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TMI Blog2024 (7) TMI 1306X X X X Extracts X X X X X X X X Extracts X X X X ..... fficacious remedy available by way of appeal under Section 17 of the SARFAESI Act. It was further held that under such situation the High Court ought not to have entertained the writ petitions - The Hon ble Supreme Court in Phoenix ARC (supra) held that the remedies available to an aggrieved person against the action taken under Section 13(4) of the SARFAESI Act by way of appeal under Section 17 of the Act is both expeditious and effective and the High Court while exercising its jurisdiction under Article 226 is dutybound to consider whether the petitioner has any alternative or effective remedy for resolution of dispute. The Hon ble Supreme Court in Baghora Polylab (P) Ltd. [ 2008 (9) TMI 864 - SUPREME COURT] held that a contract may be discharged by the parties to the original contract either by entering into a new contract or by acceptance of performance of modified obligations in lieu of the obligations stipulated in the contract. In the case on hand it is evident from the records that the respondent no.1 having executed documents in terms of the letter of arrangement dated 11.10.2021 have entered into a new contract in substitution of the original contract i.e. the restructuri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent no. 1 had three separate transactions with the appellant Bank which consisted of a loan for the business, a housing loan and a vehicle loan. The credit facility for the business had an overall limit of Rs. 3.50 crores, of which the Cash Credit (for short CC ) Limit was Rs. 75 lakhs and the Letters of Credit (for short LC ) and Bank Guarantees (for short BG ) had the limits of Rs. 75 lakhs and Rs. 2 crores respectively. The respondent no. 1 claims that on account of Covid 19 pandemic and repeated lockdowns he ran out of funds for which he could not repay the LCs for which 4 LCs amounting to Rs. 1.62 crores devolved. The respondent no. 1 applied for restructuring of his account on May 30, 2021. On September 27, 2021, the respondent no. 1, as per the instructions of the officials of the Bank, signed the letter dated 28th June, 2021 without putting any date. From the restructuring letter dated June 28, 2021, the respondent no. 1 came to know that the original LC limit had become Zero as the devolved LCs amounting to Rs. 1.62 crores had been converted into a Term Loan with a moratorium of one year and the first installment payment would start in June 2022. The respondent no. 1 by l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a perverse one. 10. Mr. Rai submitted that after acceptance of the fresh sanction letter dated 11.11.2021 by the respondent no.1, the earlier letter of restructuring dated 28.06.2021 got novated and substituted. In support of such contention, he placed reliance upon the decision of the Hon ble Supreme Court in the case of National Insurance Company Limited vs. Baghore Polylab (P) Limited reported at (2009) 1 SCC 269. 11. Mr. Rai, concluded by submitting that the writ petition was also liable to be dismissed on the ground of delay as the same was filed only in July, 2022 when the respondent no. 1 became aware of the restructuring of accounts on September 26, 2021. In support of his contention that the writ petition is liable to be dismissed on the ground of delay, Mr. Rai placed reliance upon the decision in the case of U.P Jal Nigam Anr. vs. Jaswant Singh Anr. reported at (2006) 11 SCC 464. 12. Respondent no. 1, appearing in person, disputed the submission of Mr. Rai. Mr. Kohli contended that he was not aware that his account was restructured and there was a moratorium of 12 months for repayment of the principal and interest as the letter dated 28th June, 2021 was not served upon h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f arrangement dated June 28, 2021. 15. The Hon ble Supreme Court in Phoenix ARC Private Limited (supra), after taking note of the various decisions, held that writ petitions at the instance of borrowers against the proposed action to be taken under Section 13(4) of the SARFAESI Act, 2002 is an abuse of process of the Court in view of the statutory, efficacious remedy available by way of appeal under Section 17 of the SARFAESI Act. It was further held that under such situation the High Court ought not to have entertained the writ petitions. The Hon ble Supreme Court held thus- 10. In Satyawati Tandon, it was observed and held by this Court that the remedies available to an aggrieved person against the action taken under Section 13(4) or Section 14 of the SARFAESI Act, by way of appeal under Section 17, can be said to be both expeditious and effective. On maintainability of or entertainability of a writ petition under Article 226 of the Constitution of India, in a case where the effective remedy is available to the aggrieved person, it is observed and held in the said decision in paras 43 to 46 as under:- 43. Unfortunately, the High Court overlooked the settled law that the High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir constitutional and legal obligations towards the citizens. In cases relating to recovery of the dues of banks, financial institutions and secured creditors, stay granted by the High Court would have serious adverse impact on the financial health of such bodies/institutions, which (sic will) ultimately prove detrimental to the economy of the nation. Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters. Of course, if the petitioner is able to show that its case falls within any of the exceptions carved out in Baburam Prakash Chandra Maheshwari v. Antarim Zila Parishad [AIR 1969 SC 556], Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8 SCC 1] and Harbanslal Sahnia v. Indian Oil Corpn. Ltd. [(2003) 2 SCC 107] and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order. 11. In the case of City and Industrial Development Corpn. Vs. Dosu Aardeshir Bhiwandiwala, (2009) 1 SCC 168, it was observed by this Court in paragraph 30 that the Court while exercising its jurisdiction under Article 226 is duty bound to conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant bank against alleged wrongful transfer of funds from the Cash Credit Account to the Working Capital Term Loan Account without the knowledge and consent of the respondent no. 1. Therefore, it is evident that more or less identical reliefs have been claimed by the writ petitioner/ respondent no. 1 herein in the writ petition as well as in SA 221 of 2022. 19. After going through the impugned judgment and order it appears to this Court that the writ petitioner/ respondent no. 1 herein sought to pursue the proceedings which are already pending before the Debts Recovery Tribunal in so far as the notices issued by the Bank under Sections 13(2) and 13(4) of the SARFAESI Act, 2002. In the light of the modified reliefs sought by the writ petitioners before the writ court, the learned Single Judge noted that the relief sought for, from the writ court only relates to the conduct of the bank in failing to inform the writ petitioner of the restructuring, and compelling the writ petitioner to allow the bank to appropriate substantial sums of money leading to further defaults on the part of the petitioner. 20. The learned Single Judge after recording that since the relief of acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rores was revised to Rs. 0.67 crores. A Working Capital Term Loan (for short WCTL ) of Rs. 1.58 crores and Fixed Investment Term Loan (for short FITL ) of Rs. 0.04 crores was also sanctioned in favour of the respondent no. 1. 24. The respondent no. 1 claims that such restructuring of the credit facilities was not communicated to him at the relevant point of time. From the statement of accounts for the period 06.05.2021 to 01.07.2021, it appears that a sum of Rs. 1.58 crores and a further sum of Rs. 4 lakhs was credited to the account of the respondent no. 1. 25. The aforesaid amounts credited to the account of the respondent no.1 on 28.06.2021 appears to be in terms of the letter of arrangement dated 28.06.2021. It is difficult for this Court to accept the contention of the respondent no.1 that he was not aware of the said letter of arrangement at the relevant point of time in view of the aforesaid amount being credited to the account of the respondent no.1 coupled with the request made by the said respondent to allow LC of Rs. 50 lakhs with 20% margin. 26. This matter can also be looked into from a different angle. 27. It is evident from the materials on record that pursuant to an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this Court. 32. Mr. Rai contended that the respondent no.1 failed to comply with the conditions stipulated in the letter of arrangement dated 11.11.2021 as he did not liquidate the WCTL by 31.12.2021. Such issue is left open to be agitated before the appropriate forum. 33. For the reasons as aforesaid, this Court is of the considered view that after the respondent no. 1 accepted the letter of arrangement dated 11.11.2021, the cause of action for seeking specific performance of the letter of restructuring dated 28.06.2021 no longer survives. This Court, therefore, holds that the direction passed by the learned Single Judge upon the Bank to give effect to the letter of arrangement dated 28.06.2021 and to give the benefit of the same to the writ petitioner/respondent no. 1 herein calls for interference. 34. That apart admittedly the respondent no.1 approached the Writ Court in July, 2022 after issuance of the notices under Section 13(4) of the 2002 Act, though the respondent no.1 claims to have acquired knowledge of the letter dated 28.06.2021 on 27.11.2021. It is well settled proposition of law as held in U.P Jal Nigam (supra) that if an aggrieved party does not rise to the occasi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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