2016 (4) TMI 964 - HC - Indian Laws

Maintainability of writ petition against an order passed by the Debts Recovery Tribunal disposing of an appeal filed under S.17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Held that - When extraordinary writ remedy is invoked, despite the availability of an alternative remedy, the Court should at the threshold, examine, whether the petition can be entertained having regard to the pleading in the petition, more particularly, the reason(s) stated for bypassing of the alternative remedy. In a catena of decisions, it has been held by the Apex Court, that writ petition under Article 226 of the Constitution should not be entertained when the alternate remedy is available under the Act, unless exceptional circumstances are made out. The writ remedy cannot be permitted to be availed as a routine / matter of course, but only in exceptional circumstances. The Apex Court has recognized some exceptions to the rule of alternative remedy i.e., where the statutory body 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or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of principles of natural justice, or when the vires of the statute is under challenge. Unless the Court is convinced that the case falls under the exceptional categories, the writ petition filed against the order of the Tribunal, passed in exercise of the jurisdiction under S.17 of the SARFAESI Act, on account of the legislative intent behind the enactment of the SARFAESI Act and RDDB Act and the ratio of law laid down by the Apex Court in the cases of (1) Kanaiyalal Lalchand Sachdev 2011 (2) TMI 1277 - SUPREME COURT OF INDIA (2) Satyawati Tondon 2010 (7) TMI 829 - SUPREME COURT and (3) Sri Siddeshwara Co.Op. Bank Ltd. 2013 (9) TMI 216 - SUPREME COURT , cannot be entertained, as the approach of the High Court should be consistent with the provisions of the statutes and also the law laid down by the Apex Court, mandated by Article 141 of the Constitution. In view of the aforesaid discussion, we are of the opinion that Hotel Vandana Palace case 2011 (11) TMI 723 - KARNATAKA HIGH COURT does not lay down the correct position of law i.e., in so far as point No.(ii) answered therein. Hence, the finding recorded on point No.(ii), in Hotel Vandana Palace case, is declared as per incuriam. Needless to say that any decision(s) of this Court which take(s) the view contrary to the law laid down by the Apex Court, in (1) Kanaiyalal Lalchand Sachdev (2) Satyawati Tondon and (3) Sri Siddeshwara Co.Op. Bank Ltd., does not lay down the correct law on the question involved in this Reference. The Reference is answered accordingly. The petition be now listed before the learned Single Judge, to decide in the first instance, the entertainability or otherwise of the writ petition by keeping in view the position of law, as above.

Summary

Issues Involved:
1. Whether a writ petition is maintainable against an order passed by the Debts Recovery Tribunal (DRT) under Section 17 of the SARFAESI Act, given the alternative remedy of appeal under Section 18 of the Act.
2. The prerogative of the Chief Justice in constituting Benches and allocating work.
3. The statutory requirement of pre-deposit under Section 18 of the SARFAESI Act.
4. The doctrine of per incuriam and its application to conflicting judgments.

Detailed Analysis:

1. Maintainability of Writ Petition:
The primary issue was whether a writ petition can be maintained against an order of the DRT under Section 17 of the SARFAESI Act, considering the alternative remedy of appeal under Section 18. The court examined the legislative intent behind the SARFAESI Act and the RDDB Act, which provide a specialized mechanism for the expeditious recovery of debts. The court referred to several precedents, including *Union Bank of India v. Panchanan Subudhi* and *United Bank of India v. Satyawati Tondon*, emphasizing that the statutory remedy under Section 18 is efficacious and should not be bypassed except in exceptional circumstances. The court concluded that the writ petition should not be entertained when an alternative remedy is available unless there are exceptional circumstances such as violation of natural justice or fundamental judicial principles.

2. Prerogative of the Chief Justice:
The court addressed the contention regarding the Chief Justice's prerogative in constituting Benches and allocating work. It was argued that the reference to the larger Bench was improper as per Section 9(xii) of the Karnataka High Court Act, 1961. However, the court upheld the Chief Justice's absolute discretion under Articles 225 and 226 of the Constitution, supported by precedents like *Lala Shri Bhagawan v. Ram Chand* and *Central Board Of Dawoodi Bohra Community v. State of Maharashtra*. The court concluded that the Chief Justice's decision to constitute a Special Bench was justified and in accordance with the settled principles of law.

3. Statutory Requirement of Pre-deposit:
The court examined the statutory requirement of pre-deposit under Section 18 of the SARFAESI Act. It referred to *Narayan Chandra Ghosh v. UCO Bank* and *Parsn Medicinal Plants Private Limited v. Indian Bank*, which held that the requirement of pre-deposit is mandatory and cannot be waived entirely. The court reiterated that the Appellate Tribunal has the discretion to reduce the deposit amount to not less than 25% but cannot completely waive it. This provision ensures that the appeal process is not misused and that the statutory intent is respected.

4. Doctrine of Per Incuriam:
The court discussed the doctrine of per incuriam, which applies when a decision is rendered in ignorance of a binding precedent or statutory provision. The court found that the decision in *Hotel Vandana Palace* was rendered without considering the binding precedent of *Satyawati Tondon*, thus making it per incuriam. The court emphasized that decisions contrary to the law laid down by the Supreme Court do not constitute binding precedents. The court declared the finding on point (ii) in *Hotel Vandana Palace* as per incuriam and upheld the view in *Smt. Lily Joseph*.

Conclusion:
The court concluded that the writ petition should not be entertained when an alternative remedy is available under Section 18 of the SARFAESI Act, unless exceptional circumstances are demonstrated. The prerogative of the Chief Justice in constituting Benches and allocating work was upheld. The statutory requirement of pre-deposit under Section 18 was affirmed as mandatory. The decision in *Hotel Vandana Palace* was declared per incuriam due to its failure to consider binding precedents. The reference was answered accordingly, and the matter was remitted to the learned Single Judge to decide the entertainability of the writ petition.