Dismissed

Jayalekshmy v. State Bank of India

Kerala HC7 Oct 2020WA/1300/2020

Case brief

AI extract

What is this about?

This appeal challenges a Single Judge's order permitting installment repayment of a housing loan under SARFAESI Act. The High Court dismissed the appeal, holding that writ petitions are not maintainable under Article 226 when statutory remedies exist under the Act.

What did the court decide?

Appeal against Single Judge's order allowing installment payments dismissed; impugned judgment stands.

Jayalekshmy Vs State Bank of India — Banking and Recovery | Kerala HC (2020)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR

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THE HONOURABLE MR. JUSTICE SHAJI P.CHALY

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WEDNESDAY, THE 07TH DAY OF OCTOBER 2020 / 15TH ASWINA, 1942

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WA.No.1300 OF 2020

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AGAINST THE ORDER/JUDGMENT IN WP(C) 18546/2020(P) OF HIGH COURT OF KERALA

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APPELLANT/PETITIONER:

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JAYALEKSHMY AGED 57 YEARS D/O LATE B. KAMALAMMA, CHETHANA, TC 29/771, ERA-168, PALKULANGARA, VALLAKADAVU.PO, THIRUVANANTHAPURAM-695008.

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BY ADVS. SRI.GRASHIOUS KURIAKOSE (SR.) SMT.V.S.RAKHEE SMT.K.J.GISHA SMT.SAYUJYA SMT.SHARON SOLOMON SRI.BIJU BALAKRISHNAN

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RESPONDENT/RESPONDENT:

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STATE BANK OF INDIA (SUCCESSOR OF STATE BANK OF TRAVANCORE), STRESSED ASSETS RECOVERY BRANCH, LMS COMPOUND, MUSEUN WEST GATE, VIKAS BHAVAN P.O, THIRUVANANTHAPURAM DISTRICT, PIN-695033, REPRESENTED BY ITS CHIEF MANAGER.

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SRI.R.S.KALKURA, STANDING COUNSEL FOR RESPONDENT.

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THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 07.10.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WA.No.1300 OF 2020

JUDGMENT

S.MANIKUMAR,CJ

Instant writ appeal is filed against the judgment dated 23^rd September, 2020 in W.P.(C) No.18546 of 2020. Material on record discloses that appellant, along with her husband had availed a housing loan from the respondent bank in year 2011 and defaulted in repayment of the same. Consequently, as per Ext.P1 the respondent bank initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, to recover the loan amounts. Hence the appellant has approached this court seeking the following reliefs:

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Quash all the proceedings initiated by the respondent, including Ext.P1 possession Notice dt.11.3.2020, against the petitioner and her property mentioned in Ext.P1, under the provisions of the SARFAESI Act, by issuing a Writ of Certiorari or any other appropriate writ, order or direction.

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Issue a Writ of Mandamus r any other appropriate writ, order or direction commanding the respondent to permit the petitioner to pay the overdue amount in the Loan Account No.67149250909 and Loan Account No.67153943158, allegedly in arrears, by way of installments, as stipulated by this Hon'ble Court and direct the respondent to regularise the loan

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account enabling the petitioner to pay the balance amount as per the original schedule.

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Issue such other order or direction as this Hon'ble Court may deem fit and proper, including the cost of the proceedings.

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Considering the rival submissions and going through the material on record, writ court disposed of the writ petition with the following directions:

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(i) If the petitioner pays the said amount of Rs.43,82,370/- together with accrued interest and other charges in twelve equal and successive monthly installments commencing from 10.10.2020, then the further proceedings for recovery shall be kept in abeyance.

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(ii) It is made clear that, if the petitioner commits a default in any single installment, he will lose the benefit of this judgment and the respondent bank will be free to continue the recovery proceedings against him from the stage at which they presently stand.

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(iii) It is further made clear that inasmuch as it is in exceptional cases that this Court would grant the reliefs aforementioned, no further petition for modification/extension of time will be entertained.

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Being aggrieved, instant writ appeal is filed on the following grounds:

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1. Impugned Judgment dt.23.09.2020 of the learned Single Judge is irregular, unjust, arbitrary and same has been passed without appreciating the facts and circumstance of the case in its correct and proper perspective. While passing the impugned judgment, the learned Single Judge uttely failed to appreciate the present financial and other difficulties

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of an ordinary man due to the lockdown and such other issues related to COZVID-19 pandemic. Therefore, the learned Single Judge must have been given a breathing time to the appellant to commence her repayment and must have directed the respondent to regularize the loan account upon payment of overdue amount by the appellant.

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Ext. P1 in the Writ Petition and all the proceedings initiated by the respondent against the appellant and her property under the provisions of the SARFAESI Act are liable to be set aside, since those are illegal, unjust, arbitrary, irregular and unauthorized.

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Respondent has no authority or legal sanction to proceed further pursuant to Ext.P1 in the Writ Petition, since the respondent has not satisfied the mandatory requirement as provided under the SARFAESI Act.

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If the appellant is given some more breathing time, she can repay the arrears allegedly due and can regularize the facility extended by the respondent. The respondent should have given reasonable opportunity to the appellant to repay the alleged overdue amount, before taking any coercive steps against her property and the residential building.

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Appellant was on the legitimate expectation that she can repay the entire loan amount without default. Appellant was promptly repaying the loan amount. Due to the unforeseen collapse of business, appellant was facing financial constraints.

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The secured property and the building in it will fetch much more than the amount sought to be covered under Ext. P1 in the Writ Petition. Value of a very small portion of the said property itself will cover the entire amount allegedly due to the respondent.

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Totally overlooking the decision reported in AIR 2004 (SC) 2371 of the Hon'ble Supreme Court, the respondent has proceeded purportedly under

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Section 13 (4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002.

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Officials under the respondent are frequently coming to the appellant's residence and threatening the appellant and her family that they will be thrown away from the property.

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Though Mr.Biju Balakrishnan, learned counsel for appellant, made submissions on the grounds raised in the appeal and sought for interference with the impugned judgment dated 23.9.2020, we are not inclined to interfere with the same, for the reason that, time and again the Hon'ble Supreme Court

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has held that a writ against the proceedings under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, is not maintainable, when there is an alternative efficacious remedy provided under the said Act.

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Reliance can be made on a decision of the Hon'ble Supreme Court in Authorised Officer, State Bank of Travancore and another v.

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Mathew K.C. reported in (2018) 3 SCC 85. Relevant portions read as under:

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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

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at the tax payers 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 Tandon (supra), has also not been kept in mind before passing the impugned interim order:-

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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 Parishad, Whirlpool Corpn. v. Registrar of Trade Marks and Harbanslal Sahnia v. Indian Oil Corpn. Ltd. 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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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

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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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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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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 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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In United Bank of India v. Satyawati Tondon and others

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[(2010) 8 SCC 110], on a detailed consideration of the statutory scheme

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under the SARFAESI Act, 2002, availability of a remedy to the aggrieved under

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Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal, object and purpose of the legislation, Hon'ble Apex Court observed that a writ petition ought not to be entertained in view of the availability of an alternative statutory remedy,

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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 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

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remedies available under the relevant statute. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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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 Civil Appeal Nos.10243-10250 of 2018 [ICICI Bank Ltd. v. Umakanta Mohapatra and Others] , by order dated 5.10.2018, the Hon'ble Apex Court reaffirmed the legal position that High Court has no jurisdiction to entertain writ petitions under Article 226 of the Constitution of India, relating to matters coming under the purview of SARFAESI Act, 2002, where a statutory remedy is available by filing an application under Section 17 of the said Act.

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De hors the above judgments, while considering the case of the appellant, writ court has granted indulgence by permitting the payments to be made in twelve monthly installments commencing from 10.10.2020 onwards. In the light of the above, this Court is not inclined to interfere with the impugned judgment.

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In the light of the above discussion and decisions, instant appeal is dismissed.

Sd/-

S.MANIKUMAR

CHIEF JUSTICE

Sd/-

SHAJI P.CHALY