High Court dismissed a writ petition challenging a District Magistrate's order under the SARFAESI Act, holding that an effective alternative remedy exists under Section 17 of the Act and staying proceedings would harm the secured creditor.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
C/SCA/3193/2022 ORDER DATED: 18/02/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 3193 of 2022
================================================================
JAYASHRIBEN ROHITBHAI BORAD
Versus DISTRICT MAGISTRATE
================================================================
Appearance:
MR. DHRUVIN U MEHTA(9993) for the Petitioner(s) No. 1 MS JAYSHREE BHATT FOR MS KHUSHBU R SHAH(11864) for the Petitioner(s) No. 1 for the Respondent(s) No. 2
MR DHAWAN JAYSWAL, ASST. GOVERNMENT PLEADER/PP for the Respondent(s) No. 1
================================================================
CORAM: HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 18/02/2022 ORAL ORDER
Heard learned advocate Ms.Jayshree Bhatt for learned advocate Ms.Khushbu Shah for the petitioner and learned Assistant Government Pleader Mr.Dhawan Jayswal for the respondent No.1 through video conference.
“(a) Be pleased to issue appropriate writ, order or direction for quashing and setting aside the order dated 08.09.2021 passed in case no.1278/2020 and further proceeding initiated by respondent no.2.
(b) Be pleased to issue appropriate writ, order or direction to the respondent no.1 to give opportunity of hearing to the present petitioner.
Page 1 of 11
C/SCA/3193/2022 ORDER DATED: 18/02/2022
(c) Pending Admission, Hearing and Final disposal of this Petition, stay the implementation and operation of the order dated 08.09.2021 passed in case no.1278/2020 and further proceeding initiated by respondent no.2.
(d) Grant such other and further relief as thought fit in the interest of justice.”
“7. At the outset, it is required to be noted that in the present case, the respondents borrowers whose accounts have been declared as NPA in the year 2013 have filed the writ petitions before the High Court challenging the communication dated 13.08.2015
Page 2 of 11
C/SCA/3193/2022 ORDER DATED: 18/02/2022
purporting it to be a notice under Section 13(4) of the SARFAESI Act. It is required to be noted that as per the appellant assignor approximately Rs.117 crores is due and payable to the Bank. While passing the ex-parte interim order on 26.08.2015 and while entertaining the writ petitions against the communication dated 13.08.2015, the High Court has directed to maintain status quo with respect to the possession of the secured properties on condition that the borrowers deposit Rs. 1 crore only. Despite the fact that subsequently an application for vacating the ex- parte ad-interim order has been filed in the year 2016, the application for vacating the interim order has not been decided and disposed of. On the contrary, the High Court thereafter has further extended the ex-parte ad-interim order dated 26.08.2015 on condition that the borrowers should deposit a further sum of Rs. 1 crore. Thus, in all the borrowers are directed to deposit Rs. 3 crores only against the dues of approximately Rs.117 crores.
7.1 It is the case on behalf of the appellant that the writ petitions against the communication dated 13.08.2015 proposing to take further action under Section 13(4) of the SARFAESI Act and that too against a private Assets Reconstructing Company (ARC) shall not be maintainable. It is also the case on behalf of the appellant that assuming that the communication dated 13.08.2015 can be said to be a notice under Section 13(4) of the SARFAESI Act, in view of the alternative statutory remedy available by way of appeal under Section 17 of the SARFAESI Act, the High Court ought not to have entertained the writ petitions.
7.2 While considering the issue regarding the maintainability of and/or entertainability of the writ petitions by the High Court in the instant case, a few decisions of this Court relied upon by the learned Senior Advocate appearing on behalf of the appellant ARC are required to be referred to.
7.3 In the case of Satyawati Tondon & Ors. (supra),
Page 3 of 11
C/SCA/3193/2022 ORDER DATED: 18/02/2022
it was observed and held by this Court that the remedies available to an aggrieved person against the action taken under section 13(4) or Section 14 of the SARFAESI Act, by way of appeal under Section 17, can be said to be both expeditious and effective. On maintainability of or entertainability of a writ petition under Article 226 of the Constitution of India, in a case where the effective remedy is available to the aggrieved person, it is observed and held in the said decision in paragraphs 43 to 46 as under:-
Page 4 of 11
C/SCA/3193/2022 ORDER DATED: 18/02/2022
enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution.
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 Corpn. v.
Page 5 of 11
C/SCA/3193/2022 ORDER DATED: 18/02/2022
Registrar of Trade Marks [(1998) 8 SCC 1] and Harbanslal Sahnia v. Indian Oil Corpn. Ltd. [(2003) 2 SCC 107] and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order.
7.4 In the case of City and Industrial Development Corpn. Vs. Dosu Aardeshir Bhiwandiwala, (2009) 1 SCC 168, it was observed by this Court in paragraph 30 that the Court while exercising its jurisdiction under Article 226 is duty bound to consider whether (c) the petitioner has any alternative or effective remedy for the resolution of the dispute.
7.5 In the case of Kanaiyalal Lalchand Sachdev and Ors. (supra) after referring to the earlier decisions of this Court in the cases of Sadhana Lodh Vs. National insurance Co. Ltd. and Anr., (2003) 3 SCC 524; Surya Dev Rai Vs. Ram Chander Rai and Ors., (2003) 6 SCC 675 and State Bank of India Vs. Allied Chemical Laboratories and Anr., (2006) 9 SCC 252 while upholding the order passed by the High Court dismissing the writ petition on the ground that an efficacious remedy is available under Section 17 of the SARFAESI Act, it was observed 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.
7.6 Similar view has been expressed by this Court in subsequent decisions in the case of General Manager, Sri Siddeshwara Cooperative Bank Limited & Anr. (supra) as well as in the case of Agarwal Tracom Private Limited (supra).
Page 6 of 11
C/SCA/3193/2022 ORDER DATED: 18/02/2022
Page 7 of 11
C/SCA/3193/2022 ORDER DATED: 18/02/2022
decision of this Court in the case of J. Rajiv Subramaniyan and Anr. (supra) by the learned senior counsel appearing on behalf of the borrowers in support of his submission that writ petition would be maintainable, it is to be noted that in the aforesaid case, the learned counsel appearing on behalf of the Bank did not press the maintainability and/or entertainability of the writ petition under Article 226 and therefore, this Court had no occasion to consider the entertainability and/or maintainability of the writ petition. Therefore, the aforesaid decision is not of any assistance to the respondents borrowers.
Page 8 of 11
C/SCA/3193/2022 ORDER DATED: 18/02/2022
13.1 In the case of Mathew K.C. (supra) after referring to and/or considering the decision of this Court in the case of Chhabil Dass Agarwal (supra), it was observed and held in paragraph 5 as under:-
Page 9 of 11
C/SCA/3193/2022 ORDER DATED: 18/02/2022
Titaghur Paper Mills case [Titaghur Paper Mills Co. Ltd. v. State of Orissa, (1983) 2 SCC 433] 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.
13.2 Applying the law laid down by this Court in the case of Mathew K.C. (supra) 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 13.08.2015 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 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
Page 10 of 11
C/SCA/3193/2022 ORDER DATED: 18/02/2022
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.”
(BHARGAV D. KARIA, J)
dolly
Page 11 of 11
3 issues framed by the court
Whether a writ petition under Article 226 challenging an order passed under Section 14 of the SARFAESI Act is maintainable when an alternative remedy under Section 17 is available.
Whether a High Court can stay proceedings initiated by a private asset recovery company under the SARFAESI Act.
Whether filing a writ petition against a proposed notice under Section 13(4) of the SARFAESI Act amounts to an abuse of the court's process.
Colour shows how this judgement treated each authority
Phoenix ARC Pvt. Ltd. Vs. Vishwa Bharati Vidya Mandir & Ors.Relied on¶24
Phoenix ARC Pvt. Ltd. Vs. Vishwa Bharati Vidya Mandir & Ors.
Satyawati Tondon & Ors.Relied on¶33
Satyawati Tondon & Ors.
J. Rajiv Subramaniyan and Anr.Referred¶57
J. Rajiv Subramaniyan and Anr.
City and Industrial Development Corpn. Vs. Dosu Aardeshir BhiwandiwalaReferred¶45
City and Industrial Development Corpn. Vs. Dosu Aardeshir Bhiwandiwala
Kanaiyalal Lalchand Sachdev and Ors.Referred¶46
Kanaiyalal Lalchand Sachdev and Ors.
Sadhana Lodh Vs. National insurance Co. Ltd. and Anr.Referred¶46
Sadhana Lodh Vs. National insurance Co. Ltd. and Anr.
Surya Dev Rai Vs. Ram Chander Rai and Ors.Referred¶46
Surya Dev Rai Vs. Ram Chander Rai and Ors.
State Bank of India Vs. Allied Chemical Laboratories and Anr.Referred¶46
State Bank of India Vs. Allied Chemical Laboratories and Anr.
General Manager, Sri Siddeshwara Cooperative Bank Limited & Anr.Referred¶47
General Manager, Sri Siddeshwara Cooperative Bank Limited & Anr.
Agarwal Tracom Private LimitedReferred¶47
Agarwal Tracom Private Limited
CIT v. Chhabil Dass AgarwalReferred¶64
CIT v. Chhabil Dass Agarwal
Thansingh Nathmal v. Supt. of TaxesReferred¶64
Thansingh Nathmal v. Supt. of Taxes
Titaghur Paper Mills Co. Ltd. v. State of OrissaReferred¶64
Titaghur Paper Mills Co. Ltd. v. State of Orissa
JAYASHRIBEN ROHITBHAI BORAD
DISTRICT MAGISTRATE
BHARGAV D. KARIA
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
