Yousuf P. v. Authorized Officer, Canara Bank, Ramapuram Branch and Canara Bank, Ramapuram Branch

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN FRIDAY, THE 20TH DAY OF NOVEMBER 2020 / 29TH KARTHIKA, 1942** ## **W.P(C) No.23312 OF 2020(L)** ## **PETITIONER:** **YOUSUF P., AGED 55 YEARS, PROPRIETOR, M/S. SINGAPORE SUPERMARKET, S/O. KUNHIMUHAMMED, PALLIYALIL HOUSE, PANANGARA, MALAPPURAM DISTRICT-679 321.** **BY ADVS. SRI.P.K.MOHAMED JAMEEL SRI.V.P.SHAMSUDHEEN** ## **RESPONDENTS:** **1 THE AUTHORIZED OFFICER, CANARA BANK, RAMAPURAM BRANCH, RAMAPURAM, NH 213, MALAPPURAM DISTRICT-679 321. 2 THE CANARA BANK RAMAPURAM BRANCH, RAMAPURAM, NH 213, MALAPPURAM DISTRICT-679 321.** **R1-2 BY ADV. SRI.M.GOPIKRISHNAN NAMBIAR R1-2 BY ADV. SRI.K.JOHN MATHAI R1-2 BY ADV. SRI.JOSON MANAVALAN R1-2 BY ADV. SRI.KURYAN THOMAS R1-2 BY ADV. SRI.PAULOSE C. ABRAHAM R1-2 BY ADV. SRI.RAJA KANNAN R1-2 BY ADV. SMT.PARVATHY KOTTOL** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 20.11.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **W.P(C) No.23312 OF 2020(L)** -2- ## **JUDGMENT** The petitioner, who availed a cash credit facility for an amount of Rs.26,00,000/- under loan account No.1422285000003 from the 2[nd] respondent Bank, has filed this writ petition under Article 226 of the Constitution of India, seeking a writ of certiorari to quash Ext.P2 demand notice dated 14.10.2020 issued by the 1[st] respondent authorised officer, under sub-section (2) of Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, whereby the petitioner is required to satisfy a sum of Rs.23,33,261.97/- as on the date of notice and interest thereof, within sixty days from the date of receipt of that notice. The petitioner has also sought for a writ of mandamus commanding the respondents to keep in abeyance all further proceedings pursuant to Ext.P2 demand notice; and a writ of mandamus commanding the respondents to permit the petitioner to remit the outstanding amount in instalments and restructure the loan account. 2. On 03.11.2020, when this writ petition came up for admission, the learned Standing Counsel for Canara Bank sought time to get instructions. **W.P(C) No.23312 OF 2020(L)** -3- 3. On 05.11.2020, a statement has been filed on behalf of the respondents, by the learned Standing Counsel for Canara Bank, opposing the reliefs sought for in this writ petition. The learned counsel for the petitioner sought adjournment and accordingly, the writ petition was ordered to be listed today for further consideration, after making it clear that it would be open to the petitioner to file reply affidavit, if any. Paragraphs 3 to 5 of the statement filed on behalf of the respondents read thus; “3. It is submitted that the petitioner had availed a cash credit facility (Overdraft facility) from the respondents on 06/10/2017. Though he made initial payments towards the loan dues, the petitioner had been a defaulter since August 2019. The loan account has been classified as a NonPerforming Asset by the Bank on 04.01.2020 by the respondents due to the default by the petitioner in making payments. Since the loan availed by the petitioner is in the nature of an Overdraft facility, the Bank may not be able to regularise it. The petitioner shall have to pay the entire outstanding amount, which is Rs.26,97,614.97/- as on 04.11.2020. 4. The relief sought by the petitioner in the writ petition is to direct the petitioner to remit the outstanding amounts in instalments and to restructure the loan. The Bank is not willing to grant any time or instalment facility to the petitioner to make payment of the outstanding amount for the reason that the petitioner without informing the Bank has alienated the **W.P(C) No.23312 OF 2020(L)** -4- stocks to a third party. The said stock was Primary security to the said loan. Now the Bank is left with only land and building as collateral security. Also, the Bank reasonably believes that the petitioner has adequate fund to clear the outstanding amount and he is intentionally not clearing the outstanding amount. 5. It is submitted that unless and until, the entire outstanding amount is not paid by the petitioner, the Bank would not been able to hold back from taking possession of the secured property.” 4. Heard the learned counsel for the petitioner and also the learned Standing Counsel for Canara Bank, representing the respondents. 5. Going by the pleadings and materials on record, the petitioner, who is the proprietor of M/s.Singapore Supermarket availed cash credit facility for a sum of Rs.26,00,000/- from the 2[nd] respondent Bank, which was sanctioned on 16.10.2017. The petitioner has also created an equitable mortgage over the property having an extent of 5.10 cents comprised in Survey No.10/4A of Puzhakkattirir Village with a two storeyed building situated therein. The residential building of the petitioner is also situated in that property. On account of the default committed by the petitioner in effecting repayment, the 1[st] respondent Authorised **W.P(C) No.23312 OF 2020(L)** -5- Officer issued Ext.P1 demand notice dated 09.01.2020 under subsection (2) of Section 13 of the said Act, which was followed by Ext.P2 notice dated 14.10.2020 under sub-section (4) of Section 13 of the Act. In this writ petition, the petitioner is seeking an opportunity to repay the dues in 36 monthly instalments. 6. Going by the statement filed on behalf of the respondents, the petitioner has been a defaulter since August, 2019. The loan account has been classified as Non Performing Asset (NPA) by the Bank, on 04.01.2020. Since the loan availed by the petitioner is in the nature of overdraft facility, the Bank is not in a position to regularise it. Therefore, the petitioner has to pay the entire outstanding amount of Rs.26,97,614.97/-, as on 04.11.2020. Moreover, the petitioner has alienated the stocks, which was the primary security, without informing the Bank. Therefore, now the Bank is left with only land and building as collateral security. In the statement, the respondent Bank has stated that the petitioner has adequate fund to clear the outstanding amount and he is intentionally not clearing the dues. 7. As noticed hereinbefore, the primary security for the overdraft facility availed by the petitioner was the stock in the **W.P(C) No.23312 OF 2020(L)** -6- supermarket. The petitioner alienated the same to a third party, after the classification of the account as NPA, without informing the Bank. The said fact is not disclosed in the writ petition. The petitioner has also not chosen to file reply affidavit to the statement filed on behalf of the respondents. 8. In **Prestige Lights Limited v. State Bank of India [(2007) 8 SCC 449]** the Apex Court reiterated that a prerogative remedy is not a matter of course. Therefore, in exercising extraordinary power, a writ court will indeed bear in mind the conduct of the party who is invoking such jurisdiction. If the applicant does not disclose full facts or suppresses relevant materials or is otherwise guilty of misleading the court, the court may dismiss the action without adjudicating the matter. The rule has been evolved in larger public interest to deter unscrupulous litigants from abusing the process of court by deceiving it. The very basis of the writ jurisdiction rests in disclosure of true, complete and correct facts. If the material facts are not candidly stated or are suppressed or are distorted, the very functioning of the writ courts would become impossible. 9. In **Prestige Lights** the Apex Court held further that, **W.P(C) No.23312 OF 2020(L)** -7- under Article 226 of the Constitution of India, the High Court is exercising discretionary and extraordinary jurisdiction. Over and above, a Court of Law is also a Court of Equity. It is, therefore, of utmost necessity that when a party approaches a High Court, he must place all the facts before the Court without any reservation. If there is suppression of material facts on the part of the applicant or twisted facts have been placed before the court, the writ court may refuse to entertain the petition and dismiss it without entering into merits of the matter. Paragraphs 33 and 34 of the said judgment read thus: **“33** . It is thus clear that though the appellant-Company had approached the High Court under Article 226 of the Constitution, it had not candidly stated all the facts to the Court. The High Court is exercising discretionary and extraordinary jurisdiction under Article 226 of the Constitution. Over and above, a Court of Law is also a Court of Equity. It is, therefore, of utmost necessity that when a party approaches a High Court, he must place all the facts before the Court without any reservation. If there is suppression of material facts on the part of the applicant or twisted facts have been placed before the Court, the Writ Court may refuse to entertain the petition and dismiss it without entering into merits of the matter. **34** . The object underlying the above principle has been **W.P(C) No.23312 OF 2020(L)** -8- succinctly stated by Scrutton, L.J., in **R v. Kensington Income Tax Commissioners, [(1917) 1 KB 486 : 86 LJ KB 257 : 116 LT 136 (CA)]** , in the following words: "It has been for many years the rule of the Court, and one which it is of the greatest importance to maintain, that when an applicant comes to the Court to obtain relief on an ex parte statement he should made a full and fair disclosure of all the material facts - facts, not law. He must not misstate the law if he can help it - _the court is supposed to know the law. But it knows nothing about the facts_ , and the applicant must state fully and fairly the facts, and the penalty by which the Court enforces that obligation is that if it finds out that the facts have not been fully and fairly stated to it, the Court will set aside, any action which it has taken on the faith of the imperfect statement." (Emphasis supplied) 10. It is well settled that, a litigant who invokes the extraordinary jurisdiction of this Court under Article 226 of the Constitution must come with clean hands and clean objects. The judicial proceedings are sacrosanct, and no person would be allowed to abuse the judicial process, particularly, in public law remedy. In writ proceedings, the court places implicit faith on the parties and their pleadings, as it does not indulge in any fact finding or roving enquiry of what has been asserted. Since Article **W.P(C) No.23312 OF 2020(L)** -9- 226 of the Constitution of India espouses equity jurisprudence, a litigant who has approached the Court with unclean hands, without disclosing full facts, is not entitled for any reliefs. 11. As already noticed, in the writ petition, the petitioner has suppressed the fact that he had alienated the stock in the supermarket, which was the primary security, after the classification of the account as NPA, without informing the Bank. The petitioner, who has approached this Court with unclean hands, suppressing material facts from the notice of this Court in not entitled for any discretionary relief under Article 226 of the Constitution of India. 12. In **United Bank of India v. Satyawati Tondon [(2010) 8 SCC 110]** the Apex Court was dealing with a case in which the appellant Bank sanctioned a term loan of Rs.22,50,000/in favour of the 2[nd] respondent M/s.Pawan Color Lab, in November, 2004. In that loan transaction the 1[st] respondent stood as guarantor, by mortgaging her property. Since repayment of the loan was highly irregular, the loan account was classified as NonPerforming Asset (NPA). The appellant Bank issued notice under sub-section (2) of Section 13 of the Act requiring the borrower and **W.P(C) No.23312 OF 2020(L)** -10- the 1[st] respondent guarantor requiring them to pay Rs. 23,22,972/along with future interest and incidental expenses. The said notice was followed by an application before the District Magistrate, Allahabad under Section 14 of the Act seeking assistance to take possession of the secured asset, which was allowed by order dated 25.08.2008, and noticed dated 21.01.2009 issued by the appellant Bank under sub-section (4) of Section 13 of the Act. Faced with the imminent threat of losing the mortgaged property, the 1[st] respondent filed writ petition before the High Court of Judicature at Allahabad. The Division Bench of the High Court did not even advert to the plea of the appellant Bank that the writ petition should not be entertained because an effective alternative remedy was available to the writ petitioner under Section 17 of the Act and passed an interim order restraining the appellant Bank from taking action in furtherance of notice issued under sub-section (4) of Section 13 of the Act. 13. In **Satyawati Tondon** , on the question as to whether the appellant Bank could have issued notices to the 1[st] respondent guarantor under sub-sections (2) and (4) of Section 13 of the Act and filed an application under Section 14, without first initiating **W.P(C) No.23312 OF 2020(L)** -11- action against the 2[nd] respondent borrower for recovery of the outstanding dues, the Apex Court noticed that the said question is no more _res integra_ in view of the law laid down in **Bank of Bihar Ltd. v. Damodar Prasad [AIR 1969 SC 297]** that, it is the duty of the surety to pay the decretal amount. On such payment he will be subrogated to the rights of the creditor under Section 140 of the Indian Contract Act, and he may then recover the amount from the principal. The very object of the guarantee is defeated if the creditor is asked to postpone his remedies against the surety. Therefore, the High Court completely misdirected itself in assuming that the appellant Bank could not have initiated action against the 1[st] respondent guarantor without making efforts for recovery of its dues from the 2[nd] respondent borrower. 14. In **Satyawati Tondon** , on the challenge made against the notice to the 1[st] respondent guarantor under sub-section (4) of Section 13 of the Act and also the order of the District Magistrate under Section 14 of the Act, the Apex Court held that, if the 1[st] respondent had any tangible grievance against the notice issued under sub-section (4) of Section 13 of the Act or the action taken **W.P(C) No.23312 OF 2020(L)** -12- under Section 14, then she could have availed remedy by filing an application under sub-section (1) of Section 17. The expression 'any person' used in sub-section (1) of Section 17 is of wide import. It takes within its fold, not only the borrower but also guarantor or any other person who may be affected by the action taken under sub-section (4) of Section 13 or Section 14. Both, the Tribunal and the Appellate Tribunal are empowered to pass interim orders under Section 17 and Section 18 and are required to decide the matters within a fixed time schedule. It is thus evident that the remedies available to an aggrieved person under the Act are both expeditious and effective. Unfortunately, the High Court overlooked the settled law that it will ordinarily not entertain a petition under Article 226 of the Constitution of India 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. 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 legislation enacted by Parliament and State Legislature for recovery of such dues are **W.P(C) No.23312 OF 2020(L)** -13- 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, 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. 15. In **Satyawati Tondon** the Apex Court held that, the powers conferred upon the High Court under Article 226 of the Constitution of India to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III of the Constitution or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, the court cannot be oblivious of the rules of self-imposed restraint evolved by the Apex Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom **W.P(C) No.23312 OF 2020(L)** -14- any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance. 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 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 show that its case falls within any of the exceptions carved out in **Baburam Prakash Chandra Maheshwari v. Antarim Zila Parishad [AIR 1969 SC 556]** , **Whirlpool Corporation v.** **W.P(C) No.23312 OF 2020(L)** -15- **Registrar of Trade Marks, Mumbai [(1998) 8 SCC 1]** and **Harbanslal Sahnia v. Indian Oil Corporation Ltd. [(2003) 2 SCC 107]** and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass appropriate interim order. 16. In **Commissioner of Income Tax v. Chhabil Das Agarwal [(2014) 1 SCC 603]** the Apex Court held that nonentertainment of a writ petition under Article 226 of the Constitution of India when an efficacious alternative remedy is available is a rule and self-imposed limitation. It is essentially a rule of policy, convenience and discretion rather than a rule of law. Undoubtedly, it is within the discretion of the High Court to grant relief under Article 226 of the Constitution of India, despite the existence of alternative remedy. However, High Court must not interfere if there is an adequate efficacious alternative remedy available to the petitioner and he has approached the High Court without availing the same, unless he has made out an exceptional case warranting such interference or there exists sufficient ground to invoke the extraordinary jurisdiction under Article 226. 17. In **Authorised Officer, State Bank of Travancore v.** **W.P(C) No.23312 OF 2020(L)** -16- **Mathew K.C. [(2018) 3 SCC 85]** the Apex Court reiterated that the discretionary jurisdiction under Article 226 of the Constitution of India 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 of India ought not to be entertained if alternative statutory remedies are - available, except in cases falling within the well defined exceptions as observed in **Chaabil Das Agarwal [(2014) 1 SCC 603]** _,_ 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. After referring to the law laid down in **Thansingh Nathmal [AIR 1964 SC 1419]** and **Titaghur Paper Mills Company Ltd. [(1983) 2 SCC 433]** the Apex Court held that 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 contains a mechanism for redressal of grievance. Therefore, when a statutory **W.P(C) No.23312 OF 2020(L)** -17- forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation. 18. In view of the law laid down in the decisions referred to supra, conclusion is irresistible that this Court, in exercise of the discretionary jurisdiction under Article 226 of the Constitution of India, cannot interfere with the recovery proceedings initiated by the respondent Bank, invoking the provisions under Section 13 of the Act, on the grounds raised in this writ petition, in view of the statutory remedy available under Section 17 of the said Act. In the result, the writ petition fails and the same, is accordingly, dismissed. Sd/- **ANIL K. NARENDRAN JUDGE** bpr -18- ## **W.P(C) No.23312 OF 2020(L)** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **EXHIBIT P1 THE TRUE COPY OF THE DEMAND NOTICE ISSUED UNDER SECTION 13(2) OF THE SARFAESI ACT DATED 9.1.2020.** **EXHIBIT P2 THE TRUE COPY OF POSSESSION NOTICE U/S 13(4) OF THE SARFAESI ACT DATED 14.10.2020.** ## **RESPONDENTS' EXHIBITS: NIL**