High Court of Madhya Pradesh
Sujoy Paul, Prakash Chandra Gupta, JJ.
SWAGATIKA IMPEX PVT. LTD., MUMBAI – APPELLANT
Versus
STATE OF MADHYA PRADESH & ORS. – RESPONDENTS
W. P. No. 13900 of 2022
Decided On : 24-06-2022
Securitisation Act - Petition filed under Article 226 of the Constitution - Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Summary of Acts and Sections: The court discussed the applicability of section 13(4) of the Securitisation Act and the competence of the Debt Recovery Tribunal (DRT) under sections 17 and 18 of the Act. The court also emphasized the importance of approaching the court with clean hands and the consequences of suppression of material facts.
Fact of the Case:
The petitioner filed a petition under Article 226 of the Constitution seeking relief against an auction notice issued by the respondent bank under section 13(4) of the Securitisation Act. The petitioner sought to withdraw the petition with the liberty to approach the DRT. The respondent objected to the withdrawal, alleging suppression of facts by the petitioner.
Finding of the Court:
The court found that the petitioner had suppressed material facts and approached the court with unclean hands, leading to the dismissal of the petition with exemplary cost. The court reserved the liberty for the petitioner to approach the DRT against the impugned auction notice.
Issues: The issues involved suppression of material facts by the petitioner, the competence of the DRT, and the consequences of approaching the court with unclean hands.
Ratio Decidendi: The court emphasized the importance of approaching the court with clean hands and the consequences of suppression of material facts. It held that suppression of facts cannot be termed as 'advocacy' and dismissed the petition with exemplary cost.
Final Decision: The petition was dismissed with exemplary cost of Rs. 50,000, and the petitioner was reserved the liberty to approach the DRT against the impugned auction notice.
ORAL ORDER SUJOY PAUL, J. : – Heard on admission.
2. In this petition filed under Article 226 of the Constitution, the petitioner has prayed for following reliefs : –
(i) This Hon’ble Court may kindly be pleased to call for the entire record pertaining to impugned order of the respondent bank. (ii) This Hon’ble Court may kindly be pleased to issue a writ in the nature of certiorari for quashing the paper publication dated 23-5-2022 published by the respondent No. 3. (iii) This Hon’ble Court may kindly be please to allow any other relief, which this Court Hon’ble Court deemed just and proper in view of aforesaid submissions. (Emphasis Supplied)
3. Shri Shekhar Sharma, learned counsel for the petitioner submits that the impugned auction notice dated 23-5-2022 (Annexure P/16) is issued under section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short, ‘Securitisation Act’) read with the relevant rules.
4. The learned counsel for the petitioner pursuant to a query urged that petitioner doesn’t have remedy of approaching DRT by filing proceedings under section 17 of the Securitisation Act.
5. Learned counsel for the petitioner by taking this Court to the order of previous round of litigation passed in W. P. No. 7509/2013, UCO Bank vs. State of M. P., decided on 28-4-2022 urged that the impugned auction notice is issued with a view to circumvent this order of Division Bench dated 28-4-2022. The another query of the Court was that although it appears that the lis before this Court in W. P. No. 7509/2013 was different and not related to the auction of the property, the petitioner can still raise this ground/point before the DRT by availing the alternative statutory remedy. Apart from above in W. P. No. 7509/2013, liberty was given by this Court to the bank to take recourse of Securitisation Act. Shri Sharma, learned counsel for the petitioner then placed reliance on another order of this Court in W. P. No. 12623/2007 decided on 19-6-2012. It is seen that this Court order was also considered in the previous round on 28-4-2022 in W. P. No. 7509/2013.
6. The next contention of Shri Shekhar Sharma, learned counsel for the petitioner is based on the language employed in section 17 of the Securitization Act. He submits that the petitioner, a purchaser of the property, does not fall within the ambit of ‘any person’ as per section 17(1) of the Securitization Act. In support of this contention, he placed reliance on Standard Chartered Bank vs. Dharminder Bhohi, (2013) 15 SCC 341.
7. In nutshell, Shri Sharma submits that in view of the previous order dated 28-4-2022 passed in W. P. No. 7509/2013, this petition may be entertained because DRT is not legally equipped and competent to pass appropriate orders to take care of the relief claimed.
8. The relief prayed for was carefully perused by this Court. A conjoint reading of sub-section (2), (3) and (4) of section 17 of the Securitization Act shows that DRT is indeed competent to decide the validity of action of secured creditor taken under section 13(2) and (4) of the Securitization Act.
9. At this stage after consuming about 45 minutes, Shri Sharma, learned counsel for the petitioner seeks to withdraw this petition with the liberty to approach the DRT. We were inclined to grant that innocuous relief prayed by Shri Shekhar Sharma, learned counsel for the petitioner. However, Shri Atul Choudhary, learned counsel for the Bank raised serious objection regarding withdrawal of this petition and on the liberty sought for on the ground that petition suffers from serious suppression of facts and in view of the conduct of petitioner, the petition deserves to be dismissed with cost.
10. Shri Atul Choudhary, learned counsel for the respondent submits that the private treaty between the petitioner and the Bank was cancelled on 14th September, 2007 pursuant to which petitioner got the ownership on the property in question. The petitioner
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The main legal point established in the judgment is the importance of approaching the court with clean hands and the consequences of suppression of material facts.
Suppression of material facts disentitles a party to invoke equitable jurisdiction under Article 226 of the Constitution of India.
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A party invoking writ jurisdiction must disclose all material facts honestly, as suppression and falsehood invalidate claims for equitable relief.
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Suppression of material facts and failure to join necessary parties render a writ petition untenable; fraud on the court mandates dismissal of the case.
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