Chattisgarh High CourtM/S A.S. Nutratech Private Ltd vs Central Bank Of India on 26 September, 2022NAFR\n\n                   HIGH COURT OF CHHATTISGARH, BILASPUR\n\n\n                             Writ Petition (C) No.4106 of 2022\n\n                              Order Reserved on : 22.9.2022\n                              Order Passed on :            26.9.2022\n\n         M/s A.S. Nutratech Private Ltd. through its Director, Shailesh\n         Bhargava, having its Corporate Office at D-60, First Floor, Opposite\n         Heritage Hospital, Above Bank of Maharashtra, Sector 3, Devendra\n         Nagar, Raipur, District Raipur, Chhattisgarh\n                                                                 ---- Petitioner\n                                      versus\n\n    1. Central Bank of India through the Chief Manager, Civil Lines Branch,\n       Raipur, District Raipur, Chhattisgarh\n    2. Zonal Manager, Central Bank of India, 9, Arera Hill, Jail Road, Bhopal\n       - 462 011, Raipur, District Raipur, Chhattisgarh\n    3. Head Office, Central Bank of India Mumbai Main Office Building, 1 st\n       Floor, M.G. Road, Fort, Mumbai - 4000234\n                                                                                 --- Respondents\n\n-------------------------------------------------------------------------------------------------------For Petitioner                              :                 Ms. Shailja Shukla, Advocate\nFor Respondents No.2 & 3                    :                 Shri Anand Shukla, Advocate\nFor Respondent No.1                         :                 None-------------------------------------------------------------------------------------------------------Hon'ble Shri Justice Arvind Singh Chandel\n\n                                         C.A.V. ORDER1.         The issue involved in the instant petition is as to its maintainability.2.         The instant writ petition has been moved underArticle 226of the\n\n             Constitution of India with the following prayer:(1) Set aside the impugned order dated 29.8.2022 (Annexure\n\n                     P1) passed by Respondent 1 and2(2) Direct the Respondents/authorities to settle the Non-Performing Asset (NPA) account of the Petitioner under the\n\n            Scheme 2022-23.3.   Facts of the case, in brief, are that the Petitioner is a company duly\n\n     registered   under theCompanies Actand              is engaged     in\n\n     manufacturing of refined rice bran oil and vegetable oil having its\n\n     factory at District Mahasamund. For the purposes of running the\n\n     aforesaid plant/factory, loan facilities were sought from the\n\n     Respondent 1/Bank and the same was sanctioned in terms of Cash\n\n     Credit to the tune of Rupees Three Crores and Forty Lakhs and\n\n     term loan to the tune of Rupees Ten Crores. Along with these\n\n     loans, assets including the lands of the company/Petitioner were\n\n     also mortgaged with Respondent 1/Bank.          Both the above loan\n\n     accounts were declared as Non-Performing Asset (NPA) by the\n\n     Respondent/Bank on 31.3.2018.         The Respondent/Bank initiated\n\n     proceeding under theSecuritisation and Reconstruction of\n\n     Financial Assets and Enforcement of Security Interest Act, 2002(henceforth 'the Act of 2002') and issued a notice underSection\n\n     13(2)of the Act of 2002 to the Petitioner on 10.4.2018 and also\n\n     took   symbolic   possession     of   the   secured   assets   of   the\n\n     company/Petitioner on 4.7.2018. In the year 2021, a scheme was\n\n     floated by the Respondent/Bank, whereby the Non-Performing\n\n     Assets valued till Rupees Ten Crores of the Bank throughout the\n\n     country were sought to be settled after sacrificing certain\n\n     percentage of the outstanding amount.         Since the outstanding\n\n     amount of the company/Petitioner was more than Rupees Ten3Crores, it was asked to reduce the same and bring it to Rupees Ten\n\n     Crores so that the benefit of the scheme could be availed by the\n\n     Petitioner. In furtherance thereof, the Petitioner deposited a sum of\n\n     Rupees One Crore. Thereafter, One Time Settlement (OTS) plan\n\n     was submitted by the Petitioner to the Bank on 15.11.2021. As\n\n     directed by the Bank, the offer was revised by the Petitioner vide\n\n     Annexure P6, but this was not accepted by the Bank and was\n\n     rejected vide Annexure P7.        Thereafter, on 6.7.2022, a new\n\n     scheme was floated by the Respondent/Bank titled as "Special One\n\n     Time Settlement Scheme, 2022-23" (henceforth 'the scheme 2022-\n\n     23'). As contained in the instant petition, the Petitioner is eligible\n\n     for this scheme and, therefore, the Petitioner applied under this\n\n     new scheme vide Annexure P9.            The OTS proposal of the\n\n     Petitioner was rejected vide the impugned letter dated 29.8.2022\n\n     (Annexure P1). Hence, this petition.4.   At this juncture, it would be appropriate to mention the fact that in\n\n     paragraph 8.16 of the petition the Petitioner has pleaded that the\n\n     Respondent/Bank has issued an auction notice on 5.9.2022 for sale\n\n     of two properties mortgaged with the Petitioner and the auction is to\n\n     take place on 27.9.2022.      It is further pleaded therein that as\n\n     contained in Rule 8(6) and proviso to Rule 8(6) of the Security\n\n     Interest (Enforcement) Rules, 2002 (henceforth 'the Rules of\n\n     2002'), the authorised officer shall serve a notice of 30 days to the\n\n     borrower for sale of immovable assets, but, the notice has been\n\n     issued on 5.9.2022 and the auction is to take place on 27.9.2022\n\n     and, therefore, Rule 8(6) and proviso thereto of the Rules of 20024have also not been complied with. At this juncture, it would also be\n\n     appropriate to mention here that along with this writ petition the\n\n     Petitioner has filed I.A. 1/2022 praying for stay of the effect and\n\n     operation of the impugned auction notice dated 5.9.2022, but, in\n\n     this regard, the Petitioner has not made any prayer in the relief\n\n     clause of the writ petition.5.   Learned Counsel appearing for Respondents 2 and 3 submitted\n\n     that as admitted by the Petitioner himself, a notice underSection\n\n     13(2)of the Act of 2002 has been issued against him on 10.4.2018\n\n     and   symbolic     possession      of   the   secured   assets   of   the\n\n     Petitioner/company has also been taken by the Bank on 4.7.2018.\n\n     Referring to Annexure P11, Learned Counsel further submitted that\n\n     the sale notice for sale of immovable properties has also been\n\n     issued to the Petitioner as contained in Rule 8(6) of the Rules of\n\n     2002. Thus, it is clear that the proceedings are initiated under the\n\n     Act of 2002. Therefore, the Petitioner has only remedy available to\n\n     approach the Debts Recovery Tribunal (DRT) as contained inSection 17of the Act of 2002. Therefore, the instant petition is not\n\n     maintainable and deserves to be dismissed as not maintainable.\n\n     Reliance was placed on (2018) 3 SCC 85 (Authorized Officer, State\n\n     Bank of Travancore v. Mathew K.C.), 2021 SCC OnLine SC 1255\n\n     (Bijnor Urban Cooperative Bank Limited, Bijnor v. Meenal Agarwal)\n\n     and (2022) 5 SCC 345 (Phoenix ARC Private Limited v. Vishwa\n\n     Bharati Vidya Mandir).6.   In counter, Learned Counsel appearing for the Petitioner submitted5that the Petitioner has not approached this Court challenging the\n\n     proceedings of recovery so drawn under the Act of 2002, but the\n\n     instant petition has been filed being aggrieved by the illegal and\n\n     arbitrary action of the Respondent/Bank in not giving the benefit of\n\n     the scheme of 2022-23 to the Petitioner, which is violative of the\n\n     fundamental rights of equity as guaranteed underArticle 14of the\n\n     Constitution of India. The Debts Recovery Tribunal does not have\n\n     jurisdiction to grant the relief as prayed for by the Petitioner in the\n\n     present petition. Therefore, there is no alternative remedy available\n\n     to the Petitioner to go to the DRT.           Thus, this petition is well\n\n     maintainable before this Court underArticle 226of the Constitution\n\n     of India.7.   I have heard Learned Counsel appearing for the parties and\n\n     perused the entire petition and the documents annexed thereto with\n\n     due care.8.   When a proceeding is already drawn underSection 13(4)of the Act\n\n     of 2002, whether a remedy is available to the Petitioner/company\n\n     underArticle 226of the Constitution of India, the Supreme Court\n\n     dealing with this issue inAuthorized Officercase (supra) observed\n\n     as under:"7.     TheSection 13(4)notice along with possession\n          notice under Rule 8 was issued on 21.4.2015. The remedy underSection 17of the SARFAESI Act was now available to the\n          respondent if aggrieved. These developments were not brought\n          on record or placed before the Court when the impugned interim\n          order came to be passed on 24.4.2015. The writ petition was\n          clearly not instituted bona fide, but patently to stall further action\n          for recovery. There is no pleading why the remedy available6underSection 17of the Act before the Debts Recovery Tribunal\nwas not efficacious and the compelling reasons for by-passing\nthe same. Unfortunately, the High Court also did not dwell upon\nthe same or record any special reasons for grant of interim relief\nby direction to deposit.10.InUnited Bank of India v. Satyawati Tondon, (2010)\n8 SCC 110 the High Court had restrained further proceedings\nunderSection 13(4)of the Act. Upon a detailed consideration of\nthe statutory scheme under theSARFAESI Act, the availability\nof remedy to the aggrieved underSection 17before the Tribunal\nand the appellate remedy underSection 18before the Appellate\nTribunal, the object and purpose of the legislation, it was\nobserved that a writ petition ought not to be entertained in view\nof the alternate statutory remedy available holding: (SCC pp. 123\n& 128, paras 43 & 55)\n              "43. Unfortunately, the High Court overlooked\n              the settled law that the High Court will ordinarily\n              not entertain a petition underArticle 226of the\n              Constitution if an effective remedy is available to\n              the aggrieved person and that this Rule applies\n              with greater rigour in matters involving recovery\n              of taxes, cess, fees, other types of public money\n              and the dues of banks and other financial\n              institutions. In our view, while dealing with the\n              petitions involving challenge to the action taken\n              for recovery of the public dues, etc. the High Court\n              must keep in mind that the legislations enacted by\n              Parliament and State Legislatures for recovery of\n              such dues are a code unto themselves inasmuch as\n              they not only contain comprehensive procedure for\n              recovery of the dues but also envisage constitution\n              of quasi-judicial bodies for redressal of the\n              grievance of any aggrieved person. Therefore, in\n              all such cases, the High Court must insist that\n              before availing remedy underArticle 226of the\n              Constitution, a person must exhaust the remedies\n              available under the relevant statute.*            *              *55. It is a matter of serious concern that despite\n              repeated pronouncement of this Court, the High\n              Courts continue to ignore the availability of\n              statutory remedies under the DRT Act and the\n              SARFAESI Act and exercise jurisdiction underArticle 226for passing orders which have serious\n              adverse impact on the right of banks and other\n              financial institutions to recover their dues. We7hope and trust that in future the High Courts will\n                       exercise their discretion in such matters with\n                       greater caution, care and circumspection."11.InUnion Bank of India v. Panchanan Subudhi,\n          (2010) 15 SCC 552, further proceedings underSection 13(4)were stayed in the writ jurisdiction subject to deposit of\n          Rs.10,00,000 leading this Court to observe as follows: (SCC pp.\n          553-54, para 7)\n                       "7. In our view, the approach adopted by the\n                       High Court was clearly erroneous. When the\n                       respondent failed to abide by the terms of one-time\n                       settlement, there was no justification for the High\n                       Court to entertain the writ petition and that too by\n                       ignoring the fact that a statutory alternative remedy\n                       was available to the respondent underSection 17of the Act."12.    The same view was reiterated inKanaiyalal\n          Lalchand Sachdev v. State of Maharashtra, 2009 SCC OnLine\n          Bom 2388, observing: (SCC p. 789, para 23)\n                        "23. In our opinion, therefore, the High Court\n                        rightly dismissed the petition on the ground that\n                        an efficacious remedy was available to the\n                        appellants underSection 17of the Act. It is well\n                        settled that ordinarily relief under Articles\n                        226/227 of the Constitution of India is not\n                        available if an efficacious alternative remedy is\n                        available to any aggrieved person."9.   With regard to refusal of grant of benefit of One Time Settlement\n\n     Scheme, inBijnor Urbancase (supra), it was observed by the\n\n     Supreme Court as under:"28. Even otherwise, as observed hereinabove, no\n          borrower can, as a matter of right, pray for grant of benefit of\n          One Time Settlement Scheme. In a given case, it may happen\n          that a person would borrow a huge amount, for example Rs.100\n          Crores. After availing the loan, he may deliberately not pay any\n          amount towards installments, through able to make the payment.\n          He would wait for the OTS Scheme and then pray for grant of\n          benefit under the OTS Scheme under which, always a lesser\n          amount than the amount due and payable under the loan account8will have to be paid. This, despite there being all possibility for\nrecovery of the entire loan amount which can be realised by\nselling the mortgaged/secured properties. If it is held that the\nborrower can still, as a matter of right, pray for benefit under the\nOTS Scheme,in that case, it would be giving a premium to a\ndishonest borrower, who, despite the fact that he is able to make\nthe payment and the fact that the bank is able to recover the\nentire loan amount even by selling the mortgaged/secured\nproperties, either from the borrower and/or guarantor. This is\nbecause under the OTS Scheme a debtor has to pay a lesser\namount than the actual amount due and payable under the loan\naccount. Such cannot be the intention of the bank while offering\nOTS Scheme and that cannot be purpose of the Scheme which\nmay encourage such a dishonesty.30.     The sum and substance of the aforesaid discussion\nwould be that no writ of mandamus can be issued by the High\nCourt in exercise of powers underArticle 226of the\nConstitution of India, directing a financial institution/bank to\npositively grant the benefit of OTS to a borrower. The grant of\nbenefit under the OTS is always subject to the eligibility criteria\nmentioned under the OTS Scheme and the guidelines issued\nfrom time to time. If the bank/financial institution is of the\nopinion that the loanee has the capacity to make the payment\nand/or that the bank/financial institution is able to recover the\nentire loan amount even by auctioning the mortgaged\nproperty/secured property, either from the loanee and/or\nguarantor, the bank would be justified in refusing to grant the\nbenefit under the OTS Scheme. Ultimately, such a decision\nshould be left to the commercial wisdom of the bank whose\namount is involved and it is always to be presumed that the\nfinancial institution/bank shall take a prudent decision whether\nto grant the benefit or not under the OTS Scheme, having regard\nto the public interest involved and having regard to the factors\nwhich are narrated hereinabove.31.      In view of the aforesaid discussion and for the\nreasons stated above, we are of the firm opinion that the High\nCourt, in the present case, has materially erred and has exceeded\nin its jurisdiction in issuing a writ of mandamus in exercise of its\npowers underArticle 226of the Constitution of India by\ndirecting the appellant-Bank to positively consider/grant the\nbenefit of OTS to the original writ petitioner. The impugned\njudgment and order passed by the High Court is hence\nunsustainable and deserves to be quashed and set aside and is\naccordingly quashed and set aside."910.InPhoenix ARCcase (supra), it was observed by the Supreme\n\n      Court as under:"16. Assuming that the communication dated 13.8.2015\n           can be said to be a notice underSection 13(4)of the SARFAESI\n           Act,in that casealso, in view of the statutory remedy available\n           underSection 17of the SARFAESI Act and in view of the lawlaid down bythis Court in the cases referred to hereinabove, the\n           writ petitions against the notice underSection 13(4)of the\n           SARFAESI Act was not required to be entertained by the High\n           Court. Therefore, the High Court has erred in entertaining the\n           writ petitions against the communication dated 13.8.2015 and\n           also passing the ex parte ad interim orders directing to maintain\n           the status quo with respect to possession of secured properties on\n           the condition directing the borrowers to pay Rs.1 Crore only (in\n           all Rs.3 crores in view of the subsequent orders passed by the\n           High Court extending the ex parte ad interim order dated\n           26.8.2015) against the total dues of approximate Rs.117 crores.\n           Even the High Court ought to have considered and disposed of\n           the application for vacating the ex parte ad interim relief, which\n           was filed in the year 2016 at the earliest considering the fact that\n           a large sum of Rs.117 crores was involved.18.    Even otherwise, it is required to be noted that a writ\n           petition against the private financial institution - ARC - the\n           appellant herein underArticle 226of the Constitution of India\n           against the proposed action/actions underSection 13(4)of the\n           SARFAESI Act can be said to be not maintainable. In the\n           present case, the ARC proposed to take action/actions under theSARFAESI Actto recover the borrowed amount as a secured\n           creditor. The ARC as such cannot be said to be performing\n           public functions which are normally expected to be performed by\n           the State authorities. During the course of a commercial\n           transaction and under the contract, the bank/ARC lent the money\n           to the borrowers herein and therefore the said activity of the\n           bank/ARC cannot be said to be as performing a public function\n           which is normally expected to be performed by the State\n           authorities. If proceedings are initiated under theSARFAESI\n           Actand/or any proposed action is to be taken and the borrower\n           is aggrieved by any of the actions of the private bank/bank/ARC,\n           borrower has to avail the remedy under theSARFAESI Actand\n           no writ petition would lie and/or is maintainable and/or\n           entertainable. Therefore, decisions of this Court inPraga Tools\n           Corpn. v. C.A. Imanual, (1969) 1 SCC 585 and Ramesh\n           Ahluwalia v. State of Punjab, (2012) 12 SCC 331 relied upon by\n           the learned counsel appearing on behalf of the borrowers are not10of any assistance to the borrowers.21.    Applying the law laid down by this Court inState\n           Bank of Travancore v. Mathew K.C., (2018) 3 SCC 85 to the\n           facts on hand, we are of the opinion that filing of the writ\n           petitions by the borrowers before the High Court underArticle\n           226of the Constitution of India is an abuse of process of the\n           court. The writ petitions have been filed against the proposed\n           action to be taken underSection 13(4).             As observed\n           hereinabove, even assuming that the communication dated\n           13.8.2015 was a notice underSection 13(4),in that casealso, in\n           view of the statutory, efficacious remedy available by way of\n           appeal underSection 17of the SARFAESI Act, the High Court\n           ought not to have entertained the writ petitions. ....."11.   On examination of the facts of the instant case in the light of above\n\n      observations of the Supreme Court, it is clear that the\n\n      Petitioner/company borrowed loan from the Respondent/Bank. Both\n\n      the loan accounts of the Petitioner were declared as Non-\n\n      Performing Assets. Notice underSection 13(2)of the Act of 2002\n\n      has also been served on the Petitioner on 10.4.2018. Symbolic\n\n      possession of the premises of the Petitioner/company has also\n\n      been taken by the Respondent/Bank as contained in Rule 8(1) of\n\n      the Rules of 2002. In compliance of Rule 8(6) of the Rules of 2002,\n\n      sale notice for the sale of immovable properties has also been\n\n      served on the Petitioner.      Thus, it is well established that the\n\n      proceeding under the Act of 2002 has already been drawn against\n\n      the Petitioner.   Though the Petitioner has not challenged in the\n\n      instant petition any of the proceedings pending under the Act of\n\n      2002, the fact remains that the proceedings have already been\n\n      drawn against the Petitioner under the Act of 2002. Therefore, as\n\n      observed by the Supreme Court in the above cited cases, the\n\n      Petitioner/company has the only remedy available to approach the11Debts Recovery Tribunal (DRT) as contained inSection 17of the\n\n              Act of 2002. Thus, it is held that the instant writ petition filed underArticle 226of the Constitution of India is not maintainable before\n\n              this Court.12.   Consequently, with the aforesaid observations, the instant writ\n\n              petition is dismissed as not maintainable.Sd/-(Arvind Singh Chandel)\n                                                                 JUDGE\nGopal