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2012 DIGILAW 17 (CAL)

Chowhan Exports Limited v. The Union of India

2012-01-06

JAYANTA KUMAR BISWAS

body2012
Judgment : The Court:- The petitioners in this WP under art.226 dated December 14, 2011 are seeking the following principal reliefs: “a)A Writ of Mandamus commanding the respondent authorities to consider the prayer of redemption of the property as made by your petitioners vide letter dated 16-04-2011 being Annexure “P-13” to this application; b)A Writ of Mandamus commanding the respondent authorities to act in terms of S. 9(c) and 9(e) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;” The petitioners borrowed some money from Punjab National Bank. They were in default on the loan. Consequently, the bank initiated proceedings under provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Against measures taken under s.13(4) of the Act, the petitioners made an application before the Debts Recovery Tribunal under s.17 of the Act. The application under s.17 was dismissed by the Tribunal for non-appearance of the petitioners. It was subsequently restored to file. Against restoration order proceedings were initiated before this Court under art.227; they are pending. In the meantime, the bank assigned the secured assets to one Assets Reconstruction Company(India) Limited (the third respondent). Assets Reconstruction Company(India) Limited again assigned the secured assets to one Kotak Mahindra Bank Limited (the fourth respondent). The bank recovering a part of its debt by assigning the secured assets has initiated proceedings before the Debts Recovery Tribunal under s.19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Such proceedings are also pending before the Tribunal. The petitioners made an application dated April 16, 2011 to Assets Reconstruction company expressing their intention to redeem the mortgage. Now alleging that their request has not been considered, they have brought this WP. Mr Mukherjee appearing for the petitioners has submitted as follows. Since the petitioners wanted to redeem the mortgage in terms of s.9 of the Act, against the inaction they could not go to the Debts Recovery Tribunal either by filing an interlocutory application in their pending s.17 application or otherwise, for s.9 has no connection with proceedings initiated under provisions of Chapter III of the Act. Hence against the inaction they are entitled to approach the High Court under art.226. Mr. Basu appearing for Kotak Mahindra has disputed the correctness of the contention. Hence against the inaction they are entitled to approach the High Court under art.226. Mr. Basu appearing for Kotak Mahindra has disputed the correctness of the contention. He has said that the petitioners’ remedy, if any, was before the Debts Recovery Tribunal by way of interlocutory application in their pending s.17 application. Mr.Saraf appearing for Assets Reconstruction Company, while saying that Assests Reconstruction Company has no role to play, has supported Mr.Basu’s contentions. The question is whether alleging the secured creditor’s inaction concerning the redemption request the petitioners can approach the High Court under art.226. In my opinion, once measures are taken by a secured creditor under sub-s.(4) of s.13 of the Act everything concerning the debt is to be adjudicated only by the Debts Recovery Tribunal under s.17 of the Act. Proceedings initiated under the Act are not to be derailed by initiating parallel proceedings before the Writ Court. A right to redeem a mortgage in terms of s.9 of the Act is not to be decided by the Writ Court segregating the issue from the recovery proceedings that, if at all, should lead to initiation of proceedings under s.17 of the Act. Admittedly, the petitioners initiated the s.17 proceedings, which were pending at the date they submitted the request to Assets Reconstruction Company for redemption of the mortgage. They did not get any response and felt aggrieved. In my opinion, the petitioners’ remedy, if any, was to apply to the Tribunal by filing an interlocutory application in their pending s.17 application. The provisions of sub-s.(8) of s.13 could not get in the way of their applying to the Tribunal. They could invite the Tribunal to consider the question of giving them relief available under s.9 of the Act. For these reasons, I dismiss the WP making it clear that nothing herein shall prevent the petitioners from approaching the Tribunal by filing interlocutory application in the pending s.17 application. Needless to say that if an application seeking redemption order is filed, the Tribunal will decide it according to law. No costs. Certified xerox.