Dismissed

M/S Shanti Rice Mill v. State of U.P. and 2 Others

Allahabad HC5 Jan 2021WRIC/20859/2020

Case brief

AI extract

What is this about?

The court dismissed a writ petition challenging SARFAESI Act proceedings, ruling that an alternative remedy exists before the Debts Recovery Tribunal. The petition was dismissed due to the presence of highly disputed factual questions and the availability of the statutory right to approach the TAD. Held that High Courts should be cautious in entertaining such matters without hearing secured credit

What did the court decide?

The writ petition seeking quashing of the impugned order and directives to recover loans was dismissed.

M/S Shanti Rice Mill Vs State of U.P. and 2 Others — Banking and Recovery | Allahabad HC (2021)

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Court No. - 39

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Case :- WRIT - C No. - 20859 of 2020

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Petitioner :- M/S Shanti Rice Mill Respondent :- State Of U.P. And 2 Others Counsel for Petitioner :- Ram Janam Singh Counsel for Respondent :- C.S.C.,Sanjai Singh

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Hon'ble Naheed Ara Moonis,J. Hon'ble Dinesh Pathak,J.

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Heard learned counsel for the petitioner, Sri Sanjai Singh, learned counsel for respondent no.2 and learned Standing Counsel appearing on behalf of respondent no.1.

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The instant petition has been filed seeking the following reliefs :-

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“(i) Issue a writ, order or direction in the nature of certiorari quashing the order dated 10.11.2017 (Annexure-1 to the writ petition).

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(ii) Issue a writ, order or direction in the nature of mandamus directing to the respondent bank to recover the loan from respondent no.3 equal to claim amount Rs.47,40,710/-.

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(iii) Issue a writ, order or direction in the nature of mandamus directing respondent no.2 to take the rest loan amount (Rs.17,59,290) in equal monthly instalment from petitioner.

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(iv) Issue a writ, order or direction in the nature of mandamus directing respondent no.2 not to attach the mill of the petitioner.”

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Learned counsel for the respondent-bank, has raised a preliminary objection that against the proceedings initiated under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the "SARFAESI Act"), the petitioner has remedy to approach the Debts Recovery Tribunal under Section 17 of the SARFAESI Act.

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The said contention raised by the learned counsel for the respondent-bank has

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not been disputed by the learned counsel for the petitioner.

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We have considered the submissions made at the bar.

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The Hon'ble Supreme Court in the case of ICICI Bank Ltd. v. Umakanta Mohapatra, Civil Appeal Nos. 10243-10250 of 2018, decided on 05.10.2018 , has held as under:

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"Delay condoned.

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Leave granted.

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Despite several judgments of this Court, including a judgment by Hon'ble Mr. Justice Navin Sinha, as recently as on 30.01.2018, in Authorized Officer, State Bank of Travancore and Another VS Mathew KC., (2018) 3 SCC 85, the High Courts continue to entertain matters which arise under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI), and keep granting interim orders in favour of persons who are NonPerforming Assets (NPAs).

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The writ petition itself was not maintainable, as a result of which, in view of our recent judgment, which has followed earlier judgments of this Court, held as follows:-

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18. 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:-

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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

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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.

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The writ petition, in this case, being not maintainable, obviously, all orders passed must perish, including the impugned order, which is set aside.

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The appeals are allowed in the aforesaid terms.

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Pending applications, if any, shall stand disposed of."

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Recently, Hon'ble Apex Court in the case of C. Bright Vs. The District Collector & others, Civil Appeal No. 3441 of 2020 decided on 05.11.2020 has observed as follows:

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"21. Even though, this Court in United Bank of India v. Satyawati Tondon & Ors., (2010) 8 SCC 110, held that 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 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. Hindon Forge Private Limited has held that the remedy of an aggrieved person by a secured creditor under the Act is by way of an application before the Debts Recovery Tribunal, how- ever, borrowers and other aggrieved persons are invoking the jurisdiction of the High Court under Articles 226 or 227 of the Constitution of India without availing the alternative statutory remedy. The Hon'ble High Courts are well aware of the limitations in exercising their jurisdiction when effective alternative remedies are available, but a word of caution would be still necessary for the High Courts that interim orders should

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generally not be passed without hearing the secured creditor as interim orders defeat the very purpose of expeditious recovery of public money.

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22. Thus, we do not find any error in the order passed by the High Court. Consequently, the appeal is dismissed."

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In view of the availability of an alternative remedy, and since, highly disputed questions of facts are involved, we are not inclined to entertain this writ petition.

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Accordingly, the writ petition is dismissed on the ground of alternative remedy.

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Order Date :- 5.1.2021 Manish Himwan

M/S Shanti Rice Mill v. State of U.P. and 2 Others

Case brief

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M/S Shanti Rice Mill v. State of U.P. and 2 Others

Case brief

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