extremely careful and circumspect in exercising its discretion while granting stay in such matters. In these circumstances, the proceedings before the High Court deserve to be dismissed”._ ## As per the dictum laid above, the Hon’ble Supreme Court has cautioned in invoking Article 226 of the constitution of India against any orders passed under the 14 _W. A. Nos.608 & 623 / 2023_ passed under the ‘SARFAESI Act’. Hence, we are of the considered opinion that the learned single Judge was perfectly right in dismissing the appeals as the writ petition is not maintainable before this Court. Any proceedings taken under the ‘SARFAESI Act’ cannot be interdicted by filing arbitration proceedings under Section 69 of the Co-operative Societies Act. Regarding the recovery of amounts due to the bank, the ‘SARFAESI Act’ enables them. The dispute as to whether the mortgage is obtained by fraud, coercion, or misrepresentation, cannot stand in the way of the bank in invoking the provisions under the ‘SARFAESI Act’. Therefore, the Writ Appeals fail, and the same is dismissed. However, liberty is granted to the appellant to move the forum, which the appellant thinks is appropriate for the relief available against the main order, including the relief for not moving 15 _W. A. Nos.608 & 623 / 2023_ consider and pass appropriate orders. With these observations, the writ appeals stand dismissed. _Sd/-_ S.V.N.BHATTI, CHIEF JUSTICE _Sd/-_ BASANT BALAJI, JUDGE ss