IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE [ENTITY] TUESDAY, THE 10TH DAY OF APRIL 2012/[SECTION]ST CHAITHRA [SECTION][SECTION] WP(C).No. 8[SECTION]3 of 2012 (P) CRMP.4227/2011 of CHIEF JUDL.MAGISTRATE, ERNAKULAM PETITIONER(S): PESCADOS SEBEL EXPORTS PRIVATE LIMITED, PALLIKKAL ROAD, COCHIN-682005 REPRESENTED BY ITS MANAGING DIRECTOR, R.VIKRAMAN. BY ADVS.SRI.MATHEWS J.NEDUMPARA SRI.VADAKARA V.V.N.MENON SRI.A.B.MOHANAKUMAR RESPONDENT(S): 1. UNION OF INDIA REPRESENTED BY THE SECRETARY TO THE GOVERNMENT DEPARTMENT OF BANKING, MINISTRY OF FINANCE JEEVAN DEEP BUILDING, PARLIAMENT STREET NEW DELHI-110001. 2. THE GOVERNOR RESERVE BANK OF INDIA, CENTRAL OFFICE BUILDING SHAHID BHAGAT SINGH ROAD, MUMBAI-400001. 3. SRI. A.A.BADSHAH ZONAL MANAGER & AUTHORISED OFFICER BANK OF INDIA, KALUR TOWERS, KALUR COCHIN-6820[SECTION]. (IN HIS PERSONAL AND OFFICIAL PARTY). 4. BANK OF INDIA REPRESENTED BY ITS CHAIRMAN & MANAGING DIRECTOR HAVING ITS OFFICE AT C-5, G BLOCK BANDRA-KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051. 5. MS. R.LATHA AUTHORISED OFFICER, BANK OF INDIA, KALUR TOWERS KALUR, COCHIN-6820[SECTION]. 6. THE CHIEF JUDICIAL MAGISTRATE ERNAKULAM, KERALA-11. 7. STATE OF KERALA REPRESENTED BY ITS CHIEF SECRETARY GOVERNMENT SECRETARIAT, TRIVANDRUM-695001. WP(C) No. 8[SECTION]3/12 -2- 8. SRI. ABDUL RASHID T.A. ADVOCATE (APPOINTED AS ADVOCATE COMMISSIONER BY THE LEARNED CHIEF JUDICIAL MAGISTRATE ERNAKULAM, IN CRL.M.P. NO.4227 OF 2011) THAMARASSERY HOUSE, CHERANALLLORE ERNAKULAM-6820[SECTION]. 9. M/S. PRIVITY SERVICE PROVIDERS PRIVATE LIMITED RECOVERY AGENT, EMPIRE BUILDING, ERNAKULAM-31. 10. THE SUB-INSPECTOR OF POLICE MATTANCHERI POLICE STATION, MATTANCHERI COCHIN-682002. BY ADV. SRI.MATHEWS JACOB (SR.) BY ADV. SRI.JAWAHAR JOSE BY ADV. SRI.P.PARAMESWARAN NAIR,ASG OF INDIA BY SRI.P.PARAMESWARAN NAIR,ASG OF INDIA BY SR GOVERNMENT PLEADER SRI.S.JAMAL BY SRI.V.SUNIL KUMAR,SC,BANK OF INDIA BY SRI.GEORGE VARGHESE, SC FOR BANK THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 10-04-2012, ALONG WITH WP(C) No. NO.8826/12, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WPC NO.8[SECTION]3/12 APPENDIX PETITIONER'S EXHIBITS EXHIBIT P1: COPY OF NOTICE DATED [SECTION]TH MARCH, 2006 UNDER SECTION 13(2) OF THE SARFAESI ACT. EXHIBIT P2: COPY OF LETTER DATED 31-01-2009 OFFERING OTS BY THE PETITIONER. EXHIBIT P3: COPY OF LETTER DATED [SECTION]-03-2009 AT THE HANDS OF THE AUTHORIZED OFFICER TO THE PETITIONER DEMANDING TO ENHANCE THE OTS. EXHIBIT P4: COPY OF NOTICE DATED 28-11-2011 UNDER SECTION 13(4) OF THE SARFAESI ACT TAKING SYMBOLIC POSSESSION INDIAN EXPRESS. EXHIBIT P5: COPY OF JUDGMENT DATED 13-12-2011 PASSED BY THE HONOURABLE HIGH COURT IN WPC NO. 33[SECTION]5 OF 2011 DIRECTING THE RESPONDENT BANK TO CONSIDER THE PETITIONER'S OFFER FOR OTS. EXHIBIT P6: COPY OF ORDER DATED 14TH DECEMBER, 2011 PASSED BY THE CHIEF JUDICIAL MAGISTRATE, ERNAKULAM, UNDER [SECTION]. EXHIBIT P7: COPY OF NOTICE DATED [SECTION]-12-2011 FROM RESPONDENT NO.7 INTIMATING TAKING OF FORCIBLE POSSESSION (CHIEF JUDICIAL MAGISTRATE COURT, ERNAKULAM). EXHIBIT P8: COPY OF APPLICATION TO RECALL THE ORDER DATED 14TH DECEMBER, 2011 IN [CASE NUMBER] IN CHIEF JUDICIAL MAGISTRATE COURT, ERNAKULAM. EXHIBIT P9: COPY OF BANK'S APPLICATION FOR PREPONEMENT OF ADVANCE HEARING OF THE PETITIONER'S APPLICATION TO RECALL THE ORDER UNDER [SECTION] IN [CASE NUMBER] IN CHIEF JUDICIAL MAGISTRATE COURT, ERNAKULAM. EXHIBIT P10: COPY OF AFFIDAVIT IN [CASE NUMBER] IN UNNUMBERED [CASE NUMBER] IN DEBTS RECOVERY TIRBUNAL, ERNAKULAM. EXHIBIT P11: COPY OF NOTICE DATED 29TH FEBRUARY, 2012 PUTTING THE PETITIONER'S PROPERTY FOR SALE ON 10TH APRIL, 2012 IN MATHRUBHOOMI. True Copy PA to Judge Rp [ENTITY], J. W.P.(C) NOs. 8[SECTION]3 & 8826 OF 2012 Dated this the 10th day of April, 2012 J U D G M E N T
The issues raised in these writ petitions are common and the reliefs sought are also identical. Therefore these cases were heard together and are disposed of by this common judgment.
2. The petitioners in these writ petitions are being proceeded against by the respondent Banks under the provisions of the [ACT] and it is aggrieved by the said action, these writ petitions are filed.
3. In so far as [CASE NUMBER] is concerned, it needs to be mentioned that the petitioner herein is a guarantor of a housing loan and a cash credit facility availed of by his mother. On account of the defaults committed, [SECTION]P1 notice under [SECTION] of the [ACT] was issued and since then, at different stages of the proceedings, his mother filed nine writ petitions before this Court. These writ petitions are WP(C) Nos.9701/07, [SECTION]332/07, 20203/07, 4864/10, 13945/10, 9548/11, 26726/11, 4473/12 and 5829/12. Suffice it to say that she was given various opportunities to settle the liability by instalments WPC.Nos.8[SECTION]3 & 8826/12 and she was also relegated to pursue her grievances before the Debts Recovery Tribunal. She had also filed a writ appeal against the judgment in [CASE NUMBER] and securitisation applications before the Tribunal, of which one of the application is stated to be still pending. It is thereafter that the petitioner has filed this writ petition and the main prayers sought are the following:-
(a) issue a writ, order or declaration, declaring that [SECTION] and [SECTION] of the [ACT] are unconstitutional and void inasmuch as while the said Sections bar the jurisdiction of Civil Courts to entertain and adjudicate any matter with respect to which the Debt Recovery Tribunal and Debt Recovery Appellate Tribunal (constituted under the Recovery of Debts Due to Banks and financial Institutions Act, [SECTION]93) are empowered and competent to decide, including granting of ad-interim relief, the said [ACT] does not provide for any express provision whereunder a secured debtor or borrower or guarantor, who has suffered injury, damage and loss and thus is entitled to an action as against ht Bank for compensation, damages, specific performance, injunction and other remedies or, in the alternative and more ideally, to declare that the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, [SECTION]93 have been incorporated in the [ACT] WPC.Nos.8[SECTION]3 & 8826/12 Act, 2002 and [SECTION] Recovery of Debts Due to Banks and Financial Institutions Act, [SECTION]93 entail a right in a borrower or secured debtor or guarantor to institute a claim for compensation or damages or other remedies by virtue of a counterclaim/set-off etc.,
(b) declare that the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, [SECTION]93 be read into the [ACT] with such modification, implied or express, by incorporation as called for;
(c) issue a declaration or writ or order, declaring that [SECTION], [SECTION] and [SECTION] of the [ACT] are unconstitutional on the ground that they are in violation of the second principle of natural justice namely, nemo potest esse simul actor et judex or nemo iudex in sua causa or nemo debet esse judex in propria causa - no one can be judge in his own cause - and the issue remains res integra;
(d) issue a writ or order or declaration, declaring that [SECTION] of the [ACT] is unconstitutional inasmuch as it does not provide for a right of hearing to the secured debtor before valuation of the secured asset;
(e) issue a writ or order or declaration, declaring that [SECTION] of the [ACT] is unconstitutional and void inasmuch as it permits the learned Chief Judicial Magistrate/District Magistrate to order dispossession of the property of a borrower/tenant or even a third party on a WPC.Nos.8[SECTION]3 & 8826/12 mere application at the hands of a Bank or Financial Institution, often a simple mortgage, without notice and without hearing him, and thus in violation of [SECTION], [SECTION] and [SECTION] of the [ACT] or, in the alternative, and may be more appropriately, to read into the said Section an obligation to issue a notice and afford a hearing to the borrower/tenant or third party;
(f) issue a declaration or a writ or order, declaring that [SECTION] of the [ACT] is unconstitutional and void inasmuch as the said Section enables a secured creditor/Bank/financial institution to take possession of the property of a citizen, thereafter sell the same and liquidate the amount allegedly due to the Bank or financial institution without providing for an appeal against the order of the learned Magistrate;
4. Apart from the above, he is also seeking to quash [SECTION]P1, a notice issued under [SECTION], [SECTION]P6 order passed by the learned Magistrate exercising his powers under [SECTION] and Exts.P14 and P[SECTION] possession notice and auction notice. He is also seeking an award of damages.
5. In so far as WP(C) No. 8[SECTION]3/12 is concerned, the reliefs sought are also similar.
6. I heard the learned counsel appearing for the petitioners extensively and in my view, these writ petitions are ill WPC.Nos.8[SECTION]3 & 8826/12 advised and misconceived.
7. The constitutional validity of the [ACT] with particular reference to [SECTION], [SECTION], [SECTION] and [SECTION] was considered by the Apex Court in [PRECEDENT]. Finally, the Apex Court held as follows in paras 80 to 82 of the judgment:-
Under the Act in consideration, we find that before taking action a notice of 60 days is required to be given and after the measures under [SECTION] of the Act have been taken, a mechanism has been provided under [SECTION] of the Act to approach the Debt Recovery Tribunal. The above noted provisions are for the purposes of giving some reasonable protection to the borrower. Viewing the matter in the above perspective, we find what emerges from different provisions of the Act, is as follows :-
1. Under [SECTION] it is incumbent upon the secured credior to serve 60 days notice before proceeding to take any of the measures as provided under [SECTION] of the Act. After service of notice, if the borrower raises any objection or places facts for consideration of the secured creditor, such reply to the notice must be considered with due application of mind and the reasons for not accepting the objections, howsoever brief they may be, must be communicated to the borrower. In connection with this conclusion we have already held a discussion in the earlier part of the judgment. The reasons so communicated shall only be for the purposes of the information/knowledge of the borrower without giving rise to any right to approach the Debt Recovery Tribunal under [SECTION] of the Act, at that stage.
WPC.Nos.8[SECTION]3 & 8826/12
2. As already discussed earlier, on measures having been taken under [SECTION] and before the date of sale/auction of the property it would be open for the borrower to file an appeal (petition) under [SECTION] of the Act before the Debt Recovery Tribunal.
3. That the Tribunal in exercise of its ancillary powers shall have jurisdiction to pass any stay/interim order subject to the condition as it may deem fit and proper to impose.
4. In view of the discussion already held on this behalf, we find that the requirement of deposit of 75% of amount claimed before entertaining an appeal (petition) under [SECTION] of the Act is an oppressive, onerous and arbitrary condition against all the canons of reasonableness. Such a condition is invalid and it is liable to be struck down.
5. As discussed earlier in this judgment, we find that it will be open to maintain a civil suit in civil Court, within the narrow scope and on the limited grounds on which they are permissible, in the matters relating to an English mortgage enforceable without intervention of the Court.
81.In view of the discussion held in the judgment and the findings and directions contained in the preceding paragraphs, we hold that the borrowers would get a reasonably fair deal and opportunity to get the matter adjudicated upon before the Debt Recovery Tribunal. The effect of some of the provisions may be a bit harsh for some of the borrowers but on that ground the impugned provisions of the Act cannot be said to be unconstitutional in view of the fact that the object of the Act is to achieve speedier recovery of the dues declared as NPAs and better availability of capital liquidity and resources to help in growth of economy of the country and welfare of the people in general which would subserve the public interest.
82. We, therefore, subject to what is provided in WPC.Nos.8[SECTION]3 & 8826/12 paragraph 80 above, uphold the validity of the Act and its provisions except that of [SECTION] of the Act, which is declared ultra vires of [SECTION] of the [ACT].
8. Thus, after a detailed examination of the whole issues, the Apex Court has upheld the validity of the Act except that of [SECTION]. Despite this, counsel contended that the issues raised by the petitioners in these writ petitions were not considered by the Apex Court and therefore, according to him, this Court should go into the validity of the provisions of the Act once again.
9. In my view, this prayer of the learned counsel for the petitioners is misconceived and deserves only to be rejected in view of [SECTION] of the [ACT] which makes this Court bound by the law declared by the Apex Court, it being the law of the land. The question whether issues decided by the Apex Court can be reagitated on the ground that some of the contentions raised were not considered or that some of the statutory provisions were not brought to the notice of the court also has been considered by the Apex Court in its judgment in [PRECEDENT] and it was held thus:
WPC.Nos.8[SECTION]3 & 8826/12 The decision in a judgment of the Supreme Court cannot be assailed on the ground that certain aspects were not considered or the relevant provisions were not brought to the notice of the Court (See Ballabhadas Mathurdas Lakhani v. Municipal Committee, Malkapur and AIR [SECTION]73 SC
794). When the Supreme Court decides a principle it would be the duty of the High Court or a subordinate Court to follow the decision of the Supreme Court. A judgment of the High Court which refuses to follow the decision and directions of the Supreme Court or seeks to revive a decision of the High Court which had been set aside by the Supreme Court is a nullity.
(See [PRECEDENT]).
10. This judgment is a complete answer to the contentions raised by the learned counsel for the petitioners.
In this view of the matter, these writ petitions deserve only dismissal and accordingly, I dismiss these cases.
[ENTITY], JUDGE Rp