2022 (7) TMI 1505 - HC - Indian Laws

Maintainability of petition - non-availment of the alternative remedy under Section 17 of the SARFAESI Act 2002 - HELD THAT - Reliance placed on the decision of the Supreme Court in the case of Aggarwal Tracom Pvt.Ltd. vs. Punjab National Bank Order 2017 (11) TMI 1523 - SUPREME COURT to contend that the Writ Petitions under Article 226 of the Constitution of India cannot be entertained when effective statutory remedy is available to the aggrieved person in a later judgment rendered in the case of Authorized Officer State Bank of Travancore and Another Vs. Mathew K.C 2018 (2) TMI 25 - SUPREME COURT the Supreme Court held that there are well defined exceptions to the rule of exhaustion of alternative remedy as laid down in decision of Commissioner of Income Tax and Others vs. Chhabil Dass Agarwal 2013 (8) TMI 458 - SUPREME COURT and one of such exceptions mentioned in Para 15 of the said judgment is where the statutory authority has not acted in accordance with the provisions of the enactment in question. - the plea of the respondent is rejected that the Writ Petition ought to be dismissed in view of existence of alternative remedy under Sec.17 of the Act. Whether the petitioner is entitled to any relief? - HELD THAT - As per Or.XXXVIII Rule 11 CPC where property is under attachment by virtue of the provisions of the said Order XXXVIII CPC and a decree is subsequently passed in favor of the plaintiff it shall not be necessary upon an application for execution of such decree to apply for reattachment of the property. So the attachment before judgment granted shall be effective and operative even after passing of the decree and while executing the decree it is not necessary to re-attach the property - So if the petitioner had to get clear title from the Bank pursuant to the tender /public notice dt.24.4.2019 (P4) he would have to satisfy the said decree in the above suit as well. Had the petitioner been aware of this he might not have participated in the tender issued by the Bank at all. No intending purchaser wants to buy fresh litigation or take on other unknown liabilities against third parties and it was the statutory duty of the Bank to disclose them in the public notice/tender notice. So the action of the respondent Bank is arbitrary and contrary to the provisions of the Act - It is strange that these documents are disclosed along with reply affidavit had not been taken into account for disclosing in the tender/public notice dt.24.4.2019 (P4) (under Rule 8(6) (f)) the existence of civil court decree which undoubtedly would have a bearing on the willingness of the bidder to participate in a Public Auction/Tender notification and would also have impact on the price being offered. The Bank has failed to act in a transparent manner and had acted inequitably and arbitrarily - the respondent-Bank is directed to refund to the petitioner a sum of 1.80 Crores deposited by the petitioner with interest @ 7% per annum from the respective dates of deposit of such amount within 4 weeks from today - the Writ Petition is partly allowed.

Summary

Issues Involved:
1. Maintainability of the Writ Petition.
2. Entitlement of the petitioner to any relief.

Issue-wise Detailed Analysis:

1. Maintainability of the Writ Petition:
The first issue addressed was whether the Writ Petition was maintainable and if the petitioner should have availed the alternative remedy under Section 17 of the SARFAESI Act, 2002. The court noted that the Writ Petition had been filed almost three years prior and had been entertained by issuing a notice of motion and granting interim relief. Dismissing the petition at this stage would be a travesty of justice. The court also cited the Supreme Court's judgment in Authorized Officer, State Bank of Travancore and Another Vs. Mathew K.C, which allows for exceptions to the rule of exhaustion of alternative remedies, particularly when statutory authorities have not acted in accordance with the provisions of the enactment. The court concluded that the Writ Petition was maintainable and rejected the plea for dismissal based on the availability of an alternative remedy.

2. Entitlement of the Petitioner to Any Relief:
The court then examined whether the petitioner was entitled to any relief. Under the SARFAESI Act, the secured creditor can sell the secured asset in the event of loan default, but must follow specific procedures, including disclosing encumbrances on the property. The court highlighted that the Bank's tender notice failed to disclose existing encumbrances, including civil litigation and court orders affecting the properties. The Bank's argument that it was not responsible for any encumbrances due to the "as is where is" clause was rejected. The court cited multiple precedents, including decisions from the High Courts of Allahabad, Telangana, and Andhra Pradesh, which held that banks must disclose all material facts and encumbrances to potential bidders. The court found that the Bank had acted arbitrarily and inequitably by not disclosing these details, which would have affected the petitioner's decision to participate in the tender.

Judgment:
The court partially allowed the Writ Petition, directing the respondent-Bank to refund the petitioner a sum of 1.80 Crores with interest at 7% per annum from the respective dates of deposit within four weeks. The Bank was also ordered to pay costs of 25,000/- to the petitioner. Other reliefs sought by the petitioner were rejected.