Court No. - 3
Case :- WRIT - C No. - 18517 of 2017 Petitioner :- Smt. Manoj Kumari Shah And Another Respondent :- State Of U.P. And 2 Others Counsel for Petitioner :- Pradeep Kumar Rai Counsel for Respondent :- C.S.C.,Sanjai Singh
Hon'ble Naheed Ara Moonis,J. Hon'ble Saumitra Dayal Singh,J.
1. Heard Sri Pradeep Kumar Rai, learned counsel for the petitioners, Sri Sanjai Singh, learned counsel for the respondent-bank and learned Standing Counsel for the State.
2. Present petition has been filed for the following relief:-
"I. To issue a writ order or direction to quash the entire E-auction proceeding made in favour of respondent no.3 on 24.01.2017.
II. To issue a writ order or direction in the nature of mandamus not to execute sale in favour of respondent no.3 in pursuance of E-auction nor to create third party right interest."
3. At the fresh stage, upon hearing the parties, this Court has passed the below quoted order on 01.05.2017:-
"Heard Sri Pradeep Kumar Rai, learned counsel for the petitioners and learned Standing Counsel for the State.
The hypothecated property (residential house) of the petitioner was put to auction in realization of outstanding dues of the Bank. Admittedly, E-Auction was held on 24.01.2017. Learned counsel for the petitioner refers to Annexure-1 to the writ petition, which is a certificate for confirmation of sale of immovable property, pointing out that though e-auction was held on 24.01.2017, the deposit of the entire amount by the auction purchaser was made on 23.01.2017 and the sale was confirmed on the date it took place i.e. 24.01.2017.
We fail to understand as to when auction was scheduled and took place on 24.01.2017, how the purchase money has been deposited by the Bank, a day prior to it, and what was so hurry that the sale was confirmed on the same day when the auction took place.
Sri Sanjay Singh, learned counsel for the respondents submits that petitioners have a statutory remedy to approach the Tribunal under Section 17 of SARFAESI Act and as a matter of fact, securtization application made by them is pending.
Be that as it may, availability of alternative remedy is not an absolute bar to the exercise of the discretionary power by this Court under Article 226 of the Constitution of India, particularly, where there is an illegality apparent on the facts of the record. We are of the opinion that Bank has acted in a highly arbitrary and illegal manner. We are not aware of any procedure where the entire bid money can be accepted a day prior to auction and the sale is confirmed on the very next day of the auction. This smacks of malafides and the bank is required to explain to the Court how this has happened.
In the aforesaid facts and circumstances, reliance placed by Sri Sanjay Singh, learned counsel for the respondent on the judgment of the Hon'ble Apex Court in the case of United Bank of India Vs. Satyawati Tondon and others JT 2010 (7) SC 651 has no application whatsoever, the case law relied upon by learned counsel for the respondent-bank does not put restriction on exercise of power by this Court under Article 226 of the Constitution of India when there is gross illegality in the procedure followed by the Bank.
In such circumstances, let the respondent-bank file a counter affidavit within four weeks.
Issue notice to respondent No. 3, who may also file counter affidavit. Petitioners shall also take steps for service of notice by registered post within four weeks. Office shall issue notice returnable at an early date.
List after service of notice.
Considering the facts and circumstances, parties are directed to maintain status-quo with respect to the property in dispute."
4. Affidavits have been exchanged and the matter heard.
5. Undisputedly, there is no fact pleading in the writ petition or in the rejoinder affidavit that the entire bid amount of Rs.15,80,000/- had been deposited by the auction purchaser (respondent no.3) on 23.01.2017. In that regard, the sale confirmation letter dated 24.01.2017 reads as below:
DATE: 24.01.2017 PUNJAB NATIONAL BANK CO MORADABAD CONFIRMATION OF SALE OF IMMOVABLE PROPERTY Neeraj Singh offered the highest sale price in his bid/tender/quotation/offer for Rs.15,80,000/- (Rupees fifteen Lacs eighty Thousand Only) for purchase of the immovable property specified below at a sale held by e- auction on the day of 24 JAN 2017 inviting tenders/obtaining quotations/entering into private treaty in enforcement of security interest for recovery of debt due to the bank from Smt. Manoj Kumari Shah.
The initial deposit of the purchase money has been paid on 23.01.2017.
Accordingly, the said sale is hereby confirmed. The said sale is also confirmed by the bank as secured creditor.
Specification of Property Property measuring 90.00 sq meter situated at Plot no.16 Bhogpur Mithoni, New Chandra Nagar Registered on 05.11.2004 in Bahi no.1, Jild No.4702, pages 209 to 226 at SI no.4818 at SRO Moradabad having following boundaries East: Plot charanjeet Singh West: Plost Gopal Singh North: Abchak 3 Ft. wide South: Road 18 Ft. wide. Owner of the Property: Smt Manoj Kumari Shah and Shri Pawan Kumar.
6. In absence of any fact pleading, we are unable to accept the contention advanced by learned counsel for the petitioners that the entire bid amount Rs.15,80,000/- had been deposited on 23.01.2017. Clearly, the recital made in the second paragraph of the sale certificate dated 24.01.2017 refers to the Earnest Money Deposit (EMD) in terms of the advertisement dated 26.12.2016 (annexed as Annexure CA-5).
7. In such fact there is no gross illegality in the procedure adopted by the respondent-bank to auction the secured asset under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the 'Act').
8. Insofar as the other ground has been pressed by learned counsel for the petitioners, the same may be pressed before the Debt Recovery Tribunal. We feel that the same involves factual dispute and in any case does not give rise to a ground of gross illegality as may oblige us to interfere under Article 226 of the Constitution of India. The Hon'ble Supreme Court in the case of United Bank of India vs. Satyawati Tandon and others, reported in (2010) 8 SCC 110 in paragraph 42, 43 & 55 has held as under:
"42. There is another reason why the impugned order should be set aside. If Respondent 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 the 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 pas 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.
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 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.
*** 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."
9. The Hon'ble Apex Court in Authorized Officer, State Bank of Travancore and another Vs. Mathew K.C., (2018) 3 SCC 85, of which the relevant extract is reproduced as here under:
"9. The statement of objects and reasons of the SARFAESI Act states that the banking and financial sector in the country was felt not to have a level playing field in comparison to other participants in the financial markets in the world. The financial institutions in India did not have the power to take possession of securities and sell them. The existing legal framework relating to commercial transactions had not kept pace with changing commercial practices and financial sector reforms resulting in tardy recovery of defaulting loans and mounting non-performing assets of banks and financial institutions. The Narasimhan Committee I and II as also the Andhyarujina Committee constituted by the Central Government Act had suggested enactment of new legislation for secularization and empowering banks and financial institutions to take possession of securities and sell them without court intervention which would enable them to realise long term assets, manage problems of liquidity, asset liability mismatches and improve recovery. The proceedings under the Recovery of Debts due to Banks and Financial Institutions Act, 1993, (hereinafter referred to as 'the DRT Act') with passage of time, had become synonymous with those before regular courts affecting expeditious adjudication. All these aspects have not been kept in mind and considered before passing the impugned order.
"10. Even prior to the SARFAESI Act, considering the alternate remedy available under the DRT Act it was held in Punjab National Bank vs. O.C. Krishnan and others, (2001) 6 SCC 569, that:-
"6. The Act has been enacted with a view to provide a special procedure for recovery of debts due to the banks and the financial institutions. There is a hierarchy of appeal provided in the Act, namely, filing of an appeal under Section 20 and this fast-track procedure cannot be allowed to be derailed either by taking recourse to proceedings under Articles 226 and 227 of the Constitution or by filing a civil suit, which is expressly barred. Even though a provision under an Act cannot expressly oust the jurisdiction of the court under Articles 226 and 227 of the Constitution, nevertheless, when there is an alternative remedy available, judicial prudence demands that the Court refrains from exercising its jurisdiction under the said constitutional provisions. This was a case where the High Court should not have entertained the petition under Article 227 of the Constitution and should have directed the respondent to take recourse to the appeal mechanism provided by the Act."
10. In the case of Standard Chartered Bank Vs. V. Noble Kumar and others reported in (2013) 9 SCC 620, the Supreme Court in paragraph 27 has held as under:
"27.The "appeal" under section 17 is available to the borrower against any measure taken under section 13(4). Taking possession of the secured asset is only one of the measures that can be taken by the secured creditor. Depending upon the nature of the secured asset and the terms and conditions of the security agreement, measures other than taking the possession of the secured asset are possible under section 13(4). Alienating the asset either by lease or sale, etc. and appointing a person to manage the secured asset are some of those possible measures. On the other hand, section 14 authorises the Magistrate only to take possession of the property and forward the asset along with the connected documents to the borrower (sic the secured creditor). Therefore, the borrower is always entitled to prefer an "appeal" under section 17 after the possession of the secured asset is handed over to the secured creditor. Section 13(4)(a) declares that the secured creditor may take possession of the secured assets. It does not specify whether such a possession is to be obtained directly by the secured creditor or by resorting to the procedure under section 14. We are of the opinion that by whatever manner the secured creditor obtains possession either through the process contemplated under section 14 or without resorting to such a process obtaining of the possession of a secured asset is always a measure against which a remedy under section 17 is available."
11. In the case of Kanaiyalal Lalchand Sachdev & others vs. State of Maharashtra and others reported in 2011 (2) SCC 782, the Hon'ble Supreme Court in paragraph 20 has held as under:
"20. We are in respectful agreement with the above enunciation of law on the point. It is manifest that an action under Section 14 of the Act constitutes an action taken after the stage of Section 13(4), and therefore, the same would fall within the ambit of Section 17(1) of the Act. Thus, the Act itself contemplates an efficacious remedy for the borrower or any person affected by an action under Section 13(4) of the Act, by providing for an appeal before the DRT."
12. The Hon'ble Supreme Court in the case of ICICI Bank Ltd. v. Umakanta Mohapatra, Civil Appeal Nos. 10243- 10250 of 2018, decided on 05.10.2018, has held as under:
"Delay condoned. Leave granted.
Despite several judgments of this Court, including a judgment by Hon'ble Mr. Justice Navin Sinha, as recently as on 30.01.2018, in Authorized Officer, State Bank of Travancore and Another VS Mathew KC., (2018) 3 SCC 85, the High Courts continue to entertain matters which arise under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI), and keep granting interim orders in favour of persons who are Non-Performing Assets (NPAs).
The writ petition itself was not maintainable, as a result of which, in view of our recent judgment, which has followed earlier judgments of this Court, held as follows:-
18. 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:-
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."
The writ petition, in this case, being not maintainable, obviously, all orders passed must perish, including the impugned order, which is set aside.
The appeals are allowed in the aforesaid terms.
Pending applications, if any, shall stand disposed of." Recently the Hon'ble Apex Court in the case of C. Bright Vs. The District Collector & others, Civil Appeal No. 3441 of 2020 decided on 05.11.2020 has observed as follows:
"21. Even though, this Court in United Bank of India v. Satyawati Tondon & Ors., (2010) 8 SCC 110 held that 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 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. Hindon Forge Private Limited has held that the remedy of an aggrieved person by a secured creditor under the Act is by way of an application before the Debts Recovery Tribunal, how- ever, borrowers and other aggrieved persons are invoking the jurisdiction of the High Court under Articles 226 or 227 of the Constitution of India without availing the alternative statutory remedy. The Hon'ble High Courts are well aware of the limitations in exercising their jurisdiction when effective alternative remedies are available, but a word of caution would be still necessary for the High Courts that interim orders should generally not be passed without hearing the secured creditor as interim orders defeat the very purpose of expeditious recovery of public money.
22. Thus, we do not find any error in the order passed by the High Court. Consequently, the appeal is dismissed."
13. Accordingly, the writ petition fails and is dismissed.
14. However in view of the fact that the interim order has remained in force since 01.05.2017 - for a long period of more than four years, we provide, in case the petitioners file an appeal under Section 17 of the Act, within a period of three weeks from today, along with a copy of this order, that appeal may be considered on it's own merit, granting benefit of Section 14 of the Limitation Act.
Order Date :- 19.8.2021/S.Chaurasia