Dismissed

Ms Magadh Spun Pipes Limited through Its Director Sri Subash Abhimanu Singh v. the State of Jharkhand through the Chief Secretary

Jharkhand HC11 Jun 2019WPC/2223/2019

Case brief

AI extract

What is this about?

Challenge to a District Magistrate's order under Section 14(2) of the SARFAESI Act taking possession of a factory, on the ground that the mortgage rested on a forged lease deed. The High Court declined to exercise Article 226 jurisdiction, holding that the petitioner must pursue the efficacious alternative remedy before the Tribunal under Section 17.

What the court decided

AI extract

Ms Magadh Spun Pipes Limited through Its Director Sri… — Banking and Recovery | Jharkhand HC (2019)

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IN THE HIGH COURT OF JHARKHAND AT RANCHI. W.P. (C) No. 2223 of 2019

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M/s. Magadh Spun Pipes Limited through its Director Subash Abhimanu Singh … … Petitioner

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-V e r s u s-

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1.The State of Jharkhand through the Chief Secretary, Government of Jharkhand, Ranchi.

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2.The Deputy Commissioner, Koderma.

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3.The Circle Officer, Jai Nagar, Koderma.

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4.The Officer Incharge, Jai Nagar, Koderma.

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5.The Authorised Officer, cum Chief Manager State Bank of India, Stressed Assets Management Branch, Kolkata (West Bengal).

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6.The Chief Manager, State Bank of India, Overseas Branch, Kolkata 700 001 (West Bengal).

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7.Jupiter Spun Pipes and Casting Private Limited,

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Kolkata 700 041 … Respondents.

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CORAM: - HON’BLE MR. JUSTICE SUJIT NARAYAN PRASAD

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For the Petitioner : - Mr. Navniti Prasad Singh, Sr. Advocate. and M/s. Indrajit Sinha and Arpan Mishra, Advocates. For the Respondent-SBI :- Mr. Rajesh Kumar, Advocate.

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02/11.06.2019 This writ petition is under Article 226 of the Constitution of India in which the following prayers have been made:-

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(i) For quashing the order dated 20^th February, 2017 (Annexure-3), passed by the Respondent No. 2 in exercise of the power conferred under Section 14 (2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (in short ‘SARFAESI Act, 2002) authorizing his subordinate authority to remove the petitioner and its officials, workers from the factory and office premises of the petitioner company and seal the same by taking over physical possession of entire movable and immovable property of the petitioner as being without jurisdiction, fraudulent, without authority of law;

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(ii) To direct and command the respondent-authorities to remove the lock and unseal from the premises with immediate effect to the petitioner and restore back the possession of premises at Hirodih within Jainagar Police Station of Koderma District.

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(iii) To Award reasonable compensation against the

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authorities for illegality committed resulting into serious damage/loss of reputation and the good will of the petitioner Company and for loss and damage done to the properties of the Company for a sum of Rs.5,00,00,000/-.

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(iv) To pass an order/direction commanding upon the authorities to get the matter of banking scandal of more than two hundred core syphoned away clandestinely in collusion with State Bank officials and sham loanee so that the culprits responsible for huge depredation of public money may be caught hold of;

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The factual background of the case, as per the pleading made in the writ petition is that a Company in the name of Gaday Iron & Steel Company Ltd. having its registered office in Kolkata went into liquidation and by order of the Hon’ble Kolkata High Court passed sometime in the year 1982, the official liquidator took over possession of assets of the said company situated at Village Hirodih in the District of Koderma, Jharkhand, who has published a notice for auction of the properties whereupon Bihar Industrial Development Corporation (in short ‘BSIDC’), A Government of Bihar company filed its quotation for purchase of the properties of the said Company, in total a sum of Rs.One crore 10 Lakh. The offered price of the aforesaid Company was approved by the Hon’ble Apex Court in Civil Appeal no. 1513 of 1982 and thereafter, a sale deed was executed by the official liquidator, Kolkata High Court in favour of the B.S.I.D.C. on 17.07.2009, which was ultimately registered by the District Sub Registrar, Koderma on 06.09.2011 and in view thereof, the BSIDC has become the lawful owner of the properties of Gaday Iron & Steel Company Ltd. with effect from 17.07.2009 for the entire immovable properties described in the schedule of properties, but, since the B.S.I.D.C. was not in a position to run the industry, as such, it decided to sell out the said factory and all assets attached to it. Accordingly, after following due process, the B.S.I.D.C. had executed a Sale Deed in favour of the petitioner company for total consideration of Rs.16,00,00,000/- by Registered Deed No. 624, dated 05.03.2012 and the possession of the Factory and properties of BSIDC was taken over by the petitioner with effect from 05.03.2012 and

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thereafter, it has invested a huge amount for its infrastructural development, but, all of a sudden, the petitioner came to know about pendency of a SARFAESI proceeding, when the police force came to the factory premises of the petitioner on 04.01.2019, which was for execution of an order, passed by the Deputy Commissioner, Koderma, who forcibly taken over the possession of the entire properties and handed over possession in favour of the Respondent-SBI (SAMB) Bank, Kolkata and when, he has got copy of the order dated 20^th February, 2017, passed by the Deputy Commissioner, Koderma under Section 14 (2) of the SARFAESI Act, 2002 and it is only thereafter, the petitioner has obtained a copy of the purported Lease Deed dated 24.09.2007, sworn to have been executed in between the petitioner MSPL and the BSIDC on the one part and M/s. Jupiter Spun Pipe & Casting Pvt. Ltd., a Company registered in Kolkata through one Shri Nabrun Bhattacharjee as its Managing Director on the second part, but, on going across the aforesaid Lease Deed, the signature of the MSPL and B.S.I.D.C. have been found to be forged one. Thereafter, the petitioner has filed an application on 30^th April, 2019 before the Respondent No. 2 for recall of the order on account of the fraud played by the Respondent Nos. 5 to 7 and brought the documents namely the two transfer deeds and the alleged lease deed on record, but having not done so, the petitioner left with no option, has filed the instant writ petition.

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The ground agitated in the writ petition is that since the entire property, the subject matter of the dispute, was under control, possession and legal ownership of the Official Liquidator of Hon’ble Kolkata High Court up to 06.09.2011, when the deed of sale in favour of B.S.I.D.C. was registered conveying the properties on payment of consideration of Rs. one crore ten lakh, no other person or authority other than the Official Liquidator had power to deal with the property in any manner prior to the date of registration i.e. 06.09.2011 and the B.S.I.D.C., having obtained perfect right, title and possession of the property was entitled to deal with the property by virtue of the Registered Deed dated 06.09.2011 and accordingly, lawfully executed registered deed of conveyance in favour of the petitioner-M.S.P.L. on 05.03.2012 and therefore, the petitioner having the absolute title over the property in

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question, hence, there is no question of execution of the lease deed, dated 24.09.2007 and therefore, the said Lease Deed, is forged one, but creating a mortgage of the Lease Deed, the Respondent-Bank has sanctioned the loan in favour of the Respondent No. 7, therefore, there is a serious fraud committed on the part of the loanee with the connivance of the Bank officials and, as such, the proceeding initiated under the SARFAESI Act, 2002 is not sustainable, since based upon the fraud.

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Further ground has been agitated that the petitioner has not been heard before resorting to either the provision of Section 13 (4) of Section 14 of the SARFAESI Act, 2002, therefore, the entire exercise of the authorities in issuing the order under Section 14 (2) of the SARFAESI Act, 2002 is improper.

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Mr. Rajesh Kumar, learned counsel appearing for the RespondentBank has submitted that the petitioner has come out with the disputed question of facts, raising an issue of commission of fraud and, as such, the same may not be looked into under the writ jurisdiction. Further submission has been made that the order passed under Section 14 (2) of the SARFAESI Act, 2002, has been assailed on the ground of commission of fraud, but, so far as the power, which is to be exercised by the Collector under Section 14 (2) of the SARFAESI Act, 2002, the District Magistrate is to act upon the request being made by the Secured Creditor to take possession of such assets and documents relating thereto and forward such assets and documents to the Secured Creditor, therefore, the District Magistrate on requisition made by the Secured Creditor has exercised the aforesaid power and while doing so, no infirmity has been committed, therefore, the same may not be interfered with.

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So far the submission made on behalf of the petitioner that he is not party to the proceeding either at the stage of Section 13 (4) of Section 14 of the SARFAESI Act, 2002, which can be agitated before the Forum available under Section 17 of the Act, 2002, which provides that any person aggrieved by any of the measures, referred to in Section 4 of Section 13 by the Secured Creditor or his Authorized Officer under this chapter may make an application alongwith such fee and since the proceeding of the stage of Section 13 (4), which provides that in case the borrower fails to discharge his liability will fall within the period

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specified in sub-section 2, the Secured Creditor may take recourse to one or the other measures to recover the secured debt, namely, to take possession of the secured assets of the borrower to take over the management of the business of the borrower, appoint any person to manage the secured assets, the possession of which has been taken over by the secured creditor and require at any time by notice in writing, any person, who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower and thereafter Section 14 of the Act, 2002 comes into play, which contains the provision to take possession of such assets and documents, relating thereto, and forward such assets and documents to the secured creditor and, as such, if the petitioner has got any grievance, he may have a remedy to invoke the provision of Section 17 of the Act, 2002, that can well be looked into by the Tribunal by deciding the disputed question of facts.

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Learned counsel for the parties have been heard at length.

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Before entering into merit this Court thinks it proper to deal with the objects of the enforcement of the SARFAESI Act, 2002 , prior to coming into effect of the Act, 2002, one Act has been enacted upon as the Recovery of the Debts due to the Banks and Financial Institution Act, 1993, which provides for a period of 18 months for disposal of recovery applications but the cases are pending for many years due to various adjournments and prolonged hearings and therefore, in order to facilitate expeditious disposal of Recovery applications, it has been decided to amend the said Act and also to make consequential amendments in the Indian Stamp Act, 1889 and the depositors at 1996 but the object of expeditious adjudication of Recovery applications has not been achieved, which led the parliamentarians to come out with the SARFAESI Act, 2002, with a view to recall Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest and for matters connected therewith or incidental thereto, which enables the Banks and Financial institutions to realize the long term assets and manage problem of liquidity, as asset liability mismatch and improve recovery by exercising power to take possession of the securities, sell them and reduce non-performing assets by adopting measures for recovery or

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reconstruction. The said Act further provides for setting up of Asset Reconstruction Companies, which are empowered to take possession of secured assets of the borrowers including the right to transfer by way of lease assignment or sale and realize the secured assets and take over the business management of the business of the borrower.

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Since the main object of enforcement of the Act, 2002 is to clear out the non-performing assets under Chapter 2 of the aforesaid Statute, which contains Section 3 to 12, which deals with “Regulation of Securitization and Reconstruction of Financial Assets of Banks and Financial Institution”, Chapter 3 deals “Enforcement of Security Interest”, which comprises of 7 Sectors including Section 13.

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Section 13 is for enforcement of security interest, while subsection 2 of Section 13 provides steps to be taken by the secured creditor for enforcement of security interest, which provides that if a borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice with a communication that if he fails to do so, the secured creditor shall be entitled to exercise all or any of the rights in terms of Section 13 (4). Sub-section 3 of Section 13 lays down that the notice issued under subsection (2) shall give details of the amount payable by the borrower, as also the details of the secured assets intended to be enforced by the Bank or the Financial institutions.

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Sub-section (3-A) of Section 13 lays down that the borrower may make a representation in response to the Notice issued under Section 13 (2) and challenge the classification of his account as nonperforming assets as also the quantum of amount specified in the Notice. Sub-section 4 of Section 13 specifies various notices, which can be adopted by the secured creditor for recovery of the secured debts.

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While Sub-section 7 of Section 17 lays down that where any action has been taken against a borrower under the provisions of subsection (4), all costs, charges and expenses which, Section 14 represents

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intervention by assistance to secured creditor under the provisions of this Act, the Secured creditor may, for the purpose of taking possession or control of any such secured asset, request, in writing to the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such secured asset or other documents relating thereto may be situated or found, to take possession thereof, if such request is made the Chief Metropolitan Magistrate or the District Magistrate, as the case may be, is obliged to take possession of such assets and documents and forward the same to the secured creditor.

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Section 17 speaks of the remedies available to any person (including borrower), aggrieved by the action taken by the secured creditor under Sub-section 4 of Section 13, such aggrieved person can make an application to the Tribunal within forty-five days from the date on which the action is taken under that sub-section.

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The question herein, as has been raised by the petitioner is that the property, said to have been mortgaged by way of an instrument i.e. the Lease Deed executed in the year 2007 is not possible to be executed because the aforesaid property is exclusively before the official liquidator of Hon’ble Kolkata High Court. Therefore, there is no question of mortgage of the aforesaid property, which has been directed to be attached by the District Magistrate in exercise of the power conferred under Section 14 (2) of the SARFAESI Act, 2002, which is impugned in this writ petition.

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The main argument advanced by the learned senior counsel appearing for the petitioner is that the aforesaid Lease Deed is forged one and, as such, he is seeking declaration to that effect by this Court sitting under Article 226 of the Constitution of India, therefore, the prime question, which is to be answered in this case is that if the issue of fraud is being raised by the petitioner, will it be proper for the High Court to exercise the power conferred under Article 226 of the Constitution of India in interfering with the SARFAESI proceedings, initiating by issuing notice to the petitioner under Section 13 (2) of the SARFAESI Act, 2002, and failure in complying with the said Notice, exercise under Section 13 (4) has been resorted to, which, ultimately, culminated into an order passed by the District Magistrate under Section 14 (2) of the SARFAESI

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Act, 2002, more particularly, when there is a Forum available under the Statute under Section 17 (1).

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The aforesaid aspect of the matter has been considered by the Hon’ble Apex Court in the judgment rendered in the case of United Bank of India v. Satyawati Tondon and others reported in (2010) 8 SCC 110 , wherein, while dealing with the scope of Article 226 in the matter of interference by the High Court against the Notice issued under Section 13 (4) or action taken under Section 14, the Hon’ble Apex Court has been pleased to hold hereunder as:-

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“ 42. There is another reason why the impugned order should be set aside. If Respondent 1 had any tangible grievance against the notice issued under Section 13(4) or action taken under Section 14, then she could have availed remedy by filing an application under Section 17(1). The expression “any person” used in Section 17(1) is of wide import. It takes within its fold, not only the borrower but also the guarantor or any other person who may be affected by the action taken under Section 13(4) or Section 14. Both, the Tribunal and the Appellate Tribunal are empowered to pass interim orders under Sections 17 and 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 SARFAESI Act are both expeditious and effective.

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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 legislations 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 quasi-judicial 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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44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government,

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directions, orders or writs including the five prerogative writs for the 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 selfimposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution.

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45. 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 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.

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46. 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 (sic 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. 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 Parishad⁵ , Whirlpool Corpn. v. Registrar of Trade Mark s⁶ and Harbanslal Sahnia v. Indian Oil Corpn. Ltd .⁷ and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order.

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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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In the case of Authorized Officer , State Bank of Travancore and Another v. Mathew K.C., reported in (2018) 3 SCC 85, it has been laid down therein at paragraphs 8, 10, 11, 12, 13, 14, 16 and 17, which reads hereunder

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as :-

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“ 8. 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. Narasimhan Committee I and II as also the Andhyarujina Committee constituted by the Central Government Act had suggested enactment of new legislation for securitisation 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 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. In Satyawati Tondon² the High Court had restrained⁸ further proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the SARFAESI Act, the availability of remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal, the object and purpose of the legislation, it was observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available holding: (SCC pp. 123 & 128, paras 43 & 55)

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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 legislations 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 quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy

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under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.

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* * *

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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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11. In Union Bank of India v. Panchanan Subudhi⁹ , further proceedings under Section 13(4) were stayed in the writ jurisdiction subject to deposit of Rs 10,00,000 leading this Court to observe as follows: (SCC pp. 553-54, para 7)

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“7. In our view, the approach adopted by the High Court was clearly erroneous. When the respondent failed to abide by the terms of one-time settlement, there was no justification for the High Court to entertain the writ petition and that too by ignoring the fact that a statutory alternative remedy was available to the respondent under Section 17 of the Act.” 12. The same view was reiterated in Kanaiyalal Lalchand Sachdev v. State of Maharashtra¹⁰ , observing: (SCC p. 789, para 23)

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“23. In our opinion, therefore, the High Court rightly dismisse d¹¹ the petition on the ground that an efficacious remedy was available to the appellants under Section 17 of the Act. It is well settled 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. (See Sadhana Lodh v. National Insurance Co. Ltd.¹² , Surya Dev Rai v. Ram Chander Rai¹³ and SBI v. Allied Chemical Laboratories¹⁴ . )”

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13. In Ikba l³ it was observed that the action of the bank under Section 13(4) of the SARFAESI Act available to challenge by the aggrieved under Section 17 was an efficacious remedy and the institution directly under Article 226 was not sustainable, relying upon Satyawati Tondon² observing: (Ikbal case³ , SCC pp. 94-95, paras 27-28)

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“27. No doubt an alternative remedy is not an absolute bar to the exercise of extraordinary jurisdiction under Article 226 but by now it is well settled that where a statute provides efficacious and adequate remedy, the High Court will do well in not entertaining a petition under Article 226. On misplaced considerations, statutory procedures cannot be allowed to be circumvented.

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28. … In our view, there was no justification whatsoever for the learned Single Judge¹⁵ to allow the borrower to bypass

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the efficacious remedy provided to him under Section 17 and invoke the extraordinary jurisdiction in his favour when he had disentitled himself for such relief by his conduct. The Single Judge was clearly in error in invoking his extraordinary jurisdiction under Article 226 in light of the peculiar facts indicated above. The Division Bench¹⁶ also erred in affirming the erroneous order of the Single Judge.” 4. A similar view was taken in Punjab National Bank v. Imperial Gift Hous e¹⁷ , observing: (SCC p. 622, paras 3-4)

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“3. Upon receipt of notice, the respondents filed representation under Section 13(3-A) of the Act, which was rejected. Thereafter, before any further action could be taken under Section 13(4) of the Act by the Bank, the writ petition was filed before the High Court.

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4. In our view, the High Court¹⁸ was not justified in entertaining the writ petition against the notice issued under Section 13(2) of the Act and quashing the proceedings initiated by the Bank.”

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15. It is the solemn duty of the court to apply the correct law without waiting for an objection to be raised by a party, especially when the law stands well settled. Any departure, if permissible, has to be for reasons discussed, of the case falling under a defined exception, duly discussed after noticing the relevant law. In financial matters grant of ex parte interim orders can have a deleterious effect and it is not sufficient to say that the aggrieved has the remedy to move for vacating the interim order. Loans by financial institutions are granted from public money generated at the taxpayer’s expense. Such loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as entrustment by the public. Timely repayment also ensures liquidity to facilitate loan to another in need, by circulation of the money and cannot be permitted to be blocked by frivolous litigation by those who can afford the luxury of the same. The caution required, as expressed in Satyawati Tondon² , has also not been kept in mind before passing the impugned interim order: (SCC pp. 123-24, para 46)

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“46. 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 (sic 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. Of course, if the petitioner is able to show that its case falls

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within any of the exceptions carved out in Baburam Prakash Chandra Maheshwari v. Antarim Zila Parishad¹⁹ , Whirlpool Corpn. v. Registrar of Trade Marks²⁰ and Harbanslal Sahnia v. Indian Oil Corpn. Ltd.²¹ and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order.”

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16. The writ petition ought not to have been entertained and the interim order granted for the mere asking without assigning special reasons, and that too without even granting opportunity to the appellant to contest the maintainability of the writ petition and failure to notice the subsequent developments in the interregnum. The opinion of the Division Bench that the counter-affidavit having subsequently been filed, stay/modification could be sought of the interim order cannot be considered sufficient justification to have declined interference.

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17. We cannot help but disapprove the approach of the High Court for reasons already noticed in Dwarikesh Sugar Industries Ltd. v. Prem Heavy Engg. Works (P) Ltd.²² , observing: (SCC p. 463, para 32)

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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 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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Learned senior counsel for the petitioner has emphatically submitted that before resorting to the provision of Section 14 of the Act, 2002, no notice has been given but, that argument is having no force, it is for the reason that the concerned Magistrate is not required to give notice to the borrower or to the third party, but he has to only verify from the Bank or the Financial Institution, whether the notice under Section 13 (2) of the Act, 2002 was given or not and whether the secured assets fall within his jurisdiction and there shall be no adjudication of any kind at that stage and it is only if the above conditions are not fulfilled, the concerned Magistrate can refuse to pass order and not otherwise, Reference in this regard be made to the judgment rendered by the Hon’ble Kerala High Court in the case of

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South Indian Bank Ltd.-Vs.-Union of India and others reported in AIR 2011 Kerala 35 , wherein dealing with the role of the Chief Metropolitan Magistrate/District Magistrate, as envisaged under Section 14 of the SARFAESI Act, 2002 only with a limited jurisdiction i.e. to see whether the property is a secured asset or not. The said jurisdiction is only with regard to the assistance to be given to the party/secured creditor to take possession of the property over which the security interest has been created. The secured creditor is at liberty to take possession of the property even without intervention of the Magistrate. The wordings under Section 14 of the Act are very much significant and do not require any other condition to be satisfied, except two parameters, specified therein and once the Magistrate finds that the conditions are satisfied, he is bound to extend the necessary assistance called for.

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In the case of Standard Chartered Bank and others-Vs.-V. Noble Kumar and others reported in (2013) 9 SCC 620 , wherein, also the order passed under Section 14 of the SARFAESI Act, 2002 was one of the subject matter and while dealing with the same, the Hon’ble Apex Court in the aforesaid judgment has been pleased to hold that even in case of Section 14, an appeal can be filed before the Debt Recovery Tribunal in view of the provision of Section 17, as has been decided by the Hon’ble Apex Court in the case of Mardia Chemicals Ltd. v. Union of India reported in (2004) 4 SCC 311 .

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Coming to the factual aspects involved in this case, it is admitted case of the petitioner that fraud has been committed by mortgaging the property in question by virtue of fake Lease Deed, said to have been executed on 24.07.2007 and therefore, the same, according to the petitioner, is a forged one, but the aforesaid Lease Deed is forged or not, a declaration is required to be given by appreciating the various factual aspects which is not proper to be done by this Court by exercising the power conferred under Article 226 of the Constitution of India, considering the fact that the Forum is available under Section 17 of the Act, 2002 and therefore, keeping the various pronouncements into consideration, as referred hereinabove, it is the considered view of this Court that this case is not falling under the exception to interfere with the impugned order keeping the object and aim of the SARFAESI Act, 2002 and also taking into consideration the fact that the

¶89

¶90

Forum is available where even at the stage of Section 14 of the Act, 2002, the issue can be raised.

¶91

In view of the aforesaid factual aspects, as also based upon the judicial pronouncements as referred hereinabove, this Court refrains itself in exercising the jurisdiction conferred upon this Court under Article 226 of the Constitution of India, therefore, the writ petition fails and it is, accordingly, dismissed.

¶92

However, it is open to the petitioner to agitate the dispute before the Forum under Section 17 of the Act, 2002, if the petitioner so wishes.

¶93

(Sujit Narayan Prasad, J.)

¶94

APK

Ms Magadh Spun Pipes Limited through Its Director Sri Subash Abhimanu Singh v. the State of Jharkhand through the Chief Secretary

Case brief

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Ms Magadh Spun Pipes Limited through Its Director Sri Subash Abhimanu Singh v. the State of Jharkhand through the Chief Secretary

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