Partly allowed

Sreedevi Amma M v. the Hdb Financial Services

Kerala HC11 Oct 2022WA/897/2022

Case brief

AI extract

What is this about?

The court held that writ petitions against SARFAESI Act recovery proceedings are not maintainable. However, modifying the lower order based on submissions, it granted one month's additional time to the appellant to commence repayment of the outstanding loan amount in instalments.

What did the court decide?

Granted one month extension from 11.10.2022 to 11.11.2022 to commence payment of the first instalment of the outstanding loan amount.

Sreedevi Amma M Vs the Hdb Financial Services — Consumer Protection | Kerala HC (2022)

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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 TUESDAY, THE 11^TH DAY OF OCTOBER 2022 / 19TH ASWINA, 1944 WA NO. 897 OF 2022

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AGAINST THE JUDGMENT DATED 06.04.2022 IN WP(C) 12510/2022 APPELLANT/PETITIONER:

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SREEDEVI AMMA M AGED 86 YEARS W/O. LATE PANKAJAKSHAN, SREEVILLA, 7/133, AHALYA NAGAR, PUTHUR ROAD, KOPPAM, PALAKKAD DISTRICT., PIN – 678001

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RESPONDENT/RESPONDENT:

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THE HDB FINANCIAL SERVICES; COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956, HAVING ITS REGISTERED OFFICE AT RADHIKA, 2ND FLOOR, LAW GARDEN ROAD, NAVRANGPURA, AHMEDABAD, PIN-380009, HAVING ONE OF ITS OFFICE AT NEDUNGADEES CAPITAL TOWER, 2ND FLOOR, KALMANDAPAM ROAD, KUNNATHURMEDU, PALAKKAD DISTRICT, PIN-678007; REPRESENTED BY AUTHORISED OFFICER SRI. RAJ C.R, LEGAL MANAGER, KOCHI, PIN – 678007 BY ADV. P. PAULOCHAN ANTONY, SC

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THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 11.10.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

W.A. No. 897/2022

JUDGMENT

S. Manikumar, C.J.

Before the writ court, the petitioner has sought for the following reliefs:-

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i) Calls for the record leading to exhibits P1 and P3 and quash them issuing a writ in the nature of certiorari;

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ii) Issue a writ of mandamus, order or direction commanding the respondent to permit the petitioner to regularize the loan account.

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Short facts leading to the filing of this writ appeal

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are as under:-

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“The above writ appeal is filed against the judgment dated 06.04.2022 in W.P.(C) No.12510/2022 of a learned Single Judge of this Honourable Court. Appellant is the petitioner in the writ petition. It was filed challenging the SARFAESI Act proceeding initiated against the appellant by the respondent. Writ Petition was disposed directing the appellant to remit total outstanding amount of Rs.2,31,21,309/in 15 monthly installments commencing from 30.05.2022. Meanwhile appellant's son Sreekumar who was running the business was diagnosed with lung cancer. Appellant had to borrow extensively to raise money for the treatment due to that reason the

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W.A. No. 897/2022

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appellant could not remit the initial installment directed to be paid by the appellant on 30.05.2022. Being left in such helpless situation, the appellant approached this Hon'ble court seeking a further time of 2 months by filing I.A. No.1/2022 in W.P.(C) No.12510/2022. If it was allowed as such the appellant could have remit the amount. But the learned single judge without appreciating the case in hand and fact and circumstances of the case disposed application granting comparatively a shorter period. While disposing the application the learned single judge ordered that there shall be no further extension of time. Appellant is seriously prejudiced by above. In the above circumstances, appellant could not approach learned single judge again and hence challenges the impugned judgment. Hence, this writ appeal.”

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Taking note of the submission of learned counsel

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for the appellant that the relief is confined only to an opportunity for repaying the outstanding amount in instalments and also the submission of the respondent bank that the appellant committed default in repayment and the total outstanding amount under the term loan at the time of hearing of the writ petition was Rs.2,31,21,309/- and as a matter of indulgence, the respondent bank was willing to

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W.A. No. 897/2022

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accept repayment of the outstanding amount in limited instalments, writ court vide judgment dated 06.05.2022 in W.P.(C.) No. 12510/2022 ordered thus:-

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"6. Accordingly, there will be a direction to the respondent bank to accept repayment of the entire outstanding amount of Rs.2,31,21,309/- along with bank charges from the petitioner on the following conditions:

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(i) The outstanding amount of Rs.2,31,21,309/- shall be repaid in '15' equated monthly instalments.

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(ii) The first instalment shall be paid on or before 30.05.2022 and the remaining instalments shall be paid on or before the 30^th day of the succeeding months. The date of instalment is fixed taking note of the peculiar circumstances arising in the case.

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(iii) In the event of default of any one instalment, the respondent bank shall be entitled to proceed in accordance with law.

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(iv) In order to enable the petitioner to repay the entire amounts, all coercive proceedings shall be kept in abeyance.

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The writ petition is disposed of as above."

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Thereafter, the writ petitioner has filed I.A. No.

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1/2022, on 28.05.2022, seeking extension of time by two

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W.A. No. 897/2022

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months for remitting the first instalment. The reasons assigned in I.A. No. 1/2022 are extracted hereunder:-

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"4. Meanwhile my son Sreekumar who was running the business was diagnosed with lung cancer. I had to borrow extensively to raise money for the treatment. Since his condition again, worsened and was to be hospitalized for further treatment, the available finance was canalized for the above purpose. I could not remit the initial payment as fixed by this court on 30.05.2022. A true copy of the hospital records of Thankam Cancer Centre, West Yakkara, Palakkad dated 09.05.2022 is produced herewith and same marked as Annexure-A1. 5. There is a delay for remitting the first installment as fixed by this court. The delay occurred only due to above stated reason. There is no willful negligence or latches on my part in failing the payment on or before 30.05.2022. Therefore this Hon'ble court may be pleased to condone the delay occurred in remitting the first Installment on or before 30.05.2022."

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After considering the said request, writ court on

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08.06.2022 in I.A. No. 1/2022 in W.P.(C) No. 12510/2022 ordered as under:-

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W.A. No. 897/2022

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"This is an application to extend the time stipulated in the judgment dated 06.04.2022 for payment of the first instalment by two months.

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After having heard the learned counsel for the petitioner as well as the learned counsel for the respondent, I am of the view that as a last measure of indulgence, the date stipulated for payment of the first instalment shall stand extended till 15.07.2022. Correspondingly, the remaining instalments as directed in the judgment shall stand extended to the 15^th day of every succeeding month. It is clarified that under no circumstances shall any further extension of time be granted by this Court.

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This application is allowed as above."

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Aggrieved by the judgment in W.P.(C.) No.

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12510/2022, dated 06.04.2022, instant writ appeal is filed.

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It is a well settled position of law that writ against recovery proceedings, initiated under the SARFAESI Act, 2002 is not maintainable. On the said aspect, a reference can be made to few decisions:

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(i) In United Bank of India v. Satyawati Tondon

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and others [(2010) 8 SCC 110 - AIR , the High Court restrained

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W.A. No. 897/2022

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further proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the SARFAESI Act, availability of remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal, object and purpose of the legislation, Honourable Apex Court observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available,"

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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

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W.A. No. 897/2022

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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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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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"(ii) In ICICI Bank Ltd. v. Umakanta Mohapatra

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and Others reported in [2018 (13) SCALE 724] , the Hon'ble Supreme 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

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is available by filing an application under Section 17 of the said Act."

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Reiterating the settled position of law, recently,

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Hon’ble Supreme Court in Phoenix ARC Private Limited v. Vishwa Bharati Vidya Mandir & Ors. reported in [(2022) 5 SCC 345] held that writ against recovery proceedings, initiated under the SARFAESI Act, 2002 is not maintainable. Nevertheless, the writ court having regard to the facts and circumstances of the case, extended indulgence in permitting payment of the outstanding amount in instalments, of course, with consent of the respondent bank or the financial institution, as the case may be.

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In view of the facts and circumstances and the decisions referred to above, the appellant has not made out a case for interference. However, having regard to the submission of learned counsel for the appellant that if one month time is granted from today, the appellant would pay the instalments, as ordered in W.P.(C.) No.12510/2022, we are inclined to grant one month's time from today to

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W.A. No. 897/2022

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commence the payment of the first instalment. Accordingly, the judgment dated 06.04.2022 in W.P.(C.) No. 12510/2022 is modified as under:-

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i) The outstanding amount of Rs.2,31,21,309/along with bank charges shall be repaid by the appellant in fifteen equated monthly instalments.

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ii) The first instalment shall be paid on or before 11.11.2022 and the remaining instalments shall be paid on or before the 11^th day of the succeeding months.

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iii) The other conditions contained in the judgment dated 06.04.2022 in W.P.(C.) No. 12510/2022 will remain intact.

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The writ appeal is disposed of accordingly.

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Sd/-

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S. MANIKUMAR CHIEF JUSTICE

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Sd/-

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SHAJI P. CHALY JUDGE