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TMI Blog2012 (9) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... revalidated, shall deposit the same with the bank within the aforesaid period for getting the OTS implemented. X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bank was too harsh in rejecting the application of the petitioners for sale of the mortgaged property for discharge of outstanding liability. There were sufficient grounds existed for condoning the delay and accepting the amount. It was also pointed out that the petitioners had prepared the demand drafts on 26.7.2011 for the balance amount of ₹ 2 crores which was to be paid in terms of the original settlement by the Bank. Besides the aforesaid, learned counsel for the petitioners had shown the willingness of the petitioners in paying additional amount of ₹ 50,00,000/- in addition to ₹ 2 crores already deposited in the High Court as submitted by learned counsel for the petitioners on 25.7.2012. It was highlighted that in this situation, the bonafides of the petitioner-company were clear. Learned counsel for the petitioners relied upon following judgments in support of his submissions:- i) Sat Kartar Ice and general Mills v. Punjab Financial Corporation, 2008(1) ISJ (Banking) 248 (P&H); ii) State Bank of India v. Vijay Kumar, (2007) 11 SCC 369; iii)Smt.Periyakkal and others v. Smt.Dakshyani, (1983) 2 SCC 127; iv)M/s Sardar Associates and others v. Punjab an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be categorized as under:- a) Whether the present writ petition is competent against the respondent No.1-Bank? ; b) Whether the writ petition suffers from delay and latches and deserve to be dismissed on that ground alone?; c) Whether the petitioners have acted bonafide and are entitled to relief as claimed in the writ petition? 8. Examining the issue (a) relating to maintainability of writ petition against respondents No.1-Bank, inevitably the reference is made to certain provisions of relevant statutes and also principles enunciated in the precedents laid down by the Hon'ble Apex Court and other High Courts. 9. Firstly, it may be noticed that Reserve Bank of India is a statutory authority. Section 2(e) of the Reserve Bank of India Act, 1934 (for brevity, '1934 Act') describes "Schedule Bank" to mean a bank included in the Second Schedule. A perusal of the second Schedule to the 1934 Act shows that respondent-HDFC Bank Limited is specified therein. The Reserve Bank of India being a statutory authority, exercises supervisory power in the matter of functioning of the Scheduled Banks. For the aforementioned purpose, the Reserve Bank is entitled to issue guidelines from time to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e banking companies are bound to follow. Sub-section (3) of Section 21 of the 1949 Act clearly mandates that every banking company shall be bound to comply with the directions given to it in terms thereof. Section 35A of the 1949 Act, which was inserted by the Banking Companies (Amendment) Act, 1956, empowers the Reserve Bank to issue directions inter alia in the interest of banking policy. 13. Section 36 of the 1949 Act also provides for further powers and functions of the Reserve Bank of India, clause (d) of Subsection (1) whereof reads as under: "36. Further powers and functions of Reserve Bank - (1) The Reserve Bank may- (a) *** *** *** (b) *** *** *** (c) *** *** *** (d) at any time, if it is satisfied that in the public interest or in the interest of banking policy or for preventing the affairs of the banking company being conducted in a manner detrimental to the interests of the banking company or its depositors it is necessary so to do, by order in writing and on such terms and conditions as may be specified therein- (i) require the banking company to call a meeting of its directors for the purpose of considering any matter relating to or arising out of the affairs o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l mechanism for speedy recovery of the dues of banks and financial institutions, but also made provision for ensuring that defaulting borrowers are not able to invoke the jurisdiction of Civil Courts for frustrating the proceedings initiated by the banks and other financial institutions. 16. In the year 2002, Parliament enacted the SARFAESI Act. The scheme of the SARFAESI Act after analysing various provisions of the Statute, has been culled out succinctly by the Hon'ble Apex Court in United Bank of India v. Satyavati Tandon, AIR 2010 SC 3413 in the following terms:- "3. Section 13 of the SARFAESI Act contains detailed mechanism for enforcement of security interest. Sub-section (1) thereof lays down that notwithstanding anything contained in Sections 69 or 69-A of the Transfer of Property Act, any security interest created in favour of any secured creditor may be enforced, without the intervention of the court or tribunal, by such creditor in accordance with the provisions of this Act. Subsection (2) of Section 13 enumerates first of many steps needed to be taken by the secured creditor for enforcement of security interest. This sub-section provides that if a borrower, who is un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncidental thereto can be recovered from the borrower. The money which is received by the secured creditor is required to be held by him in trust and applied, in the first instance, for such costs, charges and expenses and then in discharge of dues of the secured creditor. Residue of the money is payable to the person entitled thereto according to his rights and interest. Sub-section (8) of Section 13 imposes a restriction on the sale or transfer of the secured asset if the amount due to the secured creditor together with costs, charges and expenses incurred by him are tendered at any time before the time fixed for such sale or transfer. Sub-section (9) of Section 13 deals with the situation in which more than one secured creditor has stakes in the secured assets and lays down that in the case of financing a financial asset by more than one secured creditor or joint financing of a financial asset by secured creditors, no individual secured creditor shall be entitled to exercise any or all of the rights under sub-section (4) unless all of them agree for such a course. There are five unnumbered provisos to Section 13(9) which deal with pari passu charge of the workers of a company in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consent of the secured creditor. In terms of Section 14, the secured creditor can file an application before the Chief Metropolitan Magistrate or the District Magistrate, within whose jurisdiction the secured asset or other documents relating thereto are found for taking possession thereof. If any such request is made, the Chief Metropolitan Magistrate or the District Magistrate, as the case may be, is obliged to take possession of such asset or document and forward the same to the secured creditor. 4. Section 17 speaks of the remedies available to any person including borrower who may have grievance against the action taken by the secured creditor under sub-section (4) of Section 13. Such an aggrieved person can make an application to the Tribunal within 45 days from the date on which action is taken under that sub-section. By way of abundant caution, an Explanation has been added to Section 17(1) and it has been clarified that the communication of reasons to the borrower in terms of Section 13(3-A) shall not constitute a ground for filing application under Section 17(1). Sub-section (2) of Section 17 casts a duty on the Tribunal to consider whether the measures taken by the sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue in the petition does not relate to whether the respondent-Bank falls within the meaning of "State" as defined in Article 12 of the Constitution or is an instrumentality of the State or not. The core question is whether a writ petition under Article 226 of the Constitution of India can be entertained against "any person", who is under statutory obligation to perform, where the reliefs claimed necessarily are not against the "State", "Government" or "authority" or "instrumentality of the State". The Hon'ble Supreme Court in The Praga Tools Corporation vs. Shri C.V. Imanual and others, AIR 1969 Supreme Court 1306 laid down that writ petition would be competent against any person or authority on whom the statutory duty is imposed. It was observed as under:- ".....It is, however, not necessary that the person or the authority on whom the statutory duty is imposed need be a public official or an official body. A mandamus can be issued, for instance, to an official of a society to compel him to carry out the terms of the statute under or by which the society is constituted or governed and also to companies or corporations to carry out duties placed on them by the statutes authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC 298 noticed as follows:- "'In Anadi Mukta case this Court examined the various aspects and the distinction between an authority and a person and after analysis of the decisions referred in that regard came to the conclusion that it is only in the circumstances when the authority or the person performs a public function or discharges a public duty that Article 226 of the Constitution can be invoked." 20. Defining of scope of exercise of writ jurisdiction under Article 226 of the Constitution of India by the High Court, the Supreme Court in Binny Limited and another v. V.Sadasivan and others, (2005) 6 SCC 657 noted as follows:- "9. The Superior Court's supervisory jurisdiction of judicial review is invoked by an aggrieved party in myriad cases. High Courts in India are empowered under Article 226 of the Constitution to exercise judicial review to correct administrative decisions and under this jurisdiction High Court can issue to any person or authority, any direction or order or writs for enforcement of any of the rights conferred by Part III or for any other purpose. The jurisdiction conferred on the High Court under Article 226 is very wide. However, it is an accepted prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n view of the words used in Article 226 of the Constitution. However, the scope of mandamus is limited to enforcement of public duty. The scope of mandamus is determined by the nature of the duty to be enforced, rather than the identity of the authority against whom it is sought. If the private body is discharging a public function and the denial of any right is in connection with the public duty imposed on such body, the public law remedy can be enforced. The duty cast on the public body may be either statutory or otherwise and the source of such power is immaterial, but, nevertheless, there must be the public law element in such action. Sometimes, it is difficult to distinguish between public law and private law remedies. According to Halsbury's Laws of England 3rd ed. Vol. 30, page-682, "a public authority is a body not necessarily a county council, municipal corporation or other local authority which has public statutory duties to perform and which perform the duties and carries out its transactions for the benefit of the public and not for private profit." There cannot be any general definition of public authority or public action. The facts of each case decide the point." 21 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pelled to perform its duty by the issue of a writ of mandamus. This principle shall, however, not be attracted in case of every private school or college. (vi) The Full Bench decisions of this Court in Pritam Singh v. State of Punjab, (1982) 2 Serv LR 135 : (AIR 1982 Punj & Har 228) and Gurpreet Singh Sindhu v. The Punjab University, Chandigarh, AIR 1983 Punj & Har 70, do not contain a correct enunciation of law and are overruled." 22. In Firozali Abdulkarim Jivani and another v. The Union of India and others, AIR 1992 Bombay 179, Bombay High Court following the principles enunciated by the Apex Court in Praga Tools Corporation's case (supra) held that writ against private person under Article 226 of the Constitution of India can be issued for enforcement of duties and obligations imposed upon them by statute. Observations made in para 25 which are relevant, read thus:- "25. We need not go into this question as to whether respondent No. 6 Bank is a 'State' within the meaning of Art. 12. In the present case, what is sought to be enforced is the statutory duty imposed upon respondent No. 6 Bank and its returning officer respondent No. 7 by virtue of the provisions of S. 37. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any of the rights conferred by Part III and for any other purpose. xxxx xxxx xxxx xxxx" A plain reading would suggest that the powers are plenary and the High Court can issue directions, orders or writs to "any person" for the enforcement of any fundamental right and "for any other purpose". However, these wide powers have been regulated by judicial pronouncements so as to avoid interference in matters where alternative remedies are available as also where the dispute is purely of a private nature having no "public law" element. The traditional view was that wherever the State or its instrumentality was involved, it was regarded as an issue within the domain of public law. Likewise, where individuals were at loggerheads, the remedy lay within the precincts of private law. This was all very well as long as governments stuck to governance and private persons or bodies confined their activities to pursuits of a private nature. But, when the state entered into the fields of commerce, industry and business and when private bodies took up public functions and duties, this distinction between public law and private law based on the public or private character of the institution was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diction. The "function" test is the correct one to test maintainability. If a public duty or public function is involved, any body, public or private, qua that duty or function, and limited to that, would be subject to judicial scrutiny under the extraordinary writ jurisdiction of article 226. The BCCI which is the sole repository of everything cricket in India has attained this "giant" stature through its organisation, skill, the craze for the game in India and last but not the least by the tacit approval of the Government. Its objects are the functions and duties it has arrogated to itself. Many of these are in the nature of public duties and functions. Others may be in the field of private law such as private contracts, internal rules not affecting the public at large etc.,. Therefore, BCCI cannot be said to be beyond the sweep of article 226 in all eventualities for all times to come. That is the certificate that BCCI wants from this court. We are afraid, we cannot grant that. Consequently, this petition cannot be thrown out on the maintainability issue. This does not necessarily mean that the petitioners would be entitled to the orders, directions or writs that they seek. That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e resorted to." 26. Another factor which cannot be ignored is that under Section 17 of the SARFAESI Act, an appeal lies to the Debt Recovery Tribunal against the action of the Bank and against any order passed thereunder, an appeal is maintainable under Section 18 of the said Act to Debt Recovery Appellate Tribunal (DRAT). An order passed by DRAT is amenable to writ jurisdiction of the High Court. Section 34 of SARFAESI Act also has significance in deciding the issue relating to writ jurisdiction of this Court. This facet lends different dimension to the controversy raised herein. Section 34 bars the jurisdiction of civil courts in matters relating to actions where provisions of SARFAESI Act have been invoked. Constitution guarantees equality and strikes against any arbitrary action of an authority. It cannot be said that wherever any authority acts in a discriminatory or unreasonable manner, the aggrieved party would be without any remedy either by way of civil suit or by invoking writ jurisdiction of the High Court. In such circumstances, it cannot be held that an action by the Scheduled Bank to which the provisions of SARFAESI Act are applicable and have been invoked by it, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay additional amount of ₹ 50 lakhs. This intention clearly depicts the bonafides of the petitioners. The narration of events noticed hereinbefore shows that it was due to certain unfortunate exigencies, the petitioners could not honour the terms of the OTS. In such circumstances, the action of the respondent-Bank in rejecting the OTS is harsh and unjust. It may also be noticed that the petitioners have no other remedy available against the rejection of extension of time for OTS proposal. This Court in Sat Kartar Ice and General Mills v. Punjab Financial Cororation, 2008(1) ISJ Banking 248 had condoned the delay in depositing the amount of OTS and directed the Bank to abide by the OTS. Similarly in State Bank of India v. Vijay Kumar, AIR 2007 SC 1689 again, the delay in depositing the amount which was condoned by the High Court was upheld by the Apex Court. Accordingly, in the present facts and circumstances after condoning the delay in depositing the amount, while allowing the writ petition, it is directed that in case, the petitioners deposit another sum of ₹ 50 lakhs in terms of the statement made by their counsel on 25.7.2012 within two months of receipt of a certif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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