2015 (9) TMI 82 - HC - Indian Laws

Application under Section 17 SARFAESI Act - Loan taken from respondent Bank - Assessee classified as NPA - Petition dismissed by Supreme Court - Respondent also filed an application under section 14 before the District Magistrate - District Magistrate issued a notice and on receipt of the notice, the petitioner filed the instant Securitization Application as provided under section 17 on 4-6-2014, challenging the demand notice as well as the notice dated 21-6-2013 issued by respondent No. 1 Bank under section 13(4) - Tribunal rejected the application - Held that - In the present case, it cannot be said that the Tribunal has just dismissed the application for stay by merely stating that it is dismissed. Even if it is presumed as stated in the additional affidavit filed by the petitioner that certain contentions raised by the Tribunal, though recorded, are not dealt with, is examined, it cannot be said that no reasons are given. The Tribunal was dealing with an application for stay and therefore, prima facie case was to be examined. - contentions raised herein touches the merits of the main application which requires elaborate examination and even considering the impugned order, it cannot be said that there is no consideration by the Tribunal and hence, it cannot be said that there is breach of principles of natural justice as contended by the petitioner and in facts arising out of this petition, such a contention deserves to be negatived while exercising extraordinary discretionary jurisdiction of this Court. The petitioner having failed even before the Apex Court has filed this petition directly under Article 226 of the Constitution of India. The decision of the Apex Court in the case of Keshavlal Khemchand & Sons Pvt. Ltd. (2015 (2) TMI 686 - SUPREME COURT OF INDIA) was rendered in a group of petitions and one of the petitions therein was filed by the present petitioner. - Tribunal was examining the application for stay and not the main Securitization Application under Section 17 of the Act and therefore, the Tribunal was required to consider only the primafacie case of the petitioner. - Tribunal has given its findings on merits and in facts and circumstances of this case, as observed above, the same cannot be termed as breach of principles of natural justice and in opinion of this Court, permitting the petitioner to bypass the statutory remedy of filing an appeal would be against the very purpose and object of the Act. It is true that alternative remedy is not an absolute bar; however, in facts of this case, the same does not warrant bypassing the statutory remedy. Even considering the facts of this case, the petitioner has been litigating before different forums including this Court and also the Apex Court and the points in issue raised by the petitioner even in this petition are entirely on merits of the main Securitization Application. The record indicates that the petitioner as well as the Bank were heard extensively by the Tribunal and therefore, considering the same, when the petitioner has an alternative efficacious remedy, the present petition under Article 226 and/or Article 227 of the Constitution of India does not deserve to be entertained keeping in mind the ratio laid down by the Apex Court in the case of United Bank of India (2010 (7) TMI 829 - SUPREME COURT) and Kanaiyalal Lalchand Sachdev (2011 (2) TMI 1277 - SUPREME COURT OF INDIA). The aspect which would touch the merit of the main application, in facts of this case, needs to be examined in a fullfledged appeal as provided under Section 18 of the Act. The petitioner has got an alternative efficacious remedy by way of filing an appeal and the petitioner deserves to be relegated to such an alternative remedy, leaving it open for the appellate authority to examine the same in accordance with law if any appeal is filed by the petitioner. The facts and circumstances of the case on hand do not fall within the exceptions carved out by the Apex Court in the case of Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai & Ors. reported in 1998 (10) TMI 510 - SUPREME COURT and the facts do not lead to the conclusion that there is breach of principles of natural justice, which would enable this Court to exercise its extraordinary jurisdiction under Article 226 of the Constitution of India. - though the learned advocates have also gone into the merits of the application which is decided by the Tribunal by the impugned order, the same is not examined by this Court in view of the fact that the petition is not being entertained on the ground of availability of alternative remedy. - Decided against appellant.

Summary

Issues Involved:
1. Maintainability of the petition under Article 226 of the Constitution of India.
2. Alleged violation of principles of natural justice by the Debt Recovery Tribunal (DRT).
3. Availability and efficacy of alternative remedies under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

Issue-Wise Detailed Analysis:

1. Maintainability of the Petition under Article 226:
The petitioner filed a writ petition under Article 226 of the Constitution of India challenging the interim order passed by the DRT, Ahmedabad. The respondent bank raised a preliminary objection regarding the maintainability of the petition, arguing that the petitioner had an efficacious alternative remedy under Section 18 of the SARFAESI Act. The court emphasized that while the power under Article 226 is plenary and not limited by other Acts, it should be exercised with restraint, especially when an alternative statutory remedy is available. The court cited several judgments, including Punjab National Bank v. O.C. Krishnan and United Bank of India v. Satyawati Tondon, which underscore the principle that the High Court should refrain from exercising its jurisdiction under Article 226 when an effective alternative remedy is available.

2. Alleged Violation of Principles of Natural Justice by the DRT:
The petitioner contended that the DRT's order violated principles of natural justice as it did not consider all contentions raised by the petitioner and lacked detailed reasoning. The court examined whether the DRT provided adequate reasons for its decision. It referred to several judgments, including Siemens Engineering & Manufacturing Co. of India Ltd. v. Union of India and S.N. Mukherjee v. Union of India, which establish that quasi-judicial orders must be supported by reasons to ensure transparency and fairness. The court found that the DRT had indeed provided reasons, albeit briefly, and had not merely dismissed the application without consideration. Therefore, it concluded that there was no breach of natural justice.

3. Availability and Efficacy of Alternative Remedies under Section 18 of the SARFAESI Act:
The court noted that the SARFAESI Act provides a comprehensive mechanism for addressing grievances, including the right to appeal under Section 18. It emphasized that the petitioner should have availed this statutory remedy instead of directly approaching the High Court. The court reiterated the principle that the existence of an alternative remedy is a significant factor in deciding whether to exercise jurisdiction under Article 226. The court cited the judgment in Kanaiyalal Lalchand Sachdev v. State of Maharashtra, which held that the High Court should not entertain a writ petition when an efficacious alternative remedy is available.

Conclusion:
The court dismissed the petition, holding that the petitioner should have availed the alternative remedy of filing an appeal under Section 18 of the SARFAESI Act. The court found that the DRT had provided adequate reasons for its decision and that there was no violation of principles of natural justice. The court emphasized the need for judicial prudence in exercising jurisdiction under Article 226 when an effective statutory remedy is available. The petitioner was directed to approach the appellate authority, and the court requested the appellate authority to consider any delay sympathetically.