Dismissed

Ramesh Chandra Yadav v. Union of India and 2 Others

Allahabad HC28 Sept 2020WRIC/14666/2020

Case brief

AI extract

What is this about?

The court dismissed a writ petition challenging an auction notice issued by a bank under the SARFAESI Act. Holding that alternative remedies exist under Section 17 of the Act before the Debts Recovery Tribunal, the court declined to interfere with bank recovery proceedings despite pandemic concerns. The petition was dismissed as devoid of merit.

What did the court decide?

Writ petition dismissed; no interference with auction notice or sale of property.

Ramesh Chandra Yadav Vs Union of India and 2 Others — Banking and Recovery | Allahabad HC (2020)

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Court No. - 47

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Case :- WRIT - C No. - 14666 of 2020

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Petitioner :- Ramesh Chandra Yadav Respondent :- Union Of India And 2 Others Counsel for Petitioner :- Gaurav Tiwari,Javed Khan Counsel for Respondent :- A.S.G.I.,Ashish Agrawal

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Hon'ble Naheed Ara Moonis,J. Hon'ble Vivek Varma,J.

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Heard learned counsel for the petitioner, Shri Ashish Agrawal, learned counsel for respondent nos.2 & 3 and the learned Standing Counsel for the respondent no.1 and gone through the record.

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By means of the present writ petition, the petitioner has invoked the extra ordinary jurisdiction of this Court under Article 226 of the Constitution of India with the following prayer:

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To issue a writ, order order or direction in the nature of certiorari for quashing the impugned notice dated 29.7.2020 issued by the respondent Bank;

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To issue a writ, order or direction in the nature of mandamus restraining the respondent Bank from sale of the immovable property of the petitioner in pursuance to the impugned notice.

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The submission of the learned counsel for the petitioner is that the impugned auction sale notice has been issued by the respondent Bank in an illegal manner without adopting the procedure prescribed under the Act which is nothing but to cause sheer harassment to the petitioner. It is further submitted that the impugned notice has been issued during pandemic of Covid-19 hence the auction of the respondent Bank requires interference in view of the fact that the vires of Section 2(o)(a) of the SARFAESI Act has been challenged by filing a Writ-C No.30846 of 2018. Despite the aforesaid fact, the respondent Bank has issued notice to the petitioner for auction of the immovable property of the petitioner.

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Learned counsel for respondent nos.2 & 3 and the learned Standing Counsel for the respondent no.1 have refuted the submissions advanced by the learned counsel for the petitioner and contended that in terms of the E Auction Sale Notice, the date was fixed for auction on 19.8.2020. In view of Section 13(8) of the SARFAESI Act the petitioner is entitled to redeem the secured assets if he pays the entire amount before the sale/transfer of the secured asset. The petitioner was under legal obligation to pay the outstanding dues. It is further contended that the petitioner, even otherwise, can take all these objections before the Debts Recovery Tribunal under Section 17 of the SARFAESI Act. The language of Section 17 is wide enough to include any person who is aggrieved by the action taken under Sections 13(2) and 13(4) of the Act inasmuch as it uses the word 'any person (including borrower)'.

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On perusal of the E Auction Sale Notice it transpires that the proceedings have been undertaken pursuant to steps taken under Section 13(2) & 13(4) of the Securitisation and Reconstruction of Financial Assets and

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Enforcement of Security Interest Act, 2002 (SARFAESI Act).

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At this juncture, it would be appropriate to refer the decision of United Bank of India Vs. Satyawati Tandon and others reported in 2010 (8) SCC 110 , in which Hon'ble the Apex Court has observed that the writ petition ought not to entertain in view of the alternate statutory remedy available holding:-

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"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 legislation's 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 quasijudicial 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. ***

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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."

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The aforesaid decision in Satyawati Tandon ( Supra ) has been reiterated and followed in various decision by the Hon'ble Apex Court. The reasons for not entertaining the petition where there is efficacious and alternative remedy available has been recently dealt with in extenso by the Hon'ble Apex Court in Authorized Officer, State Bank of Travancore and another reported in 2018(3) SCC85 , of which the relevant extract is reproduced as here under;

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"9. The statement of objects and reasons of the SARFAESI Act states that the banking and financial sector in the country was felt not to have a level playing field in comparison to other participants in the financial markets in the world. The financial institutions in India did not have the power to take possession of securities and sell them. The existing legal framework relating to commercial transactions had not kept pace with changing commercial practices and financial sector reforms resulting in tardy recovery of defaulting loans and mounting non-performing assets of banks and financial institutions. The Narasimhan Committee I and II as also the Andhyarujina Committee constituted by the Central Government Act had suggested enactment of new legislation for secularization and empowering banks and financial institutions to take possession of securities and sell them without court intervention which would enable them to realise long term assets, manage problems of liquidity, asset liability mismatches and improve recovery. The proceedings under the Recovery of Debts due to

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Banks and Financial Institutions Act, 1993, (hereinafter referred to as 'the DRT Act') with passage of time, had become synonymous with those before regular courts affecting expeditious adjudication. All these aspects have not been kept in mind and considered before passing the impugned order.

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"10. 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 :-

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"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."

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Thus entertaining the writ petition granting interim relief have serious adverse impact on the right of bank and other financial institutions to recover their dues.

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So far as the recovery of loan during lock down due to Covid-19 Pandemic is concerned, Reserve Bank of India has already announced certain moratorium on loan repayment. However, the moratorium is only deferral and not a waiver on payment of loan amount otherwise it would put the financial viability of banks at risk and depositors interest in jeopardy. The petitioner cannot be allowed to sit on the fence and wait and thereafter coming to the writ court for the redressal of his grievance.

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In view of the aforesaid facts and circumstances, as the petitioner has an alternative remedy before the Debts Recovery Tribunal under Section 17 of the Act, we are not inclined to exercise our extraordinary jurisdiction in the matter. The impugned notice does not suffer from any error or illegality, hence the writ petition sans any merit is accordingly, dismissed.

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Order Date :- 28.9.2020 M. Tariq

Ramesh Chandra Yadav v. Union of India and 2 Others

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Ramesh Chandra Yadav v. Union of India and 2 Others

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