Hon'ble Pankaj Naqvi,J.
Heard learned counsel for the petitioner. Sri Vipin Sinha appears for respondent No.2 Bank.
The matter has been taken up on a mention made by Ms. Swati Agrawal that the mortgaged property is going to be sold today by respondent No.2 Bank under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Though the petitioner has taken housing loan of Rs.3,30,000/- in the year 2002, to be paid in equal monthly instalment of Rs.3,752/- for a period of 15 years, the petitioner could be paid only Rs.30,000/-on account of medical expenditure on petitioner No.2, who is stated to be suffering from mouth cancer.
It is submitted that petitioners' objections to the notice under Section 13 (2) of the Act was not considered. They did not receive any reply/intimation from respondent Bank on the objections to the notice under Section 13 (2) of the Act, and further that the auction notice was published in only newspaper namely Times of India (English), whereas the notice should have been published in two newspapers including one in vernacular language. The auction notice was thus issued in violation of Rule 9 (1) and 6 (2) of the Security Interest (Enforcement) Rules, 2002.
Without going into the merits of the case whether the petitioners' objection was considered and whether the auction notice was published in only one newspaper, we find that the petitioners have an alternative under Section 17 (1) of the Act before the Debt Recovery Tribunal.
In Mardia Chemicals Ltd. & Ors. v. Union of India & Ors. [(2004) 4 SCC 311], the Supreme Court upheld the constitutional validity of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 as well as Security Interest (Enforcement) Rules, 2002 (SARFAESI Act), except the deposit of 75% as pre-condition of filing the appeal in Debts Recovery Tribunal under Section 17 of the Act. It was held that the proceedings under Section 17 are not an appellate proceedings but rather an initial action, which is brought before a forum prescribed under the Act and is like a suit under the CPC in the Court of first instance.
In Transcore v. Union of India & Anr. [(2008) 1 SCC 125] following Mardia Chemical's case the Supreme Court held that it was not necessary to withdraw the DRT application before proceeding under the SARFAESI Act (NPA Act). The object behind both Section 13 of the SARFAESI Act, and Section 17 read with Section 19 of the DRT Act is the same, namely for the recovery of debts. There is no inherent or implied inconsistency between the remedies provided under the two Acts.
The Mardia Chemical's case and Transcore's case were followed by the United Bank of India v. Satwati Tandon & Ors. [(2010) 8 SCC 110] in which the Supreme Court reminded the High Court not to interfere with the proceedings under the SARFAESI Act, in view of alternative remedy provided under Section 17 (1) of the Act, in which expression 'any person' includes even guarantor or any other person, who may be affected by the action taken under Section 13 (4) or Section 14 of the Act.
In Indian Bank v. Blue Jaggers Estates Ltd. & Ors., (2010) 8 SCC 129 the Supreme Court did not interfere with 19.89% agreed interest with quarterly rest, on the grounds that it is unconscionable, ex-proprietary and contrary to law, and held that when the agreement has been signed with open eyes and was abided with upto the time, when the defaults were made, the bank rightly initiated action under the SARFAESI Act.
In Kanaiyalal Lalchand Sachdev & Ors. v. State of Maharashtra & Ors., (2011) 2 SCC 782 decided on February 7, 2011, the Supreme Court once again cautioned the High Courts not to interfere in such matters under Art.226 of the Constitution of India. The Supreme Court after explaining the scheme of the Act, held in paragraphs 15 to 25 as follows:-
"15. Section 13 of the Act deals with enforcement of security interest, providing that notwithstanding anything contained in Sections 69 or 69A of the Transfer of Property Act, 1882, any security interest created in favour of any secured creditor may be enforced, without the court's intervention, by such creditor in accordance with the provisions of the Act. Section 13(2) of the Act provides that when a borrower, who is under a liability to a secured creditor, makes any default in repayment of secured debt, and his account in respect of such debt is classified as non- performing asset, then the secured creditor may require the borrower, by notice in writing, to discharge his liabilities within sixty days from the date of the notice, failing which the secured creditor shall be entitled to exercise all or any of the rights given in Section 13(4) of the Act. Section 13(3) of the Act provides that the notice under Section 13(2) of the Act shall give details of the amount payable by the borrower as also the details of the secured assets intended to be enforced by the bank.
16. Section 13(3-A) of the Act was inserted by Act 30 of 2004 after the decision of this Court in Mardia Chemicals (supra), and provides for a last opportunity for the borrower to make a representation to the secured creditor against the classification of his account as a non-performing asset. The secured creditor is required to consider the representation of the borrowers, and if the secured creditor comes to the conclusion that the representation is not tenable or acceptable, then he must communicate, within one week of the receipt of the communication by the borrower, the reasons for rejecting the same.
17. Section 13(4) of the Act provides that if the borrower fails to discharge his liability within the period specified in Section 13(2), then the secured creditor, may take recourse to any of the following actions, to recover his debt, namely-
"13. (4) (a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset;
(b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset:
Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt:
Provided further that where the management of whole, of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security for the debt;
(c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor;
(d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt."
18. Section 14 of the Act provides that the secured creditor can file an application before the Chief Metropolitan Magistrate or the District Magistrate, within whose jurisdiction, the secured asset or other documents relating thereto are found for taking possession thereof. If any such request is made, the Chief Metropolitan Magistrate or the District Magistrate, as the case may be, is obliged to take possession of such asset or document and forward the same to the secured creditor. (See: United Bank of India Vs. Satyawati Tondon & Ors.3). Therefore, it follows that a secured creditor may, in order to enforce his rights under Section 13(4), in particular Section 13(4)(a), may take recourse to Section 14 of the Act.
19. Section 17 of the Act which provides for an appeal to the DRT, reads as follows:
"17. Right to appeal.--(1) 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 along with 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 measures had been taken:
Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower.
Explanation.--For the removal of doubts it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under sub-section (1) of Section 17.
(2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in sub-section (4) of Section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder."
20.The 2002 Rules, enacted under sub-section (1) and clause (b) of sub- section (2) of Section 38 read with sub-sections (4), (10) and (12) of Section 13 of the Act, set down the procedure for enforcing a security interest. Rule 4 of the 2002 Rules deals with the possession of movable assets, whereas Rule 8 deals with the possession of immoveable assets. It is manifest that Rule 4 has no application to the facts of the instant case, as contended by the learned counsel for the State.
21. Indian Overseas Bank & amp; Anr. Vs. Ashok Saw Mill (2009 8 SCC 366], the main question which fell for determination was whether the DRT would have jurisdiction to consider and adjudicate post Section 13(4) events or whether its scope in terms of Section 17 of the Act will be confined to the stage contemplated under Section 13(4) of the Act? On an examination of the provisions contained in Chapter III of the Act, in particular Sections 13 and 17, this Court, held as under (SCC pp 375-376) paras 35, 36 & 39):
"35. In order to prevent misuse of such wide powers and to prevent prejudice being caused to a borrower on account of an error on the part of the banks or financial institutions, certain checks and balances have been introduced in Section 17 which allow any person, including the borrower, aggrieved by any of the measures referred to in sub-section (4) of Section 13 taken by the secured creditor, to make an application to the DRT having jurisdiction in the matter within 45 days from the date of such measures having taken for the reliefs indicated in sub- section (3) thereof.
36. The intention of the legislature is, therefore, clear that while the banks and financial institutions have been vested with stringent powers for recovery of their dues, safeguards have also been provided for rectifying any error or wrongful use of such powers by vesting the DRT with authority after conducting an adjudication into the matter to declare any such action invalid and also to restore possession even though possession may have been made over to the transferee.
xxx xxx xxx xxx
39. We are unable to agree with or accept the submissions made on behalf of the appellants that the DRT had no jurisdiction to interfere with the action taken by the secured creditor after the stage contemplated under Section 13(4) of the Act. On the other hand, the law is otherwise and it contemplates that the action taken by a secured creditor in terms of Section 13(4) is open to scrutiny and cannot only be set aside but even the status quo ante can be restored by the DRT."
(emphasis supplied by us)
22.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.
23. In our opinion, therefore, the High Court rightly dismissed the petition on the ground that an efficacious remedy was available to the appellants under Section 17 of the Act. It is well-settled that ordinarily relief under Articles 226/227 of the Constitution of India is not available if an efficacious alternative remedy is available to any aggrieved person. (See: Sadhana Lodh Vs. National Insurance Co. Ltd. & amp; Anr. [2003 (3) SCC 524]5; Surya Dev Rai Vs. Ram Chander Rai & Ors. [2007 (6) SCC 675]; State Bank of India Vs. Allied Chemical Laboratories & Anr. [2006 (9) SCC 252]7).
24. In City and Industrial Development Corporation Vs. Dosu Aardeshir Bhiwandiwala & Ors. [2009 (1) SCC 168] 8, this Court had observed that (SCC p 175, para 30):
"30. The Court while exercising its jurisdiction under Article 226 is duty-bound to consider whether:
(a) adjudication of writ petition involves any complex and disputed questions of facts and whether they can be satisfactorily resolved;
(b) the petition reveals all material facts;
(c) the petitioner has any alternative or effective remedy for the resolution of the dispute;
(d) person invoking the jurisdiction is guilty of unexplained delay and laches;
(e) ex facie barred by any laws of limitation;
(f) grant of relief is against public policy or barred by any valid law; and host of other factors."
25. In the instant case, apart from the fact that admittedly certain disputed questions of fact viz. non-receipt of notice under Section 13(2) of the Act, non-communication of the order of the Chief Judicial Magistrate etc. are involved, an efficacious statutory remedy of appeal under Section 17 of the Act was available to the appellants, who ultimately availed of the same. Therefore, having regard to the facts obtaining in the case, the High Court was fully justified in declining to exercise its jurisdiction under Articles 226 and 227 of the Constitution."
In the facts of the present case, in view of the decisions of the Apex Court, referred to as above, the petitioners have alternative remedy against the action initiated by the bank under the SARFAESI Act. We accordingly dismiss the writ petition with liberty to the petitioners to invoke the remedies provided under Section 17 (1) of the SARFAESI Act to approach the Debts Recovery Tribunal, by way of filing an appeal.
Order Date :- 12.3.2012 nethra