CWP No. [SECTION]484 of 2012 1 IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH CWP No. [SECTION]484 of 2012 (O & M) Date of Decision:- September 25, 2012 M/s. [ENTITY] PETITIONER(S) vs. [ENTITY] and others RESPONDENT(S) CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL HON'BLE MR. JUSTICE G.S. SANDHAWALIA Present:- Mr. [ENTITY], Advocate, for the applicant-petitioner. G. S. SANDHAWALIA, J.
[CASE NUMBER] Affidavit (Annexure P-6) filed alongwith the application is taken on record, subject to all just exceptions.
C.M. stands disposed of.
CWP No. [SECTION]484 of 2012
1. At the request of learned counsel for the petitioner, the next date of hearing i.e. 10.10.2012 is pre-poned to today and the matter is heard on merits.
2. The present writ petition has been filed under [SECTION] and [SECTION] of the [ACT] for issuance of a writ in the nature of certiorari for quashing notice dated 02.12.2011 (Annexure P-2) issued by the respondent-Bank under [SECTION] of the [ACT] (hereinafter referred to as the '[ACT]') and the possession notice dated 02.03.2012 (Annexure P-3) under [SECTION] of the [ACT]. Challenge has also been made to all the subsequent and consequential proceedings started by the respondent-bank and for issuance of a writ in the nature of mandamus directing the respondents to produce the record of cash credit account No. 65090586720 and cash credit account No. 65109349387 in order to regularize the cash credit facility and for declaration that the petitioner's firm was wrongly declared as NPA.
3. The case set up by the petitioner in the present writ petition is that the petitioner-firm is engaged in the business of City Medicine Centre at PNB Chowk, Jalandhar and other places in Jalandhar. The firm is well reputed in the business of wholesale trading of pharmaceuticals and [ENTITY]-partner is also President of Wholesale Chemist Organisation, President of RDCA, Jalandhar, Vice President of Punjab Chemist Association and General Secretary of All India Anti-Terrorist Front Punjab. The petitioner's firm was maintaining account No. 65090586720 with cash credit limit of `4,35,00,000 and was operating the said account regularly. Earlier, the petitioner was availing the cash credit limit from the Bank of Baroda and the respondent-bank had approached the petitioner's firm in order to transfer the cash credit limit account in their bank to which the petitioner agreed and in lieu of transfer, it was promised that the cash credit limit will be increased to `7,00,00,000. The respondent-bank had resiled from the promise to increase the cash credit limit and the petitioner's firm had gone into a debt trap. The petitioner was informed vide letter dated 29.10.2011 that the account of the petitioner's firm had been declared as NPA as on 30.09.2011 and a total amount of `4,39,74,944 was required to be deposited. The said declaration was alleged to be illegal and against the guidelines of the Reserve Bank of India. Notice dated 02.12.2011 under [SECTION] of the [ACT] was issued and thereafter possession notice dated 02.03.2012 was served wherein the respondent-bank took over the symbolic possession of the five properties. The respondents-bank had also issued a letter dated 06.03.2012 wherein, they had alleged that one commercial property bearing No. 210 at Dikki Wali Gali, Tanda Road, Jalandhar and covered by sale deed No. 12[SECTION] dated 14.03.2007 had also been sold off through General Power of Attorney before creating of mortgage. Similarly, shop No. 10-C situated in the Dilkhusha Market, which was covered by sale deed No. [SECTION]80 dated 16.05.2007 had been deposited with the bank, but the bank had alleged that there were two title deeds and only one had been deposited with the bank for creating equitable mortgage. Accordingly, the bank had threatened the petitioner not only with criminal action but also for publishing the names with photographs in the media as willful defaulter. It was further pleaded that the five properties that were under the control of the bank were of more than `50 crores in value and the petitioner had received a notice dated 30.07.2012 asking it to appear before the learned District Magistrate, Jalandhar. Accordingly, it was submitted that the cash credit limit was sanctioned on 01.04.2011 and the declaration as NPA on 30.09.2011 was wrong. The bank had issued a huge cash credit limit after properly verifying the property documents and everything was in the knowledge of the bank and accordingly the action of the respondent-bank is sought to be challenged.
4. Counsel for the petitioner has also placed an affidavit on record with an undertaking to make payment of `65,00,000 to the respondent-bank upto 30.01.2013 so as to bring the accounts to the level of the sanctioned limit by the respondent-bank.
5. Mr. [ENTITY], Advocate, counsel for the petitioner has vehemently argued that the account had wrongly been declared as NPA and the bank was illegally proceeding against the properties and the petitioner was willing to regularize the said account.
6. Perusal of the petition shows that the notice dated 02.12.2011 under [SECTION] of the [ACT] was served upon the petitioner wherein, a demand of `5,01,78,357 was raised and the details of the properties mortgaged was given alongwith the break up of the cash credit account. Thereafter, on 02.03.2012, action under [SECTION] of the [ACT] was taken by issuing the possession notice of the said five properties. A letter dated 06.03.2012 was also issued by the bank in which reference was made to the numerous meetings held between the petitioner and the bank officials to regularize the account and adjusting the ad hoc cash credit facility. In the said letter, as mentioned earlier, a reference was also made to the alienation of the property before creation of mortgage and of two title deeds of the same property whereby the bank informed the petitioner that it was a willful defaulter. Thereafter, the bank has filed an application under [SECTION] of the [ACT] before the District Magistrate who had issued summons dated 30.07.2012 for 22.08.2012 to the petitioner. Resultantly, the present writ petition has been filed in this Court.
7. To test the bona fides of the petitioner, he was asked to deposit some substantial amount so that the case could be proceeded further. However, petitioner has only filed affidavit that it would pay `65 lacs by 30.01.2013 and counsel stated that he would only be able to deposit a sum of `5,00,000 immediately. The demand is of more than `5 crores. The bona fides of the petitioner are apparently missing. Even otherwise, the notice was served on the petitioner under [SECTION] of the [ACT] more than 10 months back and it has made no effort to regularize the accounts and proceedings under [SECTION] of the [ACT] have also been initiated by the bank. The petitioner has an alternative and efficacious remedy of appeal under [SECTION] of the [ACT] against the measures referred to [SECTION] of the [ACT] taken by the secured creditor. The disputed questions of facts regarding the sale of mortgaged property and of having two title deeds have also been raised by the bank.
8. In such circumstances, it would not be appropriate for this Court to exercise its discretionary jurisdiction under [SECTION] and [SECTION] of the [ACT], in view of the observations of the Hon'ble Apex Court in [PRECEDENT] wherein it has been held as under:
"30. The Court while exercising its jurisdiction under [SECTION] is duty-bound to consider whether:
(a) adjudication of writ petition involves any complex and disputed questions of facts and whether they can be satisfactorily resolved;
(b) the petition reveals all material facts;
(c) the petitioner has any alternative or effective remedy for the resolution of the dispute;
(d) person invoking the jurisdiction is guilty of unexplained delay and laches;
(e) ex facie barred by any laws of limitation;
(f) grant of relief is against public policy or barred by any valid law; and host of other factors."
9. Further, the Hon'ble Apex Court in [PRECEDENT] has held that ordinarily the High Court should not exercise its discretion where there is alternative remedy available under the [ACT]. The relevant observation reads as under:
"17. There is another reason why the impugned order should be set aside. If respondent No.1 had any tangible grievance against the notice issued under [SECTION] or action taken under [SECTION], then she could have availed remedy by filing an application under [SECTION]. The expression`any person' used in [SECTION] is of wide import. It takes within its fold, not only the borrower but also guarantor or any other person who may be affected by the action taken under [SECTION] or [SECTION]. Both, the Tribunal and the Appellate Tribunal are empowered to pass interim orders under [SECTION] and [SECTION] and are required to decide the matters within a fixed time schedule. It is thus evident that the remedies available to an aggrieved person under the [ACT] are both expeditious and effective. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under [SECTION] of the [ACT] if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc., the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, High Court must insist that before availing remedy under [SECTION] of the [ACT], a person must exhaust the remedies available under the relevant statute.
[SECTION]. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under [SECTION] of the [ACT] to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by [SECTION] or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self- imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under [SECTION] of the [ACT]. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under [SECTION] of the [ACT] and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance. It must be remembered that stay of an action initiated by the State and/or its agencies/instrumentalities for recovery of taxes, cess, fees, etc. seriously impedes execution of projects of public importance and disables them from discharging their constitutional and legal obligations towards the citizens. In cases relating to recovery of the dues of banks, financial institutions and secured creditors, stay granted by the High Court would have serious adverse impact on the financial health of such bodies/institutions, which ultimately prove detrimental to the economy of the nation. Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters. Of course, if the petitioner is able to show that its case falls within any of the exceptions carved out in [PRECEDENT], [PRECEDENT] and Harbanslal Sahnia and another v.
Indian Oil Corporation Ltd. and others (2003) 2 SCC 107 and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass appropriate interim order.
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27. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the [ACT] and [ACT] and exercise jurisdiction under [SECTION] for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection."
10. Accordingly, the writ petition is dismissed in limine with liberty to the petitioner to seek redressal through alternative and efficacious remedy of appeal under [SECTION] of the [ACT]. Needless to say that any observations made herein are only for the purpose of the decision of the present writ petition.
([ENTITY]) Judge 25.09.2012 ([ENTITY]) shivani Judge