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2019 DIGILAW 204 (CAL)

Sk. Sakir Ali v. Punjab National Bank

2019-02-08

DEBANGSU BASAK

body2019
JUDGMENT : Debangsu Basak, J. 1. Possession Notice dated November 11, 2018 issued by the bank exercising jurisdiction under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), 2002 is under challenge in the present writ petition. 2. The writ petitioners are heirs and legal representatives of a guarantor. 3. Learned Advocate appearing on behalf of the petitioners submits that, the father of the petitioners was misled by the private respondent in mortgaging an immovable property for a loan guaranteed by the bank in favour of the private respondent. The bank is not proceeding against the private respondent. The bank has other secured assets to recover its claim. The bank is seeking to take possession of the immovable property belonging to the petitioners. The petitioners are entitled to notice under the provisions of the Act of 2002 after the death of the father of the petitioners. The secured creditor should proceed de novo against the heirs and legal representatives of the deceased guarantor. Since the bank did not do so, the impugned action of the bank in taking possession of the property belonging to the petitioners is in breach of principles of natural justice and the provisions of the Act of 2002. The bank is obliged to adhere to the principles of natural justice while exercising powers under the Act of 2002. He relies upon (2014) 1 SCC 603 (Commissioner of Income Tax and Ors. Vs. Chhabil Dass Agarwal) and (2018) 3 SCC 85 (Authorized Officer, State Bank of Travancore and Anr. Vs. Mathew K.C.) and submits that, the existence of statutory alternative remedy is not a complete bar in exercising of jurisdiction by the Writ Court. In the facts of the present case, although a proceeding under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993 is pending before the Debts Recovery Tribunal and a proceeding under Section 17 of the Act of 2002 is disposed of, the present writ petition is maintainable. 4. The bank is represented. 5. The following issues arise for consideration in the present writ petition:- (i) Is a bank proceeding under the Act of 2002 required to proceed de novo on the death of a guarantor against whom it is proceeding? (ii) Are the heirs and legal representatives of the deceased guarantor entitled to fresh notice under Section 13 of the Act of 2002? The following issues arise for consideration in the present writ petition:- (i) Is a bank proceeding under the Act of 2002 required to proceed de novo on the death of a guarantor against whom it is proceeding? (ii) Are the heirs and legal representatives of the deceased guarantor entitled to fresh notice under Section 13 of the Act of 2002? (iii) What relief or reliefs, if any, are the parties entitled to? 6. The petitioners claim that the father of the petitioner, facing financial stringency, and was persuaded by the respondent no.5 to approach the bank for obtaining a loan for Rs. 30,000/- by deposit of title deeds. According to the petitioners, the father of the petitioner deposited the title deeds for a loan of Rs. 30,000/-. The father of the petitioners allegedly repaid the loan. The petitioners alleged that, the bank issued a notice dated September 15, 2010, requiring the father of the petitioner, to repay a sum in excess of Rs. 26,00,000/- due on account of and enjoyed by the respondent no. 5. In such notice, the petitioner claimed that, the father of the petitioner was the guarantor in respect of such credit facility. The father of the petitioner lodged a complaint under Section 200 of the Criminal Procedure Code. It appears from the record made available to the Court that, the bank initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. It issued a possession notice under the Act of 2002. The father of the petitioner approached the Debts Recovery Tribunal under Section 17 of the Act of 2002. A notice under Section 13(2) of the Act of 2002 was issued to the father of the petitioner on May 23, 2012. The father of the petitioner replied thereto by a writing dated July 18, 2012. A notice under Section 13(4) of the Act of 2002 was issued by the bank on September 12 requiring the father of the petitioner to deliver possession. The bank filed a proceedings under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993 against the father of the petitioner being T.A. No. 1421 of 2013. The bank proceeded to publish notice for e-auction on May 5, 2016 and May 6, 2016. The father of the petitioners applied under Section 17 of the Act of 2002 in 2015 being S.A. No. 233 of 2015. The bank proceeded to publish notice for e-auction on May 5, 2016 and May 6, 2016. The father of the petitioners applied under Section 17 of the Act of 2002 in 2015 being S.A. No. 233 of 2015. The father of the petitioner died on October 7, 2016. The death of the father of the petitioner was intimated to the bank on November 25, 2016. 7. The Act of 2002 empowers a bank covered under the Act of 2002 to enforce its security interest in respect of any secured asset. Such power is given under Section 13 under the Act of 2002. Section 13(2) requires the bank to issue a notice against the person whom the bank requires to proceed under the Act of 2002 to enforce any security interest in respect of any secured asset. In the present case, the bank did so. A notice dated May 23, 2012 under Section 13(2) was issued to the father of the petitioner. The father of the petitioner replied to such notice on July 18, 2012. The bank thereafter took further steps as provided under the Act of 2002 to enforce its security interest. The father of the petitioner died on October 7, 2016. 8. The proceedings under the Act of 2002 commences upon the bank issuing a notice under Section 13(2) of the Act of 2002. After the commencement of such proceedings, the death of any of the persons to such proceeding will not require the bank to start afresh with a notice under Section 13(2) to the heirs and legal representatives of such deceased person. The proceeding is essentially directed towards the secured assets. A person may claim interest in respect of such secured assets. Such person is given an opportunity to repay the bank, upon issuance of the notice under Section 13(2). The heirs and legal representatives of such deceased person, upon his death, need not receive a further indulgence of an opportunity to repay the claim of the bank by issuance of a notice under Section 13(2). The heirs and legal representatives of the deceased are entitled to approach the bank to settle the claim. That does not mean that the bank has to proceed afresh under Section 13(2). 9. As noted above, the petitioners are the heirs and legal representatives of the deceased guarantor. The heirs and legal representatives of the deceased are entitled to approach the bank to settle the claim. That does not mean that the bank has to proceed afresh under Section 13(2). 9. As noted above, the petitioners are the heirs and legal representatives of the deceased guarantor. In my view, when a proceeding is pending, the bank exercising jurisdiction under the Act of 2002, is not called upon to initiate the proceeding de novo as against the heirs and legal representatives of a deceased person against whom the bank is proceeding under such provision. 10. Chhabil Dass Agarwal (supra) is of the view that, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained. It lays down in paragraph 15 as follows:- “15. Thus, while it can be said that this Court has recognized some exceptions to the rule of alternative remedy, i.e., where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal case, Titagarh Paper Mills case and other similar judgments that the High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation.” 11. Mathew K.C. (supra) cautions the Court that, the discretionary jurisdiction under Article 226 of the Constitution is not absolute but has to be exercised judiciously. It is of the following view:- “5. We have considered the submissions on behalf of the parties. Normally this Court in exercise of jurisdiction under Article 136 of the Constitution is loathe to interfere with an interim order passed in a pending proceeding before the High Court, except in special circumstances, to prevent manifest injustice or abuse of the process of the court. In the present case, the facts are not in dispute. Normally this Court in exercise of jurisdiction under Article 136 of the Constitution is loathe to interfere with an interim order passed in a pending proceeding before the High Court, except in special circumstances, to prevent manifest injustice or abuse of the process of the court. In the present case, the facts are not in dispute. The discretionary jurisdiction under Article 226 is not absolute but has to be exercised judiciously in the given facts of a case and in accordance with law. The normal rule is that a writ petition under Article 226 of the Constitution ought not to be entertained if alternate statutory remedies are available, except in cases falling within the well-defined exceptions as observed in CIT vs. Chhabil Dass Agarwal, 2014 (1) SCC 603 , as follows (SCC p.611, para 15) "15. Thus, while it can be said that this Court has recognised some exceptions to the rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal case, Titaghur Paper Mills case and other similar judgments that the High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation." 12. In the facts of the present case, since the petitioners have statutory alternative remedy available and the assumption of jurisdiction under the Act of 2002 cannot be said to be without any basis, no interference is called for at this stage. 13. Proceedings against the heir and legal representatives of the deceased guarantor cannot be said to be vitiated by breach of principle of natural justice on the ground that, the proceedings are not taken de novo against such person. A secured creditor is entitled to proceed both against the borrower and guarantor. 13. Proceedings against the heir and legal representatives of the deceased guarantor cannot be said to be vitiated by breach of principle of natural justice on the ground that, the proceedings are not taken de novo against such person. A secured creditor is entitled to proceed both against the borrower and guarantor. The Court cannot direct a secured creditor to choose amongst them. 14. In view of the discussion above, the first and the second issue are answered in the negative and against the petitioner. 15. In such circumstances, I find no merit in the present writ petition. The third issue is answered by holding that the petitioner is not entitled to any relief. 16. W.P. 2923 (W) of 2019 is dismissed without any order as to costs. 17. Urgent certified website copies of this judgment and order, if applied for, be made available to the parties upon compliance of the requisite formalities.