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TMI Blog2010 (9) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... a reference under section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (for brevity "the SICA") was filed on March 31, 2004, by the appellant-company before the "Board", constituted under the SICA, stating therein that it has become a "sick industrial company". In the said reference a prayer was made by the appellant for determination of the measures which shall be adopted with respect to the appellant-company. On August 25, 2006, the Board declared the appellant-company as a sick company under section 3(1)(o) of the SICA. The Board in exercise of its powers under section 17(3) of the SICA appointed the Standard Chartered Bank as operating agency for the appellant-company. Thereafter on October 9, 2009, the appellant-company had filed a draft rehabilitation scheme before the Board, which according to the appellant, is pending consideration. 4. In the meanwhile, as the appellant-company failed to repay the credit facility availed by it and having committed default in repayment of debt, the first respondent Canara Bank issued a notice dated August 24, 2009, to the appellant-company in exercise of its powers under section 13(2) of the Securitisation and Reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2002. Aggrieved the appellant had filed the aforesaid W. P. No. 7986 of 2009 before this court. The learned single judge vide order dated July 29, 2010 (Dhar Textile Mills Ltd. v. Canara Bank No.1 [2010] 159 Comp Cas 620 (MP)), dismissed the writ petition on the ground that the appellant has got an alternative remedy available under the Act of 2002 before the Debts Recovery Tribunal under section 17 of the Act of 2002 in case an order is passed against it under section 13(4) of the Act of 2002. Aggrieved the appellant has filed this appeal. 7. Shri G. M. Chaphekar, learned senior counsel appearing for the appellant-company argued that the impugned order passed by the learned single judge dismissing the appellant's writ petition on the ground of availability of alternative remedy, is not sustainable. According to him, in view of the law laid down by the Supreme Court in the case of Whirlpool Corporation v. Registrar of Trade Marks [1998] 8 SCC 1, availability of alternative remedy is no bar for invoking jurisdiction by this court under article 226 of the Constitution of India. He further argued that the very assignment of debt by the State Bank of India, State Bank of Indore and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s writ appeal deserves to be dismissed for non-disclosure of the material fact. Even otherwise, he submitted that since the measures under section 13(4) of the SARFAESI Act, 2002, have been taken before filing of the writ appeal, this writ appeal has been rendered infructuous and as such it be dismissed. Supporting the impugned order passed by the learned single judge, Shri Manoj Munshi, learned counsel for the third respondent argued that in view of pronouncements of the various courts, including the judgment passed in the case of Nabha Industries Ltd. v. Punjab State Industrial Development Corporation [2010] 154 Comp Cas 646 (P & H), the order dated May 19, 2010, passed in W. P. No. 2079 of 2010 by a Division Bench of the Bombay High Court in the case of Nouveaw Exports P. Ltd. v. Appellate Authority for Industrial and Financial Reconstruction [2010] 159 Comp Cas 600, the law laid down by the Supreme Court in the case of Mardia Chemicals Ltd. v. Union of India [2004] 120 Comp Cas 373 ; [2004] 4 SCC 311 ; AIR 2004 SC 2371, and a judgment delivered by the Supreme Court on July 26, 2010, in the case of United Bank of India v. Satyawati Tondon [2010] 158 Comp Cas 251 ; [2010] 1 NSC 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on August 16, 2010, i.e., much after the measure under section 13(4) was taken by the first respondent, Canara Bank. Thus, though the measure under section 13(4) was already taken still the same was not disclosed by the appellant in the writ appeal. No explanation on the part of the appellant-company has been offered even during the course of the arguments as to why this material fact has not been disclosed in the writ appeal. In the circumstances, on the ground of suppression of material fact, this writ appeal deserves to be dismissed. However, we deem it proper to consider and decide the other submissions made by learned counsel for the parties in regard to the validity of the impugned order passed by the learned single judge. 11. So far as the appellant's challenge to the notice under section 13(2) of the Act of 2002 the Supreme Court in the case of United Bank of India v. Satyawati Tondon [2010] 158 Comp Cas 251 ; [2010] 1 NSC 550, after considering the scheme of the Act of 2002 and the law laid down by it in the case of Mardia Chemicals Ltd. v. Union of India [2004] 120 Comp Cas 373 ; [2004] 4 SCC 311 ; AIR 2004 SC 2371, as also in the case of Whirlpool Corporation v. Regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing the aforesaid view, we are conscious that the powers conferred upon the High Court under article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs 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. 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 an 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. It must be remembered that stay of an action initiated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court was not justified in entertaining the writ petition against the notice issued under section 13(2) of the Act and quashing the proceedings initiated by the bank. Accordingly, the appeal is allowed, impugned order passed by the High Court is set aside and the writ petition filed before it is dismissed." 13. In view of the aforesaid pronouncements of the Supreme Court, in our considered view, the learned single judge has committed no error in not entertaining the writ petition against the notice issued under section 13(2) of the Act of 2002. Moreover as observed aforesaid after the dismissal of the writ petition the measure under section 13(4) has also been taken by the first respondent-bank, in the circumstances, the appellant has to seek alternative and efficacious remedy provided under section 17 of the Act of 2002. 14. The appellant's contention that the question raised and involved in the matter cannot be gone into by the Debts Recovery Tribunal is also wholly misconceived, in view of the wide scope of the jurisdiction vested in the Debts Recovery Tribunal under section 17 of the Act of 2002. Section 17 of the Act of 2002 reads as under : "17. Right to appeal.-Any pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g anything contained in any other law for the time being in force, the secured creditor shall be entitles to take recourse to one or more of the measures specified under sub-section (4) of section 13 to recover his secured debt. (5) Any application made under sub-section (1) shall be dealt with by the Debts Recovery Tribunal as expeditiously as possible and disposed of within sixty days from the date of such application : Provided that the Debts Recovery Tribunal may, from time to time, extend the said period for reasons to be recorded in writing, so, however, that the total period of pendency of the application with the Debts Recovery Tribunal, shall not exceed four months from the date of making of such application made under sub-section (1). (6) If the application is not disposed of by the Debts Recovery Tribunal within the period of four months as specified in sub-section (5), any party to the application may make an application, in such form as may be prescribed, to the Appellate Tribunal for directing the Debts Recovery Tribunal for expeditious disposal of the application pending before the Debts Recovery Tribunal and the Appellate Tribunal may, on such application, make a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taken any measures to recover their secured debt under sub-section (4) of section 13 of that Act." 17. In the case of Nabha Industries Ltd. [2010] 154 Comp Cas 646 , the Division Bench of the Punjab and Haryana High Court and in the case of Nouveaw Exports P. Ltd. [2010] 159 Comp Cas 600, a Division Bench of the Bombay High Court after considering the aforesaid proviso of section 15 of the SICA have held that in case the secured creditors, representing not less than three-fourths in value of the amount outstanding against the financial assistance disbursed to the borrower of such creditors have taken any measure to recover their security debt under section 13(4) of the Act of 2002 the reference shall stand abated. We find ourselves in complete agreement with this view taken in the case of Nabha Industries Ltd. [2010] 154 Comp Cas 646 (P & H), and also in the case of Nouveaw Exports P. Ltd. [2010] 159 Comp Cas 600 (Bom). In the circumstances at this stage when prima facie there is a specific averment that the assignment in favour of the third respondent was effected on March 29, 2006, the reference under section 15 of the SICA was made on March 31, 2004, much after June 21, 2002, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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