# M/s Mata Kaila Devi Gangsar Stone Pvt. Ltd., District Agra v. State of U.P. & Ors

- **Citation:** (2020) 11 ILRA 350
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2020-08-26
- **Case number:** WRIT - C No. 11611 of 2020
- **Bench:** Naheed Ara Moonis, Deepak Verma
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-mata-kaila-devi-gangsar-stone-pvt-ltd-district-agra-v-state-of-u-p-ors-45407
- **Pages:** 12

## Headnote

Law
-
Securitization
and
Reconstruction of Financial Assets and
Enforcement of Security Interest Act,
2002 - Sections 13 and 17 - Enforcement
of Secured Interest - Notice to discharge
liability u/s 13(2) within 60 days and
Possession notice u/s 13(8) issued -
Alternative Remedy - Held, the petitioner
has the remedy to prefer an appeal under
Section 17 of the Act before the Debt
Recovery Tribunal. (Para 16 and 17)
B. Constitution of India - Article 14 and
226 - Scope of Writ - Recovery matter -
Alternative
Remedy
-
Discretionary
jurisdiction under Article 226 is not
absolute and can be exercised judiciously
in a given facts of the case and in
accordance with law - High Court will
ordinarily not entertain a petition under
Article 226 of the Constitution if an
effective remedy is available to the
aggrieved person - 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. (Para 20 and
21)
Writ Petition dismissed (E-1)
Cases relied on :-

## Text

_Characters 0–39,669 of 40,790. This is a partial read: ask again with offset=39669 for what follows._

350 INDIAN LAW REPORTS ALLAHABAD SERIES

15. In such circumstances, if the
prescribed authority has directed a recount
of votes to be carried out this Court finds
no error of jurisdiction or arbitrariness in
the
order
which
may
require
any
interference. Writ petition lacks merit and
is, accordingly, dismissed.
----------
(2020)11ILR A350
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 26.08.2020

BEFORE
THE HON'BLE NAHEED ARA MOONIS, J.
THE HON'BLE DEEPAK VERMA, J.

WRIT - C No. 11611 of 2020

M/s Mata Kaila Devi Gangsar Stone Pvt.
Ltd., District Agra ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Birendra Singh

Counsel for the Respondents:
C.S.C., Sri Sanjai Singh

A.
Civil
Law
-
Securitization
and
Reconstruction of Financial Assets and
Enforcement of Security Interest Act,
2002 - Sections 13 and 17 - Enforcement
of Secured Interest - Notice to discharge
liability u/s 13(2) within 60 days and
Possession notice u/s 13(8) issued -
Alternative Remedy - Held, the petitioner
has the remedy to prefer an appeal under
Section 17 of the Act before the Debt
Recovery Tribunal. (Para 16 and 17)
B. Constitution of India - Article 14 and
226 - Scope of Writ - Recovery matter -
Alternative
Remedy
-
Discretionary
jurisdiction under Article 226 is not
absolute and can be exercised judiciously
in a given facts of the case and in
accordance with law - High Court will
ordinarily not entertain a petition under
Article 226 of the Constitution if an
effective remedy is available to the
aggrieved person - 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. (Para 20 and
21)
Writ Petition dismissed (E-1)
Cases relied on :-
1. United Bank of India Vs Satyawati Tandon &
ors., (2010) 8 SCC 110
2. Civil Appeal No. 1281 of 2018; Authorized
Officer, State Bank of Tranvancore & anr. Vs
Mathew K.C.
3. Civil Appeal No. nil of 2018 (Arising out of
SLP No. 10215-10217 of 2016) ITC Limited Vs
Blue Coast Hotels Ltd & ors..
4. In Union Bank of India & anr. Vs Panchanan
Subudhi, (2010) 15 SCC 552
5. Kanaiyalal Lalchand Sachdev & ors. Vs State
of Maharashtra & ors., (2011) 2 SCC 782
6. Punjab National Bank & anr. Vs Imperial Gift
House & ors., (2013) 14 SCC 622
7. State of Maharashtra Vs Digambar, (1995) 4
SCC 683

(Delivered by Hon'ble Naheed Ara Moonis, J.
& Hon'ble Deepak Verma, J.)

1. Heard the learned counsel for the
petitioner Sri Birendra Singh, Sri S. Singh,
learned counsel appearing on behalf of the
respondent no. 3 and the learned Standing
Counsel appearing on behalf of respondent
nos. 1 and 2.

2. The instant petition has been filed
invoking extraordinary jurisdiction of this
court under Article 226 of the Constitution
of India with the following prayer;

"I. Issue a writ, order or direction
in the nature of certiorari quashing the
11 All. M/s Mata Kaila Devi Gangsar Stone Pvt. Ltd., District Agra Vs. State of U.P. & Ors.
351
Possession Notice dated 13.3.2020 and
Demand Notice dated 4.2.2019 issued by
the respondent no.3 (Annexure No. 1 and 2
to the writ petition).

2. Issue any other suitable writ,
order or direction, which this Hon'ble
Court may deem fit and proper in the facts
and circumstances of the case.

3. Award cost of the petition to
the petitioner."

3. The proceedings initiated against
the petitioner by issuing Demand Notice
under Section 13 (2) dated 4.2.2019 and
Possession Notice dated 13.3.2020 under
Section 13 (4) of the Securitization and
Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002
(for the sake of brevity hereinafter referred
to as 'SARFAESI Act" read with Rule 8 of
Security Interest (Enforcement) Rules,
2002. The aforesaid proceeding has been
initiated in exercise of power conferred
under Sub Section 12 of Section 13 read
with Rule 8 of the Security Interest
(Enforcement) Rules, 2002 on failure of
repaying the loan amount.

4. The contention of the learned
counsel for the petitioner is that the
petitioner is a private Limited Partnership
Company incorporated on 8.7.2016 under
the Companies Act 2013, which is carrying
out business of importing and exporting,
preparing, mining, cutting, polishing and
processing for all types of marble and
granite and other building materials. For
establishment of the unit, which is situated
over Khata No.114, Khasara No. 141 in
Mauja Ghaskata, Tehsil Kheragarh, district
Agra the partners of the petitioner applied
for the loan and mortgaged the aforesaid
property with the respondent no. 3 Bank of
Maharashtra. The Bank granted loan of Rs.
45,00,000/- as a term loan and Rs.
15,00,000/- as cash credit limit, total
amounting to Rs. 60,00,000/- in the year
2017. An order was passed on 15.10.2018
by the Regional Officer, U.P. Pollution
Control Board, after inspecting the unit on
20.9.2018 that it was being run without
obtaining NOC and consent of Air and
Water from Pollution Control Board and
that the unit comes within the limit of Taj
trapezium zone. As closure order was
passed
on
15.10.2018
the
business
activities of the unit have been closed as a
result of which the deposit of regular
instalment of the loan could not be made.
However
from
15.2.2019
till
30th
September 2019 the instalment of the loan
amount was paid. The respondent no. 3 has
issued the impugned demand notice dated
4.2.2019 under Section 13 (2) of the
SARFAESI Act. The possession notice was
never served upon the petitioner nor any
partners or representatives of the petitioner.
The notice was only pasted at the main gate
of the unit on the basis whereof the partner
of the petitioner came to know about the
proceeding initiated under the aforesaid
Act.

5. The learned counsel for the
petitioner further contended that even no
opportunity of hearing was afforded to the
petitioner
after
the
issuance
of
the
impugned demand notice dated 4.2.2019
issued under Section 13 (2) of the
SARFAESI Act only showing the reason
that due to failure to adhere to the terms
and conditions and had made default hence
the account has been classified by the Bank
as NPA on 31.1.2019. However, after the
demand notice the petitioner has deposited
the loan amount from 15.2.2019 uptill
30.9.2019. As the unit was closed due to
the closure order the regular instalment of
the loan amount could not be paid
thereafter. The respondent no. 3 further
352 INDIAN LAW REPORTS ALLAHABAD SERIES
proceeded arbitrarily by issuing possession
notice dated 13.3.2020 under Section 13 (4)
read with Rule 8 of the SARFAESI
Act/Rules, 2002.

6. The learned counsel for the petitioner
has placed reliance before us the judgment of
the Coordinate Bench of this court dated
11.12.2018 passed in Writ-C No. 38578 of
2018 (Kumkum Tentiwal Vs. State of U.P.
and others) and contended that the order
passed by the Additional District Magistrate
for taking possession of the property in the
said case was quashed as no opportunity of
hearing was given before passing the order
under Section 14 of the SARFAESI Act.

7. It is further contended that the
Public Interest Litigation No. 1338 of
2018 (M.C. Mehta Vs. Union of India)
was filed before the Hon'ble Apex Court
and the Hon'ble Court vide order dated
6.12.2019
allowed
permission
by
suspending the closure order of the U.P.
Pollution
Control
Board
dated
15.10.2018.
The
petitioner's
unit
reopened only on 16.3.2020 but was
closed again due to lock down amid
pandemic of Covid-19. However, the
petitioner undertakes that he would be
able to deposit the balance loan amount
in easy instalments as may be directed by
this court. The respondent bank has
proceeded against the petitioner violating
the statutory provisions of the Act, hence
the issuance of the demand notice as well
as the notice of possession are vitiated in
law liable to be quashed.

8. Per contra the learned counsel
appearing on behalf of the respondent
no.3 has raised objection and contended
that the petitioner has an alternative
remedy to take all these objections in a
proceeding under Section 17 of the
SARFAESI Act. The petitioner had an
opportunity to reply to the demand notice
issued under Section 13 (2) of the
SARFAESI Act within 60 days and
failure of which has given rise to the
respondent no.3 to declare the account as
non
performing
asset
(NPA)
on
30.1.2019. The petitioner's account was
declared as Non Performing Asset (NPA)
much prior to the lock down due to
pandemic
Covid-19.
Sufficient
opportunity was given to the petitioner to
pay the balance loan amount and the
petitioner
could
have
also
ample
opportunity to redeem the secured assets
in accordance with the provisions of Sub
Section 8 of Section 13 of the Act but the
petitioner has failed to repay the amount,
as such the possession notice has been
issued under Section 13 (4) read with
Rule 8 of the SARFAESI Act by the
impugned
possession
notice
dated
13.3.2020. The petitioner was under legal
obligation to pay the outstanding dues
even otherwise an alternative remedy is
available to the petitioner under Section
17 of the SARFAESI Act against the
action of the respondent no. 3, hence the
writ petition is liable to be dismissed on
this ground alone.

9. In support of his submission the
learned counsel for the respondent no.3 has
relied upon the various decisions of the
Hon'ble Apex Court, which is delineated
herein as under;

(I) 2010 (8) SCC 110, United
Bank of India Vs. Satyawati Tandon and
others;

(II) Civil Appeal No. 1281 of
2018 (arising out of SLP © No. 24610 of
2015) Authorized Officer, State Bank of
Tranvancore and another Vs. Mathew
K.C. and
11 All. M/s Mata Kaila Devi Gangsar Stone Pvt. Ltd., District Agra Vs. State of U.P. & Ors.
353

(III) Civil Appeal No. nil of 2018
(Arising out of SLP (C) No. 10215-10217
of 2016) ITC Limited Vs. Blue Coast
Hotels Ltd and others.

10. The learned counsel for the
respondent no. 3 has submitted that the
Hon'ble Apex Court in the above noted
cases has declined interference under
Article 226 of the Constitution of India by
observing that the writ petition under
Article 226 of the Constitution ought not to
be entertained if alternative statutory
remedies are available as ignoring the
availability
of
statutory
remedy
and
entertaining the writ petition granting
interim relief have serious adverse impact
on the right of bank and other financial
institutions to recover their dues. The entire
exercise for the recovery of loan have been
initiated much prior to the lock down due
to Covid-19 hence do not deserve any
interim relief.

11. We have given thoughtful
consideration to the arguments advanced by
the learned counsel for the parties and gone
through the record.

12. From the perusal of the impugned
notices, the respondent no. 3 has initiated
proceedings
under
the
SARFAESI
Act/Rules on account of failure of the
petitioner to repay the loan amount. The
statutory demand notice under Section 13
(2) of the SARFAESI Act was issued on
4.2.2019 declaring the account by the Bank
as Non performing Asset (NPA) on
21.1.2019.

13. From the pleadings it is not the
case of the petitioner that he has replied
through filing objections to the statutory
notice issued under Section 13 (2) of the
SARFAESI Act within 60 days from the
date of notice as the petitioner neglected to
pay the dues, hence the Possession Notice
was issued under Section 13 (4) read with
Rule 8 of the SARFAESI Act, 2002 against
which the petitioner has the remedy to
prefer an appeal under Section 17 of the
Act before the Debt Recovery Tribunal.
Further he has remedy to appeal before the
Appellate Tribunal under Section 18 of the
Act against the order passed by the Debt
Recovery Tribunal.

14. An extract of relevant provisions
of the Act are reproduced herein below for
ready reference;

13. Enforcement of security
interest.--

(1)
Notwithstanding
anything
contained in section 69 or section 69A of
the Transfer of Property Act, 1882 (4 of
1882), any security interest created in
favour of any secured creditor may be
enforced, without the intervention of the
court or tribunal, by such creditor in
accordance with the provisions of this Act.

(2) Where any borrower, who is
under a liability to a secured creditor under
a security agreement, makes any default in
repayment
of
secured
debt
or
any
installment thereof, and his account in
respect of such debt is classified by the
secured creditor as non-performing asset,
then, the secured creditor may require the
borrower by notice in writing to discharge
in full his liabilities to the secured creditor
within sixty days from the date of notice
failing which the secured creditor shall be
entitled to exercise all or any of the rights
under sub-section (4).

[Provided that--

(i)
the
requirement
of
classification of secured debt as nonperforming asset under this sub-section
shall not apply to a borrower who has
354 INDIAN LAW REPORTS ALLAHABAD SERIES
raised
funds
through
issue
of
debt
securities; and

(ii) in the event of default, the
debenture trustee shall be entitled to
enforce security interest in the same
manner as provided under this section with
such modifications as may be necessary
and in accordance with the terms and
conditions of security documents executed
in favour of the debenture trustee.]

(3) The notice referred to in subsection (2) shall give details of the amount
payable by the borrower and the secured
assets intended to be enforced by the
secured creditor in the event of nonpayment of secured debts by the borrower.

(3A) If, on receipt of the notice
under sub-section (2), the borrower makes
any representation or raises any objection,
the secured creditor shall consider such
representation or objection and if the
secured creditor comes to the conclusion
that such representation or objection is not
acceptable
or
tenable,
he
shall
communicate within fifteen days of receipt
of such representation or objection the
reasons
for
non-acceptance
of
the
representation or objection to the borrower:
Provided that the reasons so communicated
or the likely action of the secured creditor
at the stage of communication of reasons
shall not confer any right upon the
borrower to prefer an application to the
Debts Recovery Tribunal under section 17
or the Court of District Judge under section
17A.]

(4) In case the borrower fails to
discharge his liability in full within the period
specified in sub-section (2), the secured
creditor may take recourse to one or more of
the following measures to recover his secured
debt, namely:-- (a) take possession of the
secured assets of the borrower including the
right to transfer by way of lease, assignment
or sale for realising the secured asset;

[(b) take over the management of
the business of the borrower including the
right to transfer by way of lease, assignment
or sale for realizing the secured asset:

Provided that the right to transfer
by way of lease, assignment or sale shall be
exercised only where the substantial part of
the business of the borrower is held as
security for the debt: Provided further that
where the management of whole of the
business or part of the business is severble,
the secured creditor shall take over the
management of such business of the
borrower which is relatable to the security for
the debt;]

(c) appoint any person (hereafter
referred to as the manager), to manage the
secured assets the possession of which has
been taken over by the secured creditor;

(d) require at any time by notice in
writing, any person who has acquired any of
the secured assets from the borrower and
from whom any money is due or may
become due to the borrower, to pay the
secured creditor, so much of the money as is
sufficient to pay the secured debt.

(5) Any payment made by any
person referred to in clause (d) of sub-section
(4) to the secured creditor shall give such
person a valid discharge as if he has made
payment to the borrower...........

[(8) Where the amount of dues of
the secured creditor together with all costs,
charges and expenses incurred by him is
tendered to the secured creditor at any time
before the date of publication of notice for
public auction or inviting quotations or tender
from public or private treaty for transfer by
way of lease, assignment or sale of the
secured assets,--

(i) the secured assets shall not be
transferred by way of lease assignment or
sale by the secured creditor; and

(ii) in case, any step has been
taken by the secured creditor for transfer by
11 All. M/s Mata Kaila Devi Gangsar Stone Pvt. Ltd., District Agra Vs. State of U.P. & Ors.
355
way of lease or assignment or sale of the
assets before tendering of such amount
under this sub-section, no further step shall
be taken by such secured creditor for
transfer by way of lease or assignment or
sale of such secured assets.]

17.
[Application
against
measures to recover secured debts].--(1)
Any
person
(including
borrower),
aggrieved by any of the measures referred
to in sub-section (4) of section 13 taken by
the secured creditor or his authorized
officer under this Chapter,1[may make an
application along with such fee, as may be
prescribed,]to the Debts Recovery Tribunal
having jurisdiction in the matter within
forty-five days from the date on which such
measure had been taken:

[Provided that different fees may
be prescribed for making the application by
the borrower and the person other than the
borrower.]

[Explanation.--For the removal of
doubts, it is hereby declared that the
communication of the reasons to the
borrower by the secured creditor for not
having accepted his representation or
objection or the likely action of the secured
creditor at the stage of communication of
reasons to the borrower shall not entitle the
person (including borrower) to make an
application to the Debts Recovery Tribunal
under this sub-section.]

(1A) An application under subsection (1) shall be filed before the Debts
Recovery Tribunal within the local limits of
whose jurisdiction--

(a) the cause of action, wholly or in
part, arises;

(b) where the secured asset is
located; or

(c) the branch or any other office of
a bank or financial institution is maintaining
an account in which debt claimed is
outstanding for the time being.]

(2) The Debts Recovery Tribunal
shall consider whether any of the measures
referred to in sub-section (4) of section 13
taken by the secured creditor for enforcement
of security are in accordance with the
provisions of this Act and the rules made
thereunder.

(3)
If,
the
Debts
Recovery
Tribunal, after examining the facts and
circumstances of the case and evidence
produced by the parties, comes to the
conclusion that any of the measures referred
to in sub-section (4) of section 13, taken by
the secured creditor are not in accordance
with the provisions of this Act and the rules
made thereunder, and require restoration of
the management or restoration of possession,
of the secured assets to the borrower or other
aggrieved person, it may, by order,--

(a) declare the recourse to any one
or more measures referred to in sub-section
(4) of section 13 taken by the secured creditor
as invalid; and

(b) restore the possession of
secured assets or management of secured
assets to the borrower or such other aggrieved
person, who has made an application under
sub-section (1), as the case may be; and

(c) pass such other direction as it
may consider appropriate and necessary in
relation to any of the recourse taken by the
secured creditor under sub-section (4) of
section 13.]

18.
Appeal
to
Appellate
Tribunal-

(1) Any person aggrieved, by any
order made by the Debts Recovery
Tribunal under Section 17, may prefer an
appeal along with such fee, as may be
prescribed to an Appellate Tribunal within
thirty days from the date of receipt of the
order of Debts Recovery Tribunal.

15. From the above provisions it is
crystal clear that Section 13 of the
356 INDIAN LAW REPORTS ALLAHABAD SERIES
SARFAESI Act contains enforcement of
secured interest. Sub Section 2 of Section
13 enumerates first of many steps needed to
be taken by the secured creditor for
enforcement of security interest. This sub
section provides that if a borrower who is
under a liability to a secured creditor,
makes any default in repayment of secured
debt and his account in respect of such debt
is classified as non-performing asset, then
the secured creditor may require the
borrower by notice in writing to discharge
his liabilities within sixty days from the
date of notice with an indication that if he
fails to do so, the secured creditor shall be
entitled to exercise all or any of its rights in
terms of Section 13 (4). Sub Section (3) of
Section 13 lays down that notice issued
under Section 13 (2) shall contain details of
the amount payable by the borrower as also
the details of the secured assets intended to
be enforced by the bank or financial
institution. Sub-section (3-A) of Section 13
lays down that the borrower may make a
representation in response to the notice
issued under Section 13 (2) and challenge
the classification of his accounts as nonperforming asset as also the quantum of
amount specified in the notice.

16. However, in the instant case from
the pleading it is not the case of the
petitioner that he has replied through filing
objection to the statutory demand notice
dated 4.2.2019 issued under Section 13 (2)
of the Act within sixty days from the date
of the notice. As the petitioner neglected to
pay the dues, hence the possession notice
dated 13.3.2020 was issued under Section
13 (4) of the SARFAESI Act read with
Rule
8
of
the
Security
Interest
(Enforcement) Rules, 2002. The procedure
prescribed under Section 13 (2) and 13 (4)
is mandatory and the recourse taken by the
respondent no. 3 is in accordance with law.
The petitioner had an opportunity to reply
to the demand notice. Sub section 4 of
Section 13 specifies various modes, which
can be adopted by the secured creditor for
recovery of secured debts.

17. The impugned Possession Notice
had also drawn the attention of the
petitioner to the provisions contained under
sub-section 8 of Section 13 of the Act in
respect of time available to redeem the
secured assets and has also made clear that
the borrower shall not transfer by way of
sale, lease or otherwise any of his secured
assets referred to in the notice without prior
written consent of the secured creditor.
There is no reason put forth by the
petitioner why the remedy available under
Section 17 of the Act before the Debt
Recovery Tribunal was not efficacious and
compelled him for by passing the same.
The petitioner has the remedy to prefer an
appeal under Section 17 of the Act before
the Debt Recovery Tribunal. Further he has
right to appeal before the Appellate
Tribunal under Section 18 of the Act
against the order passed by the Debt
Recovery Tribunal, which is evident from
the provisions quoted herein above.

18. The pleadings in the writ petition
are in lackadaisical manner only alleging
violation of principle of natural justice. If
the
petitioner
would
have
invoked
alternative remedy under Section 17 of the
Act, it is incumbent upon the Tribunal
under Section 17 of the Act to consider
whether the measures taken by the secured
creditor for enforcement of security interest
are in accordance with the provisions of the
Act and the Rules and if the measures taken
by the secured creditor are not in
accordance with sub Section 4 of Section
13 of the Act could have directed the
secured creditor to restore the management
11 All. M/s Mata Kaila Devi Gangsar Stone Pvt. Ltd., District Agra Vs. State of U.P. & Ors.
357
of the business or the secured assets to the
borrower (the petitioner).

19. The learned counsel for the
petitioner has cited the case law, which is not
applicable under the circumstance of the case
as in that case the question was involved that
the borrower is entitled to right of hearing
prior to any order passed by the District
Magistrate while exercising the power under
Section 14 of the Act to assist the secured
creditor to take possession of the secured
assets. Whereas in the present case despite
notice under Section 13 (2) of the Act the
petitioner did not pay any heed to pay the
outstanding dues. Only after the demand
notice dated 4.2.2019 the petitioner has
deposited a paltry sum of loan amount as
mentioned in paragraph 10 of the writ
petition i.e. between 15.2.2019 to 30.9.2019,
therefore the action taken by the respondent
no. 3 for recovery of dues by issuing notice
under Section 13 (2) and Section 13 (4)
cannot be faulted with. The petitioner could
have availed the remedy by filing an
application under Section 17 (1) of the Act,
when the remedies are available under the
SARFAESI Act both to the borrower or
creditor for the redressal of their grievance.

20. We are conscious of the settled
law that discretionary jurisdiction under
Article 226 is not absolute and can be
exercised judiciously in a given facts of the
case and in accordance with law, hence in
view of the aforesaid statutory remedy
available to the petitioner the petition is
liable to be dismissed at the threshold. The
reasons for not entertaining the petition
where there is efficacious and alternative
remedy available has been dealt with in
extenso by the Hon'ble Apex Court in
Authorized
Officer,
State
Bank
of
Travancore and another (Supra), which
is reproduced as here under;

"9. The statement of objects and
reasons of the SARFAESI Act states that
the banking and financial sector in the
country was felt not to have a level playing
field in comparison to other participants in
the financial markets in the world. The
financial institutions in India did not have
the power to take possession of securities
and sell them. The existing legal framework
relating to commercial transactions had
not kept pace with changing commercial
practices and financial sector reforms
resulting in tardy recovery of defaulting
loans and mounting non-performing assets
of banks and financial institutions. The
Narasimhan Committee I and II as also the
Andhyarujina Committee constituted by the
Central Government Act had suggested
enactment
of
new
legislation
for
secularization and empowering banks and
financial institutions to take possession of
securities and sell them without court
intervention which would enable them to
realise long term assets, manage problems
of liquidity, asset liability mismatches and
improve recovery. The proceedings under
the Recovery of Debts due to Banks and
Financial
Institutions
Act,
1993,
(hereinafter referred to as 'the DRT Act')
with
passage
of
time,
had
become
synonymous with those before regular
courts affecting expeditious adjudication.
All these aspects have not been kept in
mind and considered before passing the
impugned order.

"10. Even prior to the SARFAESI
Act, considering the alternate remedy
available under the DRT Act it was held in
Punjab National Bank vs. O.C. Krishnan
and others, (2001) 6 SCC 569, that :-

"6. The Act has been enacted with
a view to provide a special procedure for
recovery of debts due to the banks and the
financial institutions. There is a hierarchy
of appeal provided in the Act, namely,
358 INDIAN LAW REPORTS ALLAHABAD SERIES
filing of an appeal under Section 20 and
this fast-track procedure cannot be allowed
to be derailed either by taking recourse to
proceedings under Articles 226 and 227 of
the Constitution or by filing a civil suit,
which is expressly barred. Even though a
provision under an Act cannot expressly
oust the jurisdiction of the court under
Articles 226 and 227 of the Constitution,
nevertheless, when there is an alternative
remedy
available,
judicial
prudence
demands that the Court refrains from
exercising its jurisdiction under the said
constitutional provisions. This was a case
where the High Court should not have
entertained the petition under Article 227
of the Constitution and should have
directed the respondent to take recourse to
the appeal mechanism provided by the
Act."

21. "In Satyawati Tandon (supra),
the High Court had restrained further
proceedings under Section 13 (4) of the
Act. Upon a detailed consideration of the
statutory scheme under the SARFAESI Act
the availability of remedy to the aggrieved
under Section 17 before the Tribunal and
the appellate remedy under Section 18
before the Appellate Tribunal, the object
and purpose of the legislation, it was
observed that a writ petition ought 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 legislation's 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 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
the
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."

22. " In Union Bank of India and
another vs. Panchanan Subudhi, 2010
(15) SCC 552, further proceedings under
Section 13 (4) were stayed in the writ
jurisdiction
subject
to
deposit
of
Rs.10,00,000/-
leading
this
Court
to
observe as follows :

"7. In our view, the approach
adopted by the High Court was clearly
erroneous. When the respondent failed to
11 All. M/s Mata Kaila Devi Gangsar Stone Pvt. Ltd., District Agra Vs. State of U.P. & Ors.
359
abide by the terms of one-time settlement,
there was no justification for the High
Court to entertain the writ petition and that
too by ignoring the fact that a statutory
alternative remedy was available to the
respondent under Section 17 of the Act."

23. "The same view was reiterated in
Kanaiyalal Lalchand Sachdev and others
vs. State of Maharashtra and others,
2011 (2) SCC 782 observing:

"23. In our opinion, therefore, the
High Court rightly dismissed the petition
on the ground that an efficacious remedy
was available to the appellants under
Section 17 of the Act. It is well settled that
ordinarily relief under Articles 226/227 of
the Constitution of India is not available if
an
efficacious
alternative
remedy
is
available to any aggrieved person. (See
Sadhana Lodh v. National Insurance Co.
Ltd.;

Surya Dev Rai v. Ram Chander
Rai
and
SBI
v.
Allied
Chemical
Laboratories.)"

24. "In Ikbal (supra), it was
observed that the action of the Bank under
Section 13(4) of the 'SARFAESI Act'
available to challenge by the aggrieved
under Section 17 was an efficacious
remedy and the institution directly under
Article 226 was not sustainable, relying
upon Satyawati Tandon (Supra), observing
:

"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 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."

"15. 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 Bank."

25. Thus from the above facts and
circumstances of the case, the petitioner has
failed to make any representation in
response to the notice dated 14.2.2019
within 60 days, which has nothing to do
with the lock down due to pandemic of
Covid-19. The loan was granted in 2017
the petitioner failed to adhere to the terms
and conditions to repay the loan as
stipulated. This compelled the respondent
no. 3 to issue demand notice after declaring
the account as NPA on 31.1.2019 much
360 INDIAN LAW REPORTS ALLAHABAD SERIES
prior to the lock down. Thereafter despite
repeated demand the outstanding amount
was not paid. The petitioner could not even
redeem the secured assets according to subsection 8 of Section 13 of the Act. Thus the
entire proceeding initiated against loan
account declared as NPA prior to the
Covid-19 lock down. After issuance of
demand notice dated 4.2.2019 the petitioner
has started depositing certain instalment
from 15.2.2019 uptill September 2019,
which in clear violation of the statutory
provisions of the SARFAESI Act/Rules.
The petitioner cannot be allowed to sit on
the fence and wait and thereafter coming to
the writ court for the redressal of his
grievance. Parity with any judgment cannot
also be given for all times to come as the
circumstance of the present case is quiet
distinct. The writ petition is manifestly not
instituted to show any bona fide from any
remote corner but only to some how stall
further action of the respondent no.3
showing a bald desire to repay loan in
instalmentas as may be directed by this
court.

26. The Hon'ble Apex Court in
Satyawati Tandon case (supra) while
discussing various judgements dealing with
the same issue has observed thus;

"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. It must be remembered
that stay of an action initiated by the State
and/or its agencies/instrumentalities for
recovery of taxes, cess, fees, etc. seriously
impedes execution of projects of public
importance
and
disables
them
from
discharging their constitutional and legal
obligations towards the citizens. In cases
relating to recovery of the dues of banks,
financial institutions and secured creditors,
stay granted by the High Court would have
serious adverse impact on the financial
health of such bodies/institutions, which
ultimately
prove
detrimental
to
the
economy of the nation. Therefore, the High
Court should be extremely careful and
circumspect in exercising its discretion to
grant stay in such matters. Of course, if the
petitioner is able to show that its case falls
within any of the exceptions carved out in
Baburam Prakash Chandra Maheshwari v.
Antarim Zila Parishad AIR 1969 SC 556,
Whirlpool Corporation v. Registrar of
Trade Marks, Mumbai (1998) 8 SCC 1 and
Harbanslal Sahnia and another v. Indian Oil
Corporation Ltd. and others (2003) 2 SCC
107 and some other judgments, then the
High Court may, after considering all the
relevant parameters and public interest,
pass appropriate interim order.

"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."

27. In ITC Limited (Supra) also the
Hon'ble Apex Court was of the view that
the
debtor
is
not
entitled
for
the
11 All. Mahandra Kumar & Anr. Vs. Union of India & Ors.
361
discretionary equitable relief under Article
226 and 136 of the Constitution of India. In
the aforesaid case the Hon'ble Apex Court
was of the view that non compliance of sub
Section 3A of Section 13 cannot be of any
avail to the debtor whose conduct has been
merely to seek time and not repay the loan
as promised on several occasions, while
relying in the case of State of Maharashtra
Vs. Digambar, 1995 (4) SCC 683 wherein
the Hon'ble Court observed as follows;

"19. Power of the High Court to
be exercised under Article 226 of the
Constitution, if is discretionary, its exercise
must be judicious and reasonable, admits
of no controversy. It is for that reason, a
person's entitlement for relief from a High
Court under Article 226 of the Constitution,
be it against the State or anybody else, even
if is founded on the allegation of
infringement of his legal right, has to
necessarily depend upon unblameworthy
conduct of the person seeking relief, and
the court refused to grant the discretionary
relief to such person in exercise of such
power, when he approaches it with unclean
hands or blameworthy conduct."

28. Thus from the above prolix and
verbose discussion, in our considered
opinion the Possession Notice dated
13.3.2020 issued under Sections 4 and 12
of Section 13 read with Rule 8 (1) and the
demand notice dated 4.2.2019 issued under
Section 13 (2) of the SARFAESI Act do
not suffer from any error or irregularity,
which may require any interference, hence
we are not inclined to exercise our
extraordinary jurisdiction.

29. The writ petition is accordingly
dismissed.

30. No order as to costs.
----------
(2020)11ILR A361
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 25.08.2020

BEFORE
THE HON'BLE NAHEED ARA MOONIS, J.
THE HON'BLE DEEPAK VERMA, J.

WRIT - C No. 12138 of 2020

Mahandra Kumar & Anr. ...Petitioners
Versus
Union of India & Ors. ...Respondents

Counsel for the Petitioners:
Sri Ramesh Chandra, Sri Neeraj Kumar

Counsel for the Respondents:
Sri C.L. Chaudhary, C.S.C.

A.