IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH B E F O R E THE HON BLE MR. JUSTICE A.N. VENUGOPALA GOWDA

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1 1 IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE 30 TH DAY OF JULY, 2014 B E F O R E THE HON BLE MR. JUSTICE A.N. VENUGOPALA GOWDA IN W.P.NO /2014 BETWEEN: W.P. NO /2014 C/W W.P.NO.59441/2013 AND W.P.NO.59442/2013 (GM-RES) K N NANDINI W/O. K V NAGARAJ AGE: 38 YEARS, R/O. GEETHA GOPAL MANSION DOOR NO. 1359, 8TH CROSS M J NAGAR, HOSPET (BY SRI. V P KULKARNI, ADV.)... PETITIONER AND 1. THE LAKSHMI VILAS BANK LTD REGIONAL OFFICE R/BY ITS AUTHORISED OFFICER & GENERAL MANAGER NO. 93, 2ND FLOOR, T K N MARISON, K H ROAD, (DOUBLE ROAD) OPP. TO KSRTC HEAD OFFICE, BANGALORE

2 2 2. A V RAGHUNATH S/O. A S VARDADARAJA GUPTHA SRIRANGA NILAYA DOOR NO. 680/A1, 8TH A MAIN M J NAGAR, HOSPET RESPONDENTS THIS PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE POSSESSION NOTICE DATED ISSUED BY THE RESPONDENT BANK VIDE ANNEXRUE-B AND ETC. IN WP NO OF 2013 BETWEEN SWASTIK STEEL (HOSPET) PVT LTD REPRESENTED BY ITS DIRECTOR SMT K N NANDINI W/O K V NAGARAJ AGED ABOUT 38 YEARS R/AT NO.1359, 8TH CROSS M J NAGAR, HOSPET (BY SRI. V P KULKARNI, ADV.)... PETITIONER AND THE LAKSHMI VILAS BANK LTD HOSPET BRANCH REPRESENTED BY ITS AUTHORISED OFFICER FIRST FLOOR, SHARADA COAMPLEX SHANBHAG CIRCLE, PATEL NAGAR HOSPET RESPONDENT (BY SRI. SURENDRA V KAMAT, ADV.)

3 3 THIS PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE POSSESSION NOTICE DTD ISSUED BY THE RESPONDENT BANK VIDE ANNEX-C. IN WP NO OF 2013 BETWEEN SMT. K N NANDINI W/O K V NAGARAJ PROPRIETOR OF SWASTIK STEELS AGED ABOUT 38 YEARS R/AT NO.373/2, OPP APMC COMPLEX, DAM ROAD 7TH WARD, HOSPET (BY SRI. V P KULKARNI, ADV.)... PETITIONER AND THE LAKSHMI VILAS BANK LTD HOSPET BRANCH REPRESENTED BY ITS AUTHORISED OFFICER FIRST FLOOR, SHARADA COMPLEX SHANBHAG CIRCLE, PATEL NAGAR HOSPET (BY SRI. SURENDRA V KAMAT, ADV.)... RESPONDENT THIS PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE POSSESSION NOTICE DTD ISSUED BY THE RESPONDENT BANK VIDE ANNEX-B. THESE PETITIONS COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING:

4 4 ORDER W.P.59441/2013 is by the borrower. W.P.59442/2013 is by the Proprietor of M/s.Swastik Steels and W.P /2014 is by the guarantor to the loan transaction of the borrower. 2. Undisputedly, loan was availed from Lakshmi Vilas Bank Ltd. and immovable property of the guarantor was furnished as security for due discharge of the loan. There is no dispute that the borrower has committed default in the matter of payment of the installments, in terms of the loan documents executed. The loan transaction having been treated as NPA, proceedings under S.13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the Act) was initiated and notice under sub-section (2) of S.13 of the Act having been served, these writ petitions were filed, to quash the notice issued under S.13(2) of the Act and direct the bank to consider a representation submitted, for one time settlement.

5 5 3. Heard learned advocates on both sides. 4. In UNITED BANK OF INDIA Vs. SATYAWATI TONDON AND OTHERS, 2010 (8) SCC 110, Apex Court has held that the remedies available to an aggrieved person under the Act are both expeditious and effective and the borrower, as well as guarantor, can avail the remedy by filing an application under S.17(1) of the Act, which contains the expression any person has a wide approach and 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 S.13(4) or S.14 and that the Tribunal and the Appellate Tribunal are empowered to pass interim order under S.17 and 18 and are required to decide the matter within a fixed time schedule. It was observed that the High Courts should not ordinarily entertain a petition under Article 226 of the Constitution, if an effective remedy is available to an aggrieved person and that the rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of

6 6 public money and the dues of banks and other financial institutions. It has been further held as follows: 43. 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 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, 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. 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.

7 7 Exception was taken for not giving effect to the pronouncements of the Apex Court and the same has been put in the following words: 55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection. 5. In KANAIYALAL LALCHAND SACHDEV AND OTHERS Vs. STATE OF MAHARASHTRA AND OTHERS, 2011 (2) SCC 782, the loan advanced having not been repaid and there being default in the matter of repayment, notice was issued under the Act and the possession of the secured property was taken, which ultimately became the subject matter of consideration before the Apex Court. While examining the provisions of Ss.13, 14 and 17, it has been held that the High Court was justified in declining to exercise its jurisdiction under Articles 226 and 227 of the Constitution and the appeal filed by the borrower was dismissed.

8 8 6. In GENERAL MANAGER, SRI SIDDESHWARA COOPERATIVE BANK LIMITED AND ANOTHER Vs. IKBAL AND OTHERS, 2013 (10) SCC 83, while examining the scope of Rule 9 of the Security Interest (Enforcement) Rules, 2002 and the availability of remedy of appeal to the Debts Recovery Tribunal, under S.17 of the Act, which was not availed by the borrower, but wrongly sought relief under Article 226 of the Constitution, it has been held as follows: 27. No doubt an alternative remedy is not an absolute bar to the exercise of extraordinary jurisdiction under Article 226 but by now it is well settled that where a statute provides efficacious and adequate remedy, the High Court will do well in not entertaining a petition under Article 226. On misplaced considerations, statutory procedures cannot e allowed to be circumvented. In view of the aforesaid declaration of law by the Apex Court, I do not deem it appropriate to entertain these writ petitions. Without going to the merit of the case sought to be put forth by the petitioners, these writ petitions are rejected, by reserving liberty to the petitioners, to avail the statutory remedy by approaching the DRT for relief.

9 9 If the statutory remedy is availed, on or before , the time taken in prosecution of these writ petitions shall stand excluded and the Tribunal shall decide the case/s, without going to the question of limitation. No costs. sac* SD/- JUDGE