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2020 DIGILAW 522 (AP)

Sri Sai Rama Tractors v. State Bank Of India

2020-08-13

C.PRAVEEN KUMAR, LALITHA KANNEGANTI

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JUDGMENT C.Praveen Kumar, J. - The present Writ Petition came to be filed seeking issuance of writ of Mandamus declaring the action of the respondent in seeking to seize and take away the hypothecated vehicles mentioned at Schedule-C Part-1 in the demand notice in DONDAPARTHI/SARFAESI/SSRT, dated 06.09.2019, received by the Petitioner, on 12.09.2019, under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [ for short 'SARFAESI'], as arbitrary, illegal and in violation of the procedure contemplated under the SARFAESI and Article 14 and 19 of the Constitution of India. 2. The circumstances which lead to filing of the present Writ Petition are as under : (i) The Petitioner is a Partnership Firm represented by its Managing Partner Sri Pradhana Rajendra Prasad, engaged in transport business. (ii) In the month of September, 2018, the Petitioner Firm availed a Term Loan under Fleet Finance to a tune of Rs.5,15,00,000/- from the Respondent Bank and purchased 12 Tata 4923 Model Lorries [Trip Trailors] by hypothecating the said vehicles and other securities. It is said that, the Petitioner Firm is regularly paying the instalment amounts and so far paid Rs. 48,34,757/-. (iii) The Petitioner Firm has taken a separate Term Loan of Rs.37,61,000/- under SME Car Loan from the Respondent Bank to purchase a Toyota Fortuner and paid instalment amount of Rs.9,05,886.84 paise. (iv) The Petitioner Firm entered into a sub-contract with Steel City Shipping Services (P) Limited, Visakhapatnam, which is the main contractor with Visakhapatnam Port Trust, for engaging 10 Nos. TATA 7923 Model Tipper Trailer Lorries for handling of Coal, Limestone, Bauxite, Iron Ore and Fertilizers and other materials at Visakhapatnam under Work Order, dated 20.04.2019, valid for a period of five years. It is said that, the Petitioner Firm engaged 10 vehicles out of the 12 vehicles purchased under the aforesaid Fleet Finance on monthly hire charge basis. (v) It is said that, the Petitioner Firm was prompt in paying instalments, however, due to recent developments in political and economic scenario in the country and more particularly in the State of Andhra Pradesh, most of the works are stalled for time being, affecting the imports, which resulting in the Petitioner Firm not paying the instalments regularly. (v) It is said that, the Petitioner Firm was prompt in paying instalments, however, due to recent developments in political and economic scenario in the country and more particularly in the State of Andhra Pradesh, most of the works are stalled for time being, affecting the imports, which resulting in the Petitioner Firm not paying the instalments regularly. Accordingly, the loan accounts of the Petitioner Firm were classified as NPA's. (vi) Having regard to the above, the Respondent Bank issued the impugned demand notice, dated 06.09.2019, under Section 13(2) of the SARFAESI Act, calling upon the Petitioner Firm to pay the entire outstanding loan amount on both the loan accounts. It is said that, the Respondent officials are also threatening to seize the hypothecated vehicles without waiting till the expiry of the statutory period of 60 days. Hence, the Writ Petition is filed. 3. A counter came to filed denying the averments made in the affidavit filed in support of the Writ Petition. Apart from that, it is stated that, the Writ Petitioner did not give any reply to the impugned notice, but, however, approached this court directly under Article 226 of the Constitution of India, circumventing the remedy available to him before the Debts Recovery Tribunal. 4. The short question that arises for consideration is, whether a writ would be maintainable against the issuance of Notice under Section 13(2) of the SARFAESI Act, more so, when remedy under Section 17 of the Act is available to the Petitioner? 5. Before proceeding further, it is to be noted that writ jurisdiction is an extraordinary jurisdiction of the High Court under Article 226 and 227 of the Constitution of India. It is settled legal position that a writ petition under Article 226 of the Constitution of India is normally not entertained where there is an efficacious alternative remedy. 6. In Kanaiyalal Lalchand Sachdev & Ors v. State Of Maharashtra & Ors,2002 2 SCC 782 where the High Court has dismissed the Writ Petition filed by the Appellant under SARFAESI Act. The Hon'ble Supreme Court while dismissing the appeal held as under:- "21. 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. The Hon'ble Supreme Court while dismissing the appeal held as under:- "21. 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". 7. The Division Bench of this Court in Durgam Anitha, W/o. Late Durgam Darshanam & Another v. State Bank of Hyderabad, represented by its Authorised Officer, Mahboobgunj Branch, Hyderabad & Others delivered on 18.01.2012 in W.P. No. 17909 of 2011, while referring to the judgments of the Hon'ble Supreme Court in United Bank of India Vs. Satyawati Tondon & Ors, 2010 8 SCC and Raj Kumar Shivhare v Directorate of Enforcement, (2010) 4 SCC 772 held that, "at the stage of demand notice under Section 13(2) of the SARFAESI Act, or possession notice under Section 13(4) of the SARFAESI Act, or at the stage of subsequent orders passed by the Bank, recovery of amount under the SARFAESI Act, no writ petition would lie, the proper remedy is by way of filing appeal under Section 17 of the SARFAESI Act and thereafter, if so aggrieved, by filing second appeal under Section 18 of the SARFAESI Act". 8. In GM, Sri Siddeshwara Co-operative Bank Ltd. and Ors. Vs. Ikbal and Ors, (2013) 10 SCC 83 the Apex Court held as under: "27. There is one more aspect in the matter which has troubled us. Against the action of the Bank under Section 13(4) of the SARFAESI Act, the borrower had a remedy of appeal to the Debts Recovery Tribunal (DRT) under Section 17. The remedy provided under Section 17 is an efficacious remedy. The borrower did not avail that remedy and further remedies from that order and instead directly approached the High Court in extraordinary jurisdiction under Article 226 of the Constitution of India. 44. The remedy provided under Section 17 is an efficacious remedy. The borrower did not avail that remedy and further remedies from that order and instead directly approached the High Court in extraordinary jurisdiction under Article 226 of the Constitution of India. 44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution. 45. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance." 31. 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 32. ...... 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." 9. 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." 9. In Authorized Officer, State Bank of Travancore vs. Mathew K.C., (2018) AIR SC 676 the Hon'ble Supreme Court held as under:- "Even prior to the SARFAESI Act, considering the alternate remedy available under the DRT Act it was held in Punjab National Bank vs. O.C. Krishnan and others, (2001) 6 SCC 569 that :- 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 a hierarchy of appeal provided in the Act, namely, filing of an appeal under Section 20 and this fast-track procedure cannot be allowed to be derailed either by taking recourse to proceedings under Articles 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 Articles 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 Article 227 of the Constitution and should have directed the respondent to take recourse to the appeal mechanism provided by the Act." In 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 :- 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. 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. The Section 13(4) notice along with possession notice under Rule 8 was issued on 21.04.2015. The remedy under Section 17 of the SARFAESI Act was now available to the Respondent if aggrieved. These developments were not brought on record or placed before the Court when the impugned interim order came to be passed on 24.04.2015. The writ petition was clearly not instituted bonafide, but patently to stall further action for recovery. There is no pleading why the remedy available under Section 17 of the Act before the Debt Recovery Tribunal was not efficacious and the compelling reasons for by-passing the same. Unfortunately, the High Court also did not dwell upon the same or record any special reasons for grant of interim relief by direction to deposit." The impugned orders are therefore contrary to the law laid down by this Court under Article 141 of the Constitution and unsustainable. They are therefore set aside and the appeal is allowed". 10. It is to be noted that, the grievance of the Petitioner appears to be that, due to political and economic change in the country, he could not pay the instalment amounts availed under Fleet Finance Term Loan to the Respondent Bank. They are therefore set aside and the appeal is allowed". 10. It is to be noted that, the grievance of the Petitioner appears to be that, due to political and economic change in the country, he could not pay the instalment amounts availed under Fleet Finance Term Loan to the Respondent Bank. The Petitioner pleads that, he approached the Officers of the Respondent Bank informing about the developments, but the Officers seems to have told him that they have nothing to do with the subject mater of the accounts, as the property was already classified as NPA's, and as such, the entire amount has to be paid, failing which, they sought for seizing the vehicles and put them to auction without even waiting for the statutory period of 60 days. 11. The averment in the Writ Petition, which is now made the basis for the argument, is that, the authorities are highhandedly trying to seize the vehicles for auction, appears to be without any basis. It is needless to mention that, any action to be taken will only be in accordance with the procedure established by law. In-fact, the record shows that, a notice under Section 13(2) of the SARFAESI Act was issued to the Petitioner, but, in-stead of giving any reply, the Petitioner has approached this court making bald allegations. 12. Having regard to the above, the Writ Petition is disposed of giving liberty to the petitioner to approach the said forum. It is made clear that any observation made in the order are only for the purpose of deciding the instant case and the same should not influence the Tribunal while deciding the application if any filed by petitioner. No order as to costs. Consequently, miscellaneous petitions pending, if any, shall stand closed.