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2019 DIGILAW 313 (UTT)

Badesha Rice Mill v. Uttarakhand Gramin Bank

2019-05-07

N.S.DHANIK, RAMESH RANGANATHAN

body2019
JUDGMENT : RAMESH RANGANATHAN, J. This appeal is preferred against the order passed by the learned Single Judge in Writ Petition (M/S) No.3713 of 2018 dated 14.03.2019. The appellants herein invoked the jurisdiction of this Court seeking a writ of certiorari to quash the order dated 09.10.2017, passed by the Additional District Magistrate, Udham Singh Nagar district (the third respondent) in Case No.51 of 2017. 2. Facts, to the limited extent necessary, are that the first appellant is a partnership firm carrying on business of running a rice mill. The first respondent-Bank sanctioned a term loan of Rs.75.00 lakhs, and a cash credit facility of Rs.1.00 crore to the first appellant-firm on 31.07.2013; while the term loan was required to be repaid in 78 monthly installments, the cash credit facility was provided for a duration of 12 months to be renewed for a period of 12 months, each time, thereafter. The appellants-writ petitioners had provided security, for the term loan, by deposit of title-deeds; the appellants-writ petitioners’ account was classified as a Non-Performing Asset on 30.06.2016; a notice under Section 13(2) of the SARFAESI Act, 2002 (for short “the Act”) was issued on 18.07.2016, followed by the proceedings, under Section 13(4) of the Act, on 07.12.2016; the respondent bank filed an application, under Section 14 of the Act, before the Additional District Magistrate on 06.01.2017 and, thereafter, a possession notice was issued under Rule 8(1) of the Security Interest (Enforcement) Rules, 2002, by putting a lock on the outer wall of the premises of the appellants-writ petitioners on 22.02.2018. Pursuant to an application filed by the respondent-Bank, the Additional District Magistrate passed an order on 09.10.2017, under Section 14 of the Act, directing delivery of possession of the appellants’ premises in favour of the respondent-Bank. 3. Questioning both the order of the Additional District Magistrate dated 09.10.2017, and the Rule 8(1) notice dated 22.02.2018, the appellants writ petitioners filed SA No.29 of 2018 before the Debt Recovery Tribunal, Dehradun (for short “DRT”) under Section 17 of the Act; and the DRT, by its order dated 18.05.2018, quashed the Rule 8(1) possession notice dated 22.02.2018. The said order of the DRT dated 18.05.2018 is silent on the challenge made by the appellants-writ petitioners to the order passed by the Additional District Magistrate under Section 14 of the Act. The said order of the DRT dated 18.05.2018 is silent on the challenge made by the appellants-writ petitioners to the order passed by the Additional District Magistrate under Section 14 of the Act. While no appeal was preferred by the respondent-Bank against the order passed by the Debt Recovery Tribunal, neither did the appellants-writ petitioners question the said order in an appeal under Section 18 of the Act. The order of the DRT dated 18.05.2018 has, therefore, attained finality. 4. Pursuant to the order passed by the Additional District Magistrate under Section 14 of the Act on 09.10.2017, officials of the first respondent-Bank came with a police party, on 22.10.2018, to take possession of the subject mortgaged property, and the appellants-writ petitioners’ factory premises was locked. 5. Placing reliance on a Division Bench judgment of this Court in The Nainital Bank Ltd. Vs. M/s Naveen Kisan Rice Mill & others (order in Special Appeal No.901 of 2018 dated 10.01.2019), the appellants-writ petitioners invoked the jurisdiction of this Court under Article 226 of the Constitution of India, questioning the order passed by the Additional District Magistrate, under Section 14 of the Act, on 09.10.2017. 6. M/s Naveen Kisan Rice Mill & others (order in Special Appeal No.901 of 2018 dated 10.01.2019), the appellants-writ petitioners invoked the jurisdiction of this Court under Article 226 of the Constitution of India, questioning the order passed by the Additional District Magistrate, under Section 14 of the Act, on 09.10.2017. 6. In the order under appeal, the learned Single Judge observed that, when the matter was taken up on 13.03.2019, no reference was made by the learned counsel for the petitioners to the proceedings of the DRT; he had failed to inform the Court that, as against the order dated 09.10.2017, he had already approached the DRT, and the DRT had not interfered with the said order; he had relied exclusively on the Division Bench judgment in M/s Naveen Kisan Rice Mill, pertaining to the competence of the Additional District Magistrate to issue a notice under Section 14 of the Act; since the issue was covered by the said Division Bench judgment, he had allowed the Writ Petition in the forenoon of 13.03.2019; thereafter, in the post-lunch session, it was brought to his notice, by the counsel for the respondent-Bank, that the order passed by the Additional District Magistrate dated 09.10.2017, under Section 14 of the Act, was already subjected to challenge before the DRT, and the DRT had declined to interfere in so far as the order dated 09.10.2017 was concerned; the counsel for the petitioners ought to have informed the Court that the order dated 09.10.2017 was already subjected to challenge before the DRT; since the order passed by the DRT dated 18.05.2018 had already attained finality, he could not question the very same order dated 09.10.2017 in writ proceedings; since the Tribunal had not interfered with the order dated 09.10.2017, passed by the Additional District Magistrate under Section 14 of the Act, a Writ Petition would not lie against the very same order, since such a relief, sought for before the DRT, must be deemed to have been denied by the DRT; any challenge could have only been made to the order of the DRT, declining to interfere with the order passed by the Additional District Magistrate dated 09.10.2017; and the very same order dated 09.10.2017 could not be subjected to challenge once again in writ proceedings. 7. 7. While faulting the counsel for the appellants-writ petitioners, in not disclosing this fact, the learned Singe Judge observed that the order of the Additional District Magistrate dated 09.10.2017 could not be subjected to challenge before two different fora, and the appellants-writ petitioners were estopped from challenging the order dated 09.10.2017 by filing a Writ Petition pursuant to the order of the DRT dated 18.05.2018. Costs of Rs.50,000/- was imposed on the appellants-writ petitioners, and the said amount was directed to be paid, to the Advocates’ Welfare Fund, for willful and deliberate misleading of the Court. 8. Before us Mr. A.K. Bansal, learned counsel for the appellants writ petitioners, would submit that the Tribunal lacked jurisdiction to entertain an appeal, under Section 17 of the Act, against the order passed by the Additional District Magistrate under Section 14 of the Act; the challenge before the DRT was mainly to the notice issued under Rule 8(1) dated 22.02.2018; the validity of the order passed by the Additional District Magistrate, under Section 14 of the Act dated 09.10.2017, was incidentally subjected to challenge therein; since the DRT lacked jurisdiction to entertain a challenge to the order passed under Section 14 of the Act, the mere fact that the appellants-writ petitioners had erroneously mounted a challenge thereto, before the DRT, would not confer jurisdiction on the Tribunal to decide this issue, since consent or acquiescence does not confer jurisdiction; the Supreme Court, in Harshad Govardhan Sondagar vs. International Assets Reconstruction Co. Ltd.: (2014) 6 SCC 1 , has held that the validity of the order, passed under Section 14 of the Act, can only be subjected to challenge in writ proceedings, and not before the DRT; there was no intention, on the part of the appellant, to mislead this Court; a copy of the order passed by the DRT dated 18.05.2018, was enclosed with the Writ Petition; and this itself reflects that a challenge was made by the appellants writ petitioners to the order dated 09.10.2017 passed by the Additional District Magistrate under Section 14 of the Act. 9. On the other hand Mr. 9. On the other hand Mr. D.S. Patni, learned counsel for the respondent-Bank, would submit that the appellants-writ petitioners having elected to approach the DRT, questioning the order passed by the Additional District Magistrate dated 09.10.2017, could not have simultaneously invoked the jurisdiction of this Court under Article 226 of the Constitution of India, questioning the very same order; any grievance which the appellant-writ petition may have, against the order passed by the DRT on 18.05.2018, could only have been agitated in an appeal under Section 18 of the Act before the Debt Recovery Appellate Tribunal (for short “DRAT”); neither did the appellants-writ petitioners question the order of the DRT before the Appellate Authority, nor was the order passed by the DRT subjected to challenge before this Court in proceedings under Article 226 of the Constitution; the contention that the DRT lacked jurisdiction to entertain a challenge, to order passed under Section 14 of the Act, is without merit since the Supreme Court, in Kanaiyalal Lalchand Sachdev & others vs. State of Maharashtra & others: (2011) 2 SCC 782 , has held that the order passed under Section 14 of the Act can be subjected to challenge before the DRT; while the appellants-writ petitioners may have enclosed a copy of the order passed by the DRT along with the Writ Petition, the writ affidavit does not disclose the appellant-writ petitioner having mounted a challenge to the order, passed by the Additional District Magistrate dated 09.10.2017, before the DRT in SA No.29 of 2018. 10. In so far as the observations made in the order under appeal, against the learned counsel for the appellants-writ petitioners are concerned, and costs of Rs.50,000/- imposed on the appellants-writ petitioners, Mr. D.S. Patni, learned counsel for the respondent-Bank, would submit that, since the respondent had not raise any such contention before the learned Single Judge, it was for this Court to consider whether the observations made against the learned counsel for the appellants-writ petitioners, in the order under appeal, should be retained or deleted. 11. D.S. Patni, learned counsel for the respondent-Bank, would submit that, since the respondent had not raise any such contention before the learned Single Judge, it was for this Court to consider whether the observations made against the learned counsel for the appellants-writ petitioners, in the order under appeal, should be retained or deleted. 11. A two Judge Bench of the Supreme Court, in Harshad Govardhan Sondagar, observed that the order passed by the District Magistrate or the Chief Metropolitan Magistrate under Section 14 of the Act can be challenged before the High Court under Article 226 of the Constitution of India, and the finality attached to the decision of the Chief Metropolitan Magistrate under Section 14(3) of the Act would not bar a person, aggrieved by the said order, to invoke the jurisdiction of the High Court exercising the jurisdiction vested in it by the Constitution; the decision of the Chief Metropolitan Magistrate, or of the District Magistrate, can be challenged before the High Court under Articles 226 and 227 of the Constitution by any aggrieved party; and, if such a challenge is made, the High Court can examine the decision in accordance with settled principles of law. 12. In Kanaiyalal Lalchand, the Supreme Court, following its earlier order in Indian Overseas Bank vs. Ashok Saw Mill: (2009) 4 SCC 366 , observed that an action under Section 14 of the Act constituted 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; and the Act itself contemplated an efficacious remedy for the borrower or any person affected by an action under Section 13(4) of the Act, for preferring an appeal before the DRT; the High Court had rightly dismissed the petition on the ground that an efficacious remedy was available to the appellants under Section 17 of the Act; and, 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. 13. In this context, it is relevant to note that the judgment of the two Judge Bench of the Supreme Court, in Kanaiyalal Lalchand, was not noticed by the subsequent two Judge Bench of the Supreme Court in Harshad Govardhan Sondagar. 14. Since Mr. 13. In this context, it is relevant to note that the judgment of the two Judge Bench of the Supreme Court, in Kanaiyalal Lalchand, was not noticed by the subsequent two Judge Bench of the Supreme Court in Harshad Govardhan Sondagar. 14. Since Mr. A.K. Bansal, learned counsel for the appellants-writ petitioners, would rely on the Division Bench judgment of this Court in M/s Naveen Kisan Rice Mill (order in Special Appeal No.901 of 2018 dated 10.01.2019), to submit that both the judgments of the Supreme Court in Kanaiyalal Lalchand and Harshad Govardhan Sondagar were considered therein, and a challenge to the order passed under Section 14 of the Act was entertained by the Division Bench, it is necessary to take note of the law declared therein. 15. In M/s Naveen Kisan Rice Mill, the challenge before the Division Bench of this Court was to the order passed by the learned Single Judge entertaining a challenge to an order passed by the Additional District Magistrate under Section 14 of the Act. While examining the contentions urged on behalf of the Bank, that the borrower had an adequate remedy under Section 17 of the Act and this Court should not entertain a challenge thereto in the exercise of its extra-ordinary jurisdiction under Article 226 of the Constitution, the Division Bench took note of the submissions, urged on behalf of the borrower, that no statutory provision would bar the High Court from exercising the jurisdiction vested in it by the Constitution. 16. The Division, thereafter, observed that the High Court had the discretion to entertain the Writ Petition questioning the validity of the order passed under Section 14 of the Act; the learned Single Judge had exercised his discretion to entertain the Writ Petition; such exercise of discretion would, ordinarily, not be interdicted in an intra-court appeal; and they saw no reason therefore, at the appellate stage, to relegate the respondent-writ petitioner to the remedy of approaching the DRT under Section 17 of the Act. 17. 17. All that the Division Bench, in M/s Naveen Kisan Rice Mill, has held is that the mere existence of a remedy, under Section 17 of the Act, would not bar exercise of jurisdiction under Article 226 of the Constitution of India; and since the learned Single Judge had exercised his discretion to entertain the Writ Petition challenging the validity of the order passed under Section 14 of the Act, the Division Bench would not interfere, with the exercise of such discretion, in an intra-court appeal preferred there against. 18. While this Court can, in the light of law declared by the Supreme Court in Harshad Govardhan Sondagar, always entertain a Writ Petition questioning the order passed under Section 14 of the Act, a person aggrieved by the order, passed under Section 14 of the Act, can also approach the DRT under Section 17 of the Act in view of the lad laid down by the Supreme court in Kanaiyalal Lal Chand. We must, therefore, express our inability to agree with the submission of Mr. A.K. Bansal, learned counsel for the appellants-writ petitioners, that the order of the DRT is non est, since it lacked jurisdiction to entertain a challenge to the order passed under Section 14 of the Act. 19. Since the DRT did not lack jurisdiction, the next question which necessitates examination is regarding the effect of the order passed by the DRT on 18.05.2018, in the proceedings instituted before it by the appellants-writ petitioners, questioning the validity of the order passed under Section 14 of the Act. While the order, under Section 14 of the Act, was subjected to challenge, along with the notice issued under Rule 8(1), the DRT has merely dealt with and quashed the Rule 8(1) notice, and has not even examined the appellants-writ petitioners’ challenge to the order passed under Section 14 of the Act. While the order, under Section 14 of the Act, was subjected to challenge, along with the notice issued under Rule 8(1), the DRT has merely dealt with and quashed the Rule 8(1) notice, and has not even examined the appellants-writ petitioners’ challenge to the order passed under Section 14 of the Act. While failure of the DRT, to not even deal with the appellants-writ petitioners’ challenge to the order passed under Section 14 of the Act dated 09.10.2017, could have been questioned by the appellants-writ petitioners either before the DRAT under Section 18 of the Act or even in writ proceedings under Article 226 of the Constitution, it was not open to them to again question the order passed by the Additional District Magistrate on 09.10.2017, under Section 14 of the Act, in writ proceedings since they had already subjected the said order dated 09.10.2017 to challenge in proceedings under Section 17 of the Act before the DRT. 20. Having elected to approach the DRT questioning the order passed under Section 14 of the Act dated 09.10.2017, it was not open to the appellants-writ petitioners to again question the very same order dated 09.10.2017 in proceedings under Article 226 of the Constitution. 21. The submission of Mr. A.K. Bansal, learned counsel for the appellants-writ petitioners, that, since the DRT did not even examine the validity of the order dated 09.10.2017 passed under Section 14 of the Act, in its order dated 18.05.2018, the appellants-writ petitioners was not disabled from invoking the jurisdiction of this Court questioning the said order dated 09.10.2017, must only be noted to be rejected. If the DRT had erred in not examining the appellants-writ petitioners’ challenge to the order passed under Section 14 of the Act, their remedy was to question the order passed by the DRT either before the DRAT or before this Court under Article 226 of the Constitution. The order of the DRT dated 18.05.2018 has not been put in issue in these writ proceedings; and it is the earlier order dated 09.10.2017, passed under Section 14 of the Act, which alone has been subjected to challenge. We find no error, therefore, in the order of the learned Single Judge in dismissing the appellants-writ petitioners’ challenge to the order dated 09.10.2017 passed under Section 14 of the Act. 22. We find no error, therefore, in the order of the learned Single Judge in dismissing the appellants-writ petitioners’ challenge to the order dated 09.10.2017 passed under Section 14 of the Act. 22. While it is, no doubt, true that the appellants-writ petitioners have not made any reference, regarding their having subjected the order dated 09.10.2017 (passed under Section 14 of the Act) to challenge before the DRT in SA No.29 of 2018, in the affidavit filed in support of the Writ Petitioner, the observations made in the order under appeal is not merely against the appellants-writ petitioners but against their counsel as well. No observation could have been made against the Counsel appearing on behalf of the parties, without giving him an opportunity to show-cause there against. The Counsel, appearing on behalf of the parties, is an officer of the Court and, while failure to state certain facts in the writ affidavit may justify the writ petitioner being penalized, this Court would, ordinarily, not fault the counsel appearing on behalf of the parties, much less without giving him an opportunity of being heard in this regard. The observations made in the order under appeal, against the counsel for the appellants-writ petitioners, are therefore set-aside. 23. On the question of imposition of costs of Rs.50,000/- on the appellants-writ petitioners, a copy of the order passed by the DRT in SA No.29 of 2018, was no doubt filed in the Writ Petition; and the said order reflects that a challenge was made to the order dated 09.10.2017 passed under Section 14 of the Act. While mere enclosure of the order passed by the DRT, which, in turn, reflects a challenge being made to the order passed under Section 14 of the Act dated 09.10.2017, would not suffice, and persons invoking the jurisdiction of this Court should disclose all relevant and material facts in the affidavit filed in support of the Writ Petition, we are satisfied, in the facts and circumstances of the present case, and more so since Mr. D.S. Patni, learned counsel for the respondent-Bank, has left it to our discretion to modify the order of the learned Single Judge, that the costs imposed on the appellants-writ petitioners should be reduced from Rs.50,000/- to Rs.25,000/-, which the appellants-writ petitioners shall pay to the Uttarakhand State Legal Services Authority within four weeks from today. 24. D.S. Patni, learned counsel for the respondent-Bank, has left it to our discretion to modify the order of the learned Single Judge, that the costs imposed on the appellants-writ petitioners should be reduced from Rs.50,000/- to Rs.25,000/-, which the appellants-writ petitioners shall pay to the Uttarakhand State Legal Services Authority within four weeks from today. 24. Subject to this modification as referred to hereinabove, with regards the observations made against the learned counsel for the appellants writ petitioners and the quantum of costs imposed on the appellants-writ petitioners, the appeal fails and is, accordingly, dismissed.