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2018 Supreme(Cal) 279
IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
ARINDAM SINHA, J.
Sk. Abdul Sabir - Petitioner
Vs.
IDBI Bank Ltd. and others - Respondents
W.P. 30668 (W) of 2016
Decided On : 24-01-2018
For the Petitioner: Mr. N. Srinivas, Mr. Debdut Mukherjee, Mr. Joydip Mukherjee.
For the Respondents: Mr. Suddhasatva Banerjee, Mr. Debasish Chakraborty, Mr. Sukanta Ghosh, Mr. Aniruddha Roy, Mr. P. Pal.
The judgment established the importance of adhering to statutory remedies, the mandatory nature of certain provisions under the SARFAESI Act, and the prevention of abuse of process.
Headnote:
SARFAESI - Borrower's Jurisdiction - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI, Act) - Sections 13(4), 17(1), 17(7), 19(25), 22 - The court discussed the borrower's jurisdiction under the SARFAESI Act and the relevant sections, emphasizing the mandatory nature of certain provisions and the need for adherence to statutory remedies. The court also highlighted the importance of territorial jurisdiction and the limitations on review jurisdiction. The judgment emphasized the need for strict adherence to statutory provisions and the prevention of abuse of process.
Fact of the Case:
The petitioner, a guarantor for a defaulted borrower, challenged the sale notice issued by the bank for the secured property. The borrower had approached multiple Debt Recovery Tribunals for relief, leading to conflicting orders. The petitioner then moved the High Court for interference against the order rejecting his application for recalling the earlier order.
Finding of the Court:
The court found that the Debt Recovery Tribunal had acted without authority of law, in complete non-application of mind and upon consideration of irrelevant material. The impugned orders were set aside and quashed, directing the bank to act in terms of the directions made in the earlier order or assail it, if permissible in law.
Issues: The key issues included the borrower's jurisdiction under the SARFAESI Act, the limitations on review jurisdiction, and the conflicting orders from different Debt Recovery Tribunals.
Ratio Decidendi: The court emphasized the mandatory nature of certain provisions under the SARFAESI Act, the importance of territorial jurisdiction, and the need for strict adherence to statutory remedies. It also highlighted the prevention of abuse of process and the limitations on review jurisdiction.
Final Decision: The writ petition was allowed, and the impugned orders were set aside and quashed, directing the bank to act in terms of the earlier order or assail it, if permissible in law.
1. This writ petition is at the instance of a person covered under the definition of borrower given in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI, Act). Petitioner stood guarantor for principal borrower, the latter having defaulted in repaying the borrowings and interest. A cold storage situated in District-Burdwan was mortgaged by the guarantor in support of his guarantee. The property was secured for repayment of the loan. The bank issued sale notice dated 31st January, 2016 for sale of the secured property. Respondent nos. 3 and 4 are the successful auction bidders. Their bid was accepted by the bank and upon deposit of earnest money, they were given time to put in the balance. They did not deposit the balance within time. The bank forfeited the earnest and cancelled the sale. It proceeded to issue another sale notice dated 8th April, 2016.
2. Some time in May, 2016, respondent nos. 3 and 4 had applied to Debts Recovery Tribunal–I for, inter alia, quashing letters dated 9th March, 2016 and 11th May, 2016 issued by the bank forfeiting earnest money deposited by them. By order dated 20th May, 2016 the said application was allowed. Respondent nos. 3 and 4 thus became auction purchasers of the secured property.
3. The borrower challenged the subsequent sale notice in Debts Recovery Tribunal-II since the said Bench had territorial jurisdiction in respect of the secured property. This application was made on 8th June, 2016. By order dated 16th June, 2016 Debts Recovery Tribunal-II set aside the second sale notice dated 8th April, 2016 with direction for issuance afresh. The borrower then appears to have got wind of what had happened in the other Tribunal regarding his mortgaged property as sold in auction. He approached Debts Recovery Tribunal–I for recalling its order dated 20th May, 2016. The said Tribunal by order dated 10th November, 2016 rejected the application on the ground that remedy of the borrower was to file an appeal as he not having been a party to the SARFAESI application, could not invoke review jurisdiction of the Tribunal. The borrower then moved this Court for interference against the said order dated 10th November, 2016 as one having been made without authority of law.
4. Mr. Srinivas, learned advocate appeared on behalf of petitioner. He relied on a decision of a learned Single Judge of this Court in the case of Elements Coke Pvt. Ltd. vs. UCO Bank reported in 2009 (3) CHN 273, particularly to paragraph 34 in which the learned Judge was of the view that :-
“Since the action under section 13 (4) of the said Act is in the nature of execution proceeding, the Tribunal within whose territorial jurisdiction the secured assets situate, is the only competent Tribunal whose jurisdiction can be invoked for filing an application under section 17 of the said Act as the cause of action for the second phase of this chapter wholly arises within the jurisdiction of the said Tribunal.”
5. He also relied on a judgment of a Full Bench of Delhi High Court in the case of Amish Jain & Another v. ICICI Bank Ltd. reported in 2013 (1) Debt Recovery Tribunal Cases (DRTC) 70 and submitted, the said Court upon considering, inter alia, Elements Coke (supra) had held accordingly. He relied on paragraph 29 which is set out below :
“For all the aforesaid reasons, we set aside the judgment of the Division Bench in Indira Devi supra and hold that an Appeal/application under Sec. 17(1) of the SARFAESI Act can be filed only before the DRT within whose jurisdiction the property /secured asset against which action is taken is situated and in no other DRT.”
6. Lastly, he relied on the case of Sri Siddeshwara Co-operative Bank Ltd. vs. Sri Ikbal decided by Supreme Court reported in (2013) 10 SCC 83. He relied on paragraph 14 which is extracted below:
“14. A reading of sub-rule (1) of Rule 9 makes it manifest that the provision is mandatory. The plain language of Rule 9(1) sug
