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2024 DIGILAW 175 (HP)

Nicon Ferrochem v. State Bank of India

2024-03-15

SANDEEP SHARMA

body2024
JUDGMENT : SANDEEP SHARMA, J. 1. By way of instant petition filed under Article 226 of the Constitution of India, petitioners have prayed for the following main reliefs: “(A) Writ of Certiorari be issued by declaring the entire exercise of taking over and handing over the industry under the provisions of Section 13 of SARFAESI Act, 2002 illegal, arbitrary, capricious, as the respondent Bank has committed procedural impropriety and has desperately failed to adhere the statutory provisions of SARFAESI Act, 2002 and Recovery of Debts and Bankruptcy Act, 1993 and Security Interest (Enforcement) Rules, 2002 due to said omissions/lapses the petitioners were forced to sustain heavy losses to the sum of Rs. 1,75,00,000/- occurred during statutory proceedings of taking over physical possession of industry under Section 13(4) of SARFAESI Act, 2002 on account of theft/ Embezzlement of goods, material, parts of plants and machinery etc. (B) Writ of Mandamus be issued by directing the respondent Bank to indemnify the petitioners for losses sustained by them to the sum of Rs. 1,75,00,000/- occurred during statutory proceedings of taking over physical possession of industry under Section 13 (4) of SARFAESI Act, 2002 on account of theft/Embezzlement of goods, material, parts of plants and machinery etc. along with charges for installation and repair of stolen articles including repair of ancillary machinery/units etc. as the losses ascertained are undisputed and are calculated in proceedings under section 160 of Cr.P.C. in presence of authorized officer of respondent Bank, police authorities and petitioners. (C) Writ of Mandamus be issued by directing the respondent Bank to indemnify the petitioners for mental agony and harassment to the sum of Rs. 10 Lacs and further, petitioners be compensated for losses sustained by them due to delay in production for thirty two months despite full and final settlement of accounts through OTS on dated 21-2-2019, as the said losses were occurred due to dictorial attitude of the respondent bank and non-adherence to the statutory provisions of SARFAESI Act, 2002 and Recovery of Debts and Bankruptcy Act, 1993.” 2. For having birds’ eye view of the matter, certain undisputed facts, relevant for the adjudication of the case at hand are noted herein after. 3. For having birds’ eye view of the matter, certain undisputed facts, relevant for the adjudication of the case at hand are noted herein after. 3. Petitioner No. 2, Shri Rajesh Kumar Jain, availed facility of Term Loan and Credit from State Bank of Patiala, Industrial Phase-II, Chandigarh, which subsequently came to be taken over by State Bank of India, for his partnership concern i.e. M/s Nicon Ferrochem, having its industrial unit at Gagret, Tehsil Amb, District Una, Himachal Pradesh. Initially, credit facility to the tune of Rs. 3.00 Crore, as Term Loan and Cash Credit was extended in favour of petitioner No. 2, for equitable mortgages created by the petitioner and person namely Radhey Shyam Aggarwal, qua the properties situate at Up Mohal Ram Nagar, Gagret, Tehsil Amb, District Una, Himachal Pradesh and a house situate over Plot No. 315, Sector 21-C, Faridabad, in favour of the respondent Bank. Subsequently, on the request of petitioner No. 2, Term Loan and Cash Credit Limit/existing credit facility was enhanced to Rs. 3,62,00,000/- against security and hypothecation of stocks and mortgage of two properties. 4. Since, the petitioners were unable to repay the loan within the schedule fixed by the respondent Bank, account of the petitioner No. 2 became Non Performing Asset (NPA), as a result whereof, notice under S. 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002 (hereinafter, ‘Act 2002’) came to be served upon petitioner No. 2 by the State Bank of India. Since petitioner No. 2 failed to pay the amount in terms of demand made by the respondent Bank, possession of the Unit (immovable property as well as machinery) was taken over by State Bank of India on 3.5.2018. 5. Before proceedings under the Act could be taken to its logical end, petitioner No. 2, under One Time Settlement Scheme, paid a sum of Rs. 2,26,59,432/- on 21.2.2019, as a result whereof, proceedings initiated under the Act, 2002 against petitioner No. 2 came to be dropped. Though the petitioner No. 2 had paid the agreed amount under One Time Settlement Scheme but since the original title deeds of the secured assets as well as possession of the Unit and machinery were not handed over, petitioner No. 2 served a legal notice upon the respondent Bank on 25.2.2019 (Annexure P-5). Though the petitioner No. 2 had paid the agreed amount under One Time Settlement Scheme but since the original title deeds of the secured assets as well as possession of the Unit and machinery were not handed over, petitioner No. 2 served a legal notice upon the respondent Bank on 25.2.2019 (Annexure P-5). Respondent Bank vide letter dated 28.2.2019 (Annexure P-6), replied to the aforesaid legal notice, thereby expressing its intention to hand over the original title deeds of mortgaged immovable property alongwith actual physical possession of the mortgaged property, but after expiry of 20 days from the date of issuance of letter dated 28.2.2019. However, despite there being aforesaid undertaking, neither any No Dues Certificate was issued to the petitioner No. 2 nor steps were initiated to hand over possession of the property within the time period, as agreed by the respondent Bank. 6. No Dues Certificate was issued on 22.3.2019 and thereafter, on 25.3.2019, petitioner No. 2 was called in the office of State Bank of India, Chandigarh to sign certain documents. Allegedly, after getting signatures of the petitioner No. 2 on certain papers, officials of the Bank alongwith petitioner No. 2, visited the industrial Unit of the petitioner at Gagret, Tehsil Amb, District Una, Himachal Pradesh. Since, after having reached the industrial premises, petitioner No. 2 noticed major theft of articles i.e. machinery etc. he raised objection with the officials of the respondent Bank, but they refused to acknowledge the same. In the aforesaid background, petitioner was compelled to make a complaint to the Superintendent of Police, Una, as well as to Station House Officer, Police Station Gagret, District Una, (Annexure P-7). Apart from above, petitioner No. 2 also claimed to have served legal notice dated 31.3.2019, upon the respondent Bank. Vide another communication dated 30.03.2019 (Annexure P-10), petitioner No. 2 requested the respondent Bank to hand over videography of the Unit done at the time of taking over the possession (Annexure P-11). 7. Respondent Bank replied to the aforesaid notice on 8.4.2019 (Annexure P-8), thereby though agreeing to get the process of handing over of possession video-graphed, but shifted the responsibility, if any, upon the security agency, which was entrusted with duty to keep the property in safe custody, during the pendency of the proceedings initiated against the petitioner No. 2, under the Act 2002. 8. 8. In reply to the aforesaid legal notice, respondent Bank though refused to acknowledge the loss, if any, but apprised the petitioner No. 2 that an FIR already stands registered against the security agency in the month of March, 2019 and loss, if any, could be confirmed only after preparation of stolen inventory and after proper valuation by the approved valuer. Allegedly, respondent Bank, instead of getting the proper inventory prepared by valuer, as detailed in the complaint made by respondent-bank (Annexure P-2), put pressure upon the petitioner through Station House Officer, Police Station Amb to take possession of unit. 9. Though, initially, the petitioner refused to take possession, but subsequently, on 25.11.2021, he was compelled to take possession on account of order passed by learned Senior Civil Judge, Court No. 1, Amb, pursuant to the request made by respondent-bank for appointment of local commissioner. Since, while taking over possession, respondent-Bank, failed to redress the complaint of the petitioner qua theft of articles/machinery and no steps were being taken by it to assess the loss caused to petitioner No. 2, on account of theft, petitioners were compelled to approach this Court, in the instant proceedings, praying therein for the relifs, as have been reproduced herein above. 10. I have heard learned counsel for the parties and perused the material available on record. 11. Vide order dated 2.8.2023, Division Bench of this Court, leaving all questions of law open, issued notice to the respondent-Bank for 6.9.2023. Pursuant to aforesaid notice, respondent-bank put in appearance and specifically raised objection with regard to maintainability of the petition. On 28.12.2023, learned counsel for the petitioners, on instructions, categorically submitted that the petitioners are not questioning the proceedings conducted under the Act and their claim is now only confined to reliefs (b) & (c). Having taken note of the aforesaid statement made by learned counsel for the petitioner, Division Bench of this Court in its order dated 28.12.2023 recorded that since proceedings under the Act are not being questioned by the petitioners, therefore, this Court does not have the roster to deal with the matter. In the aforesaid background, the matter came to be listed before this Court for further hearing. 12. In the aforesaid background, the matter came to be listed before this Court for further hearing. 12. In the aforesaid background, this Court is required to ascertain, whether relief as prayed for in Clause (b) & (c), can be granted in the instant proceedings, especially in view of the reply filed by the respondent-bank, wherein it has been specifically stated that relief of compensation and damages as sought, cannot be granted in the instant proceedings filed under Article 226 of the Constitution of India, rather such relief, if any, can only be granted in the civil suit, if any, initiated by the petitioner in the Civil Court. 13. Besides above, respondent-bank in its reply, while opposing the prayer made on behalf of the petitioners on the grounds, as taken herein above, has also sought to refute the claim of the petitioners on the ground of delay and latches. It has been stated that the petition is barred by limitation because last communication of the petitioner on record is dated 04.05.2019, whereas, petition has been filed in the Month of July, 2023, i.e. after almost 4 years. Mr. Arvind Sharma, learned counsel representing the respondents vehemently argued that present petition is not maintainable at all, but even otherwise also, claim of the petitioner has become stale in terms of provisions contained under Article 68 of the Limitation Act, which specifically provides limitation of three years to file suit, from the date, when right to redeem or to recover possession accrues in favour of a party. 14. In support of aforesaid submission, Mr. Sharma placed reliance upon judgment rendered by Hon’ble Supreme Court of India in case titled ICICI Bank Limited and Others vs. Umakanta Mohapatra and Others, (2019) 13 SCC 497 [Civil Appeals No. 10243-10250 of 2018 with Nos. 10251-10265 of 2018, decided on October 5, 2018], wherein it came to be specifically ruled that writ petition laying therein challenge to the proceedings, if any, in terms of notice issued under S.13 of the Act, 2002, is not maintainable. 15. Precisely, the grouse of the petitioners, as highlighted in the petition and further canvassed by Mr. 10251-10265 of 2018, decided on October 5, 2018], wherein it came to be specifically ruled that writ petition laying therein challenge to the proceedings, if any, in terms of notice issued under S.13 of the Act, 2002, is not maintainable. 15. Precisely, the grouse of the petitioners, as highlighted in the petition and further canvassed by Mr. Sartej Singh Narula, learned counsel, is that since remedy to file civil suit is barred in terms of the provision contained under Section 34 of the Act, 2002, petitioners are left with no alternative remedy, but to approach this Court in the instant proceedings filed under Article 226 of the Constitution of India. While fairly admitting the fact that the petitioners have given up their first prayer of setting aside entire proceedings of taking over and handing over the industry under the provisions of S. 13 of the Act, being illegal, arbitrary and capricious, Mr. Narula, learned counsel, vehemently argued that compensation and damages for the loss caused by the respondent-bank can only be claimed in the instant proceedings. He submitted that respondent-bank is/was otherwise duty bound under statute to assess the value of machinery, while making a detail of inventory at the time of taking over the possession and then at the time of handing over the possession. To substantiate his aforesaid submission, he specifically invited attention of this Court to Rule 4(i) & (ii) and Rule 5 of SARFAESI Act. Mr. Narula, further argued that the present case is not a simple case of seeking damages or filing a suit for recovery of loss caused to the respondent-bank and as such, civil suit would not be maintainable. He further submitted that the entire loss has been caused by State Bank of India, an instrumentality of State, due to the arbitrary and oppressive approach and by not adhering to the provisions of rule under the Act and as such, civil suit is not maintainable. He submitted that since respondent-bank failed to get the machinery ensured at the time of taking over the possession on 03.05.2018, it is liable to pay compensation/damages. He submitted that since respondent-bank failed to get the machinery ensured at the time of taking over the possession on 03.05.2018, it is liable to pay compensation/damages. He further submitted that since proceedings taken by the respondent-bank under SARFAESI Act, cannot be gone into by Civil Court, on account of bar contained under S.34 of the Act, 2002, petitioner is left with no other alternative remedy except to approach this Court by way of filing the petition under Article 226 of the Constitution of India. 16. To substantiate his aforesaid submissions, he placed reliance upon the judgments passed by Hon’ble Supreme Court of India in Electrosteel Castings Ltd. vs. UV Asset Reconstruction Company Ltd. 2022 (2) SCC 573 and Mardia Chemicals Ltd. and Others vs. Union of India and Others, (2004) 4 SCC 311 . While making this Court peruse various provisions contained under the Act, Mr. Narula, attempted to persuade this Court to agree with his submission that there is no remedy of appeal or revision available under the aforesaid Act to the petitioners and only remedy available is under Section 17 of the Act, which provides for filing an appeal by any person (including borrower), against any of the measures referred to in Section 13(4) of the Act, which stands culminated with “One Time Settlement Scheme’, as agreed upon on 23.08.2018. He further submitted that since proceedings under the Act stand concluded on account of One Time Settlement, arrived inter se parties, prayer made on behalf of the petitioners for damages and compensation qua missing articles, could only be decided in the proceedings under Art. 226 of the Constitution of India, in view of specific bar contained under S.34 of the Act. 17. Lastly, Mr. Narula, learned counsel for the petitioner vehemently argued that once the respondent bank itself has admitted the factum of theft of machinery while industrial unit was in its possession, nothing is required to be proved by the petitioner in the civil suit by leading cogent and convincing evidence, rather, respondent-bank can be straightway directed in the instant proceedings to assess the loss of articles as also the expenditure required for installation of articles with further direction to pay the assessed amount. 18. I have heard learned counsel for the parties and perused the material available on record. 19. 18. I have heard learned counsel for the parties and perused the material available on record. 19. Having perused the pleadings adduced on record in its entirety and heard the counsel representing the parties to lis, coupled with the fact that the petitioners have already given up their prayer No. (a) made in the petition, this Court is only required to ascertain, “whether the remaining reliefs No. (b) and (c), whereby prayer has been made to issue directions to the respondent-bank to assess the loss of articles and installation of articles and thereafter pay damages qua the same, can be allowed or not?” Since, a specific question of maintainability has been raised by the respondent-bank, this Court, at first instance, before ascertaining the correctness of rival submissions made on behalf of the learned counsel representing the parties, deems it fit to deal with the question of maintainability and for that purpose, it would be apt to take note of Section 34 of the SARFAESI Act. “34. Civil court not to have jurisdiction: No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993).” 20. Bare perusal of the aforesaid provision clearly reveals that no civil court shall have jurisdiction to entertain any suit or proceedings in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered under the Act to determine and no injunction shall be granted by any court or other authority in respect to any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts due to Banks and Financial Institutions Act, 1993. 21. 21. Having perused the aforesaid provisions of law, coupled with the law laid down by Hon’ble Apex Court in ICICI Bank Limited and Others case (supra), this Court has no hesitation to conclude that correctness and legality of the proceedings, if any, initiated in pursuance to notice issued under Section 13 of the SARFAESI Act, cannot be looked into in the instant proceedings while exercising power under Article 226 of the Constitution of India. 22. At this stage, it would be apt to take note of following Paras of the judgment rendered in ICICI Bank Limited and Others vs. Umakanta Mohapatra and Others case (supra), which read as under: “2. Despite several judgments of this Court, including a judgment by Hon'ble Navin Sinha, J. as recently as on 30-1-2018, in State Bank of Travancore vs. Mathew K.C. (2018) 3 SCC 85 : (2018) 2 SCC (Civ) 41, the High Courts continue to entertain matters which arise under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI), and keep granting interim orders in favour of persons who are non-performing assets (NPAs). 3. The writ petition itself was not maintainable, as a result of which, in view of our recent judgment, which has followed earlier judgments of this Court, held as follows: (SCC p. 94, Para 17) “17. We cannot help but disapprove the approach of the High Court for reasons already noticed in Dwarikesh Sugar Industries Ltd. vs. Prem Heavy Engineering Works (P) Ltd. (1997) 6 SCC 450 , observing: (SCC p. 463, Para 32) “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 stops.” 4. The writ petition, in this case, being not maintainable, obviously, all orders passed must perish, including the impugned order, which is set aside.” 23. It is time that this tendency stops.” 4. The writ petition, in this case, being not maintainable, obviously, all orders passed must perish, including the impugned order, which is set aside.” 23. Reliance is also placed on Electrosteel Castings Ltd. vs. UV Asset Reconstruction Company Ltd. 2022 (2) SCC 573 . Relevant Paras of the same, read as under: “7.1. It is the case on behalf of the plaintiff-appellant herein that in the plaint there are allegations of “fraud” with respect to the assignment agreement dated 30-6-2018 and it is the case on behalf of the plaintiff-appellant herein that assignment agreement is “fraudulent” inasmuch as after the full payment as per the approved resolution plan under IBC and the original corporate debtor is discharged, there shall not be any debt by the plaintiff-appellant herein as a guarantor and therefore assignment deed is fraudulent. Therefore, it is the case on behalf of the plaintiff-appellant herein that the suit in which there are allegations of “fraud” with respect to the assignment deed shall be maintainable and the bar under Section 34 of the SARFAESI Act shall not be applicable. 7.2. However, it is required to be noted that except the words used “fraud”/”fraudulent” there are no specific particulars pleaded with respect to the “fraud.” It appears that by a clever drafting and using the words “fraud”/”fraudulent” without any specific particulars with respect to the “fraud”, the plaintiff-appellant herein intends to get out of the bar under Section 34 of the SARFAESI Act and wants the suit to be maintainable. As per the settled proposition of law mere mentioning and using the word “fraud”/”fraudulent” is not sufficient to satisfy the test of “fraud.” As per the settled proposition of law such a pleading/using the word “fraud”/”fraudulent” without any material particulars would not tantamount to pleading of “fraud.” 8. In Bishundeo Narain vs. Seogeni Rai, 1951 SCC 447 : 1951 SCR 548 , in Para 22, it is observed and held as under: (SCC p. 454) “22.........Now if there is one rule which is better established than any other, it is that in cases of fraud, undue influence and coercion, the parties pleading it must set forth full particulars and the case can only be decided on the particulars as laid. There can be no departure from them in evidence. There can be no departure from them in evidence. General allegations are insufficient even to amount to an averment of fraud of which any court ought to take notice however strong the language in which they are couched may be, and the same applies to undue influence and coercion. See Order 6 Rule 4, Civil Procedure Code.” 8.2. In T. Arivandandam vs. T.V. Satyapal, (1977) 4 SCC 467 , it is observed and held in Para 5 as under: (SCC p. 470) “5. We have not the slightest hesitation in condemning the petitioner for the gross abuse of the process of the court repeatedly and unrepentantly resorted to. From the statement of the facts found in the judgment of the High Court, it is perfectly plain that the suit now pending before the First Munsif's Court, Bangalore, is a flagrant misuse of the mercies of the law in receiving plaints. The learned Munsif must remember that if on a meaningful-not formal-reading of the plaint it is manifestly vexatious, and meritless, in the sense of not disclosing a clear right to sue, he should exercise his power under Order 7 Rule 11 CPC taking care to see that the ground mentioned therein is fulfilled. And, if clever drafting has created the illusion of a cause of action, nip it in the bud at the first hearing by examining the party searchingly under Order 10 CPC. An activist Judge is the answer to irresponsible law suits.” 8.3. A similar view has been expressed by this Court in the recent decision in Canara Bank vs. P. Selathal, (2020) 13 SCC 143 . 9. Having considered the pleadings and averments in the suit more particularly the use of word “fraud” even considering the case on behalf of the plaintiff, we find that the allegations of “fraud” are made without any particulars and only with a view to get out of the bar under Section 34 of the SARFAESI Act and by such a clever drafting the plaintiff intends to bring the suit maintainable despite the bar under Section 34 of the SARFAESI Act, which is not permissible at all and which cannot be approved. Even otherwise it is required to be noted that it is the case on behalf of the plaintiff-appellant herein that in view of the approved resolution plan under IBC and thereafter the original corporate debtor being discharged there shall not be any debt so far as the plaintiff-appellant herein is concerned and therefore the assignment deed can be said to be “fraudulent.” 10. The aforesaid cannot be accepted. By that itself the assignment deed cannot be said to be “fraudulent.” In any case, whether there shall be legally enforceable debt so far as the plaintiff-appellant herein is concerned even after the approved resolution plan against the corporate debtor still there shall be the liability of the plaintiff and/or the assignee can be said to be secured creditor and/or whether any amount is due and payable by the plaintiff, are all questions which are required to be dealt with and considered by the DRT in the proceedings initiated under the SARFAESI Act. 11. It is required to be noted that as such in the present case the assignee has already initiated the proceedings under Section 13 which can be challenged by the plaintiff-appellant herein by way of application under Section 17 of the SARFAESI Act before the DRT on whatever the legally available defences which may be available to it. We are of the firm opinion that the suit filed by the plaintiff-appellant herein was absolutely not maintainable in view of the bar contained under Section 34 of the SARFAESI Act. Therefore, as such the courts below have not committed any error in rejecting the plaint/dismissing the suit in view of the bar under Section 34 of the SARFAESI Act. 12. In view of the above and for the reasons stated above, the present appeal fails and the same deserves to be dismissed and is accordingly dismissed. However, it will be open for the appellant herein to initiate appropriate proceedings before the DRT under Section 17 of the SARFAESI Act against the initiation of the proceedings by the assignee-Respondent 1 herein under Section 13 of the SARFAESI Act inter-alia on the ground: (1) that the assignee cannot be said to be secured creditor so far as the appellant is concerned. (2) that there is no amount due and payable by the plaintiff-appellant herein on the ground that in view of the proceedings under IBC against the corporate debtor and the corporate debtor being discharged after the approved resolution plan, there shall not be any enforceable debt against the appellant. If such an application is filed within a period of two weeks from today the same be considered in accordance with law and on merits after complying with all other requirements which may be required while filing the application under Section 17 of the SARFAESI Act.” 24. In both the aforesaid judgments, Hon’ble Apex Court, while cautioning the High Courts not to entertain the matters which arise under Secularization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, categorically held that mere mentioning and using the word ‘fraud’/’fraudulent’ is not sufficient to satisfy the test of ‘fraud’ and pleading using the word ‘fraud’/’fraudulen without any material particulars as required in terms of Order 6 Rule 4 CPC, would not tantamount to pleading of ‘fraud’. In case, it emerges in the pleadings and averments made in the suit that allegations of fraud are made without any material particular and only to get out of the bar under Section 34 of the Act, suit shall not be maintainable. 25. Admittedly, in the case at hand, on account of re-repayment of loan, bank account of the petitioner-company was declared NPA and thereafter notice under Section 13(2) of the Act was issued, thereby raising demand, but subsequently on account of non-payment of demand, possession of Unit (immovable as well as movable property) was taken over by State Bank of India on 03.05.2018. It is also not in dispute that before proceedings, if any, initiated against the petitioners under the aforesaid Act, could be taken to its logical end, petitioners paid a sum of Rs. 2,22,59,432/- in pursuance to ‘One Time Settlement Scheme’. It is also not in dispute that after payment of the aforesaid amount under ‘One Time Settlement Scheme’ title deeds of the property of the petitioners as well as possession of unit and machinery were handed over to the petitioners. 26. In nutshell, as of today, no proceedings, if any, under Secularization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 initiated after issuance of notice under Section 13(2), are pending. 26. In nutshell, as of today, no proceedings, if any, under Secularization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 initiated after issuance of notice under Section 13(2), are pending. Now, precise grouse of the petitioner is that he has not been handed over the entire machinery and during his visit along with bank officials, valuable parts of machinery were found to be missing and as such, he is required to be compensated for that. 27. No doubt, as per material available on record, especially, reply to the legal notice given by respondent-bank, certain parts of machinery were found missing and in that regard, police complaint already stands lodged against the Security Agency, which was entrusted with a duty to keep the property in safe custody during the pendency of the proceedings initiated under the SARFAESI Act, but question which remains to be adjudicated is whether compensation/damages, if any, on account of theft, if any, of some part of machinery can be granted/awarded in these proceedings or not. Though while referring to the provision under Section 34 of the Act, Mr. Narula, vehemently argued that civil suit is completely barred to entertain any suit or proceeding in respect of any matter, which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under the Act, but since it is not in dispute that proceedings initiated under the aforesaid Act for recovery of loan amount stands concluded with the payment of Rs. 2,26,59,432/- under ‘One Time Settlement Scheme’ and thereafter possession of the property has already been handed over to the petitioner, this Court finds it difficult to agree with Mr. Narula that only remedy left with the petitioner is to approach this Court in the instant proceedings filed under Article 226 of the Constitution of India. 28. Though, at this stage, Mr. Narula, attempted to argue that detail of inventory at the time of taking possession and then at the time of handing over the possession, was not made by the respondent-bank, as a result thereof, there is violation of Rule 4(i) and (ii) and also Rule 5 of the Act, but since such question of violation, if any, made by respondent-bank, of aforesaid rules, cannot be considered by the civil court in civil suit, if any, filed by the petitioner, only remedy available is to file instant writ petition. 29. Mr. 29. Mr. Narula, further argued that as per Rule 4(i) and (ii) and also Rule 5 of the Act, specific procedure was to be followed by respondent-bank while taking over and handing over the possession of immovable and movable property, which in the case at hand was not followed and as such, petitioner was entitled for damages on account of theft but such relief can only be granted in these proceedings. He submitted that the correctness of the proceedings conducted by respondent-bank under the Act, especially while taking over possession and delivering the possession in terms of Rules as detailed hereinabove, cannot be gone into by the civil court in terms of specific bar contained under Section 34 of the Act and as such, petitioner is left with no other alternative remedy except to approach this Court in the instant proceedings filed under Article 226 of the Constitution of India. 30. Though, to support the aforesaid submissions, Mr. Narula, placed heavy reliance upon judgment rendered by Hon’ble Apex Court in Electrosteel Castings Ltd. (supra), but having perused the aforesaid judgment, this Court finds that the same is not applicable in the present case. In the aforesaid judgment, question for adjudication before Hon’ble Apex Court was altogether different. The question before Hon’ble Apex Court in the aforesaid case was whether possession notice given to the assignee of the secured debt in question can be laid challenge by a person claiming him to be secured creditor vis-a-vis guarantor of the loan in question. Hon’ble Supreme Court in the aforesaid judgment though categorically held that jurisdiction of civil suit is completely barred in respect of any matter, which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under the Act, but also carved out the distinction by stating that where person seeking remedy of civil suit is able to establish allegation of fraud, civil suit would be maintainable. However, Hon’ble Apex Court in the aforesaid judgment has categorically held that mere allegation of fraud in such suit without material particular of fraud as required in terms of Order 6 Rule 4 CPC, would not be maintainable, rather, would be hit by bar provided under Section 34 of the SARFAESI, Act. 31. However, Hon’ble Apex Court in the aforesaid judgment has categorically held that mere allegation of fraud in such suit without material particular of fraud as required in terms of Order 6 Rule 4 CPC, would not be maintainable, rather, would be hit by bar provided under Section 34 of the SARFAESI, Act. 31. Similarly, judgment passed by the Hon’ble Apex Court in Mardia Chemicals Ltd. and Others vs. Union of India and Others, (2004) 4 SCC 311 , is not applicable in the present case because in that case, Hon’ble Apex Court while upholding the validity of the Act and its provisions except that of sub-section (2) of Section 17 the Act, held that where a secured creditor has taken action under Section 13(4)of the Act, in such cases it would be open for a borrower to file appeals under Section 17of the Act within the limitation as prescribed therein, to be counted with effect from the date of passing of that judgment. If the aforesaid judgment is read in its entirety, this Court is unable to agree with Mr. Narula that in the given facts and circumstances, petitioner would be estopped from filing civil suit and appropriate remedy, if any, for him for redressal of his grievances, is filing the writ petition under Article 226 of the Constitution of India. 32. Precisely, in the aforesaid case, main grouse as came to be highlighted before Hon’ble Apex Court was that no adjudicatory mechanism is available to the borrower to ventilate his grievance through an independent adjudicatory authority. In the aforesaid case, petitioners claimed that the remedy of appeal available under S.17 of the Act, can be availed only after measures have been taken by the secured creditor under sub-section (4) of Section 13 of the Act, which includes sale of the secured assets, taking over its management and all transferable rights thereto. However, as has been taken note hereinabove, Hon’ble Apex Court while upholding the validity of the Act, declared sub-section (2) of Section17of the Act ultra vires of Article 14 of the Constitution of India, but at no point of time, commented upon the application of Section 34 of the SARFAESI, Act, which bars jurisdiction of the civil court while entertaining the suit in the matter of recovery of loans in terms of proceedings contained under Section 13(2) of the SARFAESI, Act. Since aforesaid judgment is lengthy and runs into several pages, it would be apt to take note of some of the relevant paras of the judgment. “45. In the background we have indicated above, we may consider as to what forums or remedies are available to the borrower to ventilate his grievance. The purpose of serving a notice upon the borrower under sub-section (2) of Section 13 of the Act is, that a reply may be submitted by the borrower explaining the reasons as to why measures may or may not be taken under sub-section (4) of Section 13 in case of non-compliance of notice within 60 days. The creditor must apply its mind to the objections raised in reply to such notice and an internal mechanism must be particularly evolved to consider such objections raised in the reply to the notice. There may be some meaningful consideration of the objections raised rather than to ritually reject them and proceed to take drastic measures under sub-section (4) of Section 13 of the Act. Once such a duty is envisaged on the part of the creditor it would only be conducive to the principles of fairness on the part of the banks and financial institutions in dealing with their borrowers to apprise them of the reason for not accepting the objections or points raised in reply to the notice served upon them before proceeding to take measures under sub-section (4) of Section 13. Such reasons, overruling the objections of the borrower, must also be communicated to the borrower by the secured creditor. It will only be in fulfillment of a requirement of reasonableness and fairness in the dealings of institutional financing which is so important from the point of view of the economy of the country and would serve the purpose in the growth of a healthy economy. It would certainly provide guidance to the secured debtors in general in conducting the affairs in a manner that they may not be found defaulting and being made liable for the unsavoury steps contained under sub-section (4) of Section 13. At the same time, more importantly we must make it clear unequivocally that communication of the reasons not accepting the objections taken by the secured borrower may not be taken to give an occasion to resort to such proceedings which are not permissible under the provisions of the Act. At the same time, more importantly we must make it clear unequivocally that communication of the reasons not accepting the objections taken by the secured borrower may not be taken to give an occasion to resort to such proceedings which are not permissible under the provisions of the Act. But communication of reasons not to accept the objections of the borrower, would certainly be for the purpose of his knowledge which would be a step forward towards his right to know as to why his objections have not been accepted by the secured creditor who intends to resort to harsh steps of taking over the management/business of viz. secured assets without intervention of the court. Such a person in respect of whom steps under Section 13(4) of the Act are likely to be taken cannot be denied the right to know the reason of non-acceptance and of his objections. It is true, as per the provisions under the Act, he may not be entitled to challenge the reasons communicated or the likely action of the secured creditor at that point of time unless his right to approach the Debt Recovery Tribunal as provided under Section 17 of the Act matures on any measure having been taken under sub-section (4) of Section 13 of the Act. 46. We are holding that it is necessary to communicate the reasons for not accepting the objections raised by the borrower in reply to notice under Section 13(2) of the Act more particularly for the reason that normally in the event of non-compliance with notice, the party giving notice approaches the court to seek redressal but in the present case, in view of Section 13 (1) of the Act the creditor is empowered to enforce the security himself without intervention of the Court. Therefore, it goes with logic and reason that he may be checked to communicate the reason for not accepting the objections, if raised and before he takes the measures like taking over possession of the secured assets etc. 47. This will also be in keeping with the concept of right to know and lender's liability of fairness to keep the borrower informed particularly the developments immediately before taking measures under sub-section (4) of Section 13 of the Act. 47. This will also be in keeping with the concept of right to know and lender's liability of fairness to keep the borrower informed particularly the developments immediately before taking measures under sub-section (4) of Section 13 of the Act. It will also cater the cause of transparency and not secrecy and shall be conducive in building an atmosphere of confidence and healthy commercial practice. Such a duty, in the circumstances of the case and the provisions is inherent under Section 13(2) of the Act. 48. The next safeguard available to a secured borrower within the framework of the Act is to approach the Debt Recovery Tribunal under Section 17 of the Act. Such a right accrues only after measures are taken under sub-section (1) of Section 13 of the Act. 49. On behalf of one of the respondents Shri Andhyarujina submitted that as a matter of fact Section 13 of the Act leaves more scope and provides wider protection to the borrower as compared to in the case of an English mortgage and in connection with the above submission it has been pointed out that in case of an English mortgage there is no scope of intervention of the court unless a case is made out before the court that action of the mortgagee is fraudulent or it is a case of the like nature. Otherwise as provided under sub-section (3) of Section 69 a mortgagor shall only be entitled to damages for the wrongful or irregular sale of the property. Whereas, it is submitted, under the Securitisation Rules it is provided that before putting the property on sale the authorized officer has to obtain the valuation of immovable property, a reserved price is to be fixed and a notice of 30 days before sale is to be served on the borrower. In this connection, Rule 9, the relevant rule of the Security Interest (Enforcement) Rules, 2002 is quoted: “9. Time of sale, issue of sale certificate and delivery of possession: (1) No sale of immovable property under these rules shall take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the proviso to sub-rule (6) or notice of sale has been served to the borrower. (2) The sale shall be confirmed in favour of the purchaser who has offered the highest sale price in his bid or tender or quotation or offer to the authorized officer and shall be subject to confirmation by the secured creditor: *** *** *** (3) to (10) *** *** *** Therefore, during this period which would be in all more than 60 days it would be open for a borrower to approach the Debts Recovery Tribunal and file a petition for any appropriate relief and if a case is so made out, he can even get a relief of stay, in exercise of ancillary power which vests in the Tribunal as per decisions referred and reported as ITO vs. M.K. Mohd. Kunhi, AIR 1969 SC 430 : (1969) 2 SCR 65 and Allahabad Bank vs. Radha Krishna Maity, (1999) 6 SCC 755 . Again referring to Section 19 of the Act it is pointed out that in case in the end the Tribunal finds that the secured assets have been wrongfully transferred or taken possession of, an order for return of such assets can be passed and the borrower in that event shall also be entitled to compensation. 50. It has also been submitted that an appeal is entertainable before the Debts Recovery Tribunal only after such measures as provided in sub-section (4) of Section 13 are taken and Section 34 bars to entertain any proceeding in respect of a matter which the Debts Recovery Tribunal or the Appellate Tribunal is empowered to determine. Thus before any action or measure is taken under sub-section (4) of Section 13, it is submitted by Mr. Salve, one of the counsel for the respondents that there would be no bar to approach the civil court. Therefore, it cannot be said that no remedy is available to the borrowers. We, however, find that this contention as advanced by Shri Salve is not correct. Salve, one of the counsel for the respondents that there would be no bar to approach the civil court. Therefore, it cannot be said that no remedy is available to the borrowers. We, however, find that this contention as advanced by Shri Salve is not correct. A full reading of Section 34 shows that the jurisdiction of the civil court is barred in respect of matters which a Debts Recovery Tribunal or an Appellate Tribunal is empowered to determine in respect of any action taken “or to be taken in pursuance of any power conferred under this Act.” That is to say, the prohibition covers even matters which can be taken cognizance of by the Debts Recovery Tribunal though no measure in that direction has so far been taken under sub-section (4) of Section 13. It is further to be noted that the bar of jurisdiction is in respect of a proceeding which matter may be taken to the Tribunal. Therefore, any matter in respect of which an action may be taken even later on, the civil court shall have no jurisdiction to entertain any proceeding thereof. The bar of civil court thus applies to all such matters which may be taken cognizance of by the Debts Recovery Tribunal, apart from those matters in which measures have already been taken under sub-section (4) of Section 13. 51. However, to a very limited extent jurisdiction of the civil court can also be invoked, where for example, the action of the secured creditor is alleged to be fraudulent or their claim may be so absurd and untenable which may not require any probe, whatsoever or to say precisely to the extent the scope is permissible to bring an action in the civil court in the cases of English mortgages. We find such a scope having been recognized in the two decisions of the Madras High Court which have been relied upon heavily by the learned Attorney General as well appearing for the Union of India, namely V. Narasimhachariar (supra) p.135 at p.141 and 144, a judgment of the learned single Judge where it is observed as follows in Para 22: “The remedies of a mortgagor against the mortgagee who is acting in violation of the rights, duties and obligations are twofold in character. The mortgagor can come to the Court before sale with an injunction for staying the sale if there are materials to show that the power of sale is being exercised in a fraudulent or improper manner contrary to the terms of the mortgage. But the pleadings in an action for restraining a sale by mortgagee must clearly disclose a fraud or irregularity on the basis of which relief is sought: Adams vs. Scott, (1859) 7 WR (Eng.) 213 (Z49). I need not point out that this restraint on the exercise of the power of sale will be exercised by Courts only under the limited circumstances mentioned above because otherwise to grant such an injunction would be to cancel one of the clauses of the deed to which both the parties had agreed and annul one of the chief securities on which persons advancing moneys on mortgages rely. [See Rashbehary Ghose Law of Mortgages, Vol. II, Fourth Edn. Page 784]. 59. We may like to observe that proceedings under Section 17 of the Act, in fact are not appellate proceedings. It seems to be a misnomer. In fact it is the initial action which is brought before a Forum as prescribed under the Act, raising grievance against the action or measures taken by one of the parties to the contract. It is the stage of initial proceeding like filing a suit in civil court. As a matter of fact proceedings under Section 17 of the Act are in lieu of a civil suit which remedy is ordinarily available but for the bar under Section 34 of the Act in the present case. We may refer to a decision of this Court reported in Ganga Bai vs. Vijay Kumar and Others, (1974) 2 SCC 393 where in respect of original and appellate proceedings a distinction has been drawn as follows: “........There is a basic distinction between the right of suit and the right of appeal. There is an inherent right in every person to bring a suit of civil nature and unless one's choice. It is no answer to a suit, howsoever frivolous to claim, that the law confers no such right to sue. A suit for its maintainability requires no authority of law and it is enough that no statute bars the suit. But the position in regard to appeals is quite the opposite. It is no answer to a suit, howsoever frivolous to claim, that the law confers no such right to sue. A suit for its maintainability requires no authority of law and it is enough that no statute bars the suit. But the position in regard to appeals is quite the opposite. The right of appeal inheres in no one and therefore an appeal for its maintainability must have the clear authority of law. That explains why the right of appeal is described as a creature of statute.” 68. The main thrust of the petitioners as indicated in the earlier part of this judgment to challenge the validity of the impugned enactment is that no adjudicatory mechanism is available to the borrower to ventilate his grievance through an independent adjudicatory authority. Access to the justice, it is submitted, is hall-mark of our system. Section 34 of the Act bars the jurisdiction of the civil courts to entertain a suit in matters of recovery of loans. The remedy of appeal available under the Act as contained in Section 17 can be availed only after measures have already been taken by the secured creditor under sub-section (4) of Section 13 of the Act which includes sale of the secured assets, taking over its management and all transferable rights thereto. Virtually it is no remedy at all also in view of the onerous condition of deposit of 75% of the claim of the secured creditor. Before filing an appeal under Section 17 of the Act, decision is to be taken in respect of all matters by the bank or financial institution itself which can hardly be said to be an independent agency rather they are a party to the transaction having unilateral power to initiate action under sub-section (4) of Section 13 of the Act. So far remedy under Article 226 of the Constitution of India is concerned, the submission is that it may not always be available since the dispute may be only between two private parties, the banking companies, co-operative Banks or financial institutions, foreign banks, some of them may not be authorities within the meaning of Article 12 of the Constitution of India against whom a writ petition could be maintainable. Thus the position that emerges is that a borrower is virtually left with no remedy. Thus the position that emerges is that a borrower is virtually left with no remedy. Where access to the court is prohibited and no proper adjudicatory mechanism is provided such a law is unconstitutional and cannot survive. In support of the aforesaid contentions besides others, reliance has particularly been placed upon a case reported in L. Chandrakumar vs. Union of India and Others, (1997) 3 SCC 261 and Surya Dev Rai vs. Ram Chander Rai and Others, 2003 (6) SCC 675 . A reference has also been made to the decision of Kihoto Hollohan (supra). In the case of L. Chandra Kumar (supra) it is held, some adjudicatory process through an independent agency is essential for determining the rights of the parties more particularly when the consequences which flow from the offending Act defeat the civil rights of a party. 69. On behalf of respondents time and again stress has been given on the contention that in a contractual matter between the two private parties they are supposed to act in terms of the contract and no question of compliance with the principles of natural justice arises nor the question of judicial review of such actions need to be provided for. However, at the very outset, it may be pointed that the contract between the parties as in the present cases, is no more as private as sought to be asserted on behalf of the respondents. If that was so in that event parties would be at liberty to seek redressal of their grievances on account of breach of contract or otherwise taking recourse to the normal process of law as available, by approaching the ordinary civil courts. But we find that a contract which has been entered into between the two private parties, in some respects has been superseded by the statutory provisions or it may be said that such contracts are now governed by the statutory provisions relating to recovery of debts and bar of jurisdiction of the civil court to entertain any dispute in respect of such matters. Hence, it cannot be pleaded that the petitioners cannot complaint of the conduct of the banking companies and financial institutions for whatever goes in between the two is absolutely a matter of contract between private parties, therefore, no adjudication may be necessary. 71. Arguments have been advanced as to how far principles of lender's liability are applicable. Hence, it cannot be pleaded that the petitioners cannot complaint of the conduct of the banking companies and financial institutions for whatever goes in between the two is absolutely a matter of contract between private parties, therefore, no adjudication may be necessary. 71. Arguments have been advanced as to how far principles of lender's liability are applicable. Whatever be the position, however, it cannot be denied that the financial institutions namely, the lenders owe a duty to act fairly and in good faith. There has to be a fair dealing between the parties and the financing companies/institutions are not free to ignore performance of their part of the obligation as a party to the contract. They cannot be free from it. Irrespective of the fact as to whatever may have been held in decisions of some American courts, in view of the facts and circumstances and the terms of the contract and other details relating to those matter, that may or may not strictly apply, nonetheless even in absence of any such decisions or legislation, it is incumbent upon such financial institutions to act fairly and in good faith complying with their part of obligations under the contract. This is also the basic principle of concept of lender's liability. It cannot be a one-sided affair shutting out all possible and reasonable remedies to the other party, namely borrowers and assume all drastic powers for speedier recovery of NPAs. Possessing more drastic powers calls for exercise of higher degree of good faith and fair play. The borrowers cannot be left remediless in case they have been wronged against or subjected to unfair treatment violating the terms and conditions of the contract. They can always plead in defence deficiencies on the part of the banks and financial institutions. 80. Under the Act in consideration, we find that before taking action a notice of 60 days is required to be given and after the measures under Section 13(4) of the Act have been taken, a mechanism has been provided under Section 17 of the Act to approach the Debts Recovery Tribunal. The above-noted provisions are for the purpose of giving some reasonable protection to the borrower. Viewing the matter in the above perspective, we find what emerges from different provisions of the Act, is as follows: 1. The above-noted provisions are for the purpose of giving some reasonable protection to the borrower. Viewing the matter in the above perspective, we find what emerges from different provisions of the Act, is as follows: 1. Under sub-section (2) of Section 13 it is incumbent upon the secured creditor to serve 60 days' notice before proceeding to take any of the measures as provided under sub-section (4) of Section 13 of the Act. After service of notice, if the borrower raises any objection or places facts for consideration of the secured creditor, such reply to the notice must be considered with due application of mind and the reasons for not accepting the objections, howsoever brief they may be, must be communicated to the borrower. In connection with this conclusion we have already held a discussion in the earlier part of the judgment. The reasons so communicated shall only be for the purposes of the information/knowledge of the borrower without giving rise to any right to approach the Debts Recovery Tribunal under Section 17 of the Act, at that stage. 2. As already discussed earlier, on measures having been taken under sub-section (4) of Section 13 and before the date of sale/auction of the property it would be open for the borrower to file an appeal (petition) under Section 17 of the Act before the Debts Recovery Tribunal. 3. That the Tribunal in exercise of its ancillary powers shall have jurisdiction to pass any stay/interim order subject to the condition as it may deem fit and proper to impose. 4................. 5. As discussed earlier in this judgment, we find that it will be open to maintain a civil suit in civil court, within the narrow scope and on the limited grounds on which they are permissible, in the matters relating to an English mortgage enforceable without intervention of the court. 81. In view of the discussion held in the judgment and the findings and directions contained in the preceding paragraphs, we hold that the borrowers would get a reasonably fair deal and opportunity to get the matter adjudicated upon before the Debt Recovery Tribunal. 81. In view of the discussion held in the judgment and the findings and directions contained in the preceding paragraphs, we hold that the borrowers would get a reasonably fair deal and opportunity to get the matter adjudicated upon before the Debt Recovery Tribunal. The effect of some of the provisions may be a bit harsh for some of the borrowers but on that ground the impugned provisions of the Act cannot be said to be unconstitutional in view of the fact that the object of the Act is to achieve speedier recovery of the dues declared as NPAs and better availability of capital liquidity and resources to help in growth of economy of the country and welfare of the people in general which would sub-serve the public interest. 82. We, therefore, subject to what is provided in paragraph 80 above, uphold the validity of the Act and its provisions except that of sub-section (2) of Section 17 of the Act, which is declared ultra-vires of Article 14 of the Constitution of India. 83. Before we part with the case, we would like to observe that where a secured creditor has taken action under Section 13(4) of the Act, in such cases it would be open to borrowers to file appeals under Section 17 of the Act within the limitation as prescribed therefor, to be counted with effect from today.” 33. Though S. 17 of the SARFAESI, Act provides a remedy for filing an appeal by any person including borrower, but since proceedings initiated under Sections 13 (4) of the SARFAESI, Act stands culminated with ‘One Time Settlement Scheme’ agreed inter se parties on 23.08.2018, coupled with the fact that the petitioner has already made the payment agreed to be paid by him under ‘One Time Settlement Scheme’, remedy of an appeal provided under Section 17 of the Act, may not be available to the petitioner, but definitely, such fact, if any, cannot not be a ground for the petitioner to institute the proceedings under Article 226 of the Constitution of India for grant of damages/compensation on account of theft in the industrial premises. 34. 34. No doubt, respondent-bank in its reply to the legal notice, while referring to the claim of the petitioner with regard to theft of property, has stated that it has filed complaint against the security agency, but certainly that fact, if any, would not make the petitioner ipso facto entitled for compensation in the instant proceedings, that too, without there being assessment of loss, if any, suffered by the petitioner on account of theft of parts of the machinery. Whether theft took place in the industrial premises while property was in possession of respondent-bank and on account of theft, loss, if any, has been caused to the petitioner, are disputed question of facts, which can only be decided in a civil suit, where both the parties shall have a right to lead evidence to substantiate their claims and counter-claims put-forth through the pleadings. 35. No doubt, question with regard to infringement of Rule 4(i) & (ii) and also Rule 5 of the Act and its effect, cannot be gone into by the civil court in civil proceedings, if any, initiated by the parties to lis, but certainly while ascertaining the correctness of the claim put-forth by the petitioner, civil court can definitely ascertain, whether at the time of taking over the possession of the industrial unit and thereafter while handing over the possession to the petitioner after ‘One Time Settlement Scheme’ inventory of the machinery or its parts thereof, was made or not. 36. No doubt, it has been claimed in the reply filed by the respondent-bank that at the time of taking over the possession, inventory was made and thereafter possession was handed over as per inventory, but the relief, as prayed for in the instant proceedings cannot be merely granted on the basis of admission of theft, if any, made by the respondent-bank in the reply to the legal notice, rather, factum, if any, of theft and its acknowledgment, if any, by respondent-bank shall be required to be established on record by the petitioner in appropriate proceedings. Since, proceedings initiated pursuant to notice issued under Section 13(2) of the Act stands concluded on account of payment of Rs. Since, proceedings initiated pursuant to notice issued under Section 13(2) of the Act stands concluded on account of payment of Rs. 2,26,59,432/- under ‘One Time Settlement Scheme’ coupled with the fact that possession of the property has been already handed over to the petitioner, appropriate remedy, if any, for claiming the damages and compensation on account of theft in Industrial Unit, while the property was in possession of the respondent-bank, shall be civil suit, but definitely not a writ petition under Article 226 of the Constitution of India. 37. Reliance in this regard is placed upon the judgment passed by Hon’ble Apex Court in case titled as Leelamma Mathew vs. M/s Indian Overseas Bank and Others in Civil Appeal No. 7128 of 2022, decided on 17.11.2022, whereby, Hon’ble Apex Court, set aside the judgment passed by High Court and restored the judgment passed by trial court, decreeing the suit and categorically held that suit for damages/compensation with respect to the balance land could not have been decided by the DRT or Appellate Tribunal. Hon’ble Apex Court further held that S.34 of the Act shall be applicable only in a case where the Debts Recovery Tribunal and/or Appellate Tribunal is empowered to decide the matter under the, Act. In the case before Hon’ble Apex Court, plaintiffs claimed damages/ compensation with respect to the left out area and as such, Hon’ble Apex Court held that High Court has seriously erred in holding the suit to be barred under Section 34 of the Act. Hon'ble Apex Court held as under: “5.1 At the outset, it is required to be noted that after the Bank received the possession of the secured property in exercise of powers under the SARFAESI Act, the property in question admeasuring 54 cents was put to auction, by Auction Notice dated 23.01.2007. The plaintiff on the basis of the representation made and the auction notice in which the land was put to auction was stated to be 54 cents submitted her offer of Rs. 32,05,000/- for sale of 54 cents. At this stage, it is required to be noted that in the quotation itself the plaintiff specifically stated that the offer of Rs. 32,05,000/- is subject to the condition that the absolute ownership and vacant possession of full extent of property without encumbrances is handed over. 32,05,000/- for sale of 54 cents. At this stage, it is required to be noted that in the quotation itself the plaintiff specifically stated that the offer of Rs. 32,05,000/- is subject to the condition that the absolute ownership and vacant possession of full extent of property without encumbrances is handed over. However, the Bank replied that as in the invitation to the public for tenders, it is stated that the property would be sold on “as is where is” and “as is what is” condition, the plaintiff may confirm that the plaintiff is ready to offer the bid and take the property in the present condition. However, immediately vide communication dated 08.03.2007 the plaintiff reiterated that she is ready to purchase the property only if, absolute ownership, vacant possession and full enjoyment of 54 cents of land, free from all encumbrances is given, otherwise, she is not ready to purchase the property, if the Bank is not able to assign absolute ownership, vacant possession and full enjoyment of the property admeasuring 54 cents. At this stage it is required to be noted that the Bank took the possession of the property auctioned on paper. However, the actual possession was handed over to the Bank in the month of October, 2007 pursuant to the order passed by the CJM, Manjeri in an application under Section 14of the SARFAESI Act. That thereafter the Tehsildar submitted the report dated 21.11.2007 submitting that the actual measurement of the land is 39.60 cents and that the debtor had already transferred 14.40 cents out of land admeasuring 54 cents prior to creation of the mortgage with the Bank. Despite the above the Bank issued the sale certificate dated 21.11.2007 for 54 cents of land, however, handed over the possession of the secured property admeasuring 39.60 cents only. The sale consideration received by the Bank was for 54 cents. That thereafter the sale certificate was registered in the month of October, 2010. Thereafter the plaintiff filed the suit for recovery of damages with respect to 14.40 cents. The final certificate was registered on 01.10.2010 and thereafter when the suit was filed in the year 2012 it cannot be said that the suit was barred by limitation. That thereafter the sale certificate was registered in the month of October, 2010. Thereafter the plaintiff filed the suit for recovery of damages with respect to 14.40 cents. The final certificate was registered on 01.10.2010 and thereafter when the suit was filed in the year 2012 it cannot be said that the suit was barred by limitation. At this stage, it is required to be noted that as such no issue was framed by the learned Trial Court on whether the suit is barred by limitation or not. 5.2 Now so far as the submission on behalf of the plaintiff and the finding recorded by the High Court that the suit was barred by Section 34 of the SARFAESI Act is concerned, at the outset it is required to be noted that the suit was for damages/compensation, with respect to the balance land, which could not have been decided by the DRT or Appellate Tribunal, Section 34 of the SARFAESI Act shall be applicable only in a case where the Debt Recovery Tribunal and/or Appellate Tribunal is empowered to decide the matter under the SARFAESI Act. The plaintiff was not challenging the sale/sale certificate. The plaintiff claimed the damages/compensation with respect to the less area. Therefore, the High Court has seriously erred in holding that the suit was barred by Section 34 of the SARFAESI Act. 5.3 Now so far as the submission on behalf of the Bank that as the property was put to auction on “as is where is” and “as is what is” basis and the plaintiff was aware that the actual area of the property auction is less and thereafter entered into the transaction and therefore the plaintiff cannot claim/pray compensation/damages with respect to the deficiency in the area is concerned, at the outset, it is required to be noted that right from the very beginning the plaintiff insisted for handing over the possession of the 54 cents. When the property was put to auction even the Bank was not in actual possession. The Bank got possession pursuant to the order passed by the District Magistrate and thereafter the measurement was done by Tehsildar in which it was found that the actual area of the land auctioned was 34.60 cents and 14.40 cents was already transferred by the debtor much earlier. The Bank got possession pursuant to the order passed by the District Magistrate and thereafter the measurement was done by Tehsildar in which it was found that the actual area of the land auctioned was 34.60 cents and 14.40 cents was already transferred by the debtor much earlier. Therefore, at the relevant time when the property was put to auction even the Bank was not aware of the actual measurement and had gone by the document and 54 cents was put to auction. Considering the fact that the auction notice was for 54 cents; the plaintiff submitted the offer of Rs. 32,05,000/- for 54 cents; the plaintiff paid the actual amount of sale consideration i.e. Rs. 32,05,000/- for 54 cents; the sale certificate was issued for 54 cents and even the sale certificate which was registered in the year 2012 was for 54 cents, thereafter it was not open for the Bank to contend that though the Bank had handed over the possession of 34.60 cents still the sale consideration recovered would be for 54 cents. It was not open for the financial institution like the Bank to take such a plea. Even otherwise it is required to be noted that at least in the month of November, 2007 when the Tehsildar submitted the report, the Bank was aware that the actual area is 34.60 cents and not 54 cents. Thereafter the Bank ought not to have issued the sale certificate for 54 cents. The Bank ought to have been fair and ought to have issued the sale certificate only for 34.60 cents. This shows the conduct on the part of the bank. 5.4 Rule 8 of the 2002 Rules cast a duty on the authorized officer to take all precautions before putting the secured asset to sell. As per sub-rule 5 of Rule 8 before effecting sale of the immovable property (secured assets) the authorised officer shall obtain valuation of the property from an approved valuer and in consultation with the secured creditor and fix the reserve price of the property and may sell the whole or any part of such immovable secured asset. Therefore, when the reserve price was fixed the same was for 54 cents. Therefore, it can be presumed that the Bank was aware that the actual area of the secured asset is less than 54 cents. Therefore, when the reserve price was fixed the same was for 54 cents. Therefore, it can be presumed that the Bank was aware that the actual area of the secured asset is less than 54 cents. As per Section 54 of the Transfer of Property Act the seller was bound to disclose any buyer any material defect in the property of which the buyer is not aware and which the buyer could not ordinarily discover. Under the circumstances also the submission on behalf of the Bank that the property was put to auction on “as is where is” and “as is what is” condition, thereafter the plaintiff shall not be entitled to compensation of the less area cannot be accepted. 6. In view of the above and for the reasons stated above, the High Court has committed an error in allowing the appeal and quashing and setting aside the judgment and decree passed by the learned Trial Court. Consequently, the impugned judgment and order passed by the High Court is hereby quashed and set aside. The judgment and decree passed by the learned Trial Court decreeing the suit is hereby restored. The respondent-Bank to pay the decretal amount to the appellant with interest as per the judgment and decree passed by the learned Trial Court within a period of 8 weeks from today.” 38. In the case at hand, prayer for damages and compensation has been made on account of the fact that after culmination of proceedings initiated under the Act, machinery and premises taken over by the respondent-bank in terms of the proceedings initiated under Section 13(2) of the Act, were required to be returned to the petitioner as per inventory prepared at the time of taking over the possession, but since, major parts of the machinery were missing, petitioners have suffered huge loss. 39. Though, in the instant proceedings, there appears to be no justification for this Court to return a finding with regard to correctness of claim of the petitioners that they have not been returned their machinery, as per inventory or there was a theft, but certainly, it can take note of the fact that petitioner before taking over the possession apprised the respondent-bank with regard to theft of machinery and, in that regard, respondent-bank has already lodged complaint against the security agency. However, as has been discussed hereinabove, prayer made on behalf of the petitioners for damages and compensation, cannot be granted in the instant proceedings, rather, for that purpose, appropriate remedy would be civil suit, as has been held by Hon’ble Apex Court in Leelamma Mathew (supra). With a conclusion of proceedings initiated under SARFAESI Act, Debts Recovery Tribunal and Appellate Court had become functus officio and at present no proceedings, if any, under SARFAESI Act are pending against the petitioner and as such, relief, if any, for damages and compensation, as prayed for in the instant proceedings can only be granted under appropriate proceedings, which is civil suit, if any, filed by the petitioner. 40. At this stage, Mr. Arvind Sharma, learned counsel representing the respondent-bank attempted to argue that suit is barred by limitation in terms of the provisions contained under Article 68 of the Limitation Act, but since on account of clear-cut findings given by this Court that the present petition is not maintainable and appropriate remedy is civil suit, there shall be no justification to go into the question of limitation, rather such question, if any, shall be decided by the civil court, if arises out of the pleadings of the parties, in accordance with law in the civil suit, if filed by the petitioners. 41. Consequently, in view of the detailed discussion made hereinabove as well as law taken into consideration, this Court has no hesitation to conclude that the present petition is not maintainable and reliefs (b) & (c), as sought by way of instant petition, can only be granted in the appropriate proceedings before appropriate court of law, as indicated hereinabove. 42. In the aforesaid terms, the petition is disposed of, so also the pending applications, if any.