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2024 Supreme(Ori) 230
IN THE HIGH COURT OF ORISSA AT CUTTACK
D.DASH, V.NARASINGH, JJ.
The Chief Manager-cum-Authorized Officer, Union Bank of India, Jharsuguda - Petitioner
Versus
Rajesh Kumar Agrawal – Respondent
W.P.(C) NO.41680 of 2023
Decided on : 01-07-2024
For the Petitioners:Mr. B.C. Panda, Advocate
For the Respondent:Mr. S.K. Jethy, Advocate
The provisions of the SARFAESI Act overrule other laws, including the Consumer Protection Act. Consumer commissions lack jurisdiction in matters covered by SARFAESI when statutory remedies are available.
Headnote:(A) Constitution of India - Articles 226 and 227 - Consumer Protection Act, 2019 - Section 38(8) and Section 35 - Writ jurisdiction of High Court invoked against the order of District Consumer Commissioner staying auction proceedings under SARFAESI Act - Court emphasized that SARFAESI Act provisions overrule other laws including CP Act - District Commission lacked inherent jurisdiction since statutory remedies exist - Material suppression by applicant noted - Costs imposed on the Opposite Party. (Paras 1, 22, 27, and 28)
(B) Jurisdiction - The exercise of writ jurisdiction by High Courts should be cautious when statutory remedies are available, maintaining the principle of self-restraint, primarily in matters concerning SARFAESI Act and ensuring judicial discipline. (Paras 4, 12, 18)
Facts of the case:
The Writ Petition was initiated by the Chief Manager of a bank against an order of the District Consumer Commission which stayed auction proceedings for mortgaged properties due to non-disclosure of an ongoing Securitization Application in the appellate tribunal. The bank had issued notices under the SARFAESI Act after the loan account defaulted. (Paras 2, 20)
Findings of Court:
The court quashed the proceedings and interim orders of the District Commission, indicating its lack of jurisdiction in light of existing statutory avenues under the SARFAESI Act. The court reinforced the precedence and clarity of laws governing such financial transactions. (Paras 22, 28)
Issues: The primary issue was whether the District Consumer Commission held jurisdiction over matters governed by the SARFAESI Act when alternative remedies were available through the Debt Recovery Tribunal. (Paras 1, 20)
Ratio Decidendi: The court established that the jurisdictional bar under SARFAESI Act prohibits consumer commissions from interfering in enforcement actions, emphasizing that statutory remedies must be exhausted before approaching High Courts. (Paras 4, 18)
Result: Writ Petition allowed; proceedings before the District Consumer Commission quashed.
| Table of Content |
|---|
| 1. factual background of loan and auction proceedings. (Para 2 , 5 , 6 , 7 , 8 , 9) |
| 2. court's observations on jurisdiction and conduct of parties. (Para 3 , 20 , 22 , 24 , 25 , 26) |
| 3. arguments regarding jurisdiction and statutory remedies. (Para 4 , 10 , 12 , 16) |
| 4. interpretation of sarfaesi and consumer protection acts. (Para 18 , 19) |
| 5. conclusion and order to quash consumer proceedings. (Para 28 , 29) |
JUDGMENT :
V. Narasingh, J.
Plenary jurisdiction of this Court under Article 226 and 227 of the Constitution of India has been invoked by the Chief Manager-cum-Authorized Officer, Union Bank of India (Opposite Party No.1) assailing order dated 14.12.2023 at Annexure-8 passed in Misc. Case No.31 of 2023 arising out of C.C. No.91 of 2023 by District Consumer Commissioner, Jharsuguda in exercise of its power U/s.38(8) of the Consumer Protection Act, 2019 (hereinafter referred to as “C.P. Act”) thereby directing the Petitioner-Bank not to proceed for the auction of secured assets which was being undertaken in terms of the provisions contained in Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 read with Rule 8 of the Security Interest (Enforcement) Rules, 2002.
1. Heard learned counsel Shri B.C Panda for the Petitioner and learned counsel Sri S.K. Jethy for the Opposite Party No.1.
2. The brief facts germane for just adjudication are indicated as under;
I. The present opposite party No.1 is one of the guarantors & mortgagors for the credit facilities availed by the Company M/s-Tulshyan Storeware Pvt. Ltd. Apart from the Opp.Party No.1 there are other guarantors & mortgagors for the credit facilities availed by the said company. The said company had availed a term loan to the tune of Rs. 280.00 Lakhs and cash credit facility to the tune of Rs.35.00 Lakhs from the erstwhile Corporation Bank, Jharsuguda in the year 2015. Thereafter, the said loan was renewed in the year 2016 and 2019 and another loan facility was sanctioned being working capital term loan for Rs.20.20 lakh in the year 2019. In the said loan the present Opp.Party No.1, his wife and other persons were stood as guarantors & mortgagors.
II. In order to secure the loan dues, the Opp.Party No.1, his wife and other persons had mortgaged landed properties.
III. As, the borrowers did not repay the loan amount in time and consequently the loan account turned to NPA as per RBI guidelines. Therefore, the petitioner bank i.e the secured creditor, recalled the loan and issued demand notice under section 13(2) of SARFAESI Act 2002 on 09.12.2021 and 18.04.2022 calling upon the borrowers, guarantors and mortgagors to pay the dues within the time stipulated there. Copy of the said notice U/s-13(2) of SARFAESI Act, 2002 is annexed to the Writ Petition at Annexure-1.
IV. It is stated that as no steps were taken to comply with the said demand notice, further notice U/s.13(4) of SARFAESI Act, 2002 read with Rule 8 of the Security Interest (Enforcement) Rules, 2002 for possession of the property were taken and the same was published in daily newspaper. Copy of the said notice is on record at Annexure-2.
V. Admittedly, assailing such action of the Petitioner-Bank, the Opposite Party No.1 along with his wife filed Securitisation Appeal No.66 of 2022 in the DRT, Orissa Cuttack U/s.17(1) of the SARFAESI Act, 2002 and the relief sought for and the interim relief prayed for in the said S.A. are extracted hereunder for ready reference;
“6. Relief(s) sought for:-
(a) To declare the e-auction notice for sale of the schedule properties of the applicants as illegal and quash the same.
(b) To declare the e-auction scheduled to be held
29.04.2022 as illegal, arbitrary and null and void.
(c) To set aside/quash the notices U/s.13(2), 13(4) as well as all actions taken under SARFAESI Act being illegal.
(d) Cost of the proceeding be awarded in favour the applicants.
(e) Any other relief/reliefs which the applicants may be entitled to.
7. Interim relief, if
