TaxTMI 
TaxTMI 
2022 (1) TMI 503
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....taka Societies Registration Act, 1960 which had availed credit facilities to the tune of Rs. 105,60,84,000/- (Rupees One Hundred Five Crores Sixty Lacs and Eighty Four Thousand Only) from Saraswat Cooperative Bank Limited. That similarly, St. Ann's Education Society had also availed credit facilities to the tune of Rs. 20,05,00,000/- (Rupees Twenty Crores and Five Lacs Only) from the aforesaid Bank. 2.1 It appears that in order to secure the due repayment of the aforesaid credit facilities, various loans / security documents were executed by the respective respondents, including personal guarantees in favour of the bank. The respondents also created an equitable mortgage by way of deposit of title deeds over the immovable properties with respect to the mortgaged properties. It appears that on account of defaults committed by the borrowers / respondents in repayment of the outstanding dues, in the month of April, 2013, the account of the borrowers / respondents were classified as a "Nonperforming Asset" (NPA) by the Bank. As the borrowers / respondents failed and neglected to repay the outstanding dues of the Bank, the Bank issued a notice dated 01.06.2013 under Section 13(2) o....
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....ith the appellant - Phoenix. 2.6 The petition was opposed by the appellant by filing statement of objections to the writ petitions contending, inter alia, that the letter dated 13.08.2015 as such cannot be said to be taking a measure under Section 13(4) of the SARFAESI Act and that it was only a proposed action/measure to be taken by the appellant. It was also submitted that the writ petitions are not maintainable. That the appellants filed an application being I.A. No. 01 of 2016 for vacation of the ex-parte adinterim order dated 26.08.2015. However, instead of deciding the application for vacating the interim order, the High Court extended the interim order on 28.02.2017 on the condition that the borrowers shall deposit a further sum of Rs. 1 crore. Simultaneously, the appellant also filed two separate original applications against the borrowers before the Debt Recovery Tribunal, Bangalore for recovery of the outstanding dues. Thereafter, the High Court again vide order dated 27.03.2018 extended the earlier ex-parte interim-order dated 26.08.2015 on condition that the borrowers deposit a further sum of Rs. 1 crore. 2.7 Feeling aggrieved and dissatisfied with the aforesaid inter....
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....he SARFAESI Act would not be maintainable at all, and, therefore, the High Court ought not to have entertained such writ petitions and ought not to have granted the interim protection to the borrowers, who have failed to repay the amount due and payable, which comes to approximately Rs. 117 crores. 4.2 It is further submitted by Shri Giri, learned Senior Advocate appearing on behalf of the appellant - ARC that assuming that the communication dated 13.08.2015 is treated as an action under Section 13(4) of the SARFAESI Act, in that case also, the only remedy available to the borrowers was by way of an appeal under Section 17 of the SARFAESI Act. It is submitted that under no circumstances, the writ petitions would be maintainable and that too against the private ARC. 4.3 It is submitted that the High Court has not at all appreciated that as such there was no occasion to interfere in exercise of the powers under Article 226 of the Constitution of India against a private party and a non- State actor like the appellant - Phoenix ARC. It is submitted that the writ petitions under Article 226 of the Constitution of India for the relief sought in the writ petitions shall not be maintaina....
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....ecisions, it is prayed to set aside the impugned order dated 27.03.2018 and also to dismiss the writ petitions filed before the High Court as being non-maintainable. 5. Shri Basavaprabhu S. Patil, learned Senior Advocate appearing on behalf of the original borrowers has vehemently submitted that the present appeals are against the ad interim order/interim order passed by the High Court and the main writ petitions are pending before the High Court. It is submitted that pursuant to the earlier order passed by this Court dated 06.08.2018, the impugned interim order passed by the High Court has been stayed. It is therefore submitted that when the main writ petitions are pending before the High Court, the present appeals may not be further entertained. It is submitted that despite the fact that there is a stay of operation of the impugned order passed by the High Court since 06.08.2018, thereafter no further steps have been taken by the appellant against the borrowers under the provisions of the SARFAESI Act. 5.1 Now, so far as the maintainability of the writ petition against the Assets Reconstruction Company (ARC) is concerned, it is submitted that the writ petition is filed against ....
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....es, to the borrower and by affixing the possession notice on the outer door or at the conspicuous space of the property. It is submitted that Rule 8(2) of the said Rules also mandates that the said possession notice be published as soon as possible, but in any case not later than 7 days from the date of taking possession, in two leading newspapers, one in vernacular language having sufficient circulation in that locality by the authorized officer. 5.5 It is submitted that in the instant case, it is not the case of the appellant that it took any measure in terms of Section 13(4) of the SARFAESI Act. It is therefore submitted that the remedy under Section 17 of the SARFAESI Act, which would be against any measure referred to in sub-section (4) of Section 13 of the SARFAESI Act to file an application to the Debts Recovery Tribunal is not available to the borrowers in the instant case. It is further submitted that there is no compliance with Rule 8(1) and 8(2) of the Rules, 2002. It is submitted that as held by this Court in the case of Mathew Varghese Vs. M. Amritha Kumar and Ors., (2014) 5 SCC 610 on a detailed analysis of Rules 8 and 9 that any sale effected without complying with ....
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.....2015 and while entertaining the writ petitions against the communication dated 13.08.2015, the High Court has directed to maintain status quo with respect to the possession of the secured properties on condition that the borrowers deposit Rs. 1 crore only. Despite the fact that subsequently an application for vacating the exparte ad-interim order has been filed in the year 2016, the application for vacating the interim order has not been decided and disposed of. On the contrary, the High Court thereafter has further extended the ex-parte ad-interim order dated 26.08.2015 on condition that the borrowers should deposit a further sum of Rs. 1 crore. Thus, in all the borrowers are directed to deposit Rs. 3 crores only against the dues of approximately Rs. 117 crores. 7.1 It is the case on behalf of the appellant that the writ petitions against the communication dated 13.08.2015 proposing to take further action under Section 13(4) of the SARFAESI Act and that too against a private Assets Reconstructing Company (ARC) shall not be maintainable. It is also the case on behalf of the appellant that assuming that the communication dated 13.08.2015 can be said to be a notice under Section 13....
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....s including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution. 45. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance. 46. It must be remembered that stay of an action initiated by the State and/or its agencies/instrumentalities for recovery of taxes, cess, fees, etc. seriously impedes execution of projects of public importance and disables them from discharging their constitutional and legal obligation....
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....stified in entertaining the writ petitions against the communication dated 13.08.2015 and to pass the ex-parte ad interim order virtually stalling/restricting the proceedings under the SARFAESI Act by the creditor. 9. It is required to be noted that it is the case on behalf of the appellant that as such the communication dated 13.08.2015 cannot be said to be a notice under Section 13(4) of the SARFAESI Act at all. According to the appellant, after the notice under Section 13(2) of the SARFAESI Act was issued in the year 2013 and thereafter despite the Letter of Acceptance dated 27.02.2015, no further amount was paid, the appellant called upon the borrowers to make the payment within two weeks failing which a further proceeding under Section 13(4) of the SARFAESI Act was proposed. Thus, according to the appellant, it was a proposed action. Therefore, the writ petitions filed against the proposed action under Section 13(4) of the SARFAESI Act was not maintainable and/or entertainable at all. 10. Assuming that the communication dated 13.08.2015 can be said to be a notice under Section 13(4) of the SARFAESI Act, in that case also, in view of the statutory remedy available under Secti....
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....not be said to be as performing a public function which is normally expected to be performed by the State authorities. If proceedings are initiated under the SARFAESI Act and/or any proposed action is to be taken and the borrower is aggrieved by any of the actions of the private bank/bank/ARC, borrower has to avail the remedy under the SARFAESI Act and no writ petition would lie and/or is maintainable and/or entertainable. Therefore, decisions of this Court in the cases of Praga Tools Corporation (supra) and Ramesh Ahluwalia (supra) relied upon by the learned counsel appearing on behalf of the borrowers are not of any assistance to the borrowers. 13. Now, so far as the submission on behalf of the borrowers that in exercise of the powers under Article 226 of the Constitution, this Court may not interfere with the interim / interlocutory orders is concerned, the decision of this Court in the case of Mathew K.C. (supra) is required to be referred to. 13.1 In the case of Mathew K.C. (supra) after referring to and/or considering the decision of this Court in the case of Chhabil Dass Agarwal (supra), it was observed and held in paragraph 5 as under:- "5. We have considered the submis....