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2022 DIGILAW 1842 (GUJ)

PINABEN UDAYBHAI SHUKLA v. STATE OF GUJARAT

2022-12-22

BHARGAV D.KARIA

body2022
ORDER : 1. Heard learned advocate Mr. Yogesh G. Kanade for the petitioner. 2. By this petition under Articles 226 and 227 of the Constitution of India, the petitioner has challenged the order dated 24.08.2022 passed by the Chief Metropolitan Magistrate, Ahmedabad in Criminal Miscellaneous Application No. 4159 of 2021 filed by the respondent No. 2 under Section 14 of the Securitisation and Reconstructions of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘the SARFAESI Act’). 3.1 The brief facts of the case are that the petitioner purchased the property situated at Tenement No. 4, admeasuring 147.50 Sq. Meters in the scheme named Jalnath Co-operative Housing Society Limited forming part of the Final Plot No. 32, T.P. Scheme No. 6, Sub Plot No. 5/B of Mouje Paldi Sub District-Ahmedabad-4 (Paldi) and Registration District Ahmedabad for Rs. 14,00,000/- and paid various amount of payments qua purchasing the said property between 17.04.2010 to 08.07.2010 to the respondent Nos. 3, 4 and 5. 3.2 It is the case of the petitioner that the petitioner is therefore the owner of the property in question. The petitioner also filed a Civil Suit No. 207 of 2018 for execution of the sale deed by the respondent No. 5 and for permanent injunction. The City Civil Court, Ahmedabad by order dated 27.07.2021 partly allowed the Notice of Motion at Exhibits 6-7 as both the parties admitted the possession of the petitioner over the suit property and therefore, the defendant was directed not to dispossess the petitioner out of the suit property without the due process of law. 3.3 The respondent no. 5 also preferred an application under Order VII Rule 11 of the Code of Civil Procedure in the said Suit which was rejected by the City Civil Court, Ahmedabad vide order dated 18.04.2018. 3.4 It appears that respondent nos. 3,4 and 5 obtained loan against the property from respondent no. 2 amounting to Rs. 22,00,000/-. As the respondent nos. 3 to 5 failed to make the repayment of dues, the account was classified as Non Performing Asset (NPA) on 29.02.2020. Respondent no. 2 issued notice under section 13(2) of the SARFAESI Act on 18.06.2021 calling upon the respondent nos. 3 to 5 to pay Rs. 28,13,952.21 as outstanding dues on the said date. 3.5 As respondent nos. 3 to 5 who have mortgaged the aforesaid property to respondent no. Respondent no. 2 issued notice under section 13(2) of the SARFAESI Act on 18.06.2021 calling upon the respondent nos. 3 to 5 to pay Rs. 28,13,952.21 as outstanding dues on the said date. 3.5 As respondent nos. 3 to 5 who have mortgaged the aforesaid property to respondent no. 2 failed to make payment, respondent no. 2 preferred an application under section 14 of the SARFAESI Act being Criminal Miscellaneous Application No. 4159/2021 in the Court of Chief Metropolitan Magistrate, Ahmedabad to avail the assistance for getting possession of the secured mortgaged property. 3.6 The Chief Metropolitan Magistrate, Ahmedabad by order dated 24.08.2022 allowed the Criminal Miscellaneous Application No. 4159/2021 preferred by respondent no. 2. 3.7 It appears that pursuant to the aforesaid order passed under section 14 of SARFAESI Act, respondent no. 2 took physical possession of the property from the petitioners on 6.11.2022. 4.1 Learned advocate Mr.Kanade for the petitioner submitted that the petitioner was never the party before the Chief Judicial Magistrate in the proceeding under Section 14 of the SARFAESI Act and therefore, the impugned order passed by the Chief Judicial Magistrate under Section 14 of the SARFAESI Act is not binding upon the petitioner. It was submitted that in spite of the said fact, the petitioner has been dispossessed on 6th November, 2022 by the respondent No. 2 who is a secured creditor of the property in question. 4.2 It was submitted by learned advocate Mr. Kanade that the impugned order is violative of principles of natural justice as no opportunity was afforded to the petitioner before passing the impugned order. 4.3 It was further submitted by learned advocate Mr. Kanade that the impugned order is violative of Constitutional right of the petitioner in terms of Article 300A of the Constitution of India and in such circumstances, this petition is required to be entertained by quashing and setting aside the impugned order dated 24.08.2022 passed by the Chief Judicial Magistrate while exercising the powers under Section 14 of the SARFAESI Act. In support of his submission, learned advocate Mr. Kanade relied upon the decision of this Court in case of Shardaben Lallubhai Patel and Others vs. Vadodara Urban Development Authority and Others in Special Civil Application No. 3825/2000 with Special Civil Application No. 15153/2012 with Special Civil Application No. 2191/2013 passed on 31.01.2020. 4.4 Learned advocate Mr. In support of his submission, learned advocate Mr. Kanade relied upon the decision of this Court in case of Shardaben Lallubhai Patel and Others vs. Vadodara Urban Development Authority and Others in Special Civil Application No. 3825/2000 with Special Civil Application No. 15153/2012 with Special Civil Application No. 2191/2013 passed on 31.01.2020. 4.4 Learned advocate Mr. Kanade further relied upon the following decisions to submit that this Court has jurisdiction to entertain this petition under Article 226 of the Constitution of India as the impugned order is passed in violation of principles of natural justice: (1) The Commissioner of Income Tax, Bombay City vs. Goodavari Sugar Mills Limited, AIR 1967 SC 556 (2) Harbanslal Sahnia and Another vs. Indian Oil Corporation Limited and Others, (2003) 2 SCC 107 (3) Whirpool Corporation vs. Registrar of Trade Marks, Mumbai and Others, (1998) 8 SCC 1 5. Having heard the learned advocate for the petitioner, it is not in dispute that the learned Chief Judicial Magistrate, Ahmedabad exercised the powers under Section 14 of the SARFAESI Act pursuant to the action taken by the respondent No. 2 who is a secured creditor under Section 13 of the SARFAESI Act. 6. As per provisions of Section 17(1) of the SARFAESI Act, the petitioner has an alternative efficacious remedy to challenge the order passed by the Chief Judicial Magistrate before the Debt Recovery Tribunal. 7. Section 17(1) of the SARFAESI Act reads as under: 17(1). 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 fortyfive days from the date on which such measure had been taken. 8. The issue with regard to alternative efficacious remedy is now no more res integra in view of the decision of the Hon’ble Supreme Court in case of Phoenix Arc Private Limited vs. Vishwa Bharati Vidya Mandir, (2022) 5 SCC 345 which reads as under: “7.2. 8. The issue with regard to alternative efficacious remedy is now no more res integra in view of the decision of the Hon’ble Supreme Court in case of Phoenix Arc Private Limited vs. Vishwa Bharati Vidya Mandir, (2022) 5 SCC 345 which reads as under: “7.2. While considering the issue regarding the maintainability of and/or entertainability of the writ petitions by the High Court in the instant case, a few decisions of this Court relied upon by the learned Senior Advocate appearing on behalf of the appellant-ARC are required to be referred to. 7.3. In the case of Satyawati Tondon and Others (supra), it was observed and held by this Court that the remedies available to an aggrieved person against the action taken under section 13(4) or Section 14 of the SARFAESI Act, by way of appeal under Section 17, can be said to be both expeditious and effective. On maintainability of or entertainability of a writ petition under Article 226 of the Constitution of India, in a case where the effective remedy is available to the aggrieved person, it is observed and held in the said decision in paragraphs 43 to 46 as under: “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. 44. 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. 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. 46. It must be remembered that stay of an action initiated by the State and/or its agencies/instrumentalities for recovery of taxes, cess, fees, etc. seriously impedes execution of projects of public importance and disables them from discharging their constitutional and legal obligations towards the citizens. In cases relating to recovery of the dues of banks, financial institutions and secured creditors, stay granted by the High Court would have serious adverse impact on the financial health of such bodies/institutions, which (sic will) ultimately prove detrimental to the economy of the nation. Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters. Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters. Of course, if the petitioner is able to show that its case falls within any of the exceptions carved out in Baburam Prakash Chandra Maheshwari vs. Antarim Zila Parishad, AIR 1969 SC 556 , Whirlpool Corporation vs. Registrar of Trade Marks, (1998) 8 SCC 1 and Harbanslal Sahnia vs. Indian Oil Corporation Ltd. (2003) 2 SCC 107 and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order.” 7.4 In the case of City and Industrial Development Corporation vs. Dosu Aardeshir Bhiwandiwala, (2009) 1 SCC 168 , it was observed by this Court in paragraph 30 that the Court while exercising its jurisdiction under Article 226 is duty bound to consider whether...........(c) the petitioner has any alternative or effective remedy for the resolution of the dispute.” 7.5 In the case of Kanaiyalal Lalchand Sachdev and Others (supra) after referring to the earlier decisions of this Court in the cases of Sadhana Lodh vs. National Insurance Co. Ltd. and Another, (2003) 3 SCC 524 , Surya Dev Rai vs. Ram Chander Rai and Others, (2003) 6 SCC 675 and State Bank of India vs. Allied Chemical Laboratories and Another, (2006) 9 SCC 252 while upholding the order passed by the High Court dismissing the writ petition on the ground that an efficacious remedy is available under Section 17 of the SARFAESI Act, it was observed 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. 7.6 Similar view has been expressed by this Court in subsequent decisions in the case of General Manager, Sri Siddeshwara Cooperative Bank Limited and Another (supra) as well as in the case of Agarwal Tracom Private Limited (supra). xxx xxx xxx 12. Even otherwise, it is required to be noted that a writ petition against the private financial institution-ARC - appellant herein under Article 226 of the Constitution of India against the proposed action/actions under Section 13(4) of the SARFAESI Act can be said to be not maintainable. In the present case, the ARC proposed to take action/actions under the SARFAESI Act to recover the borrowed amount as a secured creditor. In the present case, the ARC proposed to take action/actions under the SARFAESI Act to recover the borrowed amount as a secured creditor. The ARC as such cannot be said to be performing public functions which are normally expected to be performed by the State authorities. During the course of a commercial transaction and under the contract, the bank/ARC lent the money to the borrowers herein and therefore the said activity of the bank/ARC cannot be said to be as performing a public function which is normally expected to be performed by the State authorities. If proceedings are initiated under the SARFAESI Act and/or any proposed action is to be taken and the borrower is aggrieved by any of the actions of the private bank/bank/ARC, borrower has to avail the remedy under the SARFAESI Act and no writ petition would lie and/or is maintainable and/or entertainable. Therefore, decisions of this Court in the cases of Praga Tools Corporation (supra) and Ramesh Ahluwalia (supra) relied upon by the learned counsel appearing on behalf of the borrowers are not of any assistance to the borrowers. 13. Now, so far as the submission on behalf of the borrowers that in exercise of the powers under Article 226 of the Constitution, this Court may not interfere with the interim/interlocutory orders is concerned, the decision of this Court in the case of Mathew K.C. (supra) is required to be referred to. 13.1. In the case of Mathew K.C. (supra) after referring to and/or considering the decision of this Court in the case of Chhabil Dass Agarwal (supra), it was observed and held in paragraph 5 as under: “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 loath 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. 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 vs. Supt. of Taxes, AIR 1964 SC 1419 , Titaghur Paper Mills Co. Ltd. vs. State of Orissa, (1983) 2 SCC 433 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.” 13.2 Applying the law laid down by this Court in the case of Mathew K.C. (supra) to the facts on hand, we are of the opinion that filing of the writ petitions by the borrowers before the High Court under Article 226 of the Constitution of India is an abuse of process of the Court. The writ petitions have been filed against the proposed action to be taken under Section 13(4). As observed hereinabove, even assuming that the communication dated 13.08.2015 was a notice under Section 13(4), in that case also, in view of the statutory, efficacious remedy available by way of appeal under Section 17 of the SARFAESI Act, the High Court ought not to have entertained the writ petitions. As observed hereinabove, even assuming that the communication dated 13.08.2015 was a notice under Section 13(4), in that case also, in view of the statutory, efficacious remedy available by way of appeal under Section 17 of the SARFAESI Act, the High Court ought not to have entertained the writ petitions. Even the impugned orders passed by the High Court directing to maintain the status quo with respect to the possession of the secured properties on payment of Rs. 1 crore only (in all Rs. 3 crores) is absolutely unjustifiable. The dues are to the extent of approximately Rs. 117 crores. The ad-interim relief has been continued since 2015 and the secured creditor is deprived of proceeding further with the action under the SARFAESI Act. Filing of the writ petition by the borrowers before the High Court is nothing but an abuse of process of Court. It appears that the High Court has initially granted an ex-parte ad-interim order mechanically and without assigning any reasons. The High Court ought to have appreciated that by passing such an interim order, the rights of the secured creditor to recover the amount due and payable have been seriously prejudiced. The secured creditor and/or its assignor have a right to recover the amount due and payable to it from the borrowers. The stay granted by the High Court would have serious adverse impact on the financial health of the secured creditor/assignor. Therefore, the High Court should have been extremely careful and circumspect in exercising its discretion while granting stay in such matters. In these circumstances, the proceedings before the High Court deserve to be dismissed.” 14. In view of the above and for the reasons stated above, present appeals succeed. The Writ Petition Nos. 35564 to 35566 of 2015 before the High Court are dismissed. Consequently, the ex-parte ad-interim order dated 26.08.2015 further extended by orders dated 28.02.2017 and 27.03.2018 stand vacated. Present appeals are accordingly allowed with costs to the appellants to be paid by the original writ petitioners quantified at Rs. 1 lakh in both the cases to be directly paid to the appellant within a period of four weeks from today. Pending applications, if any, also stand disposed of.” 9. In view of the above settled legal position, this petition is not entertained and the petitioner is relegated to avail alternative efficacious remedy available under Section 17 of the SARFAESI Act. 10. Pending applications, if any, also stand disposed of.” 9. In view of the above settled legal position, this petition is not entertained and the petitioner is relegated to avail alternative efficacious remedy available under Section 17 of the SARFAESI Act. 10. The petition is accordingly dismissed with no order as to costs.