Madras High CourtRajapandian vs The Authorized Officer on 22 September, 2022Author:R.MahadevanBench:R.Mahadevan,J.Sathya Narayana PrasadW.P.(MD) No.13366 of 2022\n\n\n                         BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT\n\n                                                 DATED : 22.09.2022\n\n                                                      CORAM:\n\n                                  THE HONOURABLE MR.JUSTICE R.MAHADEVAN\n                                                        AND\n                    THE HONOURABLE MR.JUSTICE J.SATHYA NARAYANA PRASAD\n\n                                            W.P.(MD)No.13366 of 2022\n                                                       and\n                                        W.M.P.(MD)Nos.9483 and 9486 of 2022\n\n                 Rajapandian                                            ... Petitioner\n                                                        -Vs-\n                 1.The Authorized Officer,\n                    LIC Housing Finance Ltd.,\n                    Madurai Area Office,\n                    No.3, 1st Floor, Jeevanjyothi LIC Buidling,\n                    West Marat Street, Madurai-625 001.\n\n\n                 2.The Branch Manager,\n                    LIC Housing Finance Ltd.,\n                    Madurai Area Office, No.3, 1st Floor,\n                    Jeevanjyothi LIC Buidling,\n                    West Marat Street, Madurai-625 001.\n\n\n                 Page 1 of 19\n\n\n\nhttps://www.mhc.tn.gov.in/judis\n                                                                             W.P.(MD) No.13366 of 2022\n\n\n\n\n                 3.The Deputy Regional Manager (Recovery),\n                    LIC Housing Finance Ltd., (Regional Officer),\n                    Harrington Champers, No.30/1A, Block Complaint,\n                    2nd Floor, Abdul Razack, 1st Street,\n                    Saidapet, Chennai-600 015.                              ... Respondents\n\n\n                 PRAYER : Petition filed underArticle 226of the Constitution of India, to issue\n                 a Writ of Certiorarified Mandamus, to call for the records pertaining to the\n                 impugned order of possession Notice Rule 8(1) under theSecuritization and\n                 Reconstruction of Financial Assets and Enforcement of Security Interest Act2002 and in exercise of powers conferred underSections 13(2)&13(12)r/w\n                 Rule 3 of the Security Interest (Enforcement Rules 2022) issued demand notice\n                 dated 16.02.2022 passed by the 1st respondent vide Loan No.21240036408 of the\n                 petitioner and further to direct the respondents to accept the one time settlement\n                 offered by the petitioner.\n\n\n                                      For Petitioner       : Mr.A.P.Muthupandian\n                                      For Respondents : Mr.L.Veerapandian,\n                                                            M/s.Vast Law Associates.\n\n\n\n\n                 Page 2 of 19\n\n\n\nhttps://www.mhc.tn.gov.in/judis\n                                                                                    W.P.(MD) No.13366 of 2022\n\n\n                                                             ORDER[Order of the Court was made by R.MAHADEVAN, J.]\n\n\n                                  The possession notice dated 16.02.2022 issued by the 1st respondent\n\n                 underSARFAESI Actr/w Proviso to Rule 8(1) of the Security Interest\n\n                 (Enforcement) Rules, 2002, is under challenge in this Writ Petition.2.Heard Mr.A.P.Muthupandian, learned counsel for the petitioner and\n\n                 Mr.L.Veerapandian, learned counsel for the respondents.3.Though there is availability of expeditious and effective remedies\n\n                 under theSARFAESI Act, this Writ Petition has been filed, since the Debts\n\n                 Recovery Tribunal, Madurai, is not functional.4.Before going into the issue raised in this Writ Petition, we deem it fit\n\n                 to consider the relevant provisions under theSARFAESI Actand the decisions\n\n                 of the Hon'ble Supreme Court as well as this Court in this regard, which will\n\n                 make one understand about the enforcement of security interest by the Banks orPage 3 of 19https://www.mhc.tn.gov.in/judisW.P.(MD) No.13366 of 2022financial institutions in case of default in repayment of secured debt, vice versa\n\n                 the rights of the borrower against such enforcement.5.Section 13of the Securitisation and Reconstruction of Financial\n\n                 Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as\n\n                 ''the Act''), which deals with enforcement of security interest, states that\n\n                 notwithstanding anything contained in Sections 69 or 69A of the Transfer of\n\n                 Property Act, 1882, any security interest created in favour of any secured\n\n                 creditor may be enforced, without the Court's intervention, by such creditor in\n\n                 accordance with the provisions of the Act.6.Section 13(2)of the Act provides that when a borrower, who is under\n\n                 a liability to a secured creditor, makes any default in repayment of secured debt,\n\n                 and his account in respect of such debt is classified as non-performing asset,\n\n                 then the secured creditor may require the borrower, by notice in writing, to\n\n                 discharge his liabilities within sixty days from the date of the notice, failing\n\n                 which the secured creditor shall be entitled to exercise all or any of the rights\n\n                 given inSection 13(4)of the Act.Page 4 of 19https://www.mhc.tn.gov.in/judisW.P.(MD) No.13366 of 20227.Section 13(3)of the Act provides that the notice underSection 13(2)of the Act shall give details of the amount payable by the borrower as also the\n\n                 details of the secured assets intended to be enforced by the bank.Section 13(3-A) of the Actwas inserted by Act 30 of 2004 after the decision of this Court inMardia Chemicals vs. Union of Indiareported in (2004) 4 SCC 311 and\n\n                 provides for a last opportunity for the borrower to make a representation to the\n\n                 secured creditor against the classification of his account as a non-performing\n\n                 asset. The secured creditor is required to consider the representation of the\n\n                 borrowers, and if the secured creditor comes to the conclusion that the\n\n                 representation is not tenable or acceptable, then he must communicate, within\n\n                 one week of the receipt of the communication by the borrower, the reasons for\n\n                 rejecting the same.8.Section 13(4)of the Act provides that if the borrower fails to\n\n                 discharge his liability within the period specified inSection 13(2), then the\n\n                 secured creditor, may take recourse to any of the following actions, to recover\n\n                 his debt, namely-Page 5 of 19https://www.mhc.tn.gov.in/judisW.P.(MD) No.13366 of 2022"(a) take possession of the secured assets of the borrower\n                           including the right to transfer by way of lease, assignment or sale\n                           for realising the secured asset;(b) take over the management of the business of the borrower\n                           including the right to transfer by way of lease, assignment or sale\n                           for realising the secured asset:Provided that the right to transfer by way of lease, assignment\n                           or sale shall be exercised only where the substantial part of the\n                           business of the borrower is held as security for the debt:Provided further that where the management of whole, of the\n                           business or part of the business is severable, the secured creditor\n                           shall take over the management of such business of the borrower\n                           which is relatable to the security for the debt;(c) appoint any person (hereafter referred to as the manager),\n                           to manage the secured assets the possession of which has been\n                           taken over by the secured creditor;(d) require at any time by notice in writing, any person who\n                           has acquired any of the secured assets from the borrower and from\n                           whom any money is due or may become due to the borrower, to pay\n                           the secured creditor, so much of the money as is sufficient to pay\n                           the secured debt."Page 6 of 19https://www.mhc.tn.gov.in/judisW.P.(MD) No.13366 of 20229.Section 14of the Act provides that the secured creditor can file an\n\n                 application before the Chief Metropolitan Magistrate or the District Magistrate,\n\n                 within whose jurisdiction, the secured asset or other documents relating thereto,\n\n                 are found for taking possession thereof. If any such request is made, the Chief\n\n                 Metropolitan Magistrate or the District Magistrate, as the case may be, is obliged\n\n                 to take possession of such asset or document and forward the same to the\n\n                 secured creditor. Therefore, it follows that a secured creditor may, in order to\n\n                 enforce his rights underSection 13(4), in particularSection 13(4)(a), may take\n\n                 recourse toSection 14of the Act.10.Section 17of the Act which provides for an appeal to the Debts\n\n                 Recovery Tribunal, reads as follows:-"17. Right to appeal.--(1) Any person (including borrower),\n                           aggrieved by any of the measures referred to in sub-section (4) ofSection 13taken by the secured creditor or his authorised officer\n                           under this Chapter, may make an application along with such fee, as\n                           may be prescribed to the Debts Recovery Tribunal having\n                           jurisdiction in the matter within forty-five days from the date on\n                           which such measures had been taken:Page 7 of 19https://www.mhc.tn.gov.in/judisW.P.(MD) No.13366 of 2022Provided that different fees may be prescribed for making the\n                           application by the borrower and the person other than the borrower.Explanation.--For the removal of doubts it is hereby declared\n                           that the communication of the reasons to the borrower by the\n                           secured creditor for not having accepted his representation or\n                           objection or the likely action of the secured creditor at the stage of\n                           communication of reasons to the borrower shall not entitle the\n                           person (including borrower) to make an application to the Debts\n                           Recovery Tribunal under sub-section (1) ofSection 17.(2) The Debts Recovery Tribunal shall consider whether any\n                           of the measures referred to in sub-section (4) ofSection 13taken by\n                           the secured creditor for enforcement of security are in accordance\n                           with the provisions of this Act and the rules made thereunder."11.As perSection 18(1)of the Act, any person aggrieved, by any order\n\n                 made by the Debts Recovery Tribunal undersection 17, may prefer an appeal\n\n                 along with such fee, as may be prescribed, to an Appellate Tribunal within thirty\n\n                 days from the date of receipt of the order of Debts Recovery Tribunal.The first proviso states that different fees may be prescribed for filing\n\n                 an appeal by the borrower or by the person other than the borrower.Page 8 of 19https://www.mhc.tn.gov.in/judisW.P.(MD) No.13366 of 2022The second proviso toSection 18of the Act states that no appeal shall\n\n                 be entertained unless the borrower has deposited with the Appellate Tribunal\n\n                 fifty per cent of the amount of debt due from him, as claimed by the secured\n\n                 creditors or determined by the Debts Recovery Tribunal, whichever is less.The third proviso states that the Appellate Tribunal may, for the\n\n                 reasons to be recorded in writing, reduce the amount to not less than twenty five\n\n                 per cent of debt referred to in the second proviso.As perSection 18(2)of the Act, save as otherwise provided in this Act,\n\n                 the Appellate Tribunal shall, as far as may be, dispose of the appeal in\n\n                 accordance with the provisions of theRecovery of Debts Due to Banks and\n\n                 Financial Institutions Act, 1993(51 of 1993) and rules made thereunder.12.As regards the Non-Maintainability of Writ Petition underArticle\n\n                 226against proceedings underSARFAESI Act, it is relevant to consider the\n\n                 following judgments:-(i) InUnited Bank of India v. Satyawati Tondon, (2010) 8 SCC 110,\n\n                 the Hon'ble Supreme Court has held as follows:-Page 9 of 19https://www.mhc.tn.gov.in/judisW.P.(MD) No.13366 of 2022"42. There is another reason why the impugned order should\n                           be set aside. If Respondent 1 had any tangible grievance against the\n                           notice issued underSection 13(4)or action taken underSection 14,\n                           then she could have availed remedy by filing an application underSection 17(1). The expression "any person" used inSection 17(1)is\n                           of wide import. It takes within its fold, not only the borrower but\n                           also the guarantor or any other person who may be affected by the\n                           action taken underSection 13(4)orSection 14. Both, the Tribunal\n                           and the Appellate Tribunal are empowered to pass interim orders\n                           underSections 17and18and are required to decide the matters\n                           within a fixed time schedule. It is thus evident that the remedies\n                           available to an aggrieved person under theSARFAESI Actare both\n                           expeditious and effective.43. Unfortunately, the High Court overlooked the settled law\n                           that the High Court will ordinarily not entertain a petition underArticle 226of the Constitution if an effective remedy is available to\n                           the aggrieved person and that this rule applies with greater rigour in\n                           matters involving recovery of taxes, cess, fees, other types of public\n                           money and the dues of banks and other financial institutions. In our\n                           view, while dealing with the petitions involving challenge to the\n                           action taken for recovery of the public dues, etc., the High Court\n                           must keep in mind that the legislations enacted by Parliament and\n                           State Legislatures for recovery of such dues are a code untoPage 10 of 19https://www.mhc.tn.gov.in/judisW.P.(MD) No.13366 of 2022themselves inasmuch as they not only contain comprehensive\n                           procedure for recovery of the dues but also envisage constitution of\n                           quasi-judicial bodies for redressal of the grievance of any aggrieved\n                           person. Therefore, in all such cases, the High Court must insist that\n                           before availing remedy underArticle 226of the Constitution, a\n                           person must exhaust the remedies available under the relevant\n                           statute.''(ii) InKanaiyalal Lalchand Sachdev v. State of Maharashtra(2011)\n\n                 2 SCC 782, the Apex Court has held as follows:-''23. In our opinion, therefore, the High Court rightly\n                           dismissed the petition on the ground that an efficacious remedy was\n                           available to the appellants underSection 17of the Act. It is well\n                           settled that ordinarily relief under Articles 226/227 of the\n                           Constitution of India is not available if an efficacious alternative\n                           remedy is available to any aggrieved person. (SeeSadhana Lodh v.\n                           National Insurance Co. Ltd.[(2003) 3 SCC 524 : 2003SCC (Cri)\n                           762] , Surya Dev Rai v. Ram Chander Rai[(2003) 6 SCC 675] and\n                           SBI v. Allied Chemical Laboratories [(2006) 9 SCC 252].)"(iii)    InICICI Bank Ltd. v. Umakanta Mohapatra, (2019) 13 SCC\n\n                 497 : (2018) 5 SCC (Civ) 812: 2018 SCC OnLine SC 2349, the Hon'blePage 11 of 19https://www.mhc.tn.gov.in/judisW.P.(MD) No.13366 of 2022Supreme Court has held as follows:-"2. Despite several judgments of this Court, including a\n                           judgment by Hon'ble Navin Sinha, J., as recently as on 30-1-2018,\n                           inState Bank of Travancore v. Mathew K.C. [State Bank of\n                           Travancorev. Mathew K.C., (2018) 3 SCC 85 : (2018) 2 SCC (Civ)\n                           41] , the High Courts continue to entertain matters which arise\n                           under theSecuritisation and Reconstruction of Financial Assets and\n                           Enforcement of Security Interest Act, 2002(SARFAESI), and keep\n                           granting interim orders in favour of persons who are non-\n                           performing assets (NPAs)."3. The writ petition itself was not maintainable, as a result of\n                           which, in view of our recent judgment, which has followed earlier\n                           judgments of this Court, held as follows: (SCC p. 94, para 17)\n                                        "17. We cannot help but disapprove the approach of the\n                           High Court for reasons already noticed inDwarikesh Sugar\n                           Industries Ltd. v. Prem Heavy Engineering Works (P) Ltd.\n                           [Dwarikesh Sugar Industries Ltd.v. Prem Heavy Engineering\n                           Works (P) Ltd., (1997) 6 SCC 450] , observing: (SCC p. 463, para32)32. When a position, in law, is well settled as a result\n                           of judicial pronouncement of this Court, it would amount to judicial\n                           impropriety to say the least, for the subordinate courts including the\n                           High Courts to ignore the settled decisions and then to pass aPage 12 of 19https://www.mhc.tn.gov.in/judisW.P.(MD) No.13366 of 2022judicial order which is clearly contrary to the settled legal position.\n                           Such judicial adventurism cannot be permitted and we strongly\n                           deprecate the tendency of the subordinate courts in not applying the\n                           settled principles and in passing whimsical orders which necessarily\n                           has the effect of granting wrongful and unwarranted relief to one of\n                           the parties. It is time that this tendency stops.''(iv)   InAgarwal Tracom (P) Ltd. v. Punjab National Bank(2018) 1\n\n                 SCC 626, the Apex Court has held as follows:-"33. In the light of the foregoing discussion, we are of the\n                           considered opinion that the writ court as also the appellate court\n                           were justified in dismissing the appellant's writ petition on the\n                           ground of availability of alternative statutory remedy of filing an\n                           application underSection 17(1)of the SARFAESI Act before the\n                           Tribunal concerned to challenge the action of PNB in forfeiting the\n                           appellant's deposit under Rule 9(5). We find no ground to interfere\n                           with the impugned judgment."(v)    In C. Bright v. Distt. Collector (2021) 2 SCC 392, the Hon'ble\n\n                 Supreme Court has held as follows:-"22. Even though, this Court in United Bank of India v.Page 13 of 19https://www.mhc.tn.gov.in/judisW.P.(MD) No.13366 of 2022Satyawati Tondon [United Bank of India v. Satyawati Tondon,\n                           (2010) 8 SCC 110 (2010) 3 SCC (Civ) 260] held that in cases\n                           relating to recovery of the dues of banks, financial institutions and\n                           secured creditors, stay granted by the High Court would have\n                           serious adverse impact on         the financial    health   of such\n                           bodies/institutions, which will ultimately prove detrimental to the\n                           economy of the nation. Therefore, the High Court should be\n                           extremely careful and circumspect in exercising its discretion to\n                           grant stay in such matters.Hindon Forge (P) Ltd. [Hindon Forge (P)\n                           Ltd. v. State of U.P., (2019) 2 SCC 198 : (2019) 1 SCC (Civ) 551]\n                           has held that the remedy of an aggrieved person by a secured\n                           creditor under the Act is by way of an application before the Debts\n                           Recovery Tribunal, however, borrowers and other aggrieved\n                           persons are invoking the jurisdiction of the High Court underArticles 226or 227 of the Constitution of India without availing the\n                           alternative statutory remedy. The Hon'ble High Courts are well\n                           aware of the limitations in exercising their jurisdiction when\n                           effective alternative remedies are available, but a word of caution\n                           would be still necessary for the High Courts that interim orders\n                           should generally not be passed without hearing the secured creditor\n                           as interim orders defeat the very purpose of expeditious recovery of\n                           public money."Page 14 of 19https://www.mhc.tn.gov.in/judisW.P.(MD) No.13366 of 2022(vi)     In S.Ganesamoorthi Vs. The Branch Manager & Ors., W.P.\n\n                 (MD).No.22536 of 2021, dated 20.12.2021, the Hon'ble First Bench of this\n\n                 Court has held that though Presiding officer is not available in DRT, Madurai,\n\n                 incharge is given to Coimbatore and therefore, liberty is given to writ petitioner\n\n                 to move DRT, Coimbatore.13.As regards the non-maintainability of the Writ Petition against\n\n                 Private financial institutions like assets re-construction companies in respect of\n\n                 their action underSARFAESI Act, it is relevant to consider the decision of the\n\n                 Hon'ble Supreme Court inPhoenix ARC (P) Ltd. v. Vishwa Bharati Vidya\n\n                 Mandir, (2022) 5 SCC 345 : 2022 SCC OnLine SC 44, wherein, it has been\n\n                 held as follows:-''18. Even otherwise, it is required to be noted\n                                    that a writ petition against the private financial\n                                    institution — ARC — the appellant herein underArticle 226of the Constitution of India against the\n                                    proposed action/actions underSection 13(4)of the\n                                    SARFAESI Act can be said to be not maintainable. In\n                                    the present case, the ARC proposed to takePage 15 of 19https://www.mhc.tn.gov.in/judisW.P.(MD) No.13366 of 2022action/actions under theSARFAESI Actto recover the\n                                  borrowed amount as a secured creditor. The ARC as\n                                  such cannot be said to be performing public functions\n                                  which are normally expected to be performed by the\n                                  State authorities. During the course of a commercial\n                                  transaction and under the contract, the bank/ARC lent\n                                  the money to borrowers herein and therefore the said\n                                  activity of the bank/ARC cannot be said to be as\n                                  performing a public function which is normally\n                                  expected to be performed by the State authorities. If\n                                  proceedings are initiated under theSARFAESI Actand/or any proposed action is to be taken and the\n                                  borrower is aggrieved by any of the actions of the\n                                  private bank/bank/ARC, borrower has to avail the\n                                  remedy underSARFAESI Actand no writ petition\n                                  would lie and/or is maintainable and/or entertainable.\n                                  Therefore, decisions of this Court inPraga Tools\n                                  Corpn. [Praga Tools Corpn. v. C.A. Manual, (1969) 1\n                                  SCC 585] and Ramesh Ahiuwalia [Ramesh Ahluwalia\n                                  v. State of Punjab, (2012; 12 SCC 331 : (2013) 3 SCC\n                                  (L&S) 456: 4 SCEC 715] relied upon by the learned\n                                  counsel appearing on behalf of the borrowers are not of\n                                  any assistance to the borrowers."Page 16 of 19https://www.mhc.tn.gov.in/judisW.P.(MD) No.13366 of 202214.As per the impugned possession notice, the total outstanding\n\n                 amount is at Rs.34,04,563.16/-.15.The learned counsel appearing for the petitioner states that the\n\n                 petitioner is prepared to pay a sum of Rs.4,25,000/- (Rupees Four Lakhs and\n\n                 Twenty Five Thousand Only) on or before 20.10.2022 and on such payment, the\n\n                 respondent may be directed to consider the representation of the petitioner for\n\n                 one time settlement or for restructuring the loan or for any other concession for\n\n                 which, the learned counsel for the respondents is agreeable.16.Recording the above submissions, the petitioner is directed to pay a\n\n                 sum of Rs.4,25,000/- to the respondents on or before 20.10.2022. In case, the\n\n                 petitioner commits any default in paying the said amount, it is open to the\n\n                 respondent to proceed further in accordance with law. On such payment, the\n\n                 petitioner is directed to submit a representation to the 1st respondent within a\n\n                 period of two weeks seeking One Time Settlement or for restructuring the loanPage 17 of 19https://www.mhc.tn.gov.in/judisW.P.(MD) No.13366 of 2022or for any other concession, as may be permissible under the guidelines of the\n\n                 Reserve Bank of India or the norms applicable to the respondent. On receipt of\n\n                 such representation, the respondents shall consider the same and pass\n\n                 appropriate orders in accordance with law, within a period of four weeks\n\n                 thereafter. Till such time, the respondents shall not take any coercive action\n\n                 against the petitioner.17.The Writ Petition is disposed of with the above directions. No\n\n                 costs. Consequently, connected miscellaneous petitions are closed.[R.M.D., J.]   &   [J.S.N.P., J.]\n                                                                   22.09.2022\n                 Index : Yes / No\n                 Internet : Yes / No\n\n                 MyrPage 18 of 19https://www.mhc.tn.gov.in/judisW.P.(MD) No.13366 of 2022R.MAHADEVAN, J.AND\n                                  J.SATHYA NARAYANA PRASAD, J.MyrW.P.(MD)No.13366 of 202222.09.2022Page 19 of 19https://www.mhc.tn.gov.in/judis