Madhya Pradesh High Court
Case BriefsHigh Courts

Madhya Pradesh High Court: The Division Bench of Sujoy Paul and Prakash Chandra Gupta, JJ., disposed of a petition reserving liberty to the petitioner to avail alternative remedy of appeal.

Petitioner had  filed Writ Petition challenging impugned order which was an interlocutory order passed by the Debts Recovery Tribunal, Jabalpur, whereby the interim relief was denied to the Petitioner as he had failed to establish violation of the SARFAESI Act, 2002, in the proceedings initiated by the Respondent Bank under the Act.

Counsel for the petitioner submitted that the present writ petition was properly drafted and pregnant with the necessary specific pleadings. He further submitted that the DRT came to hold that under the provisions of SARFAESI Act, 2002 no interim relief was due to the petitioner. Hence, the only remedy to the petitioner is of filing of present petition.

Counsel for the respondent/Bank placed reliance on the recent order of Supreme Court wherein the Supreme Court had deprecated the practice of entertaining the writ petition despite availability of alternative remedy.

The Court reiterated Section 18(1) of the SARFAESI Act, 2002 and noted that the appellate provision made it clear that the legislature in its wisdom has used the words “any order” made by the Debts Recovery Tribunal against which the appeal lies. The Court was of the opinion that expression “any order” was wide enough to include an interlocutory order drawing support from various decisions given by the High Courts of India in this regard.

The Court considering the backdrop of the present case stated that there was nothing which made it obligatory for the Court to entertain this writ petition when efficacious alternative remedy is available to the petitioner. The Court considered the case of Kotak Mahindra Bank Ltd. v. Dilip Bhosale, Special Leave to Appeal (C) No.(s). 13241-13242/2019, decided on May 11, 2022 relied on by the Counsel  for the respondent/Bank and reiterated the relevant part which was:

“Before parting with the order, we would like to observe that this Court is consistent of the view and can be noticed from the judgment in United Bank of India Vs. Satyawati Tandon (2010) 8 SCC 110, that when a remedy under the statute is available and in the instant case which indeed was availed by the respondent/borrower, filing of a writ petition under Article 226 of the Constitution of India is to be discouraged by the High Court.”

The interference was declined in view of availability of alternative remedy.

[Devendra Kumar Rai v. State Bank of India, 2022 SCC OnLine MP 1295, decided on June 13, 2022]

For petitioner: Mr N.S. Ruprah

For respondent/Bank: Mr Prabhanshu Shukla

*Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsHigh Courts

Bombay High Court: The Division Bench of Sunil B. Shukre and Anil S. Kilor, JJ., held that mandate of Section 34 leaves a party aggrieved by the action of the Bank taken under Section 13 of the SARFAESI Act with only one forum to raise its grievance before it. This would further underline the need for any Debts Recovery Tribunal to be careful in denying urgent hearings to the parties.

Petitioner was aggrieved by the notice issued under Section 32 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), whereby two mortgaged properties creating a security interest in favour of respondent 1/Bank towards repayment of a loan granted to petitioner 2/company were put on auction sale.

Petitioners had filed an application under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal, Nagpur questioning the said sale notice.

As per the sale notice, the petitioner had to pay the outstanding dues amounting to Rs 5,87, 10,380.23 together with applicable interest and costs within15 days, failing which the notice informed that the respondent 1/bank would be constrained to sell the secured assets for realization of the dues.

Further, it was noted that the petitioners did not question the said notice for its validity immediately after its receipt and almost about 25 days thereafter, chose to knock at the doors of Debts Recovery Tribunal.

Petitioner’s request for an urgent hearing was also declined by the DRT.

Right of Hearing

Contention of the petitioners was that the petitioners were being denied the right of hearing by the Debts Recovery Tribunal, the only forum available for redressal of grievances arising from the measures taken under Section 12 of the SARFAESI Act which affected the fundamental rights of the petitioners.

There is a difference between refusal to hear a matter on a particular date and refusal to hear the matter at all. 

In the present matter, DRT had not said that it would not hear the application and thus the request for grant of urgent hearing had not been altogether rejected by the DRT, Nagpur. Also, the rejection came from the Registrar of the DRT and not from the Presiding Officer of DRT.

High Court in view of the above facts and circumstances, stated that the Registrar of the Debts Recovery Tribunal, instead of taking a decision himself, ought to have placed the request for urgent hearing before the Presiding Officer of the Debts Recovery Tribunal and allowed the Presiding Officer to take appropriate decision in the matter.

Adding to the above, Bench noted that If the said auction sale was to go ahead and finalization of the sale of the properties in the auction had indeed taken place, it would have resulted into adversely affecting the rights of the petitioners even without hearing the petitioners and the further consequence would have been another grievance of violation of principles of natural justice.

High Court referred to the Supreme Court decision in Mardia Chemicals Ltd. Etc. v. Union of India, (2004) 4 SCC 311, wherein it was held that the central theme of the provisions made in the SARFAESI Act is of fairness and transparency in the procedure adopted while taking such drastic measures as taking over of the possession of the secured assets and they being sold in realization of the dues payable to the banks, without any intervention of any judicial authority.

Section 34 of the SARFAESI Act raises an embargo upon the power of the Civil Court to grant injunction in respect of any action. Taken or to be taken in pursuance of the powers conferred by under this Act or under the Recovery of Debts and Bankruptcy Act, 1993.

Opportunity of Hearing

 Court expressed that the opportunity of hearing is an integral part of our constitutional philosophy and it is well embedded in Articles 14 and 21 of the Constitution of India.

Since the Registrar of the Debts Recovery Tribunal failed to perform his duty in the matter, therefore, the order passed by him denying the hearing would have to be held as illegal.

While partly allowing the petition, Court directed the Debts Recovery Tribunal to hold an urgent hearing. [Aruna DTS Moorthy v. UCO Bank, 2021 SCC OnLine Bom 1537, decided on 30-7-2021]

Advocates before the Court:

S.S.Sanyal, Advocate for the petitioners.

Sau. Supriya Puntambekar, Advocate for respondent 1. Shri C. Deopujari, Advocate h/f Aurangabadkar, ASGI for respondent 2.

Case BriefsHigh Courts

Madras High Court: A Division Bench of Rmt. Teeka Raman and P.D. Audikesavalu, JJ. imposed costs of Rs 25,000 on Central Bank of India for deputing its Chief Manager for cross-examination in the matter before the Debts Recovery Tribunal, Chennai, in place of its Assistant General Manager who had filed the proof of affidavit therein.

The Bank had instituted an application under Section 19 of the Recovery Debts and Bankruptcy Act, 1993 against the petitioner for recovery of a certain amount due under credit facilities. The petitioners filed a petition before the High Court whereunder the Court directed the cross-examination of the Bank’s Assistant General Manager who had filed the proof of affidavit. However, it was only after the certified copy of the said order was furnished to the parties, that the counsel for the petitioner realised that the person cross-examined was not the person who was to be cross-examined. Thereafter, he prayed before the Tribunal to eschew the evidence of the Assistant General Manager as it was of cross-examined. However, the prayer was declined and an option was given to the petitioner to cross-examine the Assistant General Manager afresh. The petitioner’s counsel declined to do so and instead filed the present petition against the order of the Tribunal.

The High Court noted that despite considerable force in petitioner’s arguments. it was also to be considered that the petitioner declined to cross-examine the Assistant General Manager in spite of being given the opportunity. In such circumstance, the impugned order was held liable not to be interfered with. However, the Court strongly deprecated the conduct of the Bank and imposed costs of Rs 25,000 to be paid to the counsel of the petitioner. The petitioner was permitted to cross-examine the Assistant General Manager on the next hearing. [Devi Karumariamman Educational Trust v. Central Bank of India, CRP No. 1790 of 2019, decided on 22-05-2019]