Compensation claims against banks for theft during possession must be addressed in civil court, as writ jurisdiction is barred by SARFAESI Act.

JUDGMENT :

SANDEEP SHARMA, J.

1. By way of instant petition filed under Article 226 of the Constitution of India, petitioners have prayed for the following main reliefs:

“(A) Writ of Certiorari be issued by declaring the entire exercise of taking over and handing over the industry under the provisions of Section 13 of SARFAESI Act, 2002 illegal, arbitrary, capricious, as the respondent Bank has committed procedural impropriety and has desperately failed to adhere the statutory provisions of SARFAESI Act, 2002 and Recovery of Debts and Bankruptcy Act, 1993 and Security Interest (Enforcement) Rules, 2002 due to said omissions/lapses the petitioners were forced to sustain heavy losses to the sum of Rs. 1,75,00,000/- occurred during statutory proceedings of taking over physical possession of industry under Section 13(4) of SARFAESI Act, 2002 on account of theft/ Embezzlement of goods, material, parts of plants and machinery etc.

(B) Writ of Mandamus be issued by directing the respondent Bank to indemnify the petitioners for losses sustained by them to the sum of Rs. 1,75,00,000/- occurred during statutory proceedings of taking over physical possession of industry under Section 13 (4) of SARFAESI Act, 2002 on account of theft/Embezzlement of goods, material, parts of plants and machinery etc. along with charges for installation and repair of stolen articles including repair of ancillary machinery/units etc. as the losses ascertained are undisputed and are calculated in proceedings under Section 160 of Cr.P.C. in presence of authorized officer of respondent Bank, police authorities and petitioners.

(C) Writ of Mandamus be issued by directing the respondent Bank to indemnify the petitioners for mental agony and harassment to the sum of Rs. 10 Lacs and further, petitioners be compensated for losses sustained by them due to delay in production for thirty two months despite full and final settlement of accounts through OTS on dated 21-2-2019, as the said losses were occurred due to dictorial attitude of the respondent bank and non-adherence to the statutory provisions of SARFAESI Act, 2002 and Recovery of Debts and Bankruptcy Act, 1993.”

2. For having birds’ eye view of the matter, certain undisputed facts, relevant for the adjudication of the case at hand are noted herein after.

3. Petitioner No. 2, Shri Rajesh Kumar Jain, availed facility of Term Loan and Credit from State Bank of Patiala, Industrial Phase-II, Chandigarh, which subsequently came to be taken over by State Bank of India, for his partnership concern i.e. M/s Nicon Ferrochem, having its industrial unit at Gagret, Tehsil Amb, District Una, Himachal Pradesh. Initially, credit facility to the tune of Rs. 3.00 Crore, as Term Loan and Cash Credit was extended in favour of petitioner No. 2, for equitable mortgages created by the petitioner and person namely Radhey Shyam Aggarwal, qua the properties situate at Up Mohal Ram Nagar, Gagret, Tehsil Amb, District Una, Himachal Pradesh and a house situate over Plot No. 315, Sector 21-C, Faridabad, in favour of the respondent Bank. Subsequently, on the request of petitioner No. 2, Term Loan and Cash Credit Limit/existing credit facility was enhanced to Rs. 3,62,00,000/- against security and hypothecation of stocks and mortgage of two properties.

4. Since, the petitioners were unable to repay the loan within the schedule fixed by the respondent Bank, account of the petitioner No. 2 became Non Performing Asset (NPA), as a result whereof, notice under S. 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002 (hereinafter, ‘Act 2002’) came to be served upon petitioner No. 2