(Petition filed under Article 226 of the Constitution of India praying for a Writ of Mandamus forbearing the third respondent from proceeding against the petitioner under the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, without passing any order on the objection of the petitioner sent through her advocate dated 08.03.2010.)
B. Rajendran, J.
The petitioner has filed this writ petition praying for a Writ of Mandamus to forbear the third respondent from proceeding against the petitioner under the provisions of SARFAESI Act, 2002 without passing any order on the objection of the petitioner sent her through advocate on 08.03.2010.
2. The petitioner would contend that she is doing business in the name and style of Kavitha Agencies. The petitioner sought cash credit (stock) facilities upto Rs.50 lakhs from the second respondent/bank. The bank also sanctioned the said facility on 30.03.2009 for which the husband of the petitioner Selvarajan deposited the title deeds of the immovable properties belonged to him as Collateral security for Rs.42,00,000/-. Thereafter, in January 2010, the petitioner received a notice from the bank stating that there is a balance of Rs.65,37,484.74p i.e., the petitioner had over drawn the account to the tune of Rs.15,37,484.74 p. The petitioner would mainly contend that the Manager of the bank by name Nagarajan had taken Rs.13,27,000/- which is beyond the sanctioned limit and there is no possibility at all for her to avail the above said amount as no sanction was made by the higher authorities to avail the overdraft more than the sanctioned limit. The petitioner would further contend that she never issued any cheque to her husband Selvarajan and she came to know that the two blank cheques were sent to the second respondent bank on 15.10.2009, through the staff of the petitioner to withdraw Rs.20,000/- each if the fund is available and it appears that the Branch Manager by name Nagarajan had forged the above cheques, filled the amount and took the cash for himself after handing over Rs.40,000/- to her staff for which the petitioner has also give a complaint to the local police and also sent a notice dated 25.01.2010 to the bank. Subsequently, a notice under Section 13 (2) of the SARFAESI Act was issued calling upon the petitioner to pay Rs.66,14,964.74p for which an objection was sent by her on 08.03.2010 stating that as the amount of Rs.13,27,000/- was defrauded by the Branch Manager of the bank, the question of over due does not arise. The only contention made by the petitioner was that even before the notice issued under Section 13 (2) of the Act, she made a complaint to the respondents on 25.01.2010, and further she also made an objection on 08.03.2010 but the respondents 1 and 2 did not pass any order or rejected the objection, therefore, she would contend that the bank should not proceed with the SARFAESI Act without disposing of her objection dated 08.03.2010.
3. The respondents/bank filed a detailed counter stating that by letter dated 09.10.2009, the petitioner requested the bank to grant temporary over draft to the extent of 20% above the existing sanctioned limit of Rs.50 lakhs under the cash credit facility and thereafter, she issued bearer cheque bearing Nos. 162036 and 162037 dated 15.10.2009 for Rs.9,50,000/- and Rs.3,77,000/- respectively in favour of her husband and the same was honoured only on business gesture at the request of the petitioner and therefore, the balance exceeded the overdraft facility. In regard to the allegations against the bank manager, a detailed notice was sent on 15.03.2010 denying the same and it was drawn only by her husband. As the petitioner has not complied with the payment schedule, the notice under Section 13 (2) of SARFAESI Act was issued to the petitioner for which the petitioner did not sent any reply or objection, however another legal notice dated 08.03.2010 was received from the counsel for the petitioner which was verbatim as the earlier notice dated 25.01.2010. Therefore, for the notice dated 08.03.2010, a reply has been sent through the bank counsel on 15.03.2010. In fact, the reply dated 15.03.2010 was sent only in respect of the objections given by the petitioner for the notice issued under Section 13 (2) of the Act. As the contents in the notice dated 15.03.2010 is verbatim the subject matter of the objection made by the petitioner on 08.03.2010 to the notice under Section 13 (2), by mistake, the date is mentioned in the reply notice, whereas, the notice dated 15.03.2010 was sent by the bank for the objections dated 08.03.2010 made by the petitioner. The mere omission to include the date ?08.03.2010? in the reply sent by the bank for the objection made by the petitioner on 08.03.2010 is now projected as a serious omission by the petitioner. What was required under the Act is the petitioner should be informed about the rejection of the objections, which, in this case, has been duly done by sending a reply dated 15.03.2010. Further, the prayer in the miscellaneous petition for direction to deliver the title deeds is beyond the scope of the writ petition. Even otherwise, apart from the loan taken by the petitioner, her husband Selvarajan, who has mortgaged his properties as security for the credit facility availed by the petitioner, has also availed an All purpose mortgage loan of Rs.14,00,000/- and personally guaranteed the due repayment of another All purpose Mortgage loan of Rs.14,50,000/- and a Clean Demand loan of Rs.40,000/- availed by the petitioner; a medium term loan of Rs.10,14,000/- and cash credit facility limit of Rs.33,00,000/- availed by the petitioner?s son Dr. S. Prasannaraj (Proprietor of Alamu Agencies) and in all the loan transactions, willful default in payment was made which resulted in treating the assets of the petitioner?s husband as ?Non-performing assets?. Above all, the husband of the petitioner is the guarantor/ borrower of the property in question and the bank has got a general lien over the properties in question and it cannot be released as prayed for by the petitioner. Apart from this, M/s. IBP Company Limited, claiming to be the lessee of one of those mortgage properties, has instituted a suit in O.S. No. 106 of 2010 on the file of the Sub-Court, Attur, impeaching the rights of the respondents/bank to enforce that mortgage security. In any event, the writ petition is not maintainable. Even as per the decision of the Honourable Supreme Court reported in (United Bank of India vs. Satyawati Tondon and others) III (2010) BC 495 (SC), this Court cannot interfere with the proceedings that would be taken by the bank, especially when the impugned notice would only indicate that the bank is yet to initiate any proceedings against the petitioner. Even before that, the petitioner has approached this Court and therefore, the writ petition is not maintainable. If at all, the aggrieved person has to avail the statutory remedy provided before the Debts Recovery Tribunal and prayed for dismissal of the writ petition.
4. The petitioner has filed a reply affidavit contending that the signatures in the cheque bearing Nos. 162036 and 162037 dated 15.10.2009 for Rs.9,50,000/- and Rs.3,77,000/- respectively did not belonged to her husband and the cheques were only issued in blank. She would further contend that blank signatures received from her has been utilized to show as if a letter has been written by her. She further contend that she is ready to deposit Rs.52,87,964/- provided the bank release the property and she disputes the balance amount. According to the petitioner, the properties have been offered as security for other loans and therefore, the bank cannot deny the rights of the petitioner in respect of the subject matter of loan transaction. The Bank has deliberately not sent any reply to the objections made by her on 08.03.2010 and what was received by the bank is a reply for the notice sent by her on 25.01.2010.
5. We have heard both sides. The point for consideration in this writ petition is whether the writ petition is maintainable and whether the petitioner is entitled for issuance of a Mandamus to forbear the respondents bank from invoking the provisions of SARFAESI Act.
6. It is very clear from the averments that the petitioner?s husband is the owner of the property and he also executed a registered agreement with the bank to deposit the title deeds for the loan to be advanced for the business needs of his wife. It is admitted that the amount claimed by the bank is correct excepting for the amount for which two cheques were issued. Even in the affidavit, the petitioner would only contend that she is prepared to deposit the amount provided the bank release the title deeds. The bank has categorically stated that the subject matter of this writ petition is not the only loan taken by the petitioner. The petitioner, her husband and her son put together have taken various loans the details of which are mentioned in the counter affidavit of the bank as follows:-
?Even otherwise, apart from the loan taken by the petitioner, her husband Selvarajan, who has mortgaged his properties as security for the credit facility availed by the petitioner, has also availed an All purpose mortgage loan of Rs.14,00,000/- and personally guaranteed the due repayment of another All purpose Mortgage loan of Rs.14,50,000/- and a Clean Demand loan of Rs.40,000/- availed by the petitioner; a medium term loan of Rs.10,14,000/- and cash credit facility limit of Rs.33,00,000/- availed by the petitioner?s son Dr. S. Prasannaraj (Proprietor of Alamu Agencies) and in all the loan transactions, willful default in payment was made which resulted in treating the assets of the petitioner?s husband as ?Non-performing assets?.
7. In all the above loan transaction, either the petitioner borrowed loan and her husband stood as guarantor or her husband borrowed the loan for which she stood as guarantor. Under those circumstances, the bank would contend that under Sections 171 and 172 of the Indian Contract Act, the Bank has got a general lien over the secured assets. In this context, the learned counsel for the respondent bank relied on an unreported judgment of the Division Bench of this Court reported in CRP (NPD) No. 3019 of 2007 dated 10.01.2008. In the said decision, the Division Bench of this Court relied on the decision of the Honourable Supreme Court in Syndicate Bank vs. Vijay Kumar and others reported in AIR 1992 SC 1066 and held in para Nos. 5 and 6 as follows:-
?5. The question of Bankers lien/general lien fell for consideration before the Supreme Court in Syndicate Bank vs. Vijay Kumar and others reported in AIR 1992 SC 1066. The provision of Section 171 of the Indian Contract Act, 1872 was also noticed in the said case. Taking into consideration Halsbury?s laws of England and provisions of the Contract Act in respect of bankers lien the following observation was made by the Supreme Court:-?.
6. In view of the finding of the supreme Court, we are of the view that the bank has a general lien over the securities and other instruments deposited by the respondents 1 to 3 in the ordinary course of banking and such general lien being valuable right of the banker, as per Supreme Court decision, it cannot be ignored in absence of an agreement to the contrary.?
8. As held by the Division Bench of this Court mentioned supra, the banker has got a general lien as their valuable right over the secured assets of the borrower or the guarantor and those secured assets will not be discharged unless and until all the debt are recovered. In this case, the bank has rightly exercised their right of general lien and therefore the claim of the petitioner to release the title deeds is not tenable besides it is beyond the scope of the writ petition itself.
9. As regards the direction sought for to desist the bank from invoking the SARFAESI Act, the petitioner has not made out any case. The only ground stated is two cheques, which were issued by her husband, was not signed by her, but the husband is not made a party to this writ petition or he has filed any affidavit to that effect. In fact, the letter written by the petitioner as well as the cheque copy has been produced by the bank in the typed set of papers. Be it as it may, the question is whether the petitioner can forbear the bank from invoking the SARFAESI Act. The SARFAESI Act provides that any person, who is aggrieved by an action taken by the banks or other financial institution, has got a right of appeal before the statutory forum namely the Debt Recovery Tribunal. A further appeal against any order that would be passed by the Tribunal will lie to the Debts Recovery Appellate Tribunal under Section 18. The borrower is entitled to take any action only after issuance of notice under Section 13 (4) of the SARFAESI Act. According to the petitioner, after issuance of notice under Section 13 (2) of the SARFAESI Act by the Bank, she submitted an objection on 08.03.2010 for which there is no reply received or her objections were overruled by the Bank till date. The bank would contend that earlier, the petitioner sent a notice on 25.01.2010 and a verbatim objection dated 08.03.2010 was sent by the petitioner. After receipt of the objection, the bank has issued a lawyer notice on 15.03.2010. In the lawyer notice, it is stated that ?reply to your notice dated (originally blank later it was filled with ink? and a reference to the earlier notice dated 25.01.2010 was given but not the date of objection submitted by the petitioner namely 08.03.2010. Now it is contended by the petitioner that this reply sent by the bank on 15.03.2010 is not the reply to her objection dated 08.03.2010. When we read both the notice sent by the petitioner on 25.01.2010, objections sent by her on 08.03.2010 and the reply sent by the bank on 15.03.2010, the notice dated 25.01.2010 and objection dated 08.03.2010 of the petitioner are verbatim. Therefore, the explanation offered by the bank that by mistake, in the reply to the objection sent by the petitioner, the date was wrongly mentioned, which is plausible. Even otherwise, as per the Decision of the Honourable Supreme Court in Mardia Chemicals vs. Union of India (2004) 3 SCC 311, the Apex Court has stated that ?the reasons for not accepting the objections of borrower must be communicated to the borrower and the reasons so communicated shall be only for the purpose of the information/knowledge of the borrower without giving rise to any right to approach the Debts Recovery Tribunal under Section 17 of the Act, at this stage. The Hon?ble Supreme Court explained that communication of reasons not to accept the objections of the borrower is for the purpose of knowledge which would be a step towards his right to know as to why his objections have not been accepted by the secured creditor, who intends to resort to harsh steps of taking over the management/business. Thus, the basic object of Section 13 (3A) is to ensure the element of transparency and fair play in the implementation of the provisions of SARFAESI Act.? In this case, immediately after receipt of the objection dated 08.03.2010 of the petitioner, a reply was sent by the bank on 15.03.2010 duly rejecting the objection of the petitioner. Therefore, merely because the date is not properly mentioned in the reply dated 15.03.2010 of the bank, it cannot be construed as a violation of the provisions of Section 13 (3A).
10. Above all, as per the latest decision of the Honourable Supreme Court in (United Bank of India vs. Satyawati Tondon and others) III (2010) BC 495 (SC) a writ petition is not maintainable when the aggrieved person has a statutory remedy before the Debt Recovery Tribunal. In para Nos. 17 and 18, it was held thus:-
17. ...Both, the Tribunal and the Appellate Tribunal are empowered to pass interim orders under Sections 17 and 18 and are required to decide the matters within a fixed time schedule. It is thus evident that the remedies available to an aggrieved person under the SARFAESI Act are both expeditious and effective. 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 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.
18. 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. 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
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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. (underlining added). 11. In this case, the bank has not issued the notice under Section 13 (4) of the SARFAESI Act as on date and the petitioner could not make any challenge to the notice issued by the Bank under Section 13 (2) of the SARFAESI Act. Moreover, the petitioner has not exhausted the remedy before the Debts Recovery Tribunal and filed this writ petition by invoking Article 226 of The Constitution of India, which is not maintainable. Under those circumstances, the writ petition is devoid of merits, liable to be dismissed and accordingly it is dismissed. No costs. Connected miscellaneous petitions are closed.