Dismissed

Dinesan v. Kerala State Co-Operative Bank

Kerala HC6 Feb 2024WP(C)/2684/2024

Case brief

AI extract

What is this about?

A writ petition challenging a possession notice and Chief Judicial Magistrate order under the SARFAESI Act regarding a bad loan recovery was dismissed. The High Court held that the issues raised involved disputed questions of fact and did not warrant the exercise of writ jurisdiction under Article 226.

What did the court decide?

The writ petition was dismissed as it factually disputing questions could not be adjudicated in writ jurisdiction.

Dinesan Vs Kerala State Co-Operative Bank — Cheque Dishonour | Kerala HC (2024)

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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 N.NAGARESH

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TUESDAY, THE 6^TH DAY OF FEBRUARY 2024 / 17TH MAGHA, 1945 WP(C) NO. 2684 OF 2024

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PETITIONER:

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DINESAN AGED 53 YEARS S/O KESAVAN MANICKAN ARACKAL HOUSE, PALISSERY P.O. THRISSUR DISTRICT., PIN – 680027

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BY ADV N.K.MOHANLAL

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RESPONDENT:

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KERALA STATE CO-OPERATIVE BANK REPRESENTED BY AUTHORISED OFFICER SAHAKARANA SATHAPTHI MANDIRAM, KOVILAKATHUMPADAM, THRISSUR, PIN – 680022

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SRI.P.C.SASIDHARAN

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 06.02.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

W.P.(C) No.2684/2024

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N. NAGARESH, J.

W.P.(C) No.2684 of 2024

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Dated this the 6^th day of February, 2024

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J U D G M E N T

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~ ~ ~ ~ ~ ~ ~ ~ ~

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The petitioner is Managing Director of a Private Limited Company. The Company availed Overdraft facility of ₹5 Crores on 28.04.2015 from the respondent-Bank. Three

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pieces of immovable property were mortgaged by way of security.

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When repayment of loan defaulted, the Bank declared the Company account as NPA and invoked proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Ext.P1 Section 13(4) possession notice was issued. The Bank also filed arbitration case invoking Section 69 of

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the Kerala Co-operative Societies Act for recovery of

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W.P.(C) No.2684/2024

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: 3 :

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₹7,68,13,635/-. The respondent approached the Chief Judicial Magistrate's Court, Thrissur under Section 14 of the Act, 2002. The CJM passed Ext.P3 order appointing an Advocate Commissioner to take over physical possession of the secured asset. The petitioner is challenging Ext.P1 notice and Ext.P3 order.

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The petitioner states that the proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is without jurisdiction as proceedings were initiated before declaring the loan account as NPA. Ext.P4 Section 14 notice indicated that the initial notice under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 was issued on 31.12.2016. Ext.P2 ARC filed by the respondent would state that the account was declared as Non Performing Asset on 01.05.2018. The securitisation proceedings were therefore obviously initiated before declaring the account as Non Performing Asset. Exts.P1 and P3 are therefore liable to be

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W.P.(C) No.2684/2024

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set aside, contended the counsel for the petitioner.

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The counsel for the petitioner further argued that item No.3 property mentioned in Ext.P1 notice is an agricultural property, which is evidenced by Ext.P4 photograph. There is a residential building also in the property. Item No.1 property is also a residential plot. Ext.P1 notice does not disclose existence of a residential building. A tenant is residing in item No.1 property. This fact was suppressed while filing affidavit in Chief Judicial Magistrate's Court under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

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On behalf of the petitioner, it is further alleged that possession notice was not affixed on the secured asset nor was it published in newspapers. The security interest is not registered at the Central Registry as contemplated under Section 26B of the Act, 2002. The entire proceedings are therefore illegal and arbitrary and are liable to be quashed.

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W.P.(C) No.2684/2024

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I have heard the learned counsel for the petitioner

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and the learned Standing Counsel representing the respondent.

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The prime argument of the petitioner is based on Exts.P1 and P2. Ext.P1 indicates that notice under the Act, 2002 was issued on 31.12.2016 and the loan account was declared NPA on 01.05.2018 subsequently. I find that based on Exts.P1 and P2 alone, it cannot be concluded that proceedings under the Act, 2002 were initiated before declaring the loan account as NPA. It is possible that the account was declared as Non Performing Asset even prior to 31.12.2016. These are matters of evidence.

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The further allegation of the petitioner is that one of the properties sought to be proceeded against is an agricultural property and hence the said property cannot be proceeded against under the Act, 2002. The petitioner would further allege that possession notice had not been affixed on the secured asset and was not published in newspapers. These are also questions of fact. The Securitisation and

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W.P.(C) No.2684/2024

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Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 provides for an appellate remedy under Section 18 which states that any person aggrieved by any order made by the Debts Recovery Tribunal may prefer an appeal to the Appellate Tribunal. The petitioner therefore has an effective alternate remedy against Ext.P1 notice and Ext.P3 order.

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The counsel for the petitioner relied on the judgment in South Indian Bank Limited and others v. Naveen Mathew Philip and another [2023 (4) KLT 29] and argued that alternative remedy shall not operate as a bar when a writ petition is filed for enforcement of any fundamental right or where there has been a violation of the principles of natural justice or where the order or proceedings are wholly without jurisdiction or when vires of an Act is challenged. But, the issues involved in this case consists questions of fact. The issues raised by the petitioner involve disputed questions of facts which cannot be adjudicated in exercise of writ jurisdiction under Article 226 of

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W.P.(C) No.2684/2024

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the Constitution of India.

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Under the circumstances, I do not deem it appropriate

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to entertain this writ petition. The writ petition is therefore

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dismissed.

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Sd/-

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N. NAGARESH, JUDGE

aks/02.02.2024

W.P.(C) No.2684/2024

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APPENDIX OF WP(C) 2684/2024

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PETITIONER'S EXHIBITS

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Exhibit-P1 A TRUE COPY OF NOTICE OF POSSESSION DATED 26/6/2018 ISSUED BY THE RESPONDENT Exhibit-P2 A TRUE COPY OF PLAINT IN ARC 629/2021 FILED BY RESPONDENT BANK FOR RECOVERY OF RS. 7,68,13,635/-INCLUDING INTEREST, PENAL INTEREST AND OTHER CHARGES BEFORE JOINT REGISTRAR OF COOPERATIVE SOCIETY, THRISSUR Exhibit-P3 A TRUE COPY OF ORDER IN MC 563/2022 DATED 18/10/22 OF HON'BLE CHIEF JUDICIAL MAGISTRATE,THRISSUR. Exhibit-P4 A TRUE COPY OF PHOTOGRAPH SHOWING THE CULTIVATION IN THE PROPERTY

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RESPONDENT'S EXHIBITS

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EXHIBIT R1(A) A TRUE COPY OF THE ADVOCATE COMMISSIONER NOTICE DATED 1/12/2022

Dinesan v. Kerala State Co-Operative Bank

Case brief

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Dinesan v. Kerala State Co-Operative Bank

Case brief

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