IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 05.01.2017 CORAM:
THE HONOURABLE MR.JUSTICE S.MANIKUMAR and THE HONOURABLE MR.JUSTICE M.GOVINDARAJ W.P.No.15104 of 2015 and M.P.Nos.1 and 2 of 2015 Kuthbuddin Muneeb Rep. by his power agent Mrs.Shaheen Muneeb w/o.Kuthbuddin Muneeb .. Petitioner versus
1. The Authorised Officer, Kotak Mahindra Bank Ltd.
Retail ARD No.3, Dass India Towers 2nd Floor, Second Line Beach Parrys, Chennai - 600 001
2. Hon'ble Chief Metropolitan Magistrate Egmore, Chennai - 600 008
3. Rabi Navis Pio 4.Mrs.Veronic Rabi W/o.Rabi Navis Pio .. Respondents Writ Petition filed under Article 226 of the Constitution of India, praying for a Writ of Certiorari, calling for the records ending with the impugned order dated 9.7.2014 passed by the learned Chief Metropolitan Magistrate, Egmore, Chennai - 600 008 in Crl. M.P.No.4319 of 2014 and quash the same and consequently forbear the first respondent, their men, agents or anyone claiming under them from interfering with petitioner's physical possession of the property bearing door No.C-32, First Floor, 8th Street, Inner Plot, Anna Nagar East, Chennai - 600 104 in any manner except following the due process of law.
For Petitioner : Mr.S.Suresh Kumar For Respondents : Mr.P.Elaya Rajkumar for M/s.Ramalingam Associates for R1 Mr.Tm.Pappaiha, Spl. GP for R2 Mr.S.Mahimairaj, for R3 and R4
ORDER
(made by S.MANIKUMAR, J.) Claiming himself to be a tenant in respect of the property situate at door No.C-32, First Floor, 8th Street, Inner Plot, Anna Nagar East, Chennai - 600 104, under respondents 3 and 4, joint owners, who had mortgaged the same with Kotak Mahindra Bank Ltd, Chennai, and further contending inter alia that a statutory tenant cannot be evicted without due process of law, order dated 09.07.2014 passed by the learned Chief Metropolitan Magistrate, Egmore, Chennai - 8, in Crl. M.P.No.4319 of 2014 filed under Section 14 of the SARFAESI Act, 2002, is challenged before this court.
2. Writ petitioner, has sought for a Certiorari, to quash the same and consequently to forbear the the first respondent, their men, agents or anyone claiming under them from interfering with petitioner's physical possession of the property bearing door No.C-32, First Floor, 8th Street, Inner Plot, Anna Nagar East, Chennai - 600 104 in any manner except following the due process of law.
3. Record of proceedings of the instant writ petition shows that while ordering notice of motion on 20.05.2015 returnable in four weeks, a Hon'ble Division Bench of this Court, in M.P.No.2/2015 in W.P.No.15104/2015, has granted stay of the order dated 09.07.2014 of the learned Chief Metropolitan Magistrate, Egmore, the order impugned herein.
4. On this day, when the matter came up for further hearing, Mr.S.Mahimai kumar, learned counsel appearing for the respondents 3 and 4/joint owners, submitted that the land owners have filed a Rent Control Original Petition in RCOP No.2283 of 2008 under Section 10(2)(i) and 10(3)(a)(i) of Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, for eviction against the writ petitioner, for willful default and owner's occupation and that the same is pending on the file of the learned XIV Assistant Judge, Court of Small Causes, Chennai.
5. According to him, in the proceedings under Section 14 of the SARFAESI Act, 2002, no notice was served upon the land owners. He further submitted that the dispute over non-payment of the loan amount is purely inter se between the landlords/borrowers and Kotak Mahindra Bank/first respondent, and the tenant has role to play.
Heard the learned counsel for the parties and perused the materials available on record.
6. First of all, mandamus cannot be issued to set at naught a proceeding, issued under a statute. Secondly, under Section 17(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, may make an application alongwith such fee, as may be prescribed to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measure had been taken: PROVIDED that different fees may be prescribed for making the application by the borrower and the person other than the borrower.
7. By Act 44 of 2016, with effect from 01.09.2016, Parliament has inserted Section 4-A in Section 17 of the Act and it reads as follows:
(i) any person, in an application under sub- section (1), claims any tenancy or leasehold rights upon the secured asset, the Debt Recovery Tribunal, after examining the facts of the case and evidence produced by the parties in relation to such claims shall, for the purpose of enforcement of security interest, have the jurisdiction to examine whether lease or tenancy, -
(a) has expired or stood determined; or
(b) is contrary to Section 65 A of the Transfer of Property Act, 1882 (4 of 1882); or
(c) is contrary to terms of mortgage; or
(d) is created after the issuance of notice of default and demand by the Bank under sub-section (2) of Section 13 of the Act; and (ii). the Debt Recovery Tribunal is satisfied that tenancy right or leasehold rights claimed in secured asset falls under the sub-clause (a) or sub- clause (b) or sub-clause (c) or sub-clause (d) of clause (i), then notwithstanding anything to the contrary contained in any other law for the time being in force, the Debt Recovery Tribunal may pass such order as it deems fit in accordance with the provisions of this Act."
8. In the light of the recent amendment, by way of Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 (44 of 2016), an effective and alternative remedy is provided to a person, who claims to be a tenant or has lease hold rights, on the secured asset and that if any application is filed, the Debt Recovery Tribunal, after examining the facts of the case and evidence produced by the parties therein, in relation to such claim shall, for the purpose of enforcement of security interest, has jurisdiction to examine whether the lease or tenancy and other parameters, mentioned in Section 4 A of the Amended Act and to pass such orders, as deems fit, in accordance with the provisions of Securitisation and Reconstructions of Financial Assets and Enforcement of Security Interest Act, 2002.
9. Repeatedly, the Hon'ble Supreme Court has held that when there is an efficacious and alternate remedy under the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act or Securitisation And Reconstructions of Financial Assets Act, 2002, as the case may be, a writ petition is not maintainable. We deem it fit to consider the following decisions.
(i) In Precision Fastenings v. State Bank of Mysore, reported in 2010(2) LW 86, this Court held as follows:
"This Court has repeatedly held in a number of decisions right from the decision in Division Electronics Ltd. v. Indian Bank (DB) Markandey Katju, C.J., (2005 (3) C.T.C., 513), that the remedy of the aggrieved party as against the notice issued under Section 13(4) of SARFAESI Act is to approach the appropriate Tribunal and the writ petition is not maintainable. The same position has been succinctly stated by the Hon'ble the Supreme Court in Transcore v. Union Of India (2006 (5) C.T.C. 753) in paragraph No. 26 wherein the Supreme Court has held as under:
— “The Tribunal under the DRT Act is also the Tribunal under the NPA Act. Under Section 19 of the DRT Act read with Rule 7 of the Debts Recovery Tribunal (Procedure) Rules, 1993 (1993 Rules), the applicant bank or FI has to pay fees for filing such application to DRT under the DRT Act and, similarly, a borrower, aggrieved by an action under Section 13(4) of NPA Act was entitled to prefer an Application to the DRT under Section 17 of NPA.” (Emphasis added) "
(ii) In Union Bank of India v. Satyawati Tondon, reported in 2010 (5) LW 193 (SC), the Hon'ble Apex Court has held as follows:
"16. The facts of the present case show that even after receipt of notices under Section 13(2) and (4) and order passed under Section 14 of the SARFAESI Act, respondent Nos. 1 and 2 did not bother to pay the outstanding dues. Only a paltry amount of Rs. 50,000/- was paid by respondent No. 1 on 29.10.2007. She did give an undertaking to pay the balance amount in installments but did not honour her commitment. Therefore, the action taken by the appellant for recovery of its dues by issuing notices under Section 13(2) and 13(4) and by filing an application under Section 14 cannot be faulted on any legally permissible ground and, in our view, the Division Bench of the High Court committed serious error by entertaining the writ petition of respondent No. 1.
17. There is another reason why the impugned order should be set aside. If respondent No. 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 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. 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 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, 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.
18. 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, 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 self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution. 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 re-dressal of his grievance. 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 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 AIR 1969 SC 556, Whirlpool Corporation v. Registrar of Trade Marks, Mumbai (1998) 8 SCC 1=1999- 2-L.W. 200 and Harbanslal Sahnia and another v. Indian Oil Corporation Ltd. and others (2003) 2 SCC 107 and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass appropriate interim order.
27. 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 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.
28. Insofar as this case is concerned, we are convinced that the High Court was not at all justified in injuncting the appellant from taking action in furtherance of notice issued under Section 13(4) of the Act.
29. In the result, the appeal is allowed and the impugned order is set aside. Since the respondent has not appeared to contest the appeal, the costs are made easy."
(iii) In Saraspathy Sundararaj v. Authorised Officer and Assistant General Manager, State Bank of India, reported in (2010) 5 LW 560, the Court held as follows:
"The petitioner has filed this writ petition praying for a Writ of Certiorarified Mandamus calling for the records relating to the possession notice dated 16.09.2004 issued by the respondent under the SARFAESI Act and consequently direct the respondent to effect the settlement in accordance with the SBI OTS-SME 2010 Scheme as contained in its letter dated 18.03.2010 and unconditionally restore physical possession of the six rooms taken physical possession by it at No. 29, Sarojini Street, T. Nagar, Chennai - 17 with such damages.
... When a specific forum has been created which enables the borrower to challenge the action of the financial institution by filing necessary petition under Section 17, the petitioner is not entitled to invoke the writ jurisdiction of this Court. What could not be achieved by the petitioner by filing a petition before the appropriate Forum, which is at present barred by period of limitation, could not be permitted to be achieved by extending the jurisdiction conferred to this Court under Article 226 of The Constitution of India. Above all, since the petitioner has violated the terms and conditions of the loan by transferring the property in favour of her son, this Court is not inclined to entertain the petition.
7. In this connection, we are fortified by the decision of the Honourable Supreme Court reported in (United Bank of India v. Satyawati Tondon and others) III (2010) BC 495 (SC) = 2010-5-L.W. 193, wherein in para Nos. 17 and 18, it was held thus:— “17. …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.
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 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, 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.
18. 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 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 self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution. 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. 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 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 AIR 1969 SC 556, Whirlpool Corporation v. Registrar of Trade Marks, Mumbai (1998) 8 SCC 1 and Harbanslal Sahnia and another v. Indian Oil Corporation Ltd. and others (2003) 2 SCC 107 and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass appropriate interim order, (underlining added).
9. In the light of the above decision of the Honourable Supreme Court, the writ petition filed by the petitioner seeking to set aside the possession notice issued to her long back is legally not sustainable. We are of the considered view that this petition has been filed only to drag on the proceedings and to evade repayment of the loan. That be so, the petitioner has no legal right to compel the bank to accept the one time settlement offer made by her.
13. The present case is identical in nature and it is covered by the judgment of the Supreme Court mentioned supra. In this case, the petitioner has violated the condition of mortgage by transferring the secured asset in favour of her son and therefore, as per clause 1.7 of the OTS Scheme offered by the bank, the petitioner has to be excluded from extending the benefits of the scheme which was rightly done by the bank. In any event, without exhausting the alternative remedy, the relief sought for by the petitioner by invoking the discretionary remedy under Article 226 of The Constitution of India cannot be granted."
10. Exercise of writ jurisdiction is extraordinary, and only in the absence of alternate and efficacious remedy. If there is any attempt to forcibly evict the petitioner, he can always resort to the statutory remedy, as per the amended provision.
11. In the light of the above decisions and observation, writ petition is dismissed. Petitioner is permitted to approach the tribunal within a period of 15 days from the date of receipt of the copy of this order, to take recourse to the statutory remedy, provided under SARFAESI Act, 2002, and the amended Act 44/2016, by raising all the grounds available. No Costs. Consequently, connected, Miscellaneous Petitions are closed.
Though having regard to the interim order of stay granted by this court in M.P.No.2 of 2015 in W.P.15104 of 2015 dated 20.05.2015, in force and apprehending the bank would immediately take possession of the said property, Mr.S.Sureshkumar, learned counsel for the writ petitioner, prayed for continuity of an interim order of protection till the writ petitioner approaches the Tribunal, under Section 17(1) r/w Section 17(3) of the SARFAESI Act, 2002, we are unable to accept the said request for the reason that once writ petition is held as not maintainable, no interim order should be granted. However, we direct Mr.P.Elaya Rajkumar, learned counsel for the respondent bank, to instruct his officials that permission has been granted by this court to the writ petitioner to approach the Tribunal for necessary orders and we have also granted time, and that the same should not be nullified by any action of the bank. Registry is directed to return the original order dated 09.07.2014 to the writ petitioner after obtaining an attested copy from the learned counsel for the petitioner. Inasmuch as the writ petitioner, has approached this Hon'ble Court by way of filing a writ of certiorari, to quash the order dated 09.07.2014 of the Chief Metropolitan Magistrate and that the same is pending on the file of this court, Tribunal while entertaining an application, if any to be filed under Section 17(1) and (4) of the SARFAESI Act, 2002, need not raise a point on limitation. Suffice if the application is filed within 15 days from the date of receipt of a copy of this order, the same should be entertained, if otherwise in order.
[S.M.K., J.] [M.G.R., J.] 05.01.2017
Note to office: Issue order copy on 09.01.2017
Index: Yes/No Internet: Yes asr
S. MANIKUMAR, J.
AND M.GOVINDARAJ, J.
asr
W.P.No.15104 of 2015
05.01.2017
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