2015 (9) TMI 451 - HC - Indian Laws

Court dismisses Writ Petition challenging SARFAESI Act notices. Petitioner fined Rs. 50,000.

The court dismissed the Writ Petition challenging the validity of notices under the SARFAESI Act, jurisdiction of the Debt Recovery Tribunal, and ... Validity of notice u/s 13(2) and u/s 13(4) of the SARFAESI Act - right of the third party - Territorial Jurisdiction of Debt Recovery Tribunal (DRT) - secured creditor to take possession of the secured assets. - Held that:- this Writ Petition ex-facie was not maintainable. The petitioner throughout knew that the remedy of the petitioner to challenge any order in the Securitisation Appeal No.4 of 2012 was not to approach this Court directly. Further, even if the Presiding Officer of DRAT was not available, it is not as if urgent matters are not taken up by any other officer to whom the charge is handed over temporarily. Thirdly, if any genuine or bona fide borrower apprehended that his rights and remedies would be defeated, he would seek a limited protection from this Court and in order to enable him to avail of the alternate remedy. The reliefs that are sought from this Court were on the footing that a third party will be prejudicially affected in the event the possession is taken over and of the factory premises. If really the third party was in possession, all these facts could have been brought to the notice of the officials and while executing the notice or enforcing it, that third party could have and if genuinely apprehensive, pointed out to these officials and the Police machinery as well that it has nothing to do with the transactions between the bank and the borrower and are put in possession under a valid and legal document. Multiple proceedings for same relief were instituted at Pune and Mumbai before the DRTs. The Tribunal noted the undisputed facts that both the Securitisation Appeals are pending. They are pertaining to the same asset. The Pune Securitisation Appeal is filed by one Unnikrishnan Nambiar, Director and the present petition is filed by the company a juristic person. Thus, more or less same persons filed applications after applications to seek the same relief and on such conclusions equitable and discretionary reliefs were denied by the DRT. The petitioner's appeal / Securitisation Appeal No.4 of 2012 is pending and all this was known to the petitioner. Yet, after inducting a alleged third party in possession and to facilitate it, such collusive proceedings are brought before this Court. In the present circumstances really the protection given by this Court is completely misused and to institute multiple proceedings. Writ Petition dismissed with costs quantified at ₹ 50,000/- to be paid to the first respondent bank or its advocate - Decided against the petitioners. Issues Involved:1. Validity of notices under sections 13(2), 13(4), and 14 of the SARFAESI Act.2. Jurisdiction and powers of the Debt Recovery Tribunal (DRT).3. Maintainability of the Writ Petition under Article 226 of the Constitution of India.4. Allegations of abuse of court process and collusive proceedings.Detailed Analysis:1. Validity of Notices under Sections 13(2), 13(4), and 14 of the SARFAESI Act:The petitioner sought declarations that the notices issued under sections 13(2), 13(4), and 14 of the SARFAESI Act were null and void. The petitioner argued that the satisfaction required under section 13(4) was not met, and the authorized officer was not a valid forum in the eyes of law, making the entire inquiry a farce. However, the court found that the petitioner had already availed of the remedy by filing an appeal before the DRT, and the proceedings had reached finality with the issuance of the notice under section 14. The court noted that the petitioner was aware of the remedies available under the law and had approached the DRAT, albeit claiming the Presiding Officer was unavailable.2. Jurisdiction and Powers of the Debt Recovery Tribunal (DRT):The petitioner contended that the DRT should be considered a substitute for an ordinary civil court, with all requirements, including territorial jurisdiction, read into the provisions of the SARFAESI Act. The court, however, emphasized that the DRT's jurisdiction is specifically outlined in the SARFAESI Act and that the civil court's jurisdiction is barred in matters the DRT or the Appellate Tribunal is empowered to determine. The court maintained that the petitioner could raise appropriate pleas before the DRT, including issues of estoppel and res judicata, and challenge the Original Application filed by the bank on legal grounds.3. Maintainability of the Writ Petition under Article 226 of the Constitution of India:The petitioner argued that the Writ Petition was maintainable under Article 226 due to the plenary nature of the court's jurisdiction, which is not restricted by ordinary law. However, the court found that the petitioner had alternate remedies available and that the Writ Petition was not maintainable. The court noted that the petitioner had already approached the DRT and DRAT and that the legal and constitutional issues raised could be argued at appropriate stages before competent forums.4. Allegations of Abuse of Court Process and Collusive Proceedings:The court observed that the petitioner had engaged in multiple proceedings to avoid handing over possession of the secured asset. The court noted that the petitioner and a third party had colluded to file a suit in the civil court to nullify the concluded action under the SARFAESI Act. The court found substance in the bank's contention that the petition was a gross abuse of the court's process, aimed at obstructing and interfering with the statutory authorities' powers under the SARFAESI Act. The court highlighted that the petitioner had misused the court's interim protection to institute multiple proceedings.Conclusion:The court dismissed the Writ Petition with costs of Rs. 50,000 to be paid to the first respondent bank. The court vacated the ad-interim order and clarified that all legal and constitutional issues could be raised at appropriate stages before competent forums. The court emphasized that the petition was ex-facie not maintainable, as the petitioner had already instituted proceedings before the competent court. The court kept open all contentions of both sides regarding the jurisdiction of the Tribunal and other legal objections.