Allowed

R.Dhanalakshmi v. Senior Manager

Kerala HC16 Oct 2017OP (DRT)/120/2016

Case brief

AI extract

What is this about?

The High Court of Kerala allowed an original petition challenging an order dismissing a Securitisation Appeal before the Debt Recovery Tribunal. The Court held the Tribunal erred in dismissing the appeal without adjudicating merits, citing a non-exercise of jurisdiction by the Tribunal due to misunderstandings of prior court directions. The matter was remanded for fresh consideration.

What did the court decide?

The impugned order of the Tribunal (Ext.P15) was set aside, and the matter was remanded to the Tribunal for fresh consideration on merits of the Securitisation Appeal.

R.Dhanalakshmi Vs Senior Manager — Writ and Judicial Review | Kerala HC (2017)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR

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MONDAY, THE 16TH DAY OF OCTOBER 2017/24TH ASWINA, 1939

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OP (DRT).No. 120 of 2016 (O)

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ORDER IN SA 66/2006 of DEBT RECOVERY TRIBUNAL, ERNAKULAM

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PETITIONER(S):

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1. R.DHANALAKSHMI PROPRIETRIX, M/S.SEEMATTI TEXTILES,

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KOLLAM.

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2. R.VEERESH KUMAR,DHANAMS, CURZON ROAD, KOLLAM.

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3. R.ANANTHAKUMAR, DHANAMS, CURSON ROAD, KOLLAM.

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BY ADV. SRI.S.EASWARAN

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RESPONDENT(S):

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1. THE SENIOR MANAGER,UNION BANK OF INDIA, KOLLAM BRANCH, FATHIMA BUILDING, P.B.NO.182, BEACH ROAD, KOLLAM-691001.

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2. THE AUTHORIZED OFFICER, UNION BANK OF INDIA, REGIONAL OFFICE, UNION BANK BHAVAN, POST BOX.NO.307, M.G.ROAD, STATUE, THIRUVANANTHAPURAM-695001.

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3. DR.MUMTHAZ, CHANDRALAYAM, M.C.R.A.-77, NELLIMUKKU, KOLLAM-12, REPRESENTED BY POWER OF ATTORNEY HOLDER

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OP (DRT).No. 120 of 2016 (O)

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M.SHAHID AHMED, ADVOCATE, CHANDRALAM, M.C.R.A.-77,KOLLAM-12.

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4. M.SHAHID AHMED, CHANDRALAYAM,NELLIMUKKU, KOLLAM-12.

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5. RAJAMMAL , CHANDRALAYAM,NELLIMUKKU, KOLLAM-12.

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6. DEBTS RECOVERY TRIBUNAL-II, ERNAKULAM-682011.PIN 682011

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R1&R2 BY SRI.A.S.P.KURUP, SC, UBI R3-R5 BY ADV. SRI.ANIL XAVIER R3-R5 BY ADV. SRI.GEORGE G.POOTHICOTE R3-R5 BY ADV. SRI.M.RISHIKESH SHENOY R3-R5 BY ADV. SRI.E.V.BABYCHAN R6 BY SRI.N.NAGARESH, ASG

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THIS OP (DEBT RECOVERY TRIBUNAL) HAVING COME UP FOR ADMISSION ON 16-10-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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hmh

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OP (DRT).No. 120 of 2016 (O)

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APPENDIX

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PETITIONER(S)' EXHIBITS ----------------------EXHIBIT P1 COPY OF S.A.NO.66 OF 2006 FILED BY THE PETITIONERS BEFORE THE DEBTS RECOVERY TRIBUNAL. EXHIBITP2 COPY OF W.P.NO. 24839 OF 2006(WITHOUT EXHIBITS) FILED BY THE PETITIONERS. EXHIBIT P3 COPY OF THE JUDGMENT DATED 20.09.2006 IN W.P.NO.24839 OF 2006 EXHIBIT P4 COPY OF THE JUDGMENT DATED 18.10.2006 IN W.A.NO.1802 OF 2006 EXHIBIT P5 COPY OF THE CERTIFIED COPY OF I.A.NO.1791 OF 2006 IN S.A.NO.66 OF 2006 FILED BY THE PETITIONERS. EXHIBIT P6 COPY OF THE WRITTEN STATEMENT FILED BY RESPONDENTS 1 AND 2 EXHIBIT P7 COPY OF THE WRITTEN STATEMENT FILED BY 3RD RESPONDENT. EXHIBIT P8 COPY OF THE WRITTEN STATEMENT FILED BY RESPONDENTS 4 AND 5 EXHIBIT P9 COPY OF THE AMENDED SA IN SA.NO.66 OF 2006 EXHIBIT 10 COPY OF THE A DIARY PROCEEDINGS DATED 6.08.2016 IN T.S.A.NO.10 OF 2006(SA NO.66 OF 2006) EXHIBIT P11 COPY OF THE ADDITIONAL WRITTEN STATEMENT FILED BY RESPONDENTS 1 AND 2 EXHIBIT P12 COPY OF THE COUNTER AFFIDAVIT FILED BY THE PETITIONERS IN OPPOSITION TO THE APPLICATION TO ACCEPT THE ADDITIONAL WRITTEN STATEMENT. EXHIBIT P13 COPY OF THE REJOINDER FILED BY THE PETITIONERS IN T.S.A.NO.10 OF 2016 (S.A.NO.66 OF 2006)

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OP (DRT).No. 120 of 2016 (O)

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EXHIBIT P14 COPY OF THE ORDER DATED 15.11.2016 IN O.P. (DRT)NO. 24 OF 2016. EXHIBIT P15 COPY OF THE ORDER DATED 2.12.2016 IN T.S.A.NO.10 OF 2016 (SA.NO.66 OF 2006) RESPONDENT(S)' EXHIBITS :

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EXHIBIT R4(a) TRUE COPY OF THE ORDER DATED 01/06/2007 IN WA NO.1250/2007. EXHIBIT R4(b) TRUE COPY OF THE JUDGMENT DATED 07/03/2008 IN WA NO.1250/2007. EXHIBIT R4(c) TRUE COPY OF THE AMENDMENT PETITION FILED BY THE PETITIONERS IN WA NO.1250/2007 EXHIBIT R4(d) TRUE COPY OF THE ORDER DATED 11/07/2007 IN IA NO.1691/2006 IN SA 66/2006 OF THE DRT

// True Copy //

PA to Judge

hmh

A.K.JAYASANKARAN NAMBIAR, J.

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OP(DRT) No.120 of 2016

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................................................................. Dated this the 16^th day of October, 2017

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JUDGMENT

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The petitioners have approached this Court through this Original petition impugning Ext.P15 final order of the Debt Recovery Tribunal-II [DRT-II], Ernakulam, in S.A.No.66/2006 (T.S.A No.10/2016). The grievance of the petitioners in the Original petition is essentially that, while passing the said order, the DRT-II effectively avoided taking a decision on the issues raised in the Securitisation Appeal, by misinterpreting the judgment of a Division Bench of this Court in W.A.No.1250/2007. It is therefore contended that the impugned order of the Tribunal is vitiated by a jurisdictional defect, in that, the tribunal failed to exercise its jurisdiction in respect of one of the issues that was raised before the Tribunal, and dismissed S.A.No.66/2006, solely on the ground that the petitioners had not succeeded in establishing the point with regard to alleged taking over by the bank, of more extent of property than what was mortgaged with the bank.

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I have heard the learned counsel for the petitioners, the learned Standing counsel for the respondent bank and also the

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O.P.(DRT). No. 120 of 2016

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learned counsel for the auction purchaser.

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On a consideration of the facts and circumstances of the case and also the submissions made across the bar, I find from a perusal of the averments in the original petition that the petitioners, who are the proprietors of a textile firm, had availed a cash credit facility from the respondent bank. The cash credit facility extended to the petitioners was secured by the mortgage of three items of property in various Sy. Nos. of Kilikolloor Village, Kollam East Village and Kollam West Village. Pursuant to a notice issued to the petitioners under the SARFAESI Act, the respondent bank proceeded to take symbolic possession of the properties that were mortgaged to the respondent bank. Thereafter, a sale notice was also issued proposing the sale of the mortgaged properties. At that stage, the petitioners impugned the action of the respondent bank through the aforementioned S.A.No.66/2006 filed before the DRT. It would appear that, in the meanwhile, the petitioners also approached the respondent bank with the proposal for a One Time Settlement, and with a view to getting the bank to favourably consider the said proposal, the petitioners approached this Court through W.P.(C)No.24839/2006, wherein, it also

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O.P.(DRT). No. 120 of 2016

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impugned the sale proceedings initiated by the respondent bank. The said writ petition was disposed with certain directions, making it clear that, if the petitioners complied with the said directions with regard to payment of various amounts to the respondent bank, then, they could avail the benefit of the One Time Settlement scheme. It was made clear in the said judgment that, if the petitioners did not comply with the directions in the judgment, with regard to the payment of the amounts to the respondent bank, then the petitioners would have to pursue their remedies before the DRT, in its challenge against the action taken by the respondent bank. It would appear that the petitioners did not comply with the directions in the said judgment so as to facilitate a settlement of the matter with the respondent bank. A Writ appeal preferred by the petitioners against the said judgment also did not meet with any success, since the same was dismissed by judgment dated 18.10.2006. A Review petition thereafter filed by the petitioners against the judgment in the Writ appeal was also dismissed by an order dated 23.01.2007. Thereafter, the respondent bank took steps to move the District Collector for getting physical possession of the properties that had been mortgaged to it. When the petition filed under Section 14 of the SARFAESI Act

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did not yield any result, the bank approached this Court through W.P.(C).No.4635/2007, which was allowed by this Court, and the respondent bank was permitted to take physical possession of the properties in question. The judgment in W.P.(C). No.4635/2007 was carried in appeal by the petitioners herein, and on 01.06.2007, by an interim order, a Division Bench of this Court, while admitting the Writ appeal, also permitted the bank to hand over physical possession of the mortgaged properties to the auction purchaser, who, in the meanwhile, had purchased the properties in an auction sale conducted by the respondent bank. The Division Bench of this Court also permitted the bank to issue the sale certificate to the auction purchaser, subject to the result of the Writ appeal. Thereafter, by a judgment dated 07.03.2008, the Writ appeal was disposed with the following directions:

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“This writ appeal is directed against the orders passed by the learned Single Judge in W.P.(C) No.4635/2007 dated 16^th March, 2007.

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(2) The Union Bank of India, Kollam Branch, Kollam was the petitioner in W.P.(C) No.4635/2007. The prayers sought for by the petitioner Bank was to direct the District Collector, Collectorate, Kollam to evict respondents 2 to 5 and other occupants, if any, under them from the secured asset namely 71.25 cents of land with residential building in Re-survey No.48/2 at Kollam West Village and hand over the said property to the petitioner so as to enable the petitioner to issue sale

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O.P.(DRT). No. 120 of 2016

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certificate to the auction purchasers namely respondents 6 to 8 and also to put them in possession of the property.

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(3) The learned Single Judge, after hearing the parties to the lis by his order dated 16^th March,2007 has granted the reliefs sought for by the petitioner in the writ petition.

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(4) Aggrieved by the said order, respondents 3 and 5 are before us in this appeal.

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(5) Sri.A.S.P.Kurup, learned counsel appearing for the contesting respondent, on instruction, would submit that, pursuant to the directions issued by this Court while disposing of the writ petition, the District Collector has implemented the orders passed by this Court. It is further stated that, the Bank, after taking possession of the property that was sought for in the writ petition, has already handed over the same to the auction purchasers, namely respondents 6 to 8 in the writ petition.

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(6) Aggrieved by the proceedings taken by the Bank in exercise of its powers under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, respondents2 to 5 in the writ petition have filed appeal before the Debts Recovery Tribunal and the same is pending for consideration.

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(7) In the writ petition filed, the only relief that was sought for by the Bank was to direct the District Collector to take possession of the property mentioned in the prayer portion of the writ petition. That prayer was granted by the learned Single Judge and before we could entertain the writ appeal, the Bank has already taken possession of the property and then has handed over the same to the auction purchasers. Aggrived by those proceedings, the affected parties have already moved appropriate Forum. In view of these developments, in our opinion, at this stage, nothing survives in this appeal for our consideration and decision.

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(8) However, Sri.Abhraham Vakkanal, learned counsel appearing for the appellants/ respondents 3 and 5 would submit that, in the guise of implementing the orders passed by this Court, the Bank has taken some

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O.P.(DRT). No. 120 of 2016

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other portion of the property which were not even mortgaged to the Bank. If that is so, in our opinion, the appellants / respondents 3 and 5 have to question that action of the Bank in appropriate proceedings by filing appropriate applications. That cannot be agitated over in the present writ appeal. Therefore, while disposing of the writ appeal as having become unnecessary, we reserve liberty to the appellants / respondents 3 and 5 to question the action of the Bank in taking excess portion of the property other than what is mentioned in the prayer portion of the writ petition. Before appropriate Forum.

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(9) With these observations and directions the writ appeal is disposed of.

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(10) Consequently, all pending interlocutory applications are closed.

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Ordered accordingly.”

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It will be seen from the aforementioned extracted judgment of the Division Bench that, while the Division Bench found that nothing survived for consideration in the appeal, since the bank, after taking possession of the properties, had already handed over the same to the auction purchaser, it was thought fit to permit the petitioners to pursue the appeals that they had filed before the DRT, aggrieved by the proceedings taken by the bank in exercise of the powers under the SARFAESI Act. Thereafter, taking note of the additional contention that was raised on behalf of the petitioners that, in the guise of implementing the orders passed by this Court, the bank had taken some other portion of the property, which was

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not mortgaged to the bank, this Court, while disposing the Writ appeal, granted liberty to the petitioners herein, to question the action of the bank in taking excess portions of the properties other than what was mentioned in the writ petition, before the DRT. Ext.P15 order of the DRT, that is impugned in this original petition, is one that was passed by the DRT, pursuant to the directions of the Division Bench in the Writ appeal aforementioned. As already noted, in Ext.P15 order, the DRT proceeds on the assumption that, as regards the legality of the sale conducted by the respondent bank, of the properties mortgaged to it by the petitioners herein, the issue was already concluded through the judgments of this Court in the Writ Petitions and Writ Appeals referred above. It was found by the Tribunal that the contentions of the petitioners as regards nonadherence to the provisions of the Act, in respect of the sale conducted, and the issuance of sale certificate, could not be considered by the Tribunal in the light of the directions issued by this Court in the Writ Petitions and Writ Appeals referred above. It was thereafter that the Tribunal found that the petitioners had not made any case for granting the reliefs sought for in S.A.No.66/2006, and dismissed the said S.A. together with all the incidental interlocutory applications that

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were filed by the petitioners. As can be seen from the extracted portion of the Writ Appeal judgment, this Court had not concluded the issue with regard to the legality of the sale proceedings that were initiated by the respondent bank against the properties that were mortgaged with it by the petitioners herein. That issue was left to be decided by the Tribunal in the S.A. that was filed by the petitioners before it. Inasmuch as the Tribunal did not consider the said issue on merits, I am of the view that the Tribunal erred in not exercising its jurisdiction and passing an order on merits on the said issues that were raised by the petitioners in the S.A. filed before the Tribunal.

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The decisions of the Supreme Court in Radhey Shyam and Another v. Chhabi Nath and Others - [(2015) 5 SCC 423] and Hameed Kunju v. Nazim - [2017 (4) KHC 113 (SC)] are relied upon to contend that this Court, in exercise of its powers under Article 227 of the Constitution of India, ought not to interfere with a final order passed by the DRT under the SARFAESI Act. The contention essentially is that, inasmuch as the petitioners have an effective alternate remedy by way of an appeal before the Debt Recovery Appellate Tribunal, this Court should not exercise its jurisdiction to interfere with the final

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order passed by the Tribunal. Per contra, the learned counsel for the petitioners would rely upon the decisions of Commissioner of Income Tax & Others v. Chhabil Dass Agarwal - [(2014) 1 SCC 603] as also a judgment of this Court in Basheer M. Picha v. Indian Bank - [2013 (2) KLT 951] to contend that inasmuch as the final order of the Tribunal was vitiated by a non-exercise of jurisdiction by the Tribunal, this would be an ideal case, where, this Court would have to set right the injustice occasioned to the petitioners on account of a non-exercise of jurisdiction by the Tribunal, by interfering with the order passed, in exercise of its powers under Article 227 of the Constitution of India. On a consideration of the decisions cited across the bar, and in the backdrop of the factual matrix of the case, I am of the view that this is a case, where the Tribunal felt, on an erroneous interpretation of the judgment of this Court in W.A. No.1250/2007, that it was not open to it to consider the issues raised in the S.A. before it, on merits. The Tribunal proceeded on the assumption that the issues raised in the S.A. had already been conclusively decided against the petitioners through the judgment in W.A.No.1250/2007. This, as has already been noted, was factually incorrect, since the extracted portion of the judgment in the Writ Appeal clearly indicates that

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the Division Bench of this Court had left open the issues raised in the S.A. to be considered on merits by the Tribunal. The non-consideration of the issues raised in the S.A., on merits, vitiates the order of the Tribunal, and, therefore, in my view, this would be a case where this Court would be justified in interfering with the final order passed by the Tribunal in these proceedings under Article 227 of the Constitution of India. I must also advert to the contentions of the learned counsel for the auction purchaser that the petitioners have an effective alternate remedy by way of an appeal against the final orders passed by the Tribunal in the S.A. referred above. The remedy by way of an appeal, to be an effective one, has to be under circumstances where the original authority decides the issue raised before it, on merits, and gives reasons for its decision. It is only under the said circumstances that an aggrieved person can effectively avail the remedy of an appeal before the Appellate authority for, in the appeal, he can raise contentions against the reasoning offered by the lower authority on the issues decided against him. Inasmuch as in the instant case, the lower authority did not go into the issues at all, on an erroneous assumption that it could not go into those issues, I am of the view that the order impugned in this Original petition is vitiated

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O.P.(DRT). No. 120 of 2016

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on account of a non-exercise, by the Tribunal, of the jurisdiction vested in it, and, hence, a jurisdictional error. An appellate remedy would not be an effective one for the petitioner. Thus, for the reasons stated above, I set aside Ext.P15 order of the Tribunal, and relegate the matter to the Tribunal, for a fresh consideration on the merits of the case. I make it clear that all issues raised in the S.A., as also the contentions of the respondents herein, with regard to the maintainability of the SA, are left open to be decided by the Tribunal, after hearing the rival contentions. The Tribunal shall endeavour to pass final orders in the matter on or before 31.12.2017.

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The Original Petition is disposed with the above directions.

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Sd/-

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A.K.JAYASANKARAN NAMBIAR JUDGE

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nkr/19.10.2017

R.Dhanalakshmi v. Senior Manager

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R.Dhanalakshmi v. Senior Manager

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