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2024 DIGILAW 1566 (GUJ)

Yamuna Agency v. Axis Bank

2024-07-16

VAIBHAVI D.NANAVATI

body2024
ORDER : Vaibhavi D. Nanavati, J. 1. Heard learned advocate Mr. Aman Mir for the petitioner. 2. The present petition is filed by the petitioner with the following prayers. “(a) To admit and allow this petition. (b) To hold and adjudge that the Debts Recovery Tribunal - II, Ahmedabad, while passing Order dated 25/06/2024 in Securitisation Application No. 343 of 2024 has acted ultra vires the jurisdiction vested in it by directing the Petitioners - Borrowers to enter into a one-time settlement with the Respondent Bank instead of quashing the action of the Respondent Bank of taking physical possession of the secured property in question in stark contravention of Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 read with Rule 8 of the Security Interest (Enforcement) Rules, 2002. Accordingly, quash and set aside the Order dated 25/06/2024 in Securitisation Application No. 343 of 2024. (c) To quash and set aside all the actions of the Respondent Bank against the Petitioners undertaken under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 on the ground of being in contravention of Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 read with Rule 8 of the Security Interest (Enforcement) Rules, 2002. (d) Pending hearing and final disposal of the present petition, this Hon'ble Court be pleased to stay the implementation of the Order dated 25/06/2024 passed by the Debts Recovery Tribunal - II, Ahmedabad in Securitisation Application No. 343 of 2024. (e) Pending hearing and final disposal of the present petition, this Hon'ble Court be pleased to stay the implementation and continuation of all the actions of the Respondent Bank against the Petitioners undertaken under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. (f) To pass any other and further orders as may be deemed fit and proper by this Hon'ble Court. (g) To provide for the cost of this petition.” 3. It is submitted by the learned advocate Mr. Aman Mir for the petitioner that the respondent bank was to take possession of the property in question on 26.06.2024. (f) To pass any other and further orders as may be deemed fit and proper by this Hon'ble Court. (g) To provide for the cost of this petition.” 3. It is submitted by the learned advocate Mr. Aman Mir for the petitioner that the respondent bank was to take possession of the property in question on 26.06.2024. It is further submitted by the learned advocate for the petitioner as was submitted in the said application, the respondent before proceedings to take actual possession of the disputed property has not taken symbolic possession under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. It is submitted that in absence of compliance of the Section 13(4) of the Act, is dehors the statutory provision of Section. In light of the aforesaid, it is submitted that the prayers as prayed for is granted. 4. This Court has perused the order passed by the learned Debts Recovery Tribunal, Ahmedabad dated 25.06.2024, it is apposite to refer the same, which reads as under :- ORDER “1. Learned Counsel for the Applicants submitted that the Respondent Bank is going to take possession of the property in question on 26/06/2024. He further submitted that though the Respondent, before proceeding to take actual possession of disputed property, has not taken its symbolic possession u/s 13(4), however with a view to protect possession of disputed property, in order to settle the matter with the Respondent, the Applicants are ready and willing to deposit Rs. 3 lakhs with the Respondent Bank on or before the date of possession i.e. 26/06/2024. In support of his submission, he has filed Undertaking of the Applicants to that effect vide Ex.A/09. 2. Ld. Counsel for the Respondent Bank made an endorsement on the Undertaking filed by the Applicants and stated that the Applicants may be directed to pay Rs. 3 Lakhs by tomorrow and further Rs. 3 Lakhs within 14 days from today and in the event of default, the Bank may be permitted to proceed further in accordance with law. 3. Ld. Counsel for the Respondent Bank made an endorsement on the Undertaking filed by the Applicants and stated that the Applicants may be directed to pay Rs. 3 Lakhs by tomorrow and further Rs. 3 Lakhs within 14 days from today and in the event of default, the Bank may be permitted to proceed further in accordance with law. 3. Considering totality of facts and circumstances of the case, where disputed property is said to be a residential property, in order to give an opportunity for settlement and in light of the Undertaking filed by the Applicants vide Ex.A/09, the Applicants are directed to deposit an amount of Rs.3/- Lakhs with the Respondent Bank on or before 26/06/2024 and a further amount of Rs.3/- Lakhs along with OTS proposal within 14 days from today. 4. In the meantime, the Respondent Bank directed to defer the process of taking possession till next date of hearing. 5. It is clarified that in the event of the Applicants committing a single default in depositing the amounts and/or submitting OTS proposal, as stated above, the Respondent Bank shall be at liberty to proceed further in accordance with law. List the matter for hearing on 07/08/2024.” 5. This Court has also perused the undertaking which is filed by the petitioner herein in consonance with the order as referred above, the petitioner has filed the following undertaking, which reads as under :- UNDERTAKING “We, the undersigned applicants undertake to deposit an amount of Rs.3,00,000/- to the respondent bank by 26.06.2024 in order to show our bona-fide.” 6. In the light of the aforesaid undertaking filed by the petitioners herein, it appears that the learned Tribunal after considering the property as a residential property and considering the undertaking filed by the petitioners directed the petitioners to deposit the amount of Rs. 3 lakh with the respondent bank or or before 26.06.2024 and a further amount of Rs. 3 lakh along with OTS proposal within 14 days from today. 7. On perusal of the impugned order, it also appears that the respondent bank in lieu thereof was directed to defer the process of taking possession till the next date of hearing. 3 lakh with the respondent bank or or before 26.06.2024 and a further amount of Rs. 3 lakh along with OTS proposal within 14 days from today. 7. On perusal of the impugned order, it also appears that the respondent bank in lieu thereof was directed to defer the process of taking possession till the next date of hearing. It was further directed that in the event, Applicants committing a single default in depositing the amounts and/or submitting OTS proposal, as stated above, the Respondent Bank shall be at liberty to proceed further in accordance with law. The matter is posted for further hearing on 07/08/2024. 8. Upon perusal of the undertaking and the order impugned passed by the learned DRT, it appears that the petitioners have given undertaking to deposit the amount to the tune of Rs. 3 lakh to the respondent bank by 26.06.2024 to show their bona-fide. In the second part of the order, wherein the applicants were directed to deposit further amount of Rs. 3 lakh along with OTS proposal within 14 days from the date of direction issued by the learned DRT, now the next date of hearing is 07.08.2024. 9. The petitioners have submitted that the petitioners have filed undertaking to deposit the amount of Rs. 3 lakh to the respondent bank by 26.06.2024 to show their bona-fide. It is open for the petitioners herein to prefer an application seeking early hearing before the learned DRT with respect to the submission of the petitioners before this Court. It is also open for the petitioners to prefer an appeal before the appellate Tribunal challenging the order dated 25.06.2024 passed by the learned DRT, Ahmedabad. 10. It is apposite to refer the ratio laid down by the Hon’ble Apex Court in the case of “PHR Invent Educational Society Vs. UCO Bank reported in AIR Online 2024 SC 225, which reads as under :- xxxxxxxx 14. The law with regard to entertaining a petition under Article 226 of the Constitution in case of availability of alternative remedy is well settled. In the case of Satyawati Tondon (supra), this Court observed thus: "43. UCO Bank reported in AIR Online 2024 SC 225, which reads as under :- xxxxxxxx 14. The law with regard to entertaining a petition under Article 226 of the Constitution in case of availability of alternative remedy is well settled. In the case of Satyawati Tondon (supra), this Court observed thus: "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. 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. 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." 15. It could thus be seen that, this Court has clearly held 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. It has been held 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. The Court clearly observed that, 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. It has been held that, though the powers of the High Court under Article 226 of the Constitution are of widest amplitude, still the Courts cannot be oblivious of the rules of self-imposed restraint evolved by this Court. The Court further held that though the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, still it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution. 16. The view taken by this Court has been followed in the case of Agarwal Tracom Private Limited v. Punjab National Bank and Others. 17. In the case of Authorized Officer, State Bank of Travancore and Another v. Mathew K.C., this Court was considering an appeal against an interim order passed by the High Court in a writ petition under Article 226 of the Constitution staying further proceedings at the stage of Section 13(4) of the SARFAESI Act. 17. In the case of Authorized Officer, State Bank of Travancore and Another v. Mathew K.C., this Court was considering an appeal against an interim order passed by the High Court in a writ petition under Article 226 of the Constitution staying further proceedings at the stage of Section 13(4) of the SARFAESI Act. After considering various judgments rendered by this Court, the Court observed thus: "16. The writ petition ought not to have been entertained and the interim order granted for the mere asking without assigning special reasons, and that too without even granting opportunity to the appellant to contest the maintainability of the writ petition and failure to notice the subsequent developments in the interregnum. The opinion of the Division Bench that the counter-affidavit having subsequently been filed, stay/modification could be sought of the interim order cannot be considered sufficient justification to have declined interference." 18. The same position was again reiterated by this Court in the case of Phoenix ARC Private Limited v. Vishwa Bharati Vidya Mandir and Others. 19. Again, in the case of Varimadugu OBI Reddy v. B. Sreenivasulu and Others, after referring to earlier judgments, this Court observed thus: "34. The order of the Tribunal dated 1-8-2019 was an appealable order under Section 18 of the SARFAESI Act, 2002 and in the ordinary course of business, the borrowers/person aggrieved was supposed to avail the statutory remedy of appeal which the law provides under Section 18 of the SARFAESI Act, 2002. In the absence of efficacious alternative remedy being availed, there was no reasonable justification tendered by the respondent borrowers in approaching the High Court and filing writ application assailing order of the Tribunal dated 1-8-2019 under its jurisdiction under Article 226 of the Constitution without exhausting the statutory right of appeal available at its command." 20. It could thus be seen that this Court has strongly deprecated the practice of entertaining writ petitions in such matters. 21. Recently, in the case of Celir LLP (supra), after surveying various judgments of this Court, the Court observed thus: "101. More than a decade back, this Court had expressed serious concern despite its repeated pronouncements in regard to the High Courts ignoring the availability of statutory remedies under the RDBFI Act and the SARFAESI Act and exercise of jurisdiction under Article 226 of the Constitution. More than a decade back, this Court had expressed serious concern despite its repeated pronouncements in regard to the High Courts ignoring the availability of statutory remedies under the RDBFI Act and the SARFAESI Act and exercise of jurisdiction under Article 226 of the Constitution. Even after, the decision of this Court in Satyawati Tondon [United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110 : (2010) 3 SCC (Civ) 260], it appears that the High Courts have continued to exercise its writ jurisdiction under Article 226 ignoring the statutory remedies under the RDBFI Act and the SARFAESI Act." 28. Insofar as the contention of the Borrower and its reliance on the judgment of this Court in the case of Mohammad Nooh (supra) is concerned, no doubt that non-exercise of jurisdiction under Article 226 of the Constitution on the ground of availability of an alternative remedy is a rule of self-restraint. There cannot be any doubt with that proposition. In this respect, it will be relevant to refer to the following observations of this Court in the case of Commissioner of Income Tax and Others v. Chhabil Dass Agarwal: "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 [ AIR 1964 SC 1419 ], Titaghur Paper Mills case [Titaghur Paper Mills Co. Ltd. v. State of Orissa, (1983) 2 SCC 433 : 1983 SCC (Tax) 131] 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." 29. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation." 29. It could thus clearly be seen that the Court has carved out certain exceptions when a petition under Article 226 of the Constitution could be entertained in spite of availability of an alternative remedy. Some of them are thus: (i) where the statutory authority has not acted in accordance with the provisions of the enactment in question; (ii) it has acted in defiance of the fundamental principles of judicial procedure; (iii) it has resorted to invoke the provisions which are repealed; and (iv) when an order has been passed in total violation of the principles of natural justice. 30. It has however been clarified 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. 31. Undisputedly, the present case would not come under any of the exceptions as carved out by this Court in the case of Chhabil Dass Agarwal (supra). 32. We are therefore of the considered view that the High Court has grossly erred in entertaining and allowing the petition under Article 226 of the Constitution. 33. While dismissing the writ petition, we will have to remind the High Courts of the following words of this Court in the case of Satyawati Tondon (supra) since we have come across various matters wherein the High Courts have been entertaining petitions arising out of the DRT Act and the SARFAESI Act in spite of availability of an effective alternative remedy: "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." 10. Considering the aforesaid facts and position of law as referred above, the present petition stands disposed of with the aforesaid directions.