Case Law Details
Abhisek P. Tibrewala Vs Union of India (Bombay High Court)
Bombay High Court held that exercise of power under Article 226 untenable as remedy before Debt Recovery Tribunal available to the petitioner challenging forfeiture of earnest money deposit.
Facts- The Petitioner has sought to challenge the communication dated 22 February 2008, issued by Respondent No.2-Bank forfeiting the Earnest Money Deposit of Rs. 13,75,000/- with direction to the Respondent-Bank to refund the amount with 18% interest.
The Respondent No.2 initiated proceedings under Section 14 of the Secularisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002(‘SARFAESI Act’) on 11 January 2008. A public notice was issued for sale of property one shop cum godown. Petitioner tendered offer on 12 February 2008. An auction was conducted. Petitioner deposited Rs. 13,75,000/- as regards earnest money deposit. Petitioner was declared as successful bidder for the sum of Rs. 1,53,00,000/- and if the Petitioner did not make payment of 25% of the offer amount less Earnest Money Deposit amount within two days and balance amount within 15 days, the Earnest Money Deposit amount was to be forfeited. The Respondent No.2 -Bank forfeited the amount of Earnest Money Deposited by impugned communication.
Conclusion- We are called upon to exercise power under Article 226 of the Constitution of India to grant relief to the Petitioner that too when remedy before Debt Recovery Tribunal is now available. Thus, the appropriate direction in these circumstances would be to direct the Debt Recovery Tribunal to consider and decide the application made by the Petitioner in a time bound manner and to set a time table accordingly.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
Heard learned counsel for the parties.
2. The Petitioner has sought to challenge the communication dated 22 February 2008, issued by Respondent No.2-Bank forfeiting the Earnest Money Deposit of Rs. 13,75,000/- with direction to the Respondent-Bank to refund the amount with 18% interest.
3. The Respondent No.2 initiated proceedings under Section 14 of the Secularisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002(‘SARFAESI Act’) on 11 January 2008. A public notice was issued for sale of property one shop cum godown. Petitioner tendered offer on 12 February 2008. An auction was conducted. Petitioner deposited Rs. 13,75,000/- as regards earnest money deposit. Petitioner was declared as successful bidder for the sum of Rs. 1,53,00,000/- and if the Petitioner did not make payment of 25% of the offer amount less Earnest Money Deposit amount within two days and balance amount within 15 days, the Earnest Money Deposit amount was to be forfeited. The Respondent No.2 -Bank forfeited the amount of Earnest Money Deposited by impugned communication.
4. The Petitioner thereafter filed an Securitisation Application in the Debt Recovery Tribunal seeking for refund of the deposit. By order dated 10 April 2008, the Debt Recovery Tribunal, amongst other grounds, held that it does not have jurisdiction and application was not maintainable under Section 17 of the SARFAESI Act. Thereafter, Petitioner filed an Appeal before the Debt Recovery Appellate The Appellate Tribunal by Order dated 31 August 2010 remanded the matter to the Debt Recovery Tribunal on the aspect of jurisdiction. Upon remand by order dated 13 July 2012, the Debt Recovery Tribunal concluded that it does not have jurisdiction to grant relief to the Petitioner and disposed of the Application.
5. Thereafter, Petitioner has filed this Petition in which Rule has been issued on 7 January 2013.
6. Learned counsel for the Respondent-Bank takes a preliminary objection contending that the relief sought for by the Petitioner in this Petition, though was not maintainable before the Debt Recovery Tribunal when the order was passed, the position of law is now clarified by the Hon’ble Supreme Court in case of Agarwal Tracom Pvt Ltd v Punjab National Bank This decision is rendered on 27 November 2017, i.e. after this petition was filed. The learned counsel for the Respondent-Bank submitted that in the light of a series of decisions referred to in the case of Agarwal Tracom Pvt. Ltd and in view of the remedy available before the Debt Recovery Tribunal, this Court should not pass any order as prayed for by the Petitioner. The learned Counsel for the Respondent submitted that even on merits the Respondent-Bank has a good case.
7. The learned Counsel for the Petitioner countering the preliminary objection sought to rely upon the decision of the Hon’ble Supreme Court on the aspect of availability of alternate remedy and the power to the High Court to go into the disputed question of facts more particularly on the decisions of ABL International Ltd & Anr v Export Credit Guarantee Corporation of India Limited & Ors2. The learned counsel also submitted that the Rule has been issued in this Petition and all facts are admitted and a short issue is involved, therefore, Writ Court should grant prayers in this Writ Petition itself.
8. In the decision rendered in the case of Agarwal Tracom Pvt. Ltd, where the factual situation was such as the present one of forfeiture of deposit by auction purchaser, the Hon’ble Supreme Court observed thus:-
18. The short question that arise for consideration in this appeal is whether the High Court was justified in holding that the remedy of the appellant (auction purchaser) lies in challenging the action of the secured creditor(PNB) in forfeiting the deposit by filing an application under Section 17 of the SARFAESI Act before the DRT or the remedy of auction purchaser is in filing the writ petition under Article 226/227 of the Constitution of India to examine the legality of such action.
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29. We also notice that Rule 9(5) confers express power on the secured creditor to forfeit the deposit made by the auction purchaser in case the auction purchaser commits any default in paying installment of sale money to the secured creditor such action taken by the secured creditor is, in our opinion, a part of the measures specified in Section 13(4) and, therefore, it is regarded as a measure taken under Section 13(4) read with Rule 9(5). In our view, the measures taken under Section 13(4) commence with any of the action taken in clauses (a) to (d) and end with measures specified in Rule 9.
30. In our view, therefore, the expression “any of the measures referred to in Section 13(4) taken by secured creditor or his authorized officer” in Section 17(1) would include all actions taken by the secured creditor under the Rules which relate to the measures specified in Section 13(4).
31. The auction purchaser(appellant herein) is one such person, who is aggrieved by the action of the secured creditor in forfeiting their money. The appellant, therefore, falls within the expression “any person” as specified under Section 17(1) and hence is entitled to challenge the action of the secured creditor (PNB) before the DRT by filing an application under Section 17(1) of the SARFAESI Act.
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9. In the light of above position of law, the Petitioner has a remedy of appeal before the Debt Recovery Tribunal.
10. Though, it is correct that when the Debt Recovery Tribunal has passed the Order on 13 July 2012, the position of law regarding forfeiting Earnest Money Deposit and jurisdiction of the Debt Recovery Tribunal was different, this has now been clarified in case of Agarwal Tracom Pvt Ltd, rendered in the year 2017, holding that Debt Recovery Tribunal has jurisdiction wherein the Hon’ble Supreme Court granted liberty to the Appellant therein to file an application before the Debt Recovery Tribunal and the issue was not adjudicated on merits.
11. As regards, contention of the learned counsel for the Petitioner that the rule was issued in this Petition and the Petition has come up after sometime, itself, cannot be a ground to interfere. Reliance of the learned counsel for the Petitioner on the decision of learned Single Judge of Andhra Pradesh High Court in case of G. Gangaram v APSEB, Hyderabad and another3 making reference to the decision of Division Bench of the Andhra Pradesh High Court is concerned, the issue before the learned single judge arose from service matter. Each enactment has different legislative policy. As regards legislative policy governing the debt recoveries and allied aspects, the law is different and the Hon’ble Supreme Court has emphasised on it being a complete code.
12. After the decision in case of ABL International Ltd was rendered in the year 2004 where the issue had arisen regarding enforcement of contractual obligation of the law of the State in contractual matters, as regards the interference by the High Court under Article 226 of the Constitution of India in the fiscal matters, more particularly in cases of of debt recovery and associated matters, the Hon’ble Supreme Court has emphasised in various decisions that the governing legislation being the complete Code, the High Court, interference in writ jurisdiction should be extreme rare circumstance, if at all.
13. In this context observation of the Hon’ble Supreme Court in the case of Agarwal Tracom Pvt Ltd, will have to be noticed. They are as under:-
33. In United Bank of India v. Satyawati Tondon and Ors., (2010) 8 SCC 110: (AIR 2010 SC 3413 Paras 17 and 18), this Court had the occasion to examine in detail the provisions of the SARFAESI Act and the question regarding invocation of the extraordinary power under Article 226/227 in challenging the actions taken under the SARFAESI Act. Their Lordships gave a note of caution while dealing with the writ filed to challenge the actions taken under the SARFAESI Act and made following pertinent observations which, in our view, squarely apply to the case on hand:
“42. There is another reason why the impugned order should be set aside. If Respondent had any tangible grievance against the notice issued under Section 13(4) or action taken under Section 14, then she could have availed remedy by filing an application under Section 17(1). The expression “any person” used in Section 17(1) is of wide import. It takes within its fold, not only the borrower but also the guarantor or any other person who may be affected by the action taken under Section 13(4) or Section 14. Both, the Tribunal and the Appellate Tribunal are empowered to pass interim orders under Sections 17 and 18 and are required to decide the matters within a fixed time schedule. It is thus evident that the remedies available to an aggrieved person under the SARFAESI Act are both expeditious and effective.
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 legislation 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 statue.
“44. While expressing 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.
45. 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 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.”
34. In the light of foregoing discussion, we are of the considered opinion that the Writ Court as also the Appellate Court were justified in dismissing the appellant’s writ petition on the ground of availability of alternative statutory remedy of filing an application under Section 17(1) of SARFAESI Act before the concerned Tribunal to challenge the action of the PNB in forfeiting the appellant’s deposit under Rule 9(5). We find no ground to interfere with the impugned judgment of the High Court.
35. The appellant is, accordingly, granted liberty to file an application before the concerned Tribunal (DRT) under Section 17(1) of the SARFAESI Act, which has jurisdiction to entertain such application within 45 days from the date of this order. In case, if the appellant files any such application, the Tribunal shall decide the same on its merits in accordance with law uninfluenced by any of the observations made by this Court and the High Court in the impugned judgment.
14. Therefore, we cannot be unmindful of this legislative intent emphasised by the Hon’ble Supreme Court in various decision when we are called upon to exercise power under Article 226 of the Constitution of India to grant relief to the Petitioner that too when remedy before Debt Recovery Tribunal is now available. Thus, the appropriate direction in these circumstances would be to direct the Debt Recovery Tribunal to consider and decide the application made by the Petitioner in a time bound manner and to set a time table accordingly.
15. In the light of the above discussion, we dispose of the petition by following order:
a) The Securitisation Application No. 247 of 2010, filed in the Debt Recovery Tribunal-III, Mumbai is revived and restored to
b) Parties will appear before the Debt Recovery Tribunal on 19 December 2022.
c) The Tribunal will thereafter set a time table for earlier disposal of the application and the outer limit being three months from that date. An additional reply on behalf of the Respondent-Bank shall be filed in the Debt Recovery Tribunal on 19 December 2022 with advance copy to the Petitioner.
d) The Petitioner and Respondent Bank will cooperate for early disposal of the application and would not take needless The Debt Recovery Tribunal will decide the application within three months from today, if it is not so decided. The Debt Recovery Tribunal would seek leave from this Court for extension and to set out the reasons for extension.
16. The Writ Petition is disposed of in above terms.
17. All contentions of the parties on merits are kept open.
Notes:-
1 AIR 2017 SC 5562
2 2003 SCC OnLine SC 1442
3 2006(1) SLR 161
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