2022 (5) TMI 704 - SC - Indian Laws

Recovery proceedings - symbolic possession of the mortgaged property under section 13(4) of the SARFAESI Act or not - HELD THAT - First of all we deprecate the conduct on the part of respondent No. 1 in withdrawing the Letters Patent Appeal despite the fact that this Court was seized of matter in which the exparte adinterim order dated 25.01.2022 passed by the Division Bench was under challenge and in which respondent No. 1 was appearing before this Court. He ought not to have withdrawn the Letters Patent Appeal and made the proceedings before this Court infructuous. As observed hereinabove such act of withdrawal of the Letters Patent Appeal on the part of respondent No. 1 original appellant and thereby making the proceedings before this Court infructuous so as to avoid adjudication on the correctness of the impugned order after order dated 22.02.2022 was passed by this Court is wholly deplorable. Even otherwise in the facts and circumstances of the case a number of proceedings were initiated by respondent No. 1 by which he has delayed the proceedings initiated by the bank under the SARFAESI Act and has stalled the recovery proceedings. In spite of the strong observations made by the adjudicating authority in the earlier order produced by the learned Single Judge in his judgment and the strong observations made by the learned Single Judge the Division Bench was not justified in initially granting an exparte adinterim relief and thereafter to continue the same on withdrawal of the Letters Patent Appeal. In fact the Division Bench also did not consider the order of the learned Single Judge on merits but has granted relief even while permitting withdrawal of the appeal. Such conduct on the part of the litigant to once enjoy the fruits of the litigation for number of years invite the order on merits which is against him and in the appeal initially after obtaining the exparte adinterim relief and thereafter having realised that the same would not be sustained withdrawing the appeal and requesting that observations made by the learned Single Judge while dismissing the writ petition may not be considered cannot be accepted and such conduct reprehensible - Once the Division Bench did not interfere with the order passed by the learned Single Judge on merits thereafter it was not open for the Division Bench to pass an order permitting the appellant respondent No. 1 to withdraw the Letters Patent Appeal and also make observations that any of the observations made by the DRT as well as by learned Single Judge while dismissing the writ petition shall be ignored and/or shall not be taken into consideration was beyond the ken of the Division Bench. Allowing such a practice would tantamount to not only taking a chance before the court but would be indeed speculative and an abuse of the process of the court. The proceedings before the Court are not for taking the chance by the litigants. Impugned order is not sustainable - petition disposed off.

Summary

Issues Involved:
1. Validity of the ex parte interim order granted by the Division Bench of the High Court.
2. Abuse of the court process by the respondent to delay proceedings.
3. Maintainability of the writ petition under Article 226 of the Constitution against proceedings under the SARFAESI Act.
4. Jurisdictional errors by the Division Bench in permitting withdrawal of the Letters Patent Appeal and extending interim relief.

Issue-wise Detailed Analysis:

1. Validity of the ex parte interim order granted by the Division Bench of the High Court:
The Division Bench of the High Court granted an ex parte interim order on 25.01.2022, staying the dispossession of the property and the payment of costs imposed by the learned Single Judge. This order was challenged by the bank, arguing that such an interim order effectively stalled the proceedings under the SARFAESI Act. The Supreme Court noted that the Division Bench's order was unsustainable as it interfered with the recovery proceedings initiated by the bank, which had been pending since 1986. The Supreme Court emphasized that such ex parte interim orders should not be granted in a manner that delays the enforcement of valid recovery proceedings.

2. Abuse of the court process by the respondent to delay proceedings:
The respondent had initiated multiple proceedings to delay the recovery of dues since 1986. The Supreme Court observed that the respondent had abused the court process by filing one proceeding after another to hinder the bank's recovery efforts. The learned Single Judge of the High Court had dismissed the writ petition with exemplary costs, noting that the respondent had successfully avoided payment for almost 21 years. The Supreme Court reiterated that such conduct by the respondent was reprehensible and amounted to an abuse of the judicial process.

3. Maintainability of the writ petition under Article 226 of the Constitution against proceedings under the SARFAESI Act:
The Supreme Court referred to its earlier decisions, including "Authorized Officer, State Bank of Travancore vs. Mathew K.C." and "Phoenix ARC Private Limited vs. Vishwa Bharati Vidya Mandir," to reiterate that a writ petition under Article 226 of the Constitution is not maintainable against proceedings initiated under the SARFAESI Act. The Court emphasized that statutory remedies provided under the SARFAESI Act should be exhausted before approaching the High Court under Article 226. The respondent's writ petition was thus not maintainable, and the Division Bench's interim order was in contravention of established legal principles.

4. Jurisdictional errors by the Division Bench in permitting withdrawal of the Letters Patent Appeal and extending interim relief:
The Division Bench permitted the respondent to withdraw the Letters Patent Appeal with liberty to file appropriate proceedings before the appropriate forum and extended the interim relief granted earlier. The Supreme Court found this to be a jurisdictional error, as it effectively nullified the strong observations made by the learned Single Judge and the DRT. The Division Bench's order amounted to virtually allowing the appeal and setting aside the orders of the DRT and the learned Single Judge without proper adjudication. The Supreme Court quashed and set aside the impugned order of the Division Bench, including the extension of interim relief and the reduction of costs, emphasizing that such conduct by the respondent was an abuse of the court process.

Conclusion:
The Supreme Court allowed the appeals, quashing the Division Bench's orders extending interim relief and reducing costs. The Court emphasized the need to curb abuse of the judicial process and reiterated the non-maintainability of writ petitions under Article 226 against proceedings under the SARFAESI Act. The respondent was ordered to pay costs of Rs. 1,00,000 to the Gujarat High Court Legal Services Committee.