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2013 DIGILAW 839 (CAL)

Mechano Paper Machines Limited v. Allahabad Bank

2013-11-22

SANJIB BANERJEE

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Judgment : Sanjib Banerjee, J. The petitioners question the propriety of an order dated May 17, 2013 passed by the Debts Recovery Appellate Tribunal at the initial stage of an appeal arising out of an order dismissing proceedings under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Though the petitioners seek to assail the conduct of the bank, independent of the challenge to the order of the appellate tribunal, paragraph 54 of the petition limits the scope of the petition to the ad interim order of the appellate tribunal. The petitioner company obtained credit facilities from the respondent bank, failed to repay the same and now complains of the sale of the manufacturing facility of the petitioner company to the respondent No. 4 to be at a gross undervalue. The petitioners say that the property was put up for sale by a notice of January 16, 2006 where the reserve price indicated was Rs.10.98 crore. There does not appear to have been any taker for the property at such value, but the petitioners attribute mala fides to the bank scaling down the reserve price to Rs.8.52 crore in its subsequent sale notice issued early in 2011 for the property, which is off the Dum Dum airport. To record some of the facts narrated by the petitioners, whether or not they may be relevant in the ultimate consideration herein, it needs to be noticed that before the time denoted for the bids to be opened had elapsed following the second notice for sale issued in 2011, the petitioners apparently made an offer to the bank that they were willing to pay Rs.1 lakh more than the best offer received by the bank for the property; and, in support thereof, the petitioners deposited a sum of Rs.1 crore by way of earnest money which exceeded 10 per cent of the reserve price that was indicated by the bank in the relevant sale notice. The petitioners claim that on March 2, 2011, the petitioners caused the third respondent company to make an offer of Rs.10 crore for the property with an indication in the offer letter to negotiate for a higher price. The petitioners claim that on March 2, 2011, the petitioners caused the third respondent company to make an offer of Rs.10 crore for the property with an indication in the offer letter to negotiate for a higher price. It was at such stage that, inter alia, the petitioner and the third respondent companies brought a petition under Article 226 of the Constitution to this court challenging the sale of the property by the bank at a value less than the offer of the third respondent. Such petition, WP No. 252 of 2011, was withdrawn on March 9, 2011 on the submission that the petitioners therein would move the Debts Recovery Tribunal under Section 17 of the said Act of 2002. The order records that the prayer for withdrawal was made in the wake of an objection by the bank as to the propriety of the court receiving the petition. There is a further interesting aspect to the order of March 9, 2011 on which the petitioners have not thrown any light in course of the present proceedings. The order reflects that the third petitioner therein, which is the petitioner company herein, objected to the petition being instituted in the name of such company as it claimed to not have authorised the filing thereof. However, in the light of the petition being withdrawn the court did not go into such aspect of the matter. On March 10, 2011 the petitioner company applied under Section 17 of the said Act of 2002 before the appropriate Debts Recovery Tribunal. The tribunal passed an initial order restraining the bank and the purchaser from alienating or disposing of the property or creating any third party right or interest therein till further orders. The tribunal ultimately dismissed the proceedings under Section 17 of the said Act of 2002 by an order of May 2, 2013 which has since been assailed by the petitioner company before the appellate tribunal on which the impugned order was passed. The tribunal ultimately dismissed the proceedings under Section 17 of the said Act of 2002 by an order of May 2, 2013 which has since been assailed by the petitioner company before the appellate tribunal on which the impugned order was passed. The order dated May 17, 2013 passed by the appellate tribunal dealt with the principal ground on which the petition under Section 17 of the said Act of 2002 was dismissed and observed, prima facie, that Section 14 of the Limitation Act, 1963 “perhaps does not have any applicability since a Writ Court cannot be said to be a Court without jurisdiction.” The appellate tribunal also dwelt on the appeal having been filed without the mandatory pre-deposit as an application was filed for waiving or reducing the same. The appellate tribunal issued directions for filling affidavits and only made a limited order to the effect that “any action taken in respect of the property under reference will be subject to the result of the appeal.” The fourth respondent purchaser says that it wants the appeal or the application for waiver of pre-deposit to be decided expeditiously by the appellate tribunal since the order that steps taken in respect of the property would abide by the result of the appeal impairs the purchaser from exercising its rights in respect thereof. The third respondent has raised its head to offer Rs. 13 crore for the property; a submission which is irrelevant in the context of the present proceedings. The primary difficulty faced by the parties appears to be in there being no officer manning the appellate tribunal at Kolkata at the moment. The purchaser claims that the purchaser had attempted the matter to be taken up by the Debts Recovery Appellate Tribunal, Delhi, which now exercises charge of the Kolkata appellate tribunal, but the petitioner company was not represented on October 30, 2013 before the Delhi appellate tribunal despite notice. The matter that falls for consideration is as to whether the order subsisting on the petition under Section 17 of the said Act of 2002 before the Debts Recovery Tribunal ought to have been revived and continued during the pendency of the appeal before the appellate tribunal. The matter that falls for consideration is as to whether the order subsisting on the petition under Section 17 of the said Act of 2002 before the Debts Recovery Tribunal ought to have been revived and continued during the pendency of the appeal before the appellate tribunal. It is clear that a direct challenge to the acts and conduct of the bank cannot be entertained in view of the withdrawal of the previous petition and the limited scope of the present petition as indicated at paragraph 54 thereof. It is equally impermissible to treat the present petition as one espoused by the second petitioner alone against the acts and conduct of a nationalised bank in view of the averment at paragraph 54 of the petition and the further fact that the second petitioner, if he had been aggrieved by the measures taken under Section 13(4) of the said Act of 2002 by the bank, ought to have applied before the Debts Recovery Tribunal. The present petition has, per force, to be considered as one directed only against the order dated May 17, 2013 passed by the appellate tribunal. The power of judicial review that is exercised in this jurisdiction requires the decision-making process, rather than the decision itself, being subjected to scrutiny. The propriety of the decision itself may be questioned on the ground of abject perversity, but a High Court under Article 226 of the Constitution cannot be asked to sit in appeal over an order of a tribunal or any quasi-judicial body having authority to decide on the matter that it has. In the present case, there does not appear to be any infirmity in the decision-making process as the petitioners do not complain of the petitioner company not having been heard. The order impugned reflects due consideration having been given to the matters that ought to have been looked into at the ad interim stage of the appeal when an application for waiver of the pre-deposit remained pending. The tribunal appears to have given a fair hearing to the petitioner company and disclosed cogent grounds for declining the order sought and making a limited order. The order does not appear to be illegal or irrational or unreasonable and is not questioned on the ground of the failure to exercise a jurisdiction vested in the tribunal by law. The tribunal appears to have given a fair hearing to the petitioner company and disclosed cogent grounds for declining the order sought and making a limited order. The order does not appear to be illegal or irrational or unreasonable and is not questioned on the ground of the failure to exercise a jurisdiction vested in the tribunal by law. Even if the reasonableness of the order impugned is assessed, it cannot be faulted for the prima facie view taken that the challenge to the measures taken by a secured creditor under Section 13(4) of the said Act of 2002 by way of a petition under Article 226 of the Constitution may not be regarded as proceedings prosecuted with due diligence by the petitioner in a matter under Section 17 of the said Act of 2002 before a court which suffered from a defect of jurisdiction or other cause of like nature to entertain the previous proceedings. It is elementary that a High Court in exercise of its authority under Article 226 of the Constitution is empowered to receive a petition questioning the conduct of an authority answering to such description within the meaning of Article 12 of the Constitution. It is an entirely different thing that a High Court in exercise of its judicial self-restraint may not receive a petition under Article 226 of the Constitution upon recognising an efficacious alternative remedy being available to the petitioner. In the light of such legal principle, it cannot be said that the tentative view expressed on the issue in the order impugned is so perverse that it ought to be corrected in this extraordinary jurisdiction. The hullabaloo that the petitioners have raised on the ground that immovable properties are sold at throwaway prices by nationalised banks in course of sales conducted under the said Act of 2002, has to await consideration in a deserving matter. Judicial authority has to be exercised on firmer stuff than on a rumour or an impression of impropriety when the matters complained of could have been subjected to a challenge provided therefor but such course of action was not availed of without any supervening circumstance cited for missing the opportunity. Judicial authority has to be exercised on firmer stuff than on a rumour or an impression of impropriety when the matters complained of could have been subjected to a challenge provided therefor but such course of action was not availed of without any supervening circumstance cited for missing the opportunity. Several judgments have been cited on behalf of the petitioners which are not found to assist the petitioner in opening up the merits of the complaint against the bank de hors the reverses suffered before the Debts Recovery Tribunal and at the ad interim stage before the appellate tribunal. The judgment reported at (2009) 17 SCC 338 (HBM Print Limited v. Scantrans India Private Limited) has been placed to discredit the prima facie finding in the order impugned as to the applicability of the Section 14 of the Limitation Act. In the reported case, the request for the constitution of an arbitral tribunal pertaining to an international commercial agreement was carried to the Chief Justice of a High Court and withdrawn as such Chief Justice had no authority to deal with it. The period during which the request remained pending before the Chief Justice of the High Court was excluded under Section 14 of the Limitation Act by the delegate of the Chief Justice of India before whom the subsequent request was carried. In that case the Chief Justice of the High Court had no authority to receive the request; which is quite distinct from the withdrawal of the previous petition on the perception of the petitioners therein that this court may not have been inclined to receive it in view of the efficacious alternative remedy being available to the petitioners. The judgments reported at (1970) 1 SCC 248 (Rustom Cavasjee Cooper v. Union of India) and (1972) 2 SCC 788 (Bennett Coleman and Co. Ltd v. Union of India) have been brought for the proposition that the shareholder of a company affected by any executive action would have a cause of action to assail the same. The principle was recognised by the Supreme Court in either case in extreme situations. In R. C. Cooper, the executive action of nationalising banks that was questioned would have resulted in the shareholders’ interest in the banking company being extinguished upon the nationalisation thereof. In Bennett Coleman and Co. The principle was recognised by the Supreme Court in either case in extreme situations. In R. C. Cooper, the executive action of nationalising banks that was questioned would have resulted in the shareholders’ interest in the banking company being extinguished upon the nationalisation thereof. In Bennett Coleman and Co. it was the shareholders’ right to freedom of speech and expression under Article 19 of the Constitution that was recognised. The present case and the rights of the second petitioner cannot be exalted to the status of the causes espoused in either R.C. Cooper or Bennett Coleman and Co. Two other decisions, reported at (1977) 2 SCC 437 (Trimbak Gangadhar Telang v. Ramchandra Ganesh Bhide) and (2005) 5 SCC 245 (Secretary, ONGC Limited v. V.U. Warrier), have been placed as to when orders of tribunals may be interfered with in exercise of the power of judicial review. The order impugned in the present proceedings is neither violative of the fundamental principles of justice or fair play nor is any patent or flagrant error in procedure or law evident therefrom that may be said to have resulted in manifest injustice. The challenge to the order impugned fails and WP No. 23834(W) of 2013 is dismissed. There will, however, be no order as to costs. This order should not discourage either the petitioner company or the purchaser from causing the appeal and the application for waiver of the predeposit to be taken up and disposed of by the regular appellate tribunal or any other available as expeditiously as possible. Certified website copies of this judgment, if applied for, be urgently made available to the parties, subject to compliance with all requisite formalities.