Research › Search › Judgment

Gujarat High Court · body

2017 DIGILAW 1921 (GUJ)

Surendra Purshottam Gondhali v. Bank of Baroda

2017-12-18

N.V.ANJARIA

body2017
ORDER : N.V. Anjaria, J. 1. Draft amendment dated 13th December, 2017 forming part of the papers of the petition is granted, to be carried out immediately. 1.1 Heard learned advocate Mr. Jal Soli Unwalla for the petitioner. 2. It is with the following payer that the petitioner has invoked jurisdiction of this Court under Article 226 of the Constitution. "declaring the impugned notices dated 28/07/2017 issued under the provisions of section-13(2) of SARFAESI Act as well as impugned possession notice dated 11/11/2017 issued under the provisions of Rule-8(I) of the Rules, as bad, illegal, arbitrary, capricious and violative of article-14 and 300-A of Constitution of India and as not being in accordance with the provisions of SARFAESI Act, thereby be pleased to quashed and set aside the impugned notices dated 28/07/2017 and 11/11/2017" 3. Noticing the relevant facts from the pleadings and record of the petition, petitioner No.1 is a Partnership Firm whereas other petitioners happened to be the Partners. The petitioner is a manufacturing company which had taken financial assistance from the respondent - Bank and for that had mortgaged the property. It appears that as the petitioner could not pay the installment of the loan regularly, accounts came to be classified as Non-Performing Asset. The respondent - Bank initiated steps for recovery of the amounts invoking the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Notice under Section 13(2) of the Act, 2002 came to be issued on 28th July, 2017. 3.1 Thereafter it appears that on 11th November, 2017, possession notice was issued to the petitioner inter alia demanding Rs. 03,03,00,955.88 Ps. as due on 30th June, 2017 and powers under Section 13(4) appears to have been exercised, which notice in its relevant part reads as under and gives description of the immovable property in question. "The Borrowers/Guarantor/Mortgagor having failed to repay the amount, notice is hereby given to the Borrowers/Guarantor/Mortgagor and the public in general that the undersigned has taken possession of the property described herein below in exercise of powers conferred on him/her under Section 13(4) of the said Act read with Rule 8 of the said Rules on this 11th day of October of the year 2017. The Borrowers/Guarantor/Mortgagor in particular and the public in general is hereby cautioned not to deal with the property and any dealings with the property will be subject to the charge of the Bank of Baroda for an amount of Rs. 3,03,955.88 as on 30.06.2017 and interest & expenses thereon until the full payment." 4. Section 17 of the SARFAESI Act, 2002 reads as under. "17. Application against measures to recover secured debts. - (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 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. (1A) An application under sub-section (1) shall be filed before the Debts Recovery Tribunal within the local limits of whose jurisdiction- (a) the cause of action, wholly or in part, arises; (b) where the secured asset is located; or (c) the branch or any other office of a bank or financial institution is maintaining an account in which debt claimed is outstanding for the time being. (2) ... ... ... (3) ... ... ... (4) ... ... ... (5) ... ... ... (6) ... ... ... (7) ... ... ..." 5. There is no gainsaying that within the compass and for the purpose of aforesaid provision, petitioner is an aggrieved person. A distinct statutory alternative remedy is available to the petitioner by filing Appeal/Application before Debt Recovery Tribunal. The stage reached by the Bank in its process for recovery of dues under the SARFAESI Act is that of notice under Section 13(2) having been already issued and the steps under Section 13(4) are afoot. 5.1 In Kanaiyalal Lalchand Sachdev v. State of Maharashtra [ (2011) 2 SCC 782 ], the Supreme Court has stated that the measures under Section 14 constitutes the action taken after the stage of Section 13(4) and a remedy of appeal under Section 17 would be available. In that case, refusal by the High Court to entertain the writ petition was held to be fully justified. In that case, refusal by the High Court to entertain the writ petition was held to be fully justified. 5.2 In United Bank of India v. Satyawati Tondon [ (2010) 8 SCC 110 ] the Court observed in paragraph 17 that the party must exhaust the remedy under Section 17. It was further observed, "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." 5.2.1 The Apex Court stated, "...despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT 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. It is hoped and trusted that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection." 5.3 The stage obtained is a right stage where the petitioner can approach the alternative forum which is provided statutorily under the SARFAESI Act. 5.4 Learned advocate for the petitioner submitted however, that account was declared to be Non-Performing Asset on 30th June, 2017, however before that event; by addressing communication dated 22nd August, 2016, the petitioner had expressed before the Bank their willingness to pay the dues, which was not considered. It was further submitted that machinery at the factory was allowed to be sold and certain amounts were recovered. It was further submitted that machinery at the factory was allowed to be sold and certain amounts were recovered. It was vehemently submitted that the possession notice dated 11th November, 2017 could not be said to be a notice under Section 13(4), however it is a notice under Rule 8(1) which cannot precede a notice under Section 13(4) of the Act. It was submitted that in this view of the case, this Court may exercise its extra-ordinary jurisdiction. Notice dated 11th November, 2017 is extracted in part as above, however whatever contentions which the petitioner want to raise about the legality of the action of the Bank, it could well be raised before the statutory alternative forum. 6. In the compass of the facts and contents of the petitioner, when the alternative statutory remedy is available, the petitioner has to file the same before directly approaching this Court under Article 226 of the Constitution. It is trite that in the commercial matters, where the law provides for statutory remedy before the Tribunal, such remedy is availed beforehand. All the contentions of the petitioner could be better agitated before the said forum where the petitioners have an opportunity to lead evidence and establish their case on merits in accordance with law. 6.1 In view of above and having regard to the well settled position emanating from the decision of Satyawati Tondon (supra) and Kanaiyalal Lalchand Sachdev (supra) this Court is not inclined to entertain the present petition, however leaving it open for the petitioner to avail remedy under Section 17 of the SARFAESI Act. It is observed that if the petitioner files Appeal/Application under the said provision before Debt Recovery Tribunal, the same shall be entertained and decided in accordance with law. 7. This Court has not expressed any opinion on the merits of the case of the petitioners. The petition sands disposed of as not entertained by relegating the petitioners to the said alternative remedy.