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2019 DIGILAW 99 (MEG)

Madhu Bajaj v. State Bank Of India

2019-04-02

H.S.THANGKHIEW

body2019
JUDGMENT : 1. The instant application under Article 227 of the Constitution of India has been filed challenging the order dated 16.10.2017, recovery certificate dated 17.10.2017 and demand notice dated 25.12.2017 issued by the Debt Recovery Tribunal, Guwahati in OA No. 265 of 2017 against the petitioner and other respondents. The main contention of the petitioner is that the impugned order as well as the consequential order and the certificate were obtained by suppression of materials of fact and without proper service being affected upon the petitioner. 2. The brief facts leading to the said impugned orders, is that the respondent No. 1 Bank company filed OA No. 265 of 2017 before the Debt Recovery Tribunal under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the Recovery Act) against the petitioner (and other respondents herein) who are directors of M/s R.N.B. Cements Pvt. Ltd. for recovery of Rs. 44,66,81,083.12p (Rupees Forty Four Crores Sixty Six Lakhs Eighty One Thousand Eighty Three and Paise Twelve only). The petitioner and the other respondents having not appeared before the Tribunal, the matter was decided exparte and the order was passed for recovery of the above mentioned amount. Thereafter, pursuant to the aforesaid order dated 16.10.2017, recovery certificate dated 17.10.2017 under Section 19 sub Section 7 and 22 of the Recovery Act for the said amount was issued on 17.10.2017, and notice of demand under Sections 25 to 29 was issued on 25.12.2017. Being aggrieved thereby, the instant revision petition under Article 227 of the Constitution of India, has been filed before this Court. 3. Mr. K. Paul, learned counsel for the petitioner submits that the application has been filed under Section 227 of the Constitution of India in view of the fact that the respondent Bank had in spite of being aware on an earlier proceeding between the parties being OA No. 34 of 2017 and also the existence of a Civil Suit before the Court at Nongpoh, Ri- Bhoi District, and by willfully and deliberately suppressing the order dated 19.06.2017 passed in CRP No. 15 of 2017, had filed a second original application i.e. OA No. 265 of 2017 before the Debt Recovery Tribunal, Guwahati. As such, he prayed that it is a fit case for interference by this Court under Article No. 227 of the Constitution of India. 4. Mr. As such, he prayed that it is a fit case for interference by this Court under Article No. 227 of the Constitution of India. 4. Mr. S. Dutta, learned counsel for the respondent State Bank of India has on the other hand has strongly challenged the maintainability of the instant civil revision under Article 227. He submits that the same has been done without any jurisdiction and by bypassing efficacious alternative remedies which are available to the petitioner as provided in the Recovery of Debts and Bankruptcy Act, 1993. He submits that the case filed by the respondent Bank for recovery of the outstanding claim had already attained finality, with the passing of Judgment and Order dated 16.10.2017 by the Debt Recovery Tribunal, and the issuance of recovery certificate dated 17.10.2017. That being the case, he submits the remedy available to the petitioner was only to file an appeal before the Appellate Tribunal at Kolkata under Section 20 of the Recovery of Debts and Bankruptcy Act, 1993 against the Order dated 16.10.2017. He further submits that there is also a provision for challenging the recovery certificate, under Section 30 of the Recovery of Debts and Bankruptcy Act, 1993 by filing an appeal before the Debt Recovery Tribunal. 5. The learned counsel for the respondent further submitted that the revision petitioner had also filed an application under Order 9 Rule 13 of the C.P.C. numbered as I.A. No. 43 of 2018 for recalling and setting aside the exparte Judgment and Order dated 16.10.2017 and also Notice of Demand and that the same is pending disposal. He strongly urged that admittedly, therefore, by filing of the application before the Tribunal, the revision petition is unsustainable and also hit by Section 10 of the C.P.C. He submits that the petitioner cannot avail and pursue the same remedy in two different forums, as such prayed that the instant revision petition be dismissed. 6. In support of his contentions he has placed reliance on the following judgments; Punjab National Bank v. O.C.Krishnan ( AIR 2001 SC 3208 ), the relevant paragraph is quoted herein below: "6. The Act has been enacted with a view to provide a special procedure for recovery of debts due to the banks and the financial institutions. 6. In support of his contentions he has placed reliance on the following judgments; Punjab National Bank v. O.C.Krishnan ( AIR 2001 SC 3208 ), the relevant paragraph is quoted herein below: "6. The Act has been enacted with a view to provide a special procedure for recovery of debts due to the banks and the financial institutions. There is hierarchy of appeal provided in the Act, namely, filing of an appeal under S. 20 and this fast track procedure cannot be allowed to be derailed either by taking recourse to proceedings under Arts. 226 and 227 of the Constitution or by filing a civil suit, which is expressly barred. Even though a provision under an Act cannot expressly oust the jurisdiction of the Court under Arts. 226 and 227 of the Constitution, nevertheless when there is an alternative remedy available judicial prudence demands that the Court refrains from exercising its jurisdiction under the said constitutional provisions. This was a case where the High Court should not have entertained the petition under Art. 227 of the Constitution and should have directed the respondent to the take recourse to the appeal mechanism provided by the Act." The learned counsel also places reliance on the judgment rendered in Civil Appeal 1281 of 2018 (arising out of SLP(C) 24610 of 2015) Authorised Officer, State Bank of Travancore and anr. v. Mathew K.C. arising where this point has been held exhaustively discussed by the Honble Supreme Court, the relevant paragraphs whereof, are quoted herein below : "11. In the Satyawati Tandon (supra), the High Court had restrained further proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the SARFAESI Act, the availability of remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal, the object and purpose of the legislation, it was observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available holding:- 43. Unfortunately, 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 a 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, the 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. 55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the 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. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection. 12. In Union Bank of India and another v. Panchanan Subudhi, 2010 (15) SCC 552, further proceedings under Section 13(4) were stayed in the writ jurisdiction subject to deposit of Rs. 10,00,000/- leading this Court to observe as follows: 7. In our view, the approach adopted by the High Court was clearly erroneous. When the respondent failed to abide by the terms of one-time settlement, there was no justification for the High Court to entertain the writ petition and that too by ignoring the fact that a statutory alternative remedy was available to the respondent under Section 17 of the Act. 13. The same view was reiterated in Kanaiyalal Lalchand Sachdev and others v. State of Maharashtra and others, 2011 (2) SCC 782 observing: 23. In our opinion, therefore, the High Court rightly dismissed the petition on the ground that an efficacious remedy was available to the appellants under Section 17 of the Act. It is well settled that 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. (See Sadhana Lodh v. National Insurance Co. Ltd.; Surya Dev Rai v. Ram Chander Rai and SBI v. Allied Chemical Laboratories.) 4. It is well settled that 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. (See Sadhana Lodh v. National Insurance Co. Ltd.; Surya Dev Rai v. Ram Chander Rai and SBI v. Allied Chemical Laboratories.) 4. In Ikbal (supra), it was observed that the action of the Bank under Section 13(4) of the SARFAESI Act available to challenge by the aggrieved under Section 17 was an efficacious remedy and the institution directly under Article 226 was not sustainable, relying upon Satyawati Tandon (Supra), observing: 27. No doubt an alternative remedy is not an absolute bar to the exercise of extraordinary jurisdiction under Article 226 but by now it is well settled that where a statute provides efficacious and adequate remedy, the High Court will do well in not entertaining a petition under Article 226. On misplaced considerations, statutory procedures cannot be allowed to be circumvented. *** 28. In our view, there was no justification whatsoever for the learned Single Judge to allow the borrower to bypass the efficacious remedy provided to him under Section 17 and invoke the extraordinary jurisdiction in his favour when he had disentitled himself for such relief by his conduct. The Single Judge was clearly in error in invoking his extraordinary jurisdiction under Article 226 in light of the peculiar facts indicated above. The Division Bench also erred in affirming the erroneous order of the Single Judge. 18. We cannot help but disapprove the approach of the High Court for the reasons already noticed in Dwarikesh Sugar Industries Ltd. v. Prem Heavy Engineering Works (P) Ltd. and Another, 1997 (6) SCC 450 , observing:- 32. When a position, in law, is well settled as a result of judicial pronouncement of this Court, it would amount to judicial impropriety to say the least, for the subordinate courts including the High Courts to ignore the settled decisions and then to pass a judicial order which is clearly contrary to the settled legal position. Such judicial adventurism cannot be permitted and we strongly deprecate the tendency of the subordinate courts in not applying the settled principles and in passing whimsical orders which necessarily has the effect of granting wrongful and unwarranted relief to one of the parties. It is time that this tendency is stops." 7. Such judicial adventurism cannot be permitted and we strongly deprecate the tendency of the subordinate courts in not applying the settled principles and in passing whimsical orders which necessarily has the effect of granting wrongful and unwarranted relief to one of the parties. It is time that this tendency is stops." 7. While the matter was partly heard on the issues raised and was pending further hearing, the petitioner, by way of an affidavit dated 06.03.2019, brought on record two facts which were deemed necessary for proper adjudication of the matter. Firstly, was with regard to the fact of a possibility of an out of court settlement in the matter, inasmuch as, the assets of the company of Petitioner No. 1, had been put for sale and proposals had been invited from eligible assets reconstruction company/Bank/Non-Banking Financial Institution/Financial Institution for purchase of Non-Performing Assets (NPA) along with underlying security. Secondly, and more importantly, is the order dated 7/6/2018, annexed to the affidavit at Annexure-3, which reflected that the said I.A. No. 43 of 2018 filed by the petitioner, for setting aside the ex parte order had been dismissed as infructuous in view of the fact that the petitioner had approached this Court and the order in question had been kept in abeyance. The order reads:- "DEBTS RECOVERY TRIBUNAL, GUWAHATI ORDER SHEET Order or other proceeding I.A. No. 42/2018 & I.A No. 43/2018 (in O.A. No. 265 /2017) Smt. Sweta Baja v. SBI 7/6/18 The the Honble High Court of Meghalaya, Shillong has already passed order to keep in abeyance the order dated 16/10/2017 passed by the DRT in O.A. No. 265/17. Since the learned counsel for the applicant has already approached the Honble High Court of Meghalaya, Shillong, hence I.A. No. 42/2018 & 43/2018 have become infructuous and hence the same are dismissed as infructuous. I.A. No. 42/2018 & 43/2018 stand disposed of accordingly. Case record be sent to be record room. Sd/- Presiding Officer" 8. Mr. K. Paul, learned counsel for the petitioner submits that as the assets of the company have been put for sale, the moment the sale materialises, there will be an entire restructuring of the liabilities of the company and the same can be settled out of Court, on terms and conditions as may be arrived with any Bank or financial institution as the case may be who will acquire the assets. On the second point, he submits that the Debt Recovery Tribunal has acted in breach of judicial discipline by dismissing the application I.A. No. 43 of 2018 under Order 9 Rule 13 only on the ground that this Court had passed the order keeping in abeyance the order dated 16.10.2017 and strongly contends that the order dated 07.06.2018, was passed by the learned Debt Recovery Tribunal, to frustrate the entire proceedings. He closes his arguments by submitting that pending pendency of the earlier OA No. 34 of 2017, the Civil proceedings pending in the Nongpoh courts and the factum of the application under Order 9 Rule 13 being dismissed coupled with the possibility of settlement, the entire case is a fit case for exercising the power by this Court under Article 227 of the Constitution of India, more so, in the face of the grave irregularities and illegalities which are writ large in the entire proceeding before the Debt Recovery Tribunal. 9. Having heard learned counsel for the parties at length and having given thoughtful consideration to the material on records, this Court will confine itself to the maintainability of the application under Article 227 and as to whether the same is maintainable in the presence of the alternative remedy provided by special statute in these matters. It is not disputed that efficacious alternative remedies exist against the impugned order, recovery certificate, and notice of demand which have been impugned herein. However, exercising the power of superintendence by this Court under Article 227 is to be examined in the backdrop of the manner in which the proceedings have been conducted and as to whether the same amounts to grave irregularities which warrant interference under Article 227 of the Constitution of India. 10. In normal circumstances and as per settled law as laid down by the Honble Supreme Court, courts will be slow to exercise powers under Article 227, especially in such matters, wherein the proceedings are under special Acts with in-built remedial and appellate provisions. However, the only fact in the present case that has caught the attention of this court is the affidavit bringing on record the order dated 07.06.2018 passed by the Debt Recovery Tribunal and the reason stated therein dismissing the application filed in the OA No. 265 of 2017. However, the only fact in the present case that has caught the attention of this court is the affidavit bringing on record the order dated 07.06.2018 passed by the Debt Recovery Tribunal and the reason stated therein dismissing the application filed in the OA No. 265 of 2017. But for this fact the revision application is to be dismissed as being not maintainable under Article 227. 11. In the facts and circumstances therefore, limited interference by this court will be in order and in the interest of justice to correct the procedure and to bring the proceedings in line, in accordance with law. Consequently, this revision application is disposed of and remanded to the Debt Recovery Tribunal, with the following directions :- (i) As the earlier applications had been declared as infructuous by order dated 07.06.2018, the petitioner shall be permitted to file fresh applications for setting aside the exparte order dated 16.10.2017 passed in O.A. 265/17 within a week of receipt of a copy of this order. (ii) The Debt Recovery Tribunal on receipt of records and the applications will firstly take up and dispose the applications for setting aside the exparte orders dated 16.10.2017 expeditiously and thereafter proceed in accordance with law. (iii) Till such disposal the impugned order dated 16.10.2017 shall stand suspended. It is further provided that as the petitioner has submitted that there is a possibility of settlement, the pendency of the matter before the Debt Recovery Tribunal will not be a bar for a settlement. 12. With the above observations and directions this Revision Petition is accordingly disposed of. 13. No order as to costs.