TaxTMI 
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2025 (12) TMI 378
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....vt. Ltd. & Ors., pending before the Debts Recovery Tribunal-III, Delhi [DRT-III]; and (ii) I.A. No. 3340/2024 in T.A. No. 2097/2023 (O.A. No. 29/2017), titled Canara Bank vs. M/s KMG A to Z Systems Pvt. Ltd. & Ors., pending before the Debts Recovery Tribunal-II, Delhi [DRT-II]. In both IAs, the Petitioner has sought discharge from his personal guarantee and release of his mortgaged immovable property. 2. The Petitioner further seeks a stay of the personal insolvency proceedings initiated against him under Section 95 of the Insolvency and Bankruptcy Code, 2016 [IBC], bearing (IB) No. 58/ND/2025, titled Canara Bank vs. Sanjeev Krishan Sharma, pending before the National Company Law Tribunal, Court-VI, New Delhi [NCLT]. The Petitioner contends that the said proceedings arise from the same debt and transaction and that allowing them to continue simultaneously, before the Debts Recovery Tribunals [DRTs] and NCLT, would result in multiplicity of proceedings and the possibility of conflicting adjudications. BRIEF FACTS: 3. The relevant facts, as borne out from the pleadings and the documents placed on record, are set out hereunder: (a) The Petitioner is the erstwhile (su....
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....35/2024 in T.A. No. 406/2022 before the DRT-III, Delhi; and (ii) I.A. No. 3340/2024 in T.A. No. 2097/2023 before the DRT-II, Delhi. (g) While these IAs have been pending, Respondent No. 2 instituted personal insolvency proceedings against the Petitioner under Section 95 of the IBC, before NCLT, registered as (IB) No. 58/ND/2025, titled Canara Bank v. Sanjeev Krishan Sharma. The Petitioner alleges that he first became aware of the said insolvency petition on 26.05.2025. He further alleges that the insolvency proceeding is based on the same debt that forms the subject matter of the recovery actions before the DRTs. (h) The Petitioner contends that continuation of the insolvency proceedings before the NCLT, while his applications seeking discharge of guarantee remain pending before the DRTs, would result in multiplicity of proceedings and give rise to conflicting determinations by two independent fora on identical issues. It is submitted that the same underlying transaction and debt cannot be adjudicated concurrently by both the DRT and the NCLT. (i) In line of these facts, the Petitioner has filed the present Petition before us seeking directions, ....
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....e present case, of the Petitioner. 9. It would be also be contended by the learned counsel that by unilaterally releasing one co-guarantor, the Respondents have impaired the Petitioner's legal rights, thereby extinguishing his liability in law, and that any further prolongation in the adjudication of the IAs pending before the DRTs would be prejudicial to his rights and interests, and therefore, a direction would have to be passed by this Court for early and preferably joint consideration of both IAs. CONTENTIONS OF RESPONDENT: 10. The learned counsel for the Respondent would contend that this Writ Petition seeks to stall legitimate recovery and insolvency proceedings going on in accordance with law, and is an attempt to delay the discharge of lawful debt obligations. It would further be contended that the reliefs sought by the Petitioner are premature, misconceived, and devoid of legal merit, and therefore, this petition is liable to be dismissed in limine. 11. The learned counsel for the Respondent would contend that the present Writ Petition is not maintainable, as the Petitioner has an effective and adequate statutory remedy before the DRTs and the NCLT. It would be....
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....n or norms, if such in-fraction has not resulted in injustice is not a matter of course. In the case of Shiv Shanker Dal Mills v. State of Haryana, (1980) 2 SCC 437, the dealers in that case had paid market fees at the increased rate of 3%, which was raised from the original 2 per cent under Haryana Act 22 of 1977. The excess of 1 per cent over the original rate was declared ultra vires by this Court in the case of Kewal Krishna Puri v. State of Punjab, (1980) 1 SCC 416. The excess of 1 per cent over the original rate having been declared ultra vires, became refundable to the respective dealers from whom they were recovered by the Market Committee concerned. The demand for refund of the excess amounts illegally recovered from them not having been complied with, the dealers filed Writ Petitions under Article 32 and Article 226 of the Constitution for a direction to that effect to the Market Committee concerned. The Market Committees contended that although the refund of the excess collections might be legally due to the dealers, many of them had in turn recovered this excess percentage from the next purchasers. While disposing of the petition and laying down guidelines, this Court h....
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....vent (supra) are reproduced herein below for ready reference: "23. It could thus be seen that, this Court has clearly held that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person. It has been held that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. The Court clearly observed that, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not 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. It has been held that, though the powers of the High Court under Article 226 of the Constitution are of widest amplitude, still the courts cannot be oblivious of the rules of self-imposed restraint evolved by this Court.....
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....ning writ petitions in such matters. 29. Recently, in Celir LLP, after surveying various judgments of this Court, the Court observed thus : (SCC p. 81, para 101) "101. More than a decade back, this Court had expressed serious concern despite its repeated pronouncements in regard to the High Courts ignoring the availability of statutory remedies under the RDBFI Act and the SARFAESI Act and exercise of jurisdiction under Article 226 of the Constitution. Even after the decision of this Court in Satyawati Tondon, it appears that the High Courts have continued to exercise its writ jurisdiction under Article 226 ignoring the statutory remedies under the RDBFI Act and the SARFAESI Act." 30. It can thus be seen that it is more than a settled legal position of law that in such matters, the High Court should not entertain a petition under Article 226 of the Constitution particularly when an alternative statutory remedy is available. *** 37. It could thus clearly be seen that the Court has carved out certain exceptions when a petition under Article 226 of the Constitution could be entertained in spite of availability of an alternative remedy. Some ....
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....e RDB Act. Entertaining writ petitions without exhaustion of such remedies not only frustrates the legislative intent but also adversely impacts the recovery rights of banks and financial institutions. The relevant portion of Celir LLP (supra) reads as under: "97. This Court has time and again, reminded the High Courts that they should not entertain petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person under the provisions of the SARFAESI Act. This Court in United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110 made the following observations: (SCC pp. 123 & 128, paras 43-45 & 55) "43. Unfortunately, the High Court [Satyawati Tondon v. State of U.P., 2009 SCC OnLine All 2608] overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to th....
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....s held as under: (SCC p. 183, para 36) "36. In the instant case, although the respondent borrowers initially approached the Debts Recovery Tribunal by filing an application under Section 17 of the SARFAESI Act, 2002, but the order of the Tribunal indeed was appealable under Section 18 of the Act subject to the compliance of condition of pre-deposit and without exhausting the statutory remedy of appeal, the respondent borrowers approached the High Court by filing the writ application under Article 226 of the Constitution. We deprecate such practice of entertaining the writ application by the High Court in exercise of jurisdiction under Article 226 of the Constitution without exhausting the alternative statutory remedy available under the law. This circuitous route appears to have been adopted to avoid the condition of pre-deposit contemplated under the second proviso to Section 18 of the 2002 Act." 101. More than a decade back, this Court had expressed serious concern despite its repeated pronouncements in regard to the High Courts ignoring the availability of statutory remedies under the RDBFI Act and the SARFAESI Act and exercise of jurisdiction under Article 226....
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....wers vested in High Courts represent critical constitutional safeguards, yet their exercise demands rigorous scrutiny and judicious application. This is certainly not a case for the High Court to interdict the corporate insolvency resolution proceedings under the Insolvency and Bankruptcy Code. 16. In view of the above, we allow these appeals and set aside the final judgment and order passed by the High Court in Writ Petition No. 483 of 2023 (GM-RES) dated April 22, 2024. We further direct that the Adjudicating Authority will now commence the proceedings from where it was interdicted by the High Court and complete the same as expeditiously as possible, which is also the spirit of the Code." 21. It is, therefore, a well-settled and consistently affirmed principle of law that the High Courts should ordinarily refrain from invoking their extraordinary jurisdiction under Articles 226 and 227 of the Constitution where an effective and efficacious alternative remedy is available to the aggrieved party, and particularly where proceedings are already pending before the concerned Tribunal. Judicial interference in such matters is justified only in narrowly defined exceptional ci....
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....r early disposal and, if aggrieved by any inaction or order, he had an efficacious statutory remedy by way of an appeal to the DRAT under Section 20 of the RDB Act. 27. Insofar as the consolidation of the TAs pending before different DRTs, or the joint adjudication of the Petitioner's IAs, is concerned, the RDB Act and the SARFAESI Act themselves provide specific and adequate mechanisms for transfer and consolidation of proceedings, wherever a proper case is made out before the competent forum. Despite the availability of these efficacious statutory remedies, the Petitioner has chosen not to invoke or exhaust any of them. Instead, the Petitioner seeks, through the writ jurisdiction, to secure a relief that squarely falls within the domain of the fora where the matters are already pending. We are of the view that, in exercise of our jurisdiction under Articles 226 and 227 of the Constitution, and having regard to the facts of the present case, there is no justification to grant a relief that was never sought before the competent forum in the first instance. Such an attempt to bypass the statutory scheme is impermissible and warrants rejection at the threshold. 28. The Petition....
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....ed in terms of the statutory mandate. Conversely, if the Petitioner's contentions bear merit and the said proceedings are found to be in violation of the statutory scheme, the Petitioner is well within his right to raise appropriate objections before the NCLT and, if aggrieved, to avail of the appellate remedies as provided under the IBC. In such an eventuality, and subject to the outcome thereof, only the proceedings before the DRT would ultimately survive in accordance with law. 34. In a similar factual scenario, the Hon'ble Supreme Court, in Bank of Baroda v. Farooq Ali Khan 2025 SCC OnLine SC 374, deprecated the interference of the High Court in ongoing proceedings before the NCLT under the IBC, after considering the relevant provisions. The relevant portion of the said judgment reads as under: "2. The question for our consideration is whether the High Court could have justifiably invoked judicial review under article 226 of the Constitution to interdict personal insolvency proceedings initiated against respondent No. 1 under section 95 of the Insolvency and Bankruptcy Code, 2016 [ Hereinafter the "IBC".] by holding that his liability as a debtor has been waived. Th....
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..... Jiwrajka v. Union of India 2023 SCC OnLine SC 1530, while deciding the constitutional validity of sections 95 to 100, has delved into the same and has held as follows. Pursuant to an application for initiating personal insolvency proceedings under section 94 or 95, the Adjudicating Authority appoints a resolution professional under section 97. The resolution professional performs distinct functions under Part II (dealing with corporate insolvencies) and Part III (dealing with personal insolvencies) of the Insolvency and Bankruptcy Code [Dilip B. Jiwrajka v. Union of India 2023 SCC OnLine SC 1530, paragraph 50]. Under Part III, Chapter III, the resolution professional performs a facilitative role of collating information, as provided under section 99 of the Insolvency and Bankruptcy Code, 2016, in which the resolution professional examines the application, determines whether the debt has been repaid, and submits a report to the Adjudicating Authority recommending the admission or rejection of the application [Ibid, paragraphs 54 and 55.]. It is only after the submission of this report that the Adjudicating Authority's adjudicatory functions commence under section 100. At this ....
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....uirements of section 94 or 95 of the Insolvency and Bankruptcy Code, 2016. The existence of the debt will first be examined by the resolution professional in his report, and will then be judicially examined by the Adjudicating Authority when it decides whether to admit or reject the application under section 100 [ Ibid, paragraph 74.]. 10. In light of this statutory scheme, which has been followed by the Adjudicating Authority, we are of the view that the High Court incorrectly exercised its writ jurisdiction as: first, it precluded the statutory mechanism and procedure under the Insolvency and Bankruptcy Code, from taking its course, and second, to do so, the High Court arrived at a finding regarding the existence of the debt, which is a mixed question of law and fact that is within the domain of the Adjudicating Authority under section 100 of the Insolvency and Bankruptcy Code, 2016 [Ibid.]. 11. It is well-settled that when statutory Tribunals are constituted to adjudicate and determine certain questions of law and fact, the High Courts do not substitute themselves as the decision-making authority while exercising judicial review [Thansingh Nathmal v. Superinten....
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...., we expressed the same principle in the following terms [ See page 351 of 257 Comp Cas.]: ... the High Court should have noted that Insolvency and Bankruptcy Code is a complete code in itself, having sufficient checks and balances, remedial avenues and appeals. Adherence of protocols and procedures maintains legal discipline and preserves the balance between the need for order and the quest for justice. The supervisory and judicial review powers vested in High Courts represent critical constitutional safeguards, yet their exercise demands rigorous scrutiny and judicious application. This is certainly not a case for the High Court to interdict corporate insolvency resolution process proceedings under the Insolvency and Bankruptcy Code." 14. In view of the above reasons, we allow the present appeal and set aside the impugned order dated May 28, 2024 [Farooq Ali Khan v. Bank of Baroda, 2024 SCC OnLine Kar 90.] by the Karnataka High Court in Writ Petition No. 6288 of 2024 (GM-RES). Consequently, the appellant's application in C.P. (IB) No. 139/BB of 2022 is restored to the record of the National Company Law Tribunal, Bengaluru, and it shall proceed from the stage....
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....nathan Shankar 1. Appeals against the orders of the Family Courts. 2. Regular First Appeals (Original Side). 3. Execution First Appeals (Original Side). 4. First Appeals from Orders (Org. Side). 5. Regular First Appeals from orders of Copyright Board. 6. RERA Appeals. 7. Writ Petitions (AIIFR, BIFR, DRT, DRAT & Lokayukta). 8. Writ Petitions relating to MTNL, MCD & NDMC. 9. Letters Patent Appeals upto the years 2017 and LPA (other than service matters) of years 2018, 2019, 2020, 2021, 2022 and 2023. 10.Company Appeals. 11. Matters to be heard by Commercial Appellate Division. 12.Regular hearing matters of the above categories. 39. It is manifest from Item No. 7 of the above roster that all matters pertaining to the DRT, DRAT, and some other forums are specifically allocated to this Bench. The Petitioner has not challenged the validity, legality, or authority of the said roster in any manner. Consequently, there exists no basis, either in law or in fact, for the transfer sought. 40. Such an attempt, therefore, appears to be a calculated effort to engage in forum shopping, evidently motivated by an apprehension of an unfavourable outcome rathe....