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TMI Blog2023 (7) TMI 961X X X X Extracts X X X X X X X X Extracts X X X X ..... and if both the options do not work, then recovery option as last option should be used. HELD THAT:- Supreme Court in the matter of AUTHORIZED OFFICER, STATE BANK OF TRAVANCORE AND ANOTHER VERSUS MATHEW K.C. [ 2018 (2) TMI 25 - SUPREME COURT ] held that if statutory remedies under the DRT Act and the SARFAESI Act is available, High Court should not exercise its jurisdiction under Article 226 for passing orders. In the case of PHOENIX ARC PRIVATE LIMITED VERSUS VISHWA BHARATI VIDYA MANDIR ORS. [ 2022 (1) TMI 503 - SUPREME COURT ] it was held that High Court should not entertain Petition when a remedy under SARFAESI Act is available. Petitioner has already availed the benefits of Section 17, by preferring an exhaustive application by way of Securitisation Application No. 92 of 2022 before the D.R.T. On 8 May 2023, liberty was granted to the parties to file Written submissions, and matter was closed for orders. By Order dated 11.09.2019, the NCLT has declared a moratorium against the action being taken against the Borrower, including the SARFAESI proceedings. However, the Secured Asset is owned by the Petitioner/Guarantor. Therefore, as such, the Respondent No. 3 /Bank can proceed aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjusted against the claim of the petitioner for damages and compensation; (c) To grant a writ in the nature of mandamus in favour of Applicant restraining and preventing the Respondent Bank their agents, servants, officers, representatives and/or anyone else purportedly acting on their behalf from taking any action whatsoever under the SARFAESI Act or any other law for the recovery of the amounts which the Respondent Nos. 1 to 2 falsely claim to be due; (d) To declare that the declaration of a Borrower as willful defaulter results in his civil death and that the Respondent NBFC is vested with no jurisdiction to declare the Applicant as a willful defaulter in as much as there is no law empowering the Reserve Bank or the Respondent Bank/NBFCs and financial institutions to declare a Borrower as a wilful defaulter and the guidelines of the Reserve NBFC of India empowering NBFCs and financial institutions to do so is without the authority of law, utterly illegal, ultra-vires the constitution of laws of the land, illegal and void and quash and set aside all such notifications and guidelines; (e) To issue a Writ in the nature of Certiorari calling for the entire records, minutes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent No. 5/Chief Metropolitan Magistrate passed an order on 19 April, 2022, in Securitisation Application No. 117/SA/2020, appointing Respondent No. 6, the Assistant Registrar, Chief Metropolitan Magistrate as Court Commissioner to take possession of the Secured Asset. 3.4. Petitioner and Borrower filed a Civil Suit being S.C. Suit No. 338 of 2021 before the Bombay City Civil Court, impugning the action of the Respondent No. 4/Operational Creditor (for sake of convenience referred as "the First Proceedings"). So also the Petitioner and the Borrower Company filed Writ Petition (L) No. 2001/2021 impugning notices issued under section 13(2) and 13(4) of SARFAESI Act (for sake of convenience referred as "the Second Proceedings"). 3.5. The Assistant Registrar, Esplanade Court, pursuant to the order of Chief Metropolitan Magistrate issued a notice dated 27 June, 2022 to the Senior Inspector of Police, MRA Marg Police Station, Mumbai to provide security for taking forceful possession of the Secured Assets from the Petitioner. 3.6. The Order dated 19 April, 2020 of the Chief Metropolitan Magistrate under Section 14 of the SARFAESI Act was challenged by the Petitioner and Borrower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant restraining and preventing the Respondent Bank their agents, servants, officers, representatives and/or anyone else purportedly acting on their behalf from taking any action whatsoever under the SARFAESI Act or any other law for the recovery of the amounts which the Respondent Nos. 1 to 2 falsely claim to be due; (d) To declare that the declaration of a Borrower as willful defaulter results in his civil death and that the Respondent NBFC is vested with no jurisdiction to declare the Applicant as a willful defaulter in as much as there is no law empowering the Reserve Bank or the Respondent Bank/NBFCs and financial institutions to declare a Borrower as a wilful defaulter and the guidelines of the Reserve NBFC of India empowering NBFCs and financial institutions to do so is without the authority of law, utterly illegal, ultra-vires the constitution of laws of the land, illegal and void and quash and set aside all such notifications and guidelines; (e) To issue a Writ in the nature of Certiorari calling for the entire records, minutes and proceedings leading to the classification of the Applicant's account as NPA, so too under Section 13(2), 13(3A), 13(4) & 14 of the SARF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of MSMED Act being the later law and the last legislation, would override the earlier law in respect of adjudicating upon the relationship between the Borrower and the Bank. 4.1. He further submitted that the SARFAESI Act being lop sided only favours the interest of Bank/Financial Institutions. The MSMED Act has been enacted as a means of reviving and supporting MSME entities to expand to grow and to contribute to the economy. He further submitted that the Petitioner had earlier filed Writ Petition No. 644 of 2023. The said Writ Petition was disposed of vide order dated 13 February, 2023, by recording the fact that the Petitioner has sought to challenge the action of the Secured Creditor on various grounds including that MSMED Act overrides the SARFAESI Act. 5. Mr.Singhi, the Respondent Bank's counsel, opposed the present Writ Petition and pointed out that the petition has no merits and in spite of Securitisation Application being pending before the DRT, the present Writ Petition has been filed. 5.1. He submitted that Petitioner has suppressed material facts and have approached this court with unclean hands. By letter of Guarantor dated 2/7/2010 and 1/2/2013, the Petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RFAESI. As peaceful and vacant possession of the Secured Asset was not handed over, the Respondent No. 3 approached the Chief Metropolitan Magistrate, under S.14 of the SARFAESI. CMM passed an Order on 5.11.2020 in Case No. 117/SA/2020. 10. Petitioner along with Borrower thereafter filed First Proceeding, being a short cause suit before the Bombay City Civil Court viz. SC Suit No. 338 of 2021, impugning the action of Operational Creditor. The prayer in plaint reads as under: (a) declare that Defendant No. 5, who claims to be a operational creditor and thus entitled to invoke Section 9 of the Insolvency and Bankruptcy Code, 2016 title "initiation of corporate insolvency process by a operational creditor", was not competent to invoke the said Section because no amount is due to it so far as the Plaintiffs are concerned. (b) declare that the respondent Bank is vested of no declare that the National Company Law Tribunal, Mumbai, is a coram non judice and the order dated 11th September, 2019 (Exhibit "A" hereto) passed by it is void ab initio inasmuch as a Court of Tribunal of a limited jurisdiction cannot by an erroneous order as to its own jurisdiction confer a jurisdiction upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re pending for hearing before the City Civil Court at Bombay. 12. Petitioner and Borrower also preferred Second Proceeding by filing in this Court Writ Petition (L) 2001 of 2021, impugning notices issued under Section 13(2) and 13(4) of SARFAESI. No reliefs were granted to the petitioner and Borrower Company in this Petition. 13. The Petitioner / Guarantor along with Borrower Company thereafter filed Third Proceeding in the form of Securitisation Application numbered as SA/92/2022 before the DRT challenging Order of C.M.M. passed under Section 14 of SARFAESI. Interim Application No. 835/2022, was also preferred in the Securitisation Application seeking interim reliefs. IA/835/2022, was disposed of by Order dated 15 July 2022, granting no reliefs to the Petitioners. 14. On 13.02.2023, the Petitioner's Fourth Proceedings, W.P 644 of 2023 for staying the physical possession as fixed by the Bank, was dismissed with direction to Petitioner to move an Application before the DRT/DRAT for appropriate relief and deferred the taking over of possession of Secured Asset till 27.02.2023. 15. The Petitioner on 23 February 2023, moved IA/982/2023 in a disposed off Writ Petition W.P. 644 of 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery for dues arising out of loans granted by financial institutions, the remedy of appeal by the aggrieved under section 17 before the Debt Recovery Tribunal, followed by a right to appeal before the Appellate Tribunal Under Section 18. The High Court ought not to have entertained the writ petition in view of the adequate alternate statutory remedies available to the Respondent. The interim order was passed on the very first date, without an opportunity to the Appellant to file a reply. Reliance was placed on United Bank of India v. Satyawati Tandon and Ors. MANU/SC/0541/2010: 2010 (8) SCC 110, and General Manager, Sri Siddeshwara Cooperative Bank Limited and Anr. v. Ikbal and Ors. MANU/SC/0856/2013: 2013 (10) SCC 83. The writ petition ought to have been dismissed at the threshold on the ground of maintainability. The Division Bench erred in declining to interfere with the same. ………………………………………………………………………. 55. It is a matter of serious concern that despite repeated pronouncement of this Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the writ petitions by the borrowers before the High Court under Article 226 of the Constitution of India is an abuse of process of the court. The writ petitions have been filed against the proposed action to be taken under Section 13(4). As observed hereinabove, even assuming that the communication dated 13-8-2015 was a notice under Section 13(4), in that case also, in view of the statutory, efficacious remedy available by way of appeal under Section 17 of the SARFAESI Act, the High Court ought not to have entertained the writ petitions. Even the impugned orders passed by the High Court directing to maintain the status quo with respect to the possession of the secured properties on payment of Rs 1 crore only (in all Rs 3 crores) is absolutely unjustifiable. The dues are to the extent of approximately Rs 117 crores. The ad interim relief has been continued since 2015 and the secured creditor is deprived of proceeding further with the action under the SARFAESI Act. Filing of the writ petition by the borrowers before the High Court is nothing but an abuse of process of court. It appears that the High Court has initially granted an ex parte ad interim order mechanically and without a ..... 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