Calcutta High Court (Appellete Side)
Ambhi Impex Private Limited & Ors vs Punjab National Bank & Ors on 19 May, 2025
Author: Shampa Sarkar
Bench: Shampa Sarkar
IN THE HIGH COURT AT CALCUTTA
CIVIL REVISIONAL JURISDICTION
APPELLATE SIDE
Present:
Hon'ble Justice Shampa Sarkar
C.O. 553 of 2023
Ambhi Impex Private Limited & Ors.
Versus
Punjab National Bank & Ors.
For the petitioners : Mr. Jaydip Kar, Sr. Advocate
Mr. Debasish Karmakar, Adv.
Mr. Parikshit Lakhotia, Adv.
Mr. Satyam Ojha, Adv.
For PNB : Mr. Samrat Sen, Sr. Advocate
Mr. Abhishek Banerjee, Adv.
Ms. Parna Roychudhury, Adv.
Ms. Payel Ghosh, Adv.
For the respondent No.3 : Mr. Bikash Ranjan Bhattacharya
Mr. Uday Sankar Chatterjee, Adv.
Mr. Suman Sankar Chatterjee, Adv.
Hearing concluded on : 20.03.2025 Judgment on : 19.05.2025 Shampa Sarkar, J.:-
1. The revisional application arises out of a judgment and order dated
January 10, 2023, passed by the learned presiding officer (in charge), Debts
Recovery Tribunal-II, Kolkata in S.A. No. 217 of 2021 and I.A.1605 of 2022.
SA 217 of 2021, was an application under Section 17 of the Securitisation
and Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002.
2. By the order impugned, the learned tribunal dismissed S.A. 217 of
2021 along with I.A. No.1605 of 2022 on the ground that those applications
2
were devoid of any merit. Other pending I.As, if any, were also disposed of
accordingly. The learned tribunal came to the conclusion that advancement
of credit facility to the petitioners by the secured creditor was an admitted
fact. The loan had to be repaid in accordance with the terms of the contract.
The bank was not only entitled to, but also duty bound to recover the
amount, by taking recourse to the provisions of law. The sale was upheld. It
was recorded that the sale notice was issued on November 7, 2022. The sale
was conducted on November 28, 2022, through e-auction and the secured
asset had been sold to one Mr. Ashok Kumar Ghosh, the opposite Party No.
3 in this proceeding, for an amount of Rs.5,53,22,000/- against the reserved
price of Rs.3,03,97,000/-.
3. No irregularity had been detected in the entire procedure adopted by
the secured creditor. It was held that upon compliance of the provisions of
the Securitization and Reconstruction of Financial Assets and Enforcement
of Security Interest Act (hereinafter referred to as ‘SARFAESI Act‘) and the
Rules framed thereunder, the sale had been concluded.
4. The learned tribunal further held that the demand notice dated
January 18, 2021, for an amount of Rs.7,97,88,824.96/- was issued after
calculating the interest upto November 31, 2022.
5. Mr. Jaydip Kar, the learned Senior Advocate, appearing on behalf of
the petitioners submitted that the order impugned was without jurisdiction
as the same was passed in violation of the principles of natural justice. The
application bearing No. I.A. 1605 of 2022 was fixed for hearing on December
15, 2022, upon allowing a put up petition dated December 14, 2022.
Accordingly, I.A No. 1605 of 2022 was listed on December 15, 2022. By the
said application, the sale notice dated November 7, 2022, had been
3
challenged by the petitioner on various grounds. The sale was scheduled to
be held on November 28, 2022. The application was heard upon exchange of
affidavits.
6. According to Mr. Kar, the order would reflect that the learned tribunal
had heard I.A. 1605 of 2022 and directed the parties to file their written
notes of arguments. Arguments were advanced on the validity of the sale
notice. While impressing upon the court as to why the sale notice was
unsustainable in law, submissions were made on the merits of S.A. 217 of
2022. The notes of arguments and the submissions had substantial
reference to the S.A, in order to point out the illegalities on the part of the
bank in proceeding against the petitioners under the SARFAESI Act. On the
relevant date, the application challenging the sale notice was actually fixed
for hearing. Upon conclusion of the arguments of the respective parties, the
tribunal directed filing of written notes. The order sheets would clearly
reflect that the S.A. was not fixed for hearing on the said date. However,
ignoring the submissions which were made on the sale notice and the
validity thereof, the learned tribunal, after the conclusion of the hearing of
the I.A., by order dated January 10 2023, dismissed S.A. 217 of 2021 as
also I.A. 1605 of 2022. Other connected applications were accordingly
disposed of.
7. According to the petitioners, the order was passed in an unfair
manner, without putting the petitioners on notice. The learned tribunal
disposed of S.A. 217 of 2021, upon considering the merits thereof, without
giving an opportunity to the petitioners to advance arguments on the S.A.
Only because the written notes of arguments had discussions on the merits
and parties had submitted on the merits of S.A. 217 of 2021 as well, learned
4
tribunal could not have proceeded to decide S.A. 217 of 2021. The records
would reveal that the learned tribunal had fixed only the application No. I.A.
1605 of 2022 for hearing and not the SA. The merits of S.A. 217 of 2021,
were not even argued by the petitioners to their satisfaction. Passing
reference to the merits of the proceedings initiated by the bank under the
SARFAESI Act, was made only to substantiate that the sale notice was
defective. Emphasis was laid on the fact that the entire process by which the
bank sought to recover the loan, was flawed. The illegalities in the actions of
the bank, which led to the issuance of the sale notice, were pointed out.
Support was drawn from the objection taken in the SA, in order to establish
that the sale notice was violative of the statutory provisions. The
submissions of the petitioners were that the sale notice was an outcome of a
totally illegal SARFAESI action. Thus, arguments were advanced on the
merits of S.A. 217 of 2021, to substantiate before the learned tribunal and
to convince the learned tribunal why the sale notice could not have been
issued under the circumstances narrated in the S.A. Attempt was made to
establish before the learned tribunal that, the sale notice was illegal and the
sale could not go through in view of such illegalities in the process of
recovery of the loan. That, such actions were in violation of the undertakings
given by the bank in an earlier S.A, to the effect that the Bank would not
proceed against the petitioners. The submissions were made on the merits of
the case, with the understanding that those submissions would be
necessary to drive home the fact that the sale notice was issued without any
authority of law, illegally and in violation of the undertakings given by the
bank. The learned tribunal did not have the occasion to decide the merits of
the S.A. The tribunal ought to have only dealt with the submissions made
5
on the S.A, to adjudicate the validity and legality of the sale notice and not
beyond.
8. Mr. Kar submitted that the order should be set aside and the S.A.
should be remanded for further hearing on its own merits.
9. Mr. Kar specially placed reliance on ground No.XXIX at page 22 of the
revisional application, in support of his contentions. Learned Senior
Advocate urged that the revisional application was maintainable before this
court, in view of the perversity, procedural irregularity and wrongful
assumption of jurisdiction. The provision of a statutory appeal would not
operate as a bar in the facts of the case. The order was amenable to the
jurisdiction of this court under Article 227 of the Constitution of India.
Violation of the principles of natural justice vitiated the order. Mr. Kar called
upon the court to allow the said application.
10. Reliance was placed on the following decisions:-
1. Atin Arora vs Oriental Bank of Commerce reported in 2020
SCC Online Cal 2656,
2. Ajay Singh and Another vs State of Chattisgarh and Another
reported in (2017) 3 SCC 330,
3. Achutananda Baidya vs Prafullya Kumar Gayen and Others
reported in (1997) 5 SCC 76,
4. Varimadugu Obi Reddy vs B. Sreenivasulu and Ors. reported
in (2023) 2 SCC 168,
5. South Indian Bank Ltd. and Ors. vs Naveen Mathew Philip
and Anr. Reported in 2023 SCC Online SC 435.
11. Referring to the above decisions, Mr. Kar submitted that the law did
not impose an absolute bar on the power vested upon the High Court under
6
Article 227 of the Constitution of India, if the order under challenge
occasioned miscarriage of justice. The litigant should be protected. The
supervisory jurisdiction of the court should be exercised in order to advance
the cause of justice and uproot injustice. Disposing of the main S.A, when
the interlocutory application had been fixed for hearing, was a jurisdictional
error.
12. Mr. Kar urged that there were no limits, fetters or restrictions on the
power of superintendence of this court. The court was the custodian of
justice and was armed with a weapon that could be wielded to ensure that
justice was meted out fairly and properly by courts and tribunals, under its
jurisdiction. In this case, the order was not dictated in open court. The
application was heard virtually and the order was reserved. The order was
uploaded on January 10, 2023 and the petitioners were taken by surprise,
when they found that the S.A. had been disposed of on merits, although, the
court had only heard I.A. 1605 of 2021.
13. According to Mr. Kar, the order impugned did not have any legal
effect, inasmuch as, the order was neither declared in open court nor signed
on the said date. It was urged that courts and tribunals should conduct
proceedings with dignity, objectivity, rationality, and finally determine the
issues involved in accordance with law. A reasoned verdict should be given,
upon adherence to the essential principle of audi alteram partem. A fair
hearing should lead to pronouncement of a judgment. In the instant case,
the concept of fair hearing was totally missing, as the learned tribunal
disposed of the main S.A without even fixing a date for hearing of the same
and without allowing the parties to advance proper arguments. The
procedure followed by the learned tribunal was contrary to law and
7
antithetic to the very concept of a fair hearing. Those were adequate grounds
for this court to exercise its power of judicial review and set aside the order,
by remanding the hearing of the main application on merits. The duty of the
High Court was to ensure that the tribunals must act within the limits of its
jurisdiction and in accordance with law.
14. According to Mr. Kar, although rejection of the I.A. may be appellable,
but the entire order being a composite disposal of the I.A. and the SA, would
be amenable to the jurisdiction of this court for the reasons mentioned
herein above.
15. Mr. Samrat Sen, learned Senior Advocate, appeared on behalf of the
bank and submitted that the jurisdiction of the High Court under Article
227 of the Constitution of India, should not be exercised in this case. He
submitted that the proceedings were governed by the SARFAESI Act. The
SARFAESI Act was a comprehensive legislation and the sole repository of all
rights, duties and powers which could be exercised by the parties, in respect
of proceedings under the said Act. The order impugned was passed by the
tribunal in a proceeding under Section 17 of the SARFAESI Act and the
same was appealable under Section 18 of the said Act. The provisions of the
SARFAESI Act would have overriding effect. The jurisdiction of a civil court
was barred under Section 34 of the said Act. Although the constitutional
powers of the High Court under Articles 226 and 227 did not stand
abrogated, the constitutional courts always exercised self-restraint and
refrained from entertaining such applications, in view of the efficacious,
alternative and effective remedy under the SARFAESI Act.
16. According to Mr. Sen, the petitioners failed to establish how the
alternative statutory remedy was not efficacious. The petitioners had invited
8
the tribunal to take into consideration the issues and grounds raised by
them in the S.A. Having done so, the tribunal proceeded to dispose of the
entire proceeding. When the order had gone against the petitioners, the
petitioners challenged the order on the ground of perversity.
17. There was no infirmity in the order impugned. The petitioners
themselves, had invited the tribunal to consider the grounds and issues
raised in the S.A. From the first paragraph of the order dated January 10,
2023, it would appear that the tribunal had recorded that the counsel for
the petitioners had referred and argued on the objections taken in the S.A as
well. The order recorded that upon hearing the parties, the tribunal
proceeded to adjudicate the matter. The tribunal proceeded to decide all the
issues raised by the petitioners, considered, evaluated and adjudicated the
same in great detail. Nothing further remained to be decided in the S.A. If
the petitioners were aggrieved by the findings, their remedy would be to file
an appeal before the appellate tribunal.
18. Mr. Sen relied on the following decisions:-
(i) State Bank of Patiala and Others vs S.K.Sharma reported in
(1996) 3 SCC 364,
(ii) State Bank of India vs Jah Developers Private Limited and
Ors. reported in (2019) 6 SCC 787,
(iii) Commissioner of Income Tax and Ors. vs Chhabil Dass
Agarwal reported in (2014) 1 SCC 603,
reported in (2024) 6 SCC 579,
(v) Phoenix Arc Private Limited vs Vishwa Bharati Vidya Mandir
and Ors. reported in (2022) 5 SCC 345,
9
(vi) United Bank of India vs Satyawati Tondon and Ors. reported
in (2010) 8 SCC 110,
(vii) Punjab National Bank vs O.C. Krishnan and Ors. reported in
(2001) 6 SCC 569,
(viii) State of Maharashtra and Ors. vs Greatship (India) Limited
reported in 2022 SCC Online SC 1262,
(ix) Divisional Manager, Plantation Division, Andaman and
Nicobar Islands vs Minu Barrick and Ors. reported in (2005) 2
SCC 237
19. It was further submitted that the petitioners could not display the
prejudice they had suffered. Mere allegation that the principle of natural
justice had been violated, was not adequate. It was imperative for the
petitioners to show sufferance and prejudice. Mr. Sen prayed for dismissal of
the SA.
20. Mr. Bikash Ranjan Bhattacharya, learned Senior Advocate for the
auction purchaser opposite party No. 3, also submitted that the civil
revisional application was not maintainable on the ground that there was an
efficacious remedy under the law. The challenge to the impugned order was
entirely on the merits of the S.A. Thus, in effect, the petitioners were inviting
this court to decide the merits of the order passed by the tribunal, in a
circuitous manner, by raising a plea that the SA was disposed of without the
tribunal fixing the same for hearing. Mr. Bhattacharya submitted that only
to avoid the pre-deposit, the application had been filed before this court.
Due to the pendency of the application and the interim order passed, the
auction purchaser who had invested a lot of money, had been suffering. The
Hon’ble Apex Court, time and again deprecated such practice of the High
10
Courts, in entertaining applications challenging the orders passed under the
SARFAESI Act, by ignoring the alternative remedy available to the aggrieved
party. The powers guaranteed by the Constitution, should be exercised with
circumspection and restraint. This was not an extraordinary case, which
required the court to intervene and set aside the order. Commercial matters,
involving the lender and the borrower, should be decided as per the
mechanism provided by the legislature under the SARFAESI Act.
21. Considered the rival contentions of the respective parties.
Records reveal that the learned tribunal had fixed December 15, 2022, for
hearing of I.A. 1605 of 2022. The order dated December 15, 2022, indicates
that the case was listed before the tribunal for hearing of I.A.1605 of 2022.
In the said IA, the sale notice dated November 7, 2022, had been challenged
on various grounds. In the order impugned, the tribunal recorded that the
sale had already taken place. The bank had filed an affidavit-in-opposition
to the said application and the petitioners filed a reply. Learned counsel for
the parties were heard. The court directed the parties to file their written
notes of arguments to I.A.1605 of 2022, within December 31, 2022. The
process of sale was directed to continue, but the sale was made subject to
the outcome of I.A.1605 of 2022.
22. It was also recorded that the matter would be listed on January 10,
2023, for passing order and the order would be uploaded in the tribunal’s
website. The order dated January 10, 2023, recorded that counsel for the
petitioners had advanced arguments on all points, including all objections
raised in the S.A. Written objections to the I.A as well as the S.A had been
filed by the bank.
11
23. Mr. Nimish Mishra, Ankit Chatterjee and Mr. Gaurav Singh and Mr.
Debasis Chakraborty along with Ms. Anindita Das, entered appearance for
the respective parties. They were heard by the tribunal and written notes
had been filed. The learned tribunal narrated the facts in brief and decided
the matter under following heads:-
(i) Estoppel,
(ii) Barred by Law of limitation,
(iii) Principle of promissory estoppel and legitimate expectancy,
(iv) Non-performing asset,
(v) Compliance of Section 13(3A) of SARFAESI Act,
(vi) 13(2) Notice of SARFAESI Act,
(vii) Encumbrances,
(viii) Low Valuation of the property,
(ix) Opportunity to redeem the property and
(x) One time settlement.
24. Each and every issue raised by the petitioners in the S.A. as well as
the I.A, were taken up one by one, discussed and conclusions were arrived
at. The petitioners had submitted that, prior to S.A. 217 of 2021, S.A. 91 of
2015 had been filed. The bank appeared and had undertaken not to take
any steps under the SARFAESI Act. Accordingly, S.A. 91 of 2015 was
disposed of. The petitioners urged before the tribunal that, the bank had
undertaken to take steps under the Recovery of Debts and Bankruptcy Act,
1993, but proceeded under the SARFAESI Act. The SARFAESI proceeding
was hit by the principle of estoppel. The learned tribunal considered the
submissions of the parties and held that the principle of estoppel would not
apply as the bank had the right to proceed under the SARFAESI Act, even
during the pendency of an O.A. before the Debts Recovery Tribunal. The
tribunal found that the bank had undertaken at the time of disposal of S.A.
91 of 2015, that it would not give effect to the order passed by the District
Magistrate under Section 14 of the SARFAESI Act and nothing beyond.
12
25. The next issue was limitation, which was again decided by the learned
tribunal on its own merits. The decision cited by the petitioners, viz, B.K.
Educational Services Private Limited vs Parag Gupta and Associates
decided in Civil Appeal No. 23988 of 2017 and Gaurav Hargovindbhai
Dave vs Asset Reconstruction Company (India) Ltd. And Anr. reported in
(2019) 13 SCR 224, as also the decisions cited by the bank in the cases of
Akshat Commercial Pvt. Ltd. & Anr. vs Kalpana Chakraborty & Ors.
reported in AIR 2010 Calcutta 138 and Dr. Dipankar Chakraborty vs
Allahabad Bank and Ors. decided in WP No. 16511 (W) of 2016, were
held to be inapplicable.
26. The tribunal gave its own reasons and held that the proceeding
initiated by the secured creditor under the SARFAESI Act, was not barred by
limitation.
27. The applicability of the principles of promissory estoppel and
legitimate expectation, were also decided upon taking note of the pre-
disbursal conditions, the factum of sanction of loan, quantum of money
sanctioned and the contents of the loan recall notice. It was held that the
doctrine of promissory estoppel and or estoppel would not apply against
banks or financial institutions. Banks were held to be custodians of public
money, and could not be estopped from proceeding under the relevant laws,
for recovery of the loan. It was decided that even if some of the pre-disbursal
conditions had not been fulfilled, as the non-payment of the loan was an
admitted fact, the bank could proceed under the law.
28. The next question dealt with was, declaration of the account of the
petitioners as a non-performing asset. No irregularity was detected.
Thereafter, the issue of compliance of Section 13 (3A) of the SARFAESI Act,
13
was taken up. It was held that, the said issue was not required to be
adjudicated on the ground that, the proviso to sub-Section 3A of Section 13
of the SARFAESI Act, clearly stated that communications by the secured
creditor would not confer any right on the borrower to prefer an application
either under Section 17 or 17A of the SARFAESI Act.
29. The other issues dealt with were on the validity of the notice under
Section 13(2), encumbrances, the low valuation of the property, opportunity
to redeem the property, one time settlement etc. Ultimately, the learned
tribunal came to the conclusion that, the sale notice dated November 7,
2022, was the second sale notice. The earlier sale notices and the
scheduled dates for sale had become infructuous due to inadequate number
of bidders. At that time, the petitioners did not show any intention or
willingness to liquidate the amount, by tendering all dues. As such, the plea
of the petitioners that they did not get adequate opportunity to redeem the
property, was not accepted by the learned tribunal.
30. With regard to the allegation of low valuation of the property, the
learned tribunal found that the sale was confirmed in favour of the opposite
party No.3 at a price of Rs.5,53,22,000/- against the reserve price of
Rs.3,03,97,000/-. It was held that the opposite party No.3 was the highest
bidder and the learned tribunal accepted the valuation report filed by the
bank. With regard to the one-time settlement, it was found that the default
clause in the bank’s proposal, had been invoked as the OTS stood cancelled.
The clause is quoted below :-
“3. Default Clause: OTS will automatically stand cancelled in case of
default in payment of settled dues and non compliance of other terms
of sanction and Bank will revert the dues prior to the settlement along
with further interest thereon, without further reference to the
borrower(s)/Guarantor(s).”
14
31. The learned tribunal observed that although the petitioners had
deposited 35 lakhs as per the payment plan after the OTS, initial deposit of
30 lakhs and monthly instalments of 50 lakhs starting from January 2020,
were required to be made within June 2020. It was held that the petitioners
had failed to conform to the said payment plan. The learned tribunal held
that, the bank, as the financial creditor, had proceeded in accordance with
law. Accordingly, the S.A. and the I.A were dismissed.
32. The order recorded that arguments were advanced by both parties on
both the S.A. and the I.A. The objections of the petitioners which were raised
in the S.A. were decided under separate heads. Issues were framed both on
the merits of the S.A. and the I.A. Each and every contention of the
petitioners was taken up, discussed and findings were arrived at. Thus,
upon perusal of the said order, it cannot be conclusively held that the
tribunal had only restricted the hearing to the limited issue of the validity of
the sale notice, and the petitioners were deprived of an opportunity to
address on the merits of the SA. The conduct of the petitioners reflects
otherwise.
33. In my view, a passing reference to the merits of the S.A. and the
proceedings initiated by the bank under the SARFAESI Act, would not
persuade the tribunal to frame issues on the merits of the S.A., unless those
points were elaborately urged. It also appears that judgments were cited on
the merits of the S.A. and the learned tribunal had been called upon to
consider those judgments. The tribunal had dealt with the judgments. The
question whether the findings are correct and whether the merits of the case
15
have been properly appreciated, must be decided in the statutory appeal.
The law has provided an alternative, efficacious remedy.
34. Going through the written notes of arguments filed by the petitioner,
which has been annexed to this application, this court finds that, although
it was sought to be filed in I.A. No. 1605 of 2022, the merits of the entire
case had been elaborately discussed in the said written notes. Point no.1
dealt with the principle of estoppel. Arguments of the parties on the
principle of estoppel were discussed. Point no.2 was with regard to limitation
and the judgments in support of such contentions were relied upon. The
arguments of the bank and the petitioner’s reply were put forward. Point
no.3 were the contentions of the petitioner with regard to violation of Section
13(3A) of the SARFAESI Act. The judgments relied upon were discussed. The
arguments advanced by the bank and the reply of the petitioners to the
same, were also mentioned. Similarly, issues under different heads, i.e., that
the proceeding was hit by the principles of promissory estoppel and
legitimate expectation, the loan account was wrongly classified as a non-
performing asset, etc. were discussed in the form of arguments. The
decisions relied upon with regard to the low reserve price and the valuation
of the property etc., were also urged. Encumbrances, OTS settlement etc.,
were all highlighted and elaborately discussed.
35. The concluding part of the written notes, is reproduced below :-
“in light of the above grounds, the steps and the measures taken by
the defendant bank in respect of the said property in question under
the grab of the SARFAESI Act is illegal, unlawful and bad in law. The
impugned actions taken by the defendant bank are in derogation and
contrary to the law and thus liable to be dismissed with cost.
In such a pretext, the instant IA should be allowed in the interest of
Justice and the auction sale be quashed and cancelled.”
16
36. The concluding submission of the petitioner was that the steps and
the measures taken by the bank in respect of the property in question,
under the garb of the SARFAESI Act were illegal, unlawful, bad in law. The
actions of the bank were in derogation to the law and were liable to be set
aside with cost. In such context, the petitioners prayed that the I.A. should
also be allowed in the interest of justice and the auction sale should be
quashed and cancelled.
37. The conduct of the parties, the nature of submissions made before the
learned tribunal, the contents of the written notes, persuades this court to
hold that although, the I.A. was fixed for hearing on the point of validity of
the sale notice, the hearing actually proceeded on the merits of the case and
entire matter were argued by both parties. Thereafter, the learned tribunal
allowed the parties to file their written notes and passed its orders. Thus, I
do not find any arbitrariness in the manner in which the matters were
disposed of. I do not find that the tribunal proceeded in a manner which has
caused any injustice, thereby requiring this court to interfere with the order.
38. This court is not inclined to exercise jurisdiction under Article 227 of
the Constitution of India and the points which have been raised by the
petitioners before this court, are also available under Section 18 of the
SARFAESI Act, before the learned appellate tribunal, including all
challenges to the merits of the decision arrived at. The grounds taken in the
revisional application, some of which are quoted below, are entirely on the
merits of the order impugned, as also the merits of the S.A.
“VIII FOR THAT the Learned Presiding Officer (In-Charge) of the
Tribunal below should have appreciated and erred by failing to
appreciate that S.A. No. 91 of 2015 had been disposed of by the
Learned Tribunal on a clear and specific undertaking given by the
opposite parties not to proceed against the petitioners under the
17
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 any further.
IX FOR THAT the Learned Presiding Officer (In-Charge) of the
Tribunal below ought to have appreciated and failed to exercise the
jurisdiction vested in him by law by failing to appreciate that after
giving an unequivocal undertaking, as recorded in the order passed
by the Learned Tribunal in S.A. No. 91 of 2015 on 15th June,
2017, the respondents/opposite parties were absolutely debarred
from taking any further recourse to the said Act of 2002 against
the petitioners in the guise of recovery of any unpaid secured debt.
XIV FOR THAT while passing the impugned judgment and order,
the Learned Presiding Officer (In-Charge) of the Tribunal below also
acted illegally and with material irregularities in observing that the
undertaking given by the opposite parties, as recorded in the order
passed on 15th June, 2017, was confined to the order of the
District Magistrate dated 28th May, 2015. The Learned Presiding
Officer (In-Charge) of the Tribunal below failed to exercise the
jurisdiction vested in him by law by failing to appreciate that had
the undertaking given by the opposite parties been restricted only
to the order obtained from the District Magistrate on 28th May,
2015, there would have been no occasion for the Learned Tribunal
to dispose of S.A. No. 91 of 2015 as a whole holding the same to
have become infructuous inasmuch as S.A. No.91 of 2015 was not
directed solely against the order of the District Magistrate alone,
but was also directed against the several other steps taken by the
opposite parties allegedly under the provisions of the Securitisation
and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002.
XVI FOR THAT while passing the impugned judgment and order,
the Learned Presiding Officer (In-Charge) of the Tribunal below also
failed to exercise the jurisdiction vested in him by law by failing to
appreciate that inasmuch as the property allegedly mortgaged to
the opposite party no. 1 had admittedly been in possession of the
Learned Receiver appointed in O.A. No.133 of 2016, the property
was custodia legis and there would have been no occasion for the
opposite parties to take physical possession of the immovable
properties in denial of the Court appointed Receiver’s right to
remain in possession. The Presiding Officer (In-Charge) of the
Tribunal below acted illegally and with material irregularities by
not appreciating that the opposite party no. 1 could have taken
possession of the alleged mortgaged property, if at all, only from
the mortgager and not from a Court appointed Receiver.
XXII FOR THAT the Learned Presiding Officer (In-Charge) of the
Tribunal below should have appreciated and failed to exercise the
jurisdiction vested in him by law by failing to appreciate that the
opposite parties were required to issue a notice of demand, as
contemplated under Section 13(2) of the said Act of 2002, positively
within a period of 3 years from the date of classification of the
concerned loan account as a Non Performing Asset. The Learned
Presiding Officer (In-Charge) of the Tribunal below acted illegally
and with material irregularities in not appreciating that since in
18
the present case the notice of demand had been issued after more
than 5 years from the classification, of the loan account as NPA the
purported debt allegedly owed by the petitioners to the opposite
party no. 1 had become hopelessly time barred.
XXIV FOR THAT while passing the impugned judgment and order,
the Learned Presiding Officer (In-Charge) of the Tribunal below
erroneously exercised a jurisdiction not vested in him by law by
wrongly observing that the cause of action of the opposite parties to
take recourse to the provisions laid down under the said Act of
2002 was continuous and such cause of action was alive owing to
pendency of the proceeding initiated under the Act of 1993 and
also because of disposal of the previous round of litigation. The
Learned Presiding Officer (In-Charge) of the Tribunal below acted
illegally and with material irregularities by not appreciating that
the proceeding pending under the Act of 1993 was completely a
distinct and separate proceeding altogether and had no bearing on
S.A. No. 217 of 2021, nor could have kept the cause of action alive
for the opposite parties to issue a notice of demand under the Act
of 2002 at any point of time at their leisure or pleasure.
XXX FOR THAT while passing the impugned judgment and order,
the Learned Presiding Officer (In-Charge) of the Tribunal below
ought to have appreciated and failed to exercise the jurisdiction
vested in him by law by failing to appreciate that the opposite party
no. 1 could not have withheld an amount of Rs.3 Crore out of the
loan amount sanctioned without disbursing such amount to the
petitioner no. 1 on a frivolous plea of shortfall of valuation by only
Rs.33,00,000/ – (Thirty-Three Lac). The Learned Presiding Officer
(In-Charge) of the Tribunal below also acted illegally and with
material irregularities in not appreciating that by any stretch of
imagination, the opposite party no. 1 could not have withheld an
amount out of the sanctioned loan on the plea of the alleged
shortfall in valuation.
XXXI FOR THAT while passing the impugned judgment and order,
the Learned Presiding Officer (In-Charge) of the Tribunal below
failed to exercise the jurisdiction vested in him by law by failing to
appreciate that the alleged shortfall of valuation of Rs.33,00,000/-
(Thirty Three Lakh) had adequately been taken care of by the
petitioners by offering additional securities in excess of what had
been contemplated in the letter of sanction. The Learned Presiding
Officer (In-Charge) of the Tribunal below ought not to have acted
illegally or with material irregularities by overlooking or ignoring
the additional securities offered by the petitioners, which were
adequate to secure repayment of the entire loan amount
sanctioned by the first opposite party.
XXXIV. FOR THAT while passing the impugned judgment and
order, the Learned Presiding Officer (In-Charge) of the Tribunal
below also failed to exercise the jurisdiction vested in him by law
by falling to not appreciate that the loan account in question had
been wrongly classified as a Non Performing Asset dehors the
prudential norms.
19
XXXV. FOR THAT the Learned Presiding Officer (In-Charge) of the
Tribunal below also acted illegally and with material irregularities
by not appreciating that the opposite party no.1 had committed
gross illegalities in not upgrading the loan account despite having
received substantial amounts from the petitioners post
classification of the loan account as a Non Performing Asset.
LIV FOR THAT while passing the impugned judgment and order,
the Learned Presiding Officer (In-Charge) of the Tribunal below also
acted illegally and with material irregularity by erroneously
observing that simultaneously with the issuance of the impugned
sale notice, the petitioner had lost their right to redeem the
property mortgaged. Such observation made by the Learned
Presiding Officer (In-Charge) of the Tribunal below was not only
contrary to the statutory provisions, but was also reflective of a
closed mind.”
39. Only one ground has been dedicated to the issue urged before this
court i.e., the matter was taken up on a day when S.A. was not fixed for
hearing. The said ground is quoted below:-
“XXIX FOR THAT while passing the impugned judgment and
order, Learned Presiding Officer (In-Charge) of the Tribunal below
also erred in disposing of the S.A. No.217 of 2021 when argument
was advanced and concluded about the I.A. No.1605 of 2022 not
against the main S.A. No.217 of 2021. Therefore disposing off the
S.A. No.217 of 2021 with the I.A. No.1605 of 2022 Learned
Presiding Officer (In-Charge) of the Tribunal below also acted
illegally and with material irregularities while adjudicating the
same.”
40. Although, it was submitted by Mr. Kar that this court should interfere
primarily on the ground of violation of the principles of natural justice, this
court finds from the grounds taken in the revisional application that, the
entire order passed by the learned tribunal has been assailed before this
court. The prayer for remand of S.A. for further hearing, for the reason that
the petitioners had not argued the S.A. to their fullest satisfaction and had
made only passing reference to assert why the sale notice was defective, can
be made before the learned appellate tribunal. The challenges to the merits
of the order impugned can be raised before the appellate tribunal. Instead of
20
multiplying proceedings, the proper legal procedure for the petitioners would
be to avail of the remedy under Section 18 of the SARFAESI Act. The
petitioners will have a wider scope to challenge the entire order on its own
merits and also pray for rehearing of the S.A. If the learned appellate
tribunal is convinced that the petitioners were prevented from arguing the
S.A. on its own merits and the tribunal had acted with perversity in deciding
the S.A, necessary orders can always be passed. To the understanding of
this court, there is not an exceptional situation which requires interference
under Article 227 of Constitution of India. The learned tribunal has neither
abused the power vested in it by law, nor has it exceeded its jurisdiction
upon wrongful assumption of power. The decisions cited by Mr. Kar, do not
apply in the facts of this case.
41. In the matter of Phoenix ARC (supra), the Hon’ble Apex Court held as
follows:-
“21. Applying the law laid down by this Court in Mathew K.C. [State
Bank of Travancore v. Mathew K.C., (2018) 3 SCC 85 : (2018) 2 SCC
(Civ) 41] to the facts on hand, we are of the opinion that filing of the
writ petitions by the borrowers before the High Court under Article 226
of the Constitution of India is an abuse of process of the court. The
writ petitions have been filed against the proposed action to be taken
under Section 13(4). As observed hereinabove, even assuming that the
communication dated 13-8-2015 was a notice under Section 13(4), in
that case also, in view of the statutory, efficacious remedy available by
way of appeal under Section 17 of the Sarfaesi Act, the High Court
ought not to have entertained the writ petitions. Even the impugned
orders passed by the High Court directing to maintain the status quo
with respect to the possession of the secured properties on payment of
Rs 1 crore only (in all Rs 3 crores) is absolutely unjustifiable. The dues
are to the extent of approximately Rs 117 crores. The ad interim relief
has been continued since 2015 and the secured creditor is deprived of
proceeding further with the action under the Sarfaesi Act. Filing of the
writ petition by the borrowers before the High Court is nothing but an
21abuse of process of court. It appears that the High Court has initially
granted an ex parte ad interim order mechanically and without
assigning any reasons. The High Court ought to have appreciated that
by passing such an interim order, the rights of the secured creditor to
recover the amount due and payable have been seriously prejudiced.
The secured creditor and/or its assignor have a right to recover the
amount due and payable to it from the borrowers. The stay granted by
the High Court would have serious adverse impact on the financial
health of the secured creditor/assignor. Therefore, the High Court
should have been extremely careful and circumspect in exercising its
discretion while granting stay in such matters. In these circumstances,
the proceedings before the High Court deserve to be dismissed.”
42. In the matter of Punjab National Bank (supra), the Hon’ble Apex
Court held as follows:-
“5. In our opinion, the order which was passed by the Tribunal
directing sale of mortgaged property was appealable under Section 20
of the Recovery of Debts Due to Banks and Financial Institutions Act,
1993 (for short “the Act”). The High Court ought not to have exercised
its jurisdiction under Article 227 in view of the provision for alternative
remedy contained in the Act. We do not propose to go into the
correctness of the decision of the High Court and whether the order
passed by the Tribunal was correct or not has to be decided before an
appropriate forum.
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, 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
22the respondent to take recourse to the appeal mechanism provided by
the Act.”
43. In the matter of Greatship (India) Ltd. (supra), the Hon’ble Apex
Court held as follows:-
“13. ……
53. In Raj Kumar Shivhare v. Directorate of Enforcement [Raj Kumar
Shivhare v. Directorate of Enforcement, (2010) 4 SCC 772 : (2010) 3
SCC (Civ) 712] the Court was dealing with the issue whether the
alternative statutory remedy available under the Foreign Exchange
Management Act, 1999 can be bypassed and jurisdiction under Article
226 of the Constitution could be invoked. After examining the scheme
of the Act, the Court observed : (SCC p. 781, paras 31-32)
’31. When a statutory forum is created by law for redressal of grievance
and that too in a fiscal statute, a writ petition should not be
entertained ignoring the statutory dispensation. In this case the High
Court is a statutory forum of appeal on a question of law. That should
not be abdicated and given a go-by by a litigant for invoking the forum
of judicial review of the High Court under writ jurisdiction. The High
Court, with great respect, fell into a manifest error by not appreciating
this aspect of the matter. It has however dismissed the writ petition on
the ground of lack of territorial jurisdiction.
32. No reason could be assigned by the appellant’s counsel to
demonstrate why the appellate jurisdiction of the High Court under
Section 35 of FEMA does not provide an efficacious remedy. In fact
there could hardly be any reason since the High Court itself is the
appellate forum.’ ”
14. Applying the law laid down by this Court in the aforesaid decision,
the High Court has seriously erred in entertaining the writ petition
under Article 226 of the Constitution of India against the assessment
order, bypassing the statutory remedies.”
44. Accordingly, the revisional application is dismissed with liberty to the
petitioners to approach the learned appellate tribunal in accordance with
law. The pendency of the revisional application before this court shall be
taken into consideration by the learned appellate tribunal while deciding the
issue of limitation. The learned appellate tribunal shall not be influenced by
this order.
45. Interim orders, if any, stand vacated.
46. There shall be no order as to costs.
23
47. Parties are to act on the basis of the sever copy of this order.
(Shampa Sarkar, J.)