TMI Blog2020 (12) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... t are not maintainable, needs to be rejected. Even otherwise Section 7 of the Insolvency and Bankruptcy Code has application against the corporate debtor. It cannot be said that there is bar for proceedings against the guarantor under the SARFAESI Act because of pendency of corporate insolvency resolution process against the corporate debtor. It is the solemn duty of the Court to apply the correct law without waiting for an objection to be raised by a party, especially when the law stands well settled. Any departure, if permissible, has to be of the case falling under a defined exception, duly discussed after noticing the relevant law. 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. Loans by financial institutions are granted from public money generated at the tax payers expense. Such loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as entrustment by the public. Timely repayment also ensures liquidity to facilitate loan to another in need, by circulatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2018 KHC 6591) urged that the Hon'ble Apex Court has categorically held that SARFAESI proceedings against guarantor can continue under the SARFAESI Act despite pendency of proceedings under the Insolvency and Bankruptcy Code before the NCLT. Learned counsel for the 1 st respondent further relied on the judgment of this Court in W.P.(C) No.3658 of 2020 dated 19.11.2020 (Mohan K. George vs. Authorized Officer, IFCI Limited others) and contended that in view of alternate and most efficacious remedy prescribed by Section 17 of the SARFAESI Act, the writ petition as framed and filed cannot be entertained. Learned counsel also urged that the moratorium prescribed under Section 14 of the Insolvency and Bankruptcy Code is not applicable against the guarantor of the corporate debtor. 4. I have considered the submissions advanced and perused the materials placed before me. It is not in dispute that the petitioner had offered his personal properties as security for the loan availed by the corporate debtor. From perusal of the sale notice under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 (Ext.P3), it is clear that because of default in repayment of loan of ₹ 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This fact is not pleaded in the instant writ petition despite the fact that the petitioner is seeking equitable relief from this Court. 8. The impugned notice at Ext.P3 itself shows that the secured creditor has taken steps for recovery of secured debt by following provisions of SARFAESI Act. The observations of the Hon'ble Apex Court in the matter of Authorized Officer, State Bank of Travancore and another vs. Mathew K.C (2018(1) KLT 784) are thus: 5. ....... The discretionary jurisdiction under Article 226 is not absolute but has to be exercised judiciously in the given facts of a case and in accordance with law. The normal rule is that a writ petition under Article 226 of the Constitution ought not to be entertained if alternate statutory remedies are available, except in cases falling within the well defined exceptions as observed in Commissioner of Income Tax and Others vs. Chhabil Dass Agarwal, 2014 (1) SCC 603, as follows: 15. Thus, while it can be said that this Court has recognised some exceptions to the rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defianc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not to be entertained in view of the alternate statutory remedy available holding :- 43. Unfortunately, the High Court 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 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. Therefore, in all such cases, the 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. * * * 55. It is a matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, statutory procedures cannot be allowed to be circumvented. 28.......In our view, there was no justification whatsoever for the learned Single Judge to allow the borrower to bypass the efficacious remedy provided to him under Section 17 and invoke the extraordinary jurisdiction in his favour when he had disentitled himself for such relief by his conduct. The Single Judge was clearly in error in invoking his extraordinary jurisdiction under Article 226 in light of the peculiar facts indicated above. The Division Bench also erred in affirming the erroneous order of the Single Judge. 14. A similar view was taken in Punjab National Bank and another vs. Imperial Gift House and others, (2013) 14 SCC 622, observing:- 3. Upon receipt of notice, the respondents filed representation under Section 13(3-A) of the Act, which was rejected. Thereafter, before any further action could be taken under Section 13(4) of the Act by the Bank, the writ petition was filed before the High Court. 4. In our view, the High 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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