TaxTMI 
TaxTMI 
2017 (9) TMI 2035
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....Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and enforcement under the Act was deemed to be closed; (iii) alternatively, to hold that one security of the judgment debtor was lost because of negligency of the Bank, the guarantor stood discharged. A further alternative prayer made is to hold that the decree dated 30th June, 2003 in the Lavad Suit on the basis of which recovery proceedings under the SERFAESI Act were initiated was unenforceable; (iv) it was prayed that since Official Liquidator was not joined as party in the proceedings at the time of winding-up order dated 15th January, 2013 was passed, decree obtained in absence of Official Liquidator was illegal and not enforceable. 2.1 In other words, the petitioners are aggrieved by the action on part of the respondent No.2 Bank which proceeded against the petitioners for recovery of the amount as per the decree passed in the Lavad Suit. The main relief asked for is for setting aside notices issued under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SERFAESI). In the other attendant prayers, pe....
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....nd the action taken by the respondent Bank by submitting firstly that the action was taken by the Bank on the basis of decree passed of the Board of Nominee in the year 2003, Board of Nominee, therefore the same was not executable and action under the SERFAESI Act to recover the amount could not be allowed to continue. It was further submitted that in the facts and circumstances of the case, against the liability of Rs. 250 lakhs, machineries and Salt Purification Plant of the value of Rs. 286 lakhs was given in pledge but respondent No.2 Bank did not take any steps because of which the said property was lost for want of carte and precaution by the Bank and that since the Bank remained negligent, the petitioners who are the guarantors, stood discharged from their obligation by virtue of operation of Section 139 and Section 142 of the Contract Act. It was also submitted that notice under Section 13(2) was once already issued in the year 2012, therefore, such notice was not competent for the second time. 4.1 By pressing into service certain decisions including in Ratansingh v. Vijaysingh [AIR 2001 SC 279] it was submitted that in the present case also, the decree was rendered unenfo....
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....he submission that the Court may exercise the writ jurisdiction notwithstanding availability of the alternative remedy. It was contended that the notice could be said to be without jurisdiction. 4.5 By pressing into service decisions in N.K. Karangia v. State of Gujarat [2012 (5) GLR 4296], it was submitted that once the petition is admitted, plea about availability of alternative remedy could not be entertained. In order to support the contention that where the goods lost due to Bank's negligency, surety would be discharged to the extent of the security lost, decision in State Bank of Saurashtra v. Chitranjan Rangnath Raja [AIR 1980 SC 1528] as well as decision in State of M. P. v. Kaluram [AIR 1967 SC 1105], and still another decision in Amrit Lal Goverdhan Lalan (dead) by his legal representative v. State Bank of Travancore [AIR 1968 SC 1432] were relied on, on the aspect of guarantors' rights and liabilities, decision in Industrial Investment Bank of India v. Biswanath Jhunjhunwala [(2009) 9 SC 478] was relied on. Also relied on decision in Mardia Chemicals Limited v. Union of India [AIR 2004 SC 2371] for what was laid down in paragraphs 59, 60 and 64 of the judgment. ....
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....declares the recourse taken by a secured creditor under subsection (4) of section 13, is in accordance with the provisions of this Act and the rules made thereunder, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor shall be entitled to take recourse to one or more of the measures specified under sub-section (4) of section 13 to recover his secured debt. (4A) Where - (i) any person, in any application under subsection 91), claims any tenancy or leasehold rights upon the secured asset, the Debt Recovery Tribunal, after examining the facts of the case and evidence produced by the parties in relation to such claims shall, for the purposes of enforcement of security interest, have the jurisdiction to examine whether lease or tenancy, - (a) has expired or stood determined; or (b) is contrary to section 65A of the Transfer of Property Act, 1882 (4 of 1882); or (c) is contrary to terms or mortgage; or (d) is created after the issuance of notice of default and demand by the Bank under sub-section (2) of section 13 of the Act; and (ii) the Debt Recovery Tribunal is satisfied that tenancy right or leasehold rights claime....
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....f the SERFAESI Act to recover the debt. The merits in law in Bank's action cannot be equated with absence or otherwise of the jurisdiction to take such action. Merely because certain grounds are raised to challenge notices under Section 13(2) of the SERFAESI Act, it is not possible to conclude that the action was without jurisdiction. The Bank was empowered to invoke the jurisdiction of the Act, therefore the plea could not be countenanced that on the ground of Bank's action being without jurisdiction, the writ petition was required to be entertained directly even though the petitioner has a remedy as stated above under Section 17 of the SERFAESI Act. 5.3 Various contentions raised on behalf of the petitioners about the legality of the notices, about the Bank's conduct or about the discharge of the petitioners - guarantors or sureties are the questions which could be agitated before the Debts Recovery Tribunal in the alternative remedy of Appeal before it. These are the questions which require factual inquiry and leading of evidence which could be better done in the appeal proceedings before the Tribunal. In that view also, the remedy of Appeal is proper, efficacious a....
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....only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute." 6.2.1 The Apex Court stated, "...despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT DRT Act and SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. It is hoped and trusted that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection." 6.3 Lastly coming to the submission that once the petition is admitted, it cannot be dismissed on the ground of availability of alternative remedy, such proposition has not been accepted by the Apex Court. In State of Uttar Pradesh v. Uttar Pradesh Rajya Khanij Vikas Nigam Sangharsh Samiti [(2008) 12 SCC 675] ....
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....once a petition is admitted, it could never be dismissed on the ground of alternative remedy. If such bald contention is upheld, even this Court cannot order dismissal of a writ petition which ought not to have been entertained by the High Court under Article 226 of the Constitution in view of availability of alternative and equally efficacious remedy to the aggrieved party, once the High Court has entertained a writ-petition albeit wrongly and granted the relief to the petitioner." (Para 38) 6.5 The above dictum of law by the Apex Court completely takes care of and answers the submission on behalf of the petitioners that as rule is issued in the petitions, alternative remedy aspect was not permissible to be urged. Looking to the settled proposition of law on this count as emanating from aforementioned decisions, kind of contentions and the nature of of dispute, appeal under Section 17 of the Act is proper remedy. 7. For the foregoing reasons and discussion, only on the ground that the petitioners have got alternative statutory remedy as above, these petitions, without entering into any other aspects of merits of either side, are not entertained. The petitioners are relegated to ....