TMI Blog2017 (3) TMI 1339X X X X Extracts X X X X X X X X Extracts X X X X ..... oners request to continue the interim relief for a period of four weeks to enable them to approach the higher forum. Such request is opposed by learned advocates appearing for the respondents. The Court however finds that since the interim relief has remained in operation till these matters are finally decided, no prejudice would be caused to the respondents if interim relief is extended for a period of three weeks from today. Hence, it is directed that no coercive steps shall be taken against the petitioners in connection with their secured assets for a period of THREE WEEKS from today to enable them to approach the higher forum. - SPECIAL CIVIL APPLICATION NO. 10353 of 2014 With SPECIAL CIVIL APPLICATION NO. 11437 of 2014 With SPECIAL CIVIL APPLICATION NO. 15599 of 2016 With CIVIL APPLICATION NO. 3340 of 2017 In SPECIAL CIVIL APPLICATION NO. 15599 of 2016 - - - Dated:- 23-3-2017 - MR. C.L. SONI, J. FOR THE PETITIONER : MR ASHOK L SHAH, ADVOCATE, MR AR GUPTA, ADITYA A GUPTA, ADVOCATE, FOR THE RESPONDENT : MS NALINI S LODHA, ADVOCATE, MR SAURABH SOPARKAR, SR ADVOCATE with MR AS PANESAR, ADVOCATE, MS KSHNA V SHETH, SUNIL D BHAVSAR ADVOCATE COMMON ORAL JUDGMENT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That pending the admission, hearing and final disposal of this Petition, the respondents be directed to handover back to the petitioner possession of their properties at Survey No.119/120/123 Moje Navagam, Taluka Ankleshwar, Dist. Bharuch. (f) ... (g) ... 3 . In Special Civil Application No.11437 of 2014, following prayers are made in para 48:- (a) This Hon ble Court may be pleased to issue a writ of certiorari or any other writ, direction or order in the nature of certiorari declaring that in view of the facts and circumstances of the case provisions of Sections 13(2) and 13(4) do not apply to the Petitioner and therefore, the notice dated 18.11.2013 issued by the second Respondent purportedly under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is illegal, null and void and without any authority of law. (b) That this Hon ble Court may be pleased to declare that the order of learned District Magistrate dated 21.7.2014 rejecting the application of the Petitioner for copies of the Application No.E.C./M.A.G./Secu/Vasi 2713 of 2014 and documents produced therewith and for granting tile to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest (Enforcement) Rules, 2002 and to issue a writ of mandamus, certiorari or any other writ, direction or order to quash and set aside the aforesaid notice in the interest of justice. (c) YOUR LORDSHIPS BE PLEASED to restrain Respondent No.1 and/or their agents, servants to take further steps under the SARFAESI Act, 2002 and the Security Interest (Enforcement) Rules, 2002 qua the immovable property of the petitioners/ guarantors pending admission, hearing and final disposal of this petition. (d) .. In this petition, Civil Application is preferred by the respondentauthorized officer of the Bank of India seeking to vacate the interim relief granted in the main matter. Such Civil Application is not required to be considered as the main matter is finally heard. 5 . Learned advocate Mr. Ashok L. Shah appearing for the petitioners in Special Civil Application Nos.10353 of 2014 and 11437 of 2014 and learned advocate Mr. Gupta appearing for the petitioner in Special Civil Application No.15599 of 2016 submitted that the Act does not apply to the petitioners as they are not the borrowers who have taken the loan but they are the guarantors. They submitted that the action und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding to the petitioner. He submitted that if the reconstruction company is not the deemed lender within Section 5(2) of the Act, it is not authorized to recover any dues from the guarantor by resorting to the provisions of Section 13 of the Act in connection with fresh lending done by it to the borrower. He further submitted that Section 9 provides for reschedulement of debts- NPA but not restructuring of other dues. Mr. Shah submitted that since the measure of taking possession of the property of the petitioners under Section 13(4) of the Act is without jurisdiction, the Court may exercise its extraordinary powers under Article 226 of the Constitution of India. 6 . Learned senior advocate Mr. Saurabh Soparkar appearing with learned advocate Mr. Panesar in Special Civil Application No.11437 of 2014, learned advocate Ms. Lodha appearing in Special Civil Application No.10353 of 2014 and learned advocate Mr. Bhavsar appearing in Special Civil Application No.15599 of 2016 submitted that since against the measures taken under Section 13(4) of the Act, the statutory remedy of appeal under Section 17 of the Act is available, the petitioners should be relegated to avail of such statuto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of the secured assets to the borrower or restore the management of the secured assets to the borrower and pass such further order as it may consider appropriate and necessary in relation to the recourse taken under sub-section (4) of Section 13. Thus, statutory remedy of appeal under Section 17 available to any person aggrieved by measures taken under sub-section (4) of Section 13 of the Act is efficacious and exhaustive. 8 . However, it is argued on behalf of the petitioners that when the Act does not apply to the petitioners or that the action taken under sub-section (4) of Section 13 against the petitioners is without jurisdiction, the petitioners are entitled to invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India and they may not be relegated to the alternative remedy. 9 . The contentions that the Act does not apply to the petitioners and that the action taken under Section 13(4) is without jurisdiction are mainly on the premise that the petitioners since have not taken financial assistance but has given guarantee as security for financial assistance taken by the borrowers, they cannot be said to be borrower responsib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and reconstruction of financial assets and enforcement of security interest and for matters connected therewith or incidental thereto. The provisions of the Ordinance would enable banks and financial institutions to realise longterm assets, manage problem of liquidity, asset liability mismatches and improve recovery by exercising powers to take possession of securities, sell them and reduce nonperforming assets by adopting measures for recovery or reconstruction. As stated in the statement of objects and reasons, to come out from the slow place of recovery of defaulting loans and mounting levels of non-performing assets of banks and financial institutions, the Act is enacted to regulate securitisation and reconstruction of the financial assets and enforcement of the security interest and for the matters connected therewith or incidental thereto. 11 . The definition of borrower takes in its sweep even a person who has given guarantee or created any mortgage or pledge as a security for the financial assistance granted by any bank or financial institution. The security interest means right, title or interest of any kind whatsoever upon property, created in favour of any secu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would stand covered in Section 13(2) and 13(4) for taking measures to recover secured debt. 15 . When the object of the Act is for speedy recovery of the secured debts which are NPAs, which could be achieved by enforcement of security interest without intervention of the Court or the Tribunal, the guarantors/ mortgagors are very much intended to be proceeded against under the provisions of the Act for recovery of the secured debt. The provisions made in sub-section (11) of Section 13 is one more indication of the legislative intent to apply the provisions of Section 13(2) and 13(4) against the guarantor/ mortgagor for recovery of the secured debt. It provides that without prejudice to the rights conferred on the secured creditor under or by this section, secured creditor shall be entitled to proceed against the guarantors to sell the pledged assets without first taking any measures specified in Clauses (a) to (d) of sub-section (4) in relation to the secured assets under the Act. Thus, sub-section (11) would go to show that the secured creditor does have right to proceed against the guarantor or the mortgagor under Section 13 for enforcement of the security. In such view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 17 . In the case of Jagdish Singh Vs. Heeralal and others reported in (2014)1 SCC 479 , Hon ble Supreme Court on the question of availability of remedy of appeal under Section 17 of the Act has held and observed in para 19 to 25 as under:- 19. The expression 'any person' used in Section 17 is of wide import and takes within its fold not only the borrower but also the guarantor or any other person who may be affected by action taken under Section 13(4) of the Securitisation Act. Reference may be made to the judgment of this Court in Satyavati Tondon's case. 20. Therefore, the expression 'any person' referred to in Section 17 would take in the plaintiffs in the suit as well. Therefore, irrespective of the question whether the civil suit is maintainable or not, under the Securitisation Act itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal. Therefore, any matter in respect of which an action may be taken even later on, the civil court shall have no jurisdiction to entertain any proceeding thereof. The bar of civil court thus applies to all such matters which may be taken cognizance of by the Debts Recovery Tribunal, apart from those matters in which measures have already been taken under sub-section (4) of Section 13. 23. Section 13, as already indicated, deals with the enforcement of the security interest without the intervention of the court or tribunal but in accordance with the provisions of the Securitisation Act. 24. Statutory interest is being created in favour of the secured creditor on the secured assets and when the secured creditor proposes to proceed against the secured assets, sub-section (4) of Section 13 envisages various measures to secure the borrower's debt. One of the measures provided by the statute is to take possession of secured assets of the borrowers, including the right to transfer by way of lease, assignment or realizing the secured assets. Any person aggrieved by any of the measures referred to in subsection (4) of Section 13 has got a statutory right of appeal to the DRT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xercise of the powers under Section 17 of the Act. Sub-section (2) of Section 17 in terms provides that the Tribunal shall consider whether any of the measures referred to in sub-section (4) of Section 13 taken by secured creditor for enforcement of the security are in accordance with the provisions of the Act and the Rules made thereunder. The Tribunal has also power to restore the management of the assets or to restore the possession of the assets if it finds that the measures taken are contrary to the provisions of the Act or the Rules. Therefore, simply because it is alleged that the mandatory procedure of Rule 8 is not followed before taking possession of the secured assets, that by itself is no ground to bypass the statutory remedy of appeal. 19 . In the case of Kanaiyalal Lalchand Sachdev and others Vs. State of Maharashtra and others reported in (2011)2 SCC 782 , Hon ble Supreme Court has held and observed in para 21 to 23 as under:- 21. In Indian Overseas Bank and Anr. v. Ashok Saw Mill, the main question which fell for determination was whether the DRT would have jurisdiction to consider and adjudicate post- Section 13(4) events or whether its scope in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghtly dismissed the petition on the ground that an efficacious remedy was available to the appellants under Section 17 of the Act. It is well-settled that ordinarily relief under Articles 226/227 of the Constitution of India is not available if an efficacious alternative remedy is available to any aggrieved person. (See: Sadhana Lodh v. National Insurance Co. Ltd. and Anr., Surya Dev Rai v. Ram Chander Rai and SBI v. Allied Chemical Laboratories.) 20 . In Special Civil Application No.11437 of 2014, as regards the contention that the petition is not maintainable under Article 226 of the Constitution, it is required to note that the reconstruction company is to function as statutorily required to take action under Section 13 of the Act and therefore, it cannot be said that writ petition is not maintainable. But, since the statutory remedy is available, the Court may not entertain the petition under Article 226 of the Constitution. However, learned advocate Mr. Shah for the petitioner submitted that since the impugned action taken by the respondent- reconstruction company is not to recover financial assistance, but to recover the dues of ₹ 10 crores which were independently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e securitization or reconstruction company and that respondent No.1 company is neither bank nor financial institution or that it would not satisfy the definition of Secured Creditor as measures taken under Section 13(4) of the Act against the petitioners is not for secured debt but to recover the dues of independent loan advanced by respondent No.1, however once the respondent No.1 has taken stand with supporting documents placed on record that ₹ 10 crore given to the petitioner was part of restructuring of the financial assets, the Court would not enter into disputed question of such fact when a remedy of statutory appeal under Section 17 of the Act is available to the petitioners against the measures taken against them under Section 13(4) of the Act. 22 . In the case of Bharat Steel Tubes Limited Vs. IFCI Limited reported in (2010)14 SCC 77 , Hon ble Supreme Court has held held an observed in para 32 and 33 as under:- 32. In this case, we have a situation in which moneys were admittedly borrowed by the Petitioner- Company from the Punjab National Bank which it was unable to repay in full. Ultimately, a One-Time Settlement was arrived at between the Petitioner- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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