2020 (2) TMI 1411 - HC - Indian Laws

Seeking extension of iinterim stay of the proceedings on deposit of Rs. 50 lakhs - HELD THAT - In AUTHORIZED OFFICER STATE BANK OF TRAVANCORE AND ANOTHER VERSUS MATHEW K.C. 2018 (2) TMI 25 - SUPREME COURT Hon ble Apex Court stated that writ petition against proceedings initiated against SARFAESI Act 2002 is not maintainable in the light of the alternate remedy provided for under the statute. It is also made clear that in financial matters grant of ex parte interim orders can have a deleterious effect and it is not sufficient to say that the aggrieved has the remedy to move for vacating the interim order. Following the decision in K.C. Mathew s case we are not inclined to interfere with the interim order passed by the writ court. Accordingly interim order and extension of the same are vacated. Writ appeal is allowed.

Summary

Issues:
Challenge to interim order extending stay of proceedings on deposit of Rs. 50 lakhs; Contrary to dictum laid by the Honourable Apex Court in Authorised Officer, State Bank of Travancore and others Vs. Mathew K.C.; Appellants' grounds in the writ appeal against the order passed by the learned single judge; Interpretation and application of the law in financial matters and grant of ex parte interim orders; Whether the writ petition should have been entertained and interim order granted without special reasons; Consideration of the alternate remedy provided under the SARFAESI Act, 2002; Examination of the discretion vested under Article 226 of the Constitution of India in commercial matters; Impact of unwarranted exercise of discretionary jurisdiction in commercial matters, especially under the Securitisation Act, on the financial health of institutions; Compliance with settled legal principles in passing judicial orders.

Analysis:

The appeal challenges an interim order extending the stay of proceedings on deposit of Rs. 50 lakhs, which was granted by a learned single judge despite the appellants' objections. The respondent sought installment facility to pay off an outstanding loan amount, which was declined previously. The appellants argue that the order is contrary to the dictum laid by the Honourable Apex Court in a similar case. The grounds raised in the writ appeal highlight the perceived errors in invoking discretionary jurisdiction under Article 226 in a commercial matter involving a substantial sum due from the respondent. The appellants contend that the learned single judge exceeded the relief sought by the respondent in the writ petition and contravened established legal principles regarding interference in matters under the Securitisation Act.

The judgment delves into the interpretation and application of the law in financial matters, emphasizing the caution required in granting ex parte interim orders due to their potential deleterious effects. It references the importance of timely repayment to ensure liquidity for further loans and the impact of frivolous litigation on public funds. The judgment scrutinizes whether the writ petition should have been entertained and the interim order granted without special reasons, stressing the need to consider settled legal principles and the impact on financial institutions and public projects.

The court also considers the alternate remedy provided under the SARFAESI Act, 2002, and the discretion vested under Article 226 of the Constitution of India in commercial matters. It highlights the adverse effects of unwarranted exercise of discretionary jurisdiction in commercial matters, particularly under the Securitisation Act, on the financial health of institutions and the economy. The judgment concludes by vacating the interim order and extension, aligning with the decision in the referenced case and emphasizing compliance with settled legal principles in passing judicial orders.