2017 (3) TMI 623 - HC - Indian Laws

Court affirms Co-operative Bank's jurisdiction under SARFAESI Act, dismisses petition. Ignorance claim rejected, emphasizes clean hands doctrine.

The court dismissed the writ petition, affirming the jurisdiction of the Co-operative Bank under the SARFAESI Act, 2002. The petitioner's awareness and ... Co-operative Bank jurisdiction to invoke the provisions of SARFAESI Act, 2002 - load was taken by the father who has died - suppressed knowledge of the loan transaction - Held that:- Material on record shows that Reserve Bank of India, Rural Planning and Credit Department, Chennai, has granted licence to Puducherry State Co-operative Bank Ltd., Puducherry, to carry on banking business. In the letter, dated 08.03.2002, submitted by Mr.Veerappan (since deceased), the borrower and father of the petitioner, the petitioner has signed as a witness. Same is the case in letter of the borrower, dated 06.01.2015, submitted to the Manager, Puducherry Co-operative Bank Ltd., Puducherry, in which, the petitioner has signed as a witness. When the petitioner has signed as a witnesss, to the letters, dated 08.03.2002 and 06.01.2015, respectively, submitted by the borrower/his father, it is not open to him to contend that he was not aware of the loan transaction. It is the considered view of this Court that having full knowledge of the loan availed by his father, steps taken by the secured creditor, the petitioner has suppressed the above facts, in the supporting affidavit and feigned ignorance of the same. As rightly contended by the Bank, the petitioner, who has approached this Court, with unclean hands, suppressed knowledge of the loan transaction, steps taken by the bank for recovery, is not entitled to any equitable relief. During the hearing of this writ petition, the writ petitioner has undertaken not to make any alteration to the building and in this regard, Mr.T.P.Prabhakaran, learned counsel appearing for the petitioner has made submissions. While dismissing the writ petition, it is made clear that the statement made across the bar, shall not be breached. If there is any breach, the bank is at liberty to seek for appropriate relief, including invoking the provisions of the Contempt of Courts Act, 1971. Issues Involved:1. Jurisdiction of Co-operative Bank under SARFAESI Act, 2002.2. Awareness and involvement of the petitioner in the loan transaction.3. Validity of possession notices and subsequent actions by the bank.4. Petitioner's claim of ignorance and suppression of facts.5. Equitable relief and conduct of the petitioner.Issue-Wise Detailed Analysis:1. Jurisdiction of Co-operative Bank under SARFAESI Act, 2002:The primary issue was whether a Co-operative Bank has the jurisdiction to invoke the provisions of the SARFAESI Act, 2002. The court referred to Section 2(c) of the SARFAESI Act, which includes 'a multi-state Co-operative Bank or such other bank which the Central Government may by notification specify for the purpose of the Act.' The court noted that the Central Government, via notification S.O.105(E) dated 28.01.2003, specified co-operative banks as banks under the SARFAESI Act. This was supported by the Supreme Court's decision in Greater Bombay Co-operative Bank Ltd. v. United Yam tex (P) Ltd. and others, which affirmed the inclusion of co-operative banks under the Act. Hence, the court concluded that the Pondicherry State Co-operative Bank Ltd. has jurisdiction to invoke the SARFAESI Act, 2002.2. Awareness and Involvement of the Petitioner in the Loan Transaction:The petitioner claimed ignorance of the loan transaction and the proceedings initiated by the bank against his father. However, the court found that the petitioner had signed as a witness on letters dated 08.03.2002 and 06.01.2015, submitted by his father to the bank. This demonstrated his awareness and involvement in the loan transaction. The court held that the petitioner had full knowledge of the loan availed by his father and the steps taken by the bank for recovery.3. Validity of Possession Notices and Subsequent Actions by the Bank:The bank issued two demand notices under Section 13(2) of the SARFAESI Act on 10.10.2014, followed by two possession notices under Section 13(4) on 09.12.2014. The court noted that these notices were duly acknowledged by the petitioner’s father. The bank also contended that the petitioner was aware of these notices as he lived with his father in a joint family. The court found no procedural irregularity in the issuance of the notices and upheld their validity.4. Petitioner's Claim of Ignorance and Suppression of Facts:The petitioner claimed he was unaware of the mortgage deed and the proceedings initiated by the bank. However, the court found that the petitioner had suppressed material facts and feigned ignorance. The court emphasized that the petitioner had signed as a witness on relevant documents and was aware of the loan transaction and the bank's recovery actions. The court held that the petitioner had approached the court with unclean hands and was not entitled to any equitable relief.5. Equitable Relief and Conduct of the Petitioner:The court reiterated the principle that a person invoking the court's discretionary jurisdiction must come with clean hands. The court cited the Supreme Court's decision in Arunima Baruah v. Union of India, which held that a person seeking equitable relief must not suppress material facts and must act with propriety. The court found that the petitioner had suppressed facts and misrepresented his knowledge of the loan transaction. Consequently, the court dismissed the writ petition, emphasizing that the petitioner was not entitled to any equitable relief due to his conduct.Conclusion:The court dismissed the writ petition, holding that the Pondicherry State Co-operative Bank Ltd. had the jurisdiction to invoke the SARFAESI Act, 2002. The petitioner was found to be aware of the loan transaction and the bank's recovery actions, and his claims of ignorance were rejected. The court emphasized the importance of approaching the court with clean hands and found that the petitioner had suppressed material facts. The possession notices and subsequent actions by the bank were upheld as valid.