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2025 DIGILAW 2141 (KER)

Domanica Benny v. State Of Kerala

2025-08-05

ANIL K.NARENDRAN, MURALEE KRISHNA S.

body2025
JUDGMENT : Muralee Krishna, J. This writ appeal is filed under Section 5 (i) of the KERALA HIGH COURT ACT , 1958, by the petitioners in W.P.(C)No.9263 of 2025, challenging the Judgment dated 04.04.2025 passed by the learned Single Judge in that writ petition. The 1 st appellant is the wife of the 2 nd appellant. They filed the writ petition under Article 226 of the Constitution of India, seeking the following reliefs: “i. To issue a writ of Certiorari or any other appropriate writ, order calling for the records leading to Exhibit P3 Notice of Possession issued under Section 13 (4) of Securitisation and Reconstruction Assets of Financial and Enforcement of Security Interest Act, 2002 and under Rule 8 (1) of Security Interest (Enforcement) Rules, 2002 dated 22.10.2024 and quash the same holding that the same is in complete contravention of Securitisation and Reconstruction of Financial Assets and Enforcement of security interest Act, 2002 in the light of Ground A and rules framed thereunder and the steps taken by the 7 th and 8 th respondents are illegal, unjustified, erroneous, unwarranted, null and void and arbitrary; in the interest of justice. ii. To direct the 2 nd respondent Reserve Bank of India to initiate enquiry against the 7 th respondent and like NBFCs for misusing the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 for the debts less than threshold minimum not limited to the instant case; but in the identical cases. iii. To issue a writ of Certiorari or any other appropriate writ, or order calling for the records leading to the Settlement Agreement signed between the petitioners and the 8 th respondent pursuant to the Lok Adalat of the 6 th respondent and quash the same as it is illegal, unjust and arbitrary. iv. To issue a direction to the 1st respondent to extend the Debt Relief Schemes constituted under the Kerala Debt Relief Commission Act 2008 to the financial assistance availed by fisherfolk like the petitioners in the aftermath of natural calamities.” 2. According to the appellants, the 2 nd appellant is a fisherman and a member of the Kerala Fisherman Welfare Fund Board. The 2 nd appellant, along with the 1 st appellant, availed a housing loan of Rs.2/- Lakh from the 7 th respondent in the year 2018. They repaid a total sum of Rs.1,20,000/-. According to the appellants, the 2 nd appellant is a fisherman and a member of the Kerala Fisherman Welfare Fund Board. The 2 nd appellant, along with the 1 st appellant, availed a housing loan of Rs.2/- Lakh from the 7 th respondent in the year 2018. They repaid a total sum of Rs.1,20,000/-. However, the office of the 8 th respondent issued Ext.P3 possession notice dated 22.10.2024 under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’, in short), showing the total due amount as Rs.4,17,620/-. Though the 2 nd appellant was ready to remit a portion of the balance amount of Rs.70,000/-, the office of the 8 th respondent refused the same. On an evening in the month of December, some of the Officers of the 8 th respondent came to the residence of the appellants and directed them to attend the Lok Adalat to be held on the next day in Alappuzha Court. When the appellants attended the same, the lawyer who represented the 7 th respondent told them that their liability of Rs.4,17,620/- will be written off. The 1 st appellant signed in some documents from the Adalat. Thereafter, the appellants started receiving phone calls from the office of the 7 th respondent stating that an amount of Rs.1,70,000/- is still pending to be paid by them. The appellants understood that in the Lok Adalat the papers they signed were actually agreeing to repay an amount of Rs.1,70,000/- in two instalments, the first one on 22.12.2024 and the second on 22.01.2025. The member of the Lok Adalat failed to make the 1 st appellant understand the contents of the documents in which she affixed her signature. The 1 st appellant could not read English. However, she was made to sign the documents in English. Inter alia contending that the office of the 8 th respondent took advantage of the illiteracy of the appellants and the member of the Lok Adalat failed to make the appellants understand the significance of signing the settlement agreement, the appellants filed the writ petition. 3. On behalf of the 8 th respondent, the learned counsel filed a statement dated 21.03.2025 in the writ petition. Paragraphs 2 to 4 of that statement read thus: “2. 3. On behalf of the 8 th respondent, the learned counsel filed a statement dated 21.03.2025 in the writ petition. Paragraphs 2 to 4 of that statement read thus: “2. It is to be submitted that the petitioner had availed a Housing/ Construction loan from the eighth respondent with a loan tenure of 113 months. The Housing/Construction loan was disbursed on 26.05.2018. 3. 13(2) notice, under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) was issued on 10.03.2023 demanding the petitioner to repay the outstanding amount. As the petitioner failed to repay the outstanding dues within 60 days a 13(4) notice was issued on 22.10.2024. 4. It is further submitted that the customer had taken 9 months moratorium and after that the loan has been rescheduled. The total outstanding as on 10.3.2025 was Rs.468307 and the total overdue as on 10.03.2025 was Rs.327169. The last payment was Rs.17000 done on 14.01.2023.” 4. To the statement, the appellants filed a reply statement dated 25.03.2025, producing therewith Exts.P4 and P5 documents . 5. By the impugned judgment dated 04.04.2025, the learned Single Judge disposed of the writ petition, holding that in the light of the law laid down by the Supreme Court in S. Shobha v. Muthoot Finance Ltd. [2025 SCC Online SC 177] , the writ petition is not maintainable. However, the learned Single Judge, by considering the submission of the learned counsel for the respondents 7 and 8 that those respondents have no objection in granting some instalments to the appellants, issued certain directions. Paragraph 8 of the impugned judgment reads thus: “8. Accordingly, there will be a direction to the respondents 7 and 8 to accept repayment of the entire overdue amount of Rs.3,27,169/- along with any accrued interest, costs and charges from the petitioners and regularize the loan account of the petitioners in the following manner: (i) The petitioners shall pay the overdue amount of Rs.3,27,169/- together with any accrued interest, costs and charges in 15 equated monthly instalments; (ii) The first instalment shall be paid on or before 30-04- 2025. The subsequent instalments shall be paid on or before the last working day of the succeeding months; (iii) Petitioners shall continue to pay the regular EMI’s/instalments along with the instalments as directed above; (iv) In the event of default of any one instalment, the respondent financial institution shall be entitled to proceed in accordance with the law; (v) In order to enable the petitioners to repay the entire amounts, all coercive proceedings shall be kept in abeyance”. 6. On 22.04.2025, when this writ appeal came up for admission, the appellants were directed to serve a copy of the writ appeal to the learned counsel appearing for respondents 7 and 8. 7. On 25.04.2025, when this writ appeal came up for consideration, the learned Government Pleader entered appearance for respondents 1, 3 and 4. The learned Standing Counsel entered appearance for the 5 th respondent. Notice by speed post was ordered to respondents 2, 7 and 8. 8. On 20.05.2025, the learned counsel entered appearance for respondents 7 and 8. 9. On 18.06.2025, this Court directed the Registry to call for the files relating to Ext.P6 settlement agreement dated27.11.2024 signed by the 1 st appellant and the Manager of the 7 th respondent in the Lok Adalath, through the Chairman, District Legal Services Authority, Alappuzha. 10. In pursuance to the direction in the order dated 18.06.2025, the files relating to the Pre-Litigation Petition No.10076/2024 of the Taluk Legal Service Committee, Ambalappuzha, Award dated 27.11.2024 in that PLP, and proceedings sheet of that PLP were submitted by the Chairman of the District Legal Services Authority, Alappuzha. 11. Heard the learned counsel for the appellants, the learned counsel for the respondents 7 and 8, the learned counsel for the5 th respondent and the learned Senior Government Pleader. 12. The learned counsel for the appellants would argue that Ext.P6 settlement agreement dated 27.11.2024, entered into between the 1 st appellant and the 7 th respondent before the Lok Adalat conducted by the 6 th respondent, is in violation of natural justice. The 1 st appellant, who is an illiterate person, was made to sign that document without being apprised of the contents of the same. The copy of Ext.P6 was not served to the appellants. The 1 st appellant, who is an illiterate person, was made to sign that document without being apprised of the contents of the same. The copy of Ext.P6 was not served to the appellants. The learned counsel would further argue that the National Housing Bank Act, 1987, is a complete Code and the display of information was not done by the 7 th respondent as stipulated in Ext.P4 miscellaneous instructions issued by the National Housing Bank. 13. On the other hand, the learned counsel for the respondents 7 and 8 would argue that the appellants voluntarily agreed for the settlement in the Lok Adalat and accordingly, the 1 st appellant signed in Ext.P6 award fully understanding the terms and conditions of the settlement. On the date of the award, the total outstanding amount in the loan transaction was calculated as Rs.4,10,000/- and the settlement was arrived at a sum of Rs.1,70,000/-. There was no assurance from the part of respondents 7 and 8 to write off such a huge amount. The appellants clearly understood the terms of settlement, and it was explained by the Presiding Officer, who is the Secretary of the District Legal Services Authority, Alappuzha, in the rank of a Subordinate Judge. Now the appellants raise lame excuses to get time to make payment of the agreed amount in instalments. In fact, the appellants agreed for instalments during the hearing of the writ petition, and that fact was noted in paragraph 6 of the impugned judgment. 14. The learned counsel for the 5 th respondent would submit that the loan of the appellants is not qualified for any relief from the Kerala State Fishermen Debt Relief Commission, since the relief can be granted only to loans till 31.12.2007. 15. The learned Senior Government Pleader supported the arguments of respondents 7 and 8 and further submitted that if Ext.P6 award of the Lok Adalat goes, the appellants have to pay the full due amount of more than Rs.4/- Lakhs to the Bank. 16. In the writ petition, the appellants are challenging the SARFAESI proceedings initiated by the Bank as well as Ext.P6 award passed in the Lok Adalat. At first, we shall consider the challenge of the appellants against Ext.P6 award of the Lok Adalat. 17. 16. In the writ petition, the appellants are challenging the SARFAESI proceedings initiated by the Bank as well as Ext.P6 award passed in the Lok Adalat. At first, we shall consider the challenge of the appellants against Ext.P6 award of the Lok Adalat. 17. The Apex Court in K. Srinivasappa v. M.Mallamma [ AIR 2022 SC 2381 ] held that a Writ Petition would be maintainable against an award of the Lok Adalat, but a writ court cannot, in a casual manner, de hors any reasoning, set aside an award of the Lok Adalat. In Pushpa Devi Bhagat (dead) through LR. Sadhna Rai v. Rajinder Singh and Others [ (2006) 5 SCC 566 ] the Apex Court held that a party seeking to avoid the terms of a consent decree has to establish that the agreement on which the consent decree is based, is invalid or illegal. 18. As mentioned above, we have called for the files relating Ext.P6 award and perused the same. From the files submitted by the Chairman of the District Legal Services Authority, we notice that the matter was taken up in the Lok Adalat held on 27.11.2024 at District Court Complex, Alappuzha on the basis of the request made by the 7 th respondent before the Taluk Legal Services Committee, Ambalappuzha. The 1 st appellant participated in the Lok Adalat and signed the award on 27.11.2024. It is stated in that award that the total outstanding amount of Rs.4,10,000/- is settled for Rs.1,70,000/- and the first payment of Rs.70,000/- has to be made on or before 25.12.2024, and the balance sum of Rs.1/- lakh has to be discharged on or before 25.01.2025. The Presiding Officer of the Lok Adalat was the Secretary of the District Legal Services Authority, who is a Civil Judge, Senior Division. Though the appellants allege that the award was passed without enlightening them about the contents of the same, there is no material to accept that contention. When considering the fact that a liability of Rs.4,10,000/- was settled for a sum of Rs.1,70,000/-, we find no reason to say that there is any mala fide intention in passing Ext.P6 award. Therefore, while considering the facts and circumstances in the light of the judgments of the Apex Court cited supra, it is only to held that the challenge raised by the appellants against Ext.P6 award is liable to be rejected. 19. Therefore, while considering the facts and circumstances in the light of the judgments of the Apex Court cited supra, it is only to held that the challenge raised by the appellants against Ext.P6 award is liable to be rejected. 19. Now coming to the question of maintainability of a writ petition under Article 226 of the Constitution of India against a proceedings initiated under the provisions of the SARFAESI Act, it is trite that, except in exceptional circumstances, no such writ petition is maintainable. 20. In Authorized Officer, State Bank of Travancore and Another v. Mathew K.C. [ 2018 (1) KHC 786 ] , the Apex Court held that the High Court under Article 226 of the Constitution of India can entertain a writ petition only under exceptional circumstances and that it is a self-imposed restraint by the High Court. The four exceptional circumstances such as, 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, were re iterated in paragraph 6 of the said judgment by relying on the judgment of the Apex Court in Commissioner of Income Tax and Others v. Chhabil Dass Agarwal [(2014) 1 SCC 603] 21. This position was reiterated by the Apex Court in South Indian Bank Ltd. (M/s.) v. Naveen Mathew Philip [2023 (4) KLT 29] and after discussing the various judgments on the point as well as the circumstances in which the High Court can interfere within matters pertaining to the SARFAESI Act, held as under: “Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Art.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. 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 Art.226 of the Constitution, a person must exhaust the remedies available under the relevant statute”. (Underline supplied) 22. In PHR Invent Educational Society v. UCO Bank [2024 (3) KHC SN 3] the Apex Court held that it is more than a settled legal position of law that in matters arising out of RDB Act and SARFAESI Act, the High Court should not entertain a petition under Art.226 of the Constitution particularly when an alternative statutory remedy is available. 23. A learned Single Judge of this Court in Jasmin K. v. State Bank of India [ 2024 (3) KHC 266 ] reiterated the position of law laid down by the Apex Court in the aforementioned judgments. 24. From the pleadings and materials on record, it is evident that the loan of the appellants was converted into a Non- Performing Asset, and respondents 7 and 8 proceeded against the secured asset under the provisions of the SARFAESI Act. If the appellants have any grievance against the initiation of proceedings under the provisions of the SARFAESI Act, then the remedy available to them is to approach the Debts Recovery Tribunal under Section 17 of the SARFAESI Act. The appellants have not made out any special circumstance to approach this Court with the writ petition under Article 226 of the Constitution of India without approaching the Debts Recovery Tribunal, before which the statutory remedy is provided to the appellants. 25. The appellants have not made out any special circumstance to approach this Court with the writ petition under Article 226 of the Constitution of India without approaching the Debts Recovery Tribunal, before which the statutory remedy is provided to the appellants. 25. Apart from that, we notice that in paragraph 9 of the judgment in the matter of S. Shobha [2025 SCC OnLine SC 177] , the Apex Court held thus; “We may sum up thus: (1) For issuing writ against a legal entity, it would have to be an Instrumentality or agency of a State or should have been entrusted with such functions as are Governmental or closely associated therewith by being of public importance or being fundamental to the life of the people and hence Governmental. (2) A writ petition under Article 226 of the Constitution of India may be maintainable against (i) the State Government; (ii) Authority; (iii) a statutory body; (iv) an instrumentality or agency of the State; (v) a company which is financed and owned by the State; (vi) a private body run substantially on State funding; (vii) a private body discharging public duty or positive obligation of public nature; and (viii) a person or a body under liability to discharge any function under any Statute, to compel it to perform such a statutory function. (3) Although a non-banking finance company like the Muthoot Finance Ltd. with which we are concerned is duty bound to follow and abide by the guidelines provided by the Reserve Bank of India for smooth conduct of its affairs in carrying on its business, yet those are of regulatory measures to keep a check and provide guideline and not a participatory dominance or control over the affairs of the company. (4) A private company carrying on banking business as a Scheduled bank cannot be termed as a company carrying on any public function or public duty (5) Normally, mandamus is issued to a public body or authority to compel it to perform some public duty cast upon it by some statute or statutory rule. In exceptional cases a writ of mandamus or a writ in the nature of mandamus may issue to a private body, but only where a public duty is cast upon such private body by a statute or statutory rule and only to compel such body to perform its public duty. In exceptional cases a writ of mandamus or a writ in the nature of mandamus may issue to a private body, but only where a public duty is cast upon such private body by a statute or statutory rule and only to compel such body to perform its public duty. (6) Merely because a statue or a rule having the force of a statute requires a company or some other body to do a particular thing, it does not possess the attribute of a statutory body. (7) If a private body is discharging a public function and the denial of any rights is in connection with the public duty imposed on such body, the public law remedy can be enforced. The duty cast on the public body may be either statutory or otherwise and the source of such power is immaterial but, nevertheless, there must be the public law element in such action. (8) According to Halsbury's Laws of England, 3 rd Ed. Vol.30, p.682, "a public authority is a body not necessarily a county council, municipal corporation or other local authority which has public statutory duties to perform, and which perform the duties and carries out its transactions for the benefit of the public and not for private profit". There cannot be any general definition of public authority or public action. The facts of each case decide the point.” 26. According to respondents 7 and 8, the 7 th respondent bank is a private company carrying on banking business as a scheduled bank, and it cannot be subjected to the writ jurisdiction of this Court under Article 226 of the Constitution of India. No material has been produced from the side of the appellants to refute this contention of the respondents. For the said reason also, this writ petition is not maintainable. 27. From the impugned judgment, we notice that when the writ petition was considered by the learned Single Judge, the appellants sought permission to clear the liability in instalments. It was in that circumstance, recording the consent of respondents 7 and 8, the learned Single Judge issued certain directions in the writ petition. Having considered the pleadings and materials on record and the submissions made at the Bar, we find no reason to interfere with the impugned judgment. In the result, the writ appeal stands dismissed.