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2023 Supreme(Online)(KER) 24053
HIGH COURT OF KERALA
K. Babu, J
M/S. AGRO CHEMICAL CORPORATION, 325, VI/32-325,
– Appellant
Versus
THE AUTHORIZED OFFICER, – Respondent
OP (DRT) 408 2022
N.SASI, RASMI NAIR, T., SRI.GEORGE VARGHESE, SC, SUNIL SHANKER, VIDYA GANGADHARAN, SANDHRA.S
The court reaffirmed that an interim order by the DRT is appealable under Section 18 of the SARFAESI Act, and Article 227 jurisdiction should be exercised sparingly.
Headnote:
SARFAESI - Debt Recovery - SARFAESI Act - Sections 17, 18, 31 - The court emphasized the appealability of interim orders under Section 18 and confirmed that Article 227 should be used sparingly, highlighting the effective remedy under the SARFAESI Act for debt recovery proceedings.
Fact of the Case:
The petitioners, a proprietrix firm and its guarantor, defaulted on a Rs.98 Lakhs overdraft loan secured by mortgaged agricultural land. The bank classified the loan as a Non-Performing Asset and initiated proceedings under the SARFAESI Act, leading to a challenge by the petitioners on the grounds of illegal proceedings.
Finding of the Court:
The court found that the petitioners had an appealable remedy under Section 18 of the SARFAESI Act to contest the rejected application for appointing an Advocate Commissioner. The petitioners did not demonstrate sufficient grounds for the court's intervention under Article 227.
Issues: Whether the petitioners were entitled to the protections under Section 31(i) of the SARFAESI Act, and whether the court should exercise its jurisdiction under Article 227 given the appealability of the DRT's order.
Ratio Decidendi: The appealability of the DRT's interim order under Section 18 of the SARFAESI Act provided a legal basis for rejecting the original petition, affirming the proper channel for challenging DRT decisions.
Final Decision: The original petition was dismissed.
J U D G M E N T
The challenge in this original petition is to the order dated
19.04.2022 in I.A.No.1565 of 2021 in S.A.No.336 of 2021 passed by the Debts Recovery Tribunal-2, Ernakulam. Petitioner No.1, a proprietrix firm availed an overdraft facility of Rs.98 Lakhs from the respondent Bank. Petitioner No.2 is the guarantor of the loan. For availing the loan, the petitioners mortgaged 37.90 ares of land along with a residential building in Survey No.816/1 (Re-survey No.265/8) and 0.40 Ares of land in Survey No.749/10 (Re-survey No.265/5A) of Kuruvilangad Village, Meenachil Taluk.
2. The petitioners committed default in repaying the loan.
The Bank classified the loan account as Non Performing Asset (NPA). Thereafter, the Bank proceeded under the provisions of the SARFAESI Act .
3. The petitioners challenged the proceedings initiated by the Bank under the the provisions of the SARFAESI Act by filing S.A.No.336 of 2021 before the Debts Recovery Tribunal-2, Ernakulam. Along with the Securitization Application, the petitioners filed I.A.No.1565 of 2021 for appointing an Advocate Commissioner to establish that the property mortgaged is agricultural land. The learned Presiding Officer of the Debts Recovery Tribunal rejected the application by way of Ext.P7 order.
4. Heard Shri.N.Sasi, the learned counsel for the petitioners and Shri.Sunil Shankar, the learned Standing Counsel.
5. The petitioners contended in the Securitization Application that they are entitled to the protection contained in Section 31 (i) of the SARFAESI Act as the property mortgaged was agricultural land. The Bank resisted the application contending that the petitioners had willingly and voluntarily created security interest in the property in question for satisfaction of the debt and the parties never intended to treat the property as agricultural land.
6. The learned counsel for the petitioners submitted that the property mortgaged is agricultural land which is exempted under Section 31 (i) of the SARFAESI Act and therefore, the Tribunal ought to have granted an opportunity to establish the contention of the petitioners by way of appointing an Advocate Commissioner. It is submitted that Ext.P7 order is illegal.
7. The learned counsel for the respondent Bank, Shri.Sunil Shankar, relying onVarghese A.P vs. Chief Manager, Vijaya Bank and others [2019 (5) KHC 685] , contended that as the order impugned is appealable the original petition filed under Article 227 of the Constitution of India, is not maintainable.
8. As per Section 18 of the SARFAESI Act , any person aggrieved by any order made by the DRT under Section 17 , may prefer an appeal along with such fee, as may be prescribed, to the Appellate Tribunal within thirty days from the date of receipt of the order of the Debts Recovery Tribunal.
9. A Division Bench of this Court in Varghese A.P (supra)
held that an order passed in an interim application is appealable under Section 18 of the SARFAESI Act .
10. The resultant conclusion is that the petitioners have an equally efficacious remedy to challenge Ext.P7 order.
11. It is settled law that the power under Article 227 of the Constitution may be exercised when there is grave injustice or failure of justice and when (i) the Court or the Tribunal has assumed a jurisdiction which it does not have (ii) has failed to exercise a jurisdiction which it does have, such failure occasioning a failure of justice and (iii) the jurisdiction though available is being exercised in a manner which tantamounts to overstepping the limits of jurisdiction {SeeRaveendran Pilla P. & Ors. v. State of Kerala & Ors., [(2020 (6) KLT 838] = [2021 (1) KHC 38] & Deepak v. Govardhanan Nair , [2021 (6) KLT 708] = [2021 (6) KHC 565 (DB)]}.
12. The High Court exercising supervisory jurisdiction does not act as a court of first appeal to re-appreciate, reweigh the evidence or facts upon which the determination under challenge is based. Supervisory jurisdiction is not to correct every error of factor eve
