IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM THURSDAY, THE 8TH DAY OF DECEMBER 2011/17TH AGRAHAYANA 1933 WPC.No. 31258 of 2010 (F) ------------------------------------ PETITIONER: ------------------- SAHIL, AGED 21, S/O.THAKRIYUDHIN.A.WAHID, 75 F NEHRU ROAD, NEAR CENTAUR HOTEL, VILE PARLE (E), MUMBAY-400 099. BY ADV. SRI.N.K.MOHANLAL. RESPONDENTS: ------------------------ 1. AUTHORISED OFFICER AND CHIEF MANAGER, INDIAN BANK, ASSET RECOVERY MANAGMENT BRANCH II, WELLINGTON ESTATE, CIRCLE OFFICE BUILDING, 4THFLOOR, 55/ETHIRAJ SALAI, CHENNAI-600 008. 2. CHIEF MANAGER, INDIAN BANK, HEAD OFFICE, 66, RAJAJI SALAI, CHENNAI-670 001. 3. M/S.EAST WEST TRAVEL AND TRADE LINKS LIMITED, 75 F, NEHRU ROAD, WHILE PARLE, EAST MUMBAI, PIN-400 099 REPRESENTED BY ITS MANAGING DIRECTOR. 4. AHAMMED HUSSAIN, S/O.SHAMSUDDIN MUSALIYAR, PUTHENVEEDU, MYLACAUD P.O. KOLLAM, PIN-670 611. R1 & R2 BY SRI.S.EASWARAN, S.C. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 08-03-2011, ALONG WITH W.P(C). NO. 6360/2011, THE COURT ON 08/12/2011 DELIVERED THE FOLLOWING: W.P.(C).NO.31258/2010-F: APPENDIX PETITIONER'S EXHIBITS & ANNEXURE:- EXT.P.1: COPY OF THE SALE NOTICE PUBLISHED IN DAILY KERALA KAUMUTHI DTD. 03/07/2010. EXT.P.2: COPY OF THE DEATH CERTIFICATE OF PETITIONER'S FATHER THAKRIYUDHIN.A. WAHID DTD. 13/11/1995. EXT.P.3: COPY OF THE COUNTER FILED BY R.1. AND R2. IN W.P.(C).27232/10. ANNEXURE A1: COPY OF THE ORDER OF C J M DTD. 04/02/2011 IN CMP.4453/2010. RESPONDENTS' EXHIBITS:- NIL. //TRUE COPY// P.A. TO JUDGE Prv. C.K. ABDUL REHIM, J. ------------------------------------------------- W.P.(c) No.31258 OF 2010 & W.P.(c) No.6360 OF 2011 ------------------------------------------------- DATED THIS THE 8th DAY OF DECEMBER, 2011 J U D G M E N T Both these writ petitions are filed by one of the legal heirs of deceased Sri. Thakriyudhin A. Wahid, who created mortgage of an immovable property, having an extent of 3½ cents along with a three storied building contained therein, situated in Sy No.973 of Vanchiyoor village in Thiruvananthapuram District. The mortgage was created in favour of respondents 1 and 2, for securing a loan availed by the 3rd respondent company. Consequent to default committed in repayment of the loan, proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI SARFAESI Act) was initiated and the above said property was sold in public auction conducted on 13-08-2010, in favour of the 4th respondent, for a sum of Rs.1.37 crores. 2. In W.P (c) No.31258/2010 the petitioner is seeking a writ of certiorari for quashing the proceedings initiated W.P.(c) Nos.31258/2010 & 6360/2011 -2- under the SARFAESI Act. Inter alia the petitioner is seeking to restrain respondents 1 and 2 from taking physical possession of the property in question. The main contention raised in the writ petition is that, the predecessor in interest who had mortgaged the property died on 13-11-1995 and the petitioner being one of his legal representatives was not brought on record and no notice under the SARFAESI Act was served on him. Hence it is contended that the proceedings initiated under the SARFAESI Act is null and void. It is also contended that the impugned proceedings is barred by limitation under Article 62 of the Limitation Act read with Section 36 of SARFAESI Act. In support of the contention it is stated that the loan in question was availed in the year 1989 and the impugned proceedings was initiated only in the year 2009, and in between there was no acknowledgment of the debt. Contentions were also raised regarding alleged irregularities in the sale proceedings. 3. W.P (c) No.6360/2011 is filed on a subsequent stage seeking the very same reliefs, stating that this court had W.P.(c) Nos.31258/2010 & 6360/2011 -3- reserved W.P (c) No.31258/2010 for judgment on 08-11- 2010, but in the meanwhile the respondents 1 and 2 had initiated proceedings under Section 14 of the SARFAESI Act to take over physical possession of the property through Advocate Commissioner appointed from the Chief Judicial Magistrate Court. Contention was raised to the effect that once the sale certificate is issued, further proceedings under Section 17 of SARFAESI Act could not be invoked. The very same contention regarding non-impleadment of one of the legal heirs in the proceedings was raised as a ground in the subsequent writ petition also. 4. In the counter affidavit filed on behalf of respondents 1 and 2 in W.P (c) No.31258/2010 it is stated that this Court had already dismissed a writ petition filed by one Sri. Abdul Salam, who claimed to be a tenant in occupation of portion of the building situated in the property sold. According to respondents 1 and 2, they have every reason to believe that the petitioner is set up by none other than the said tenant , who was the petitioner in the W.P.(c) Nos.31258/2010 & 6360/2011 -4- case already dismissed. It is further stated that the writ petition is filed at a time when the sale certificate has already issued consequent to the disposal of the said writ petition, W. P (c) No.27232/2010. Maintainability of the writ petition is also challenged contending that the petitioner had failed to avail the statutory remedy as provided under Section 17 (1) of the SARFAESI Act. It is further contended that the mortgage in question was created by virtue of Ext.R1 (a) on 30-10-1989 and there was acknowledgment of the debt from the side of the borrower as well as by the guarantors on various occasions, in the year 1991 and 1995, as evident from Exts.R1 (b), R1 (c) and R1 (d). The respondents 1 and 2 had filed O.A No.531/1997 before the Debts Recovery Tribunal on 17-07-1997 which was ultimately allowed on 07-08-2007 permitting realisation of a sum of Rs.170,13,62,657.05 along with interest as per Ext.R1 (e) order. It is stated that, the 9th defendant in the order of the Debts Recovery Tribunal is none other than the wife of the deceased mortgagor who was impleaded W.P.(c) Nos.31258/2010 & 6360/2011 -5- consequent to death of the predecessor in interest of the petitioner. According to respondents 1 and 2 it was not brought to the notice of the Bank that there is no other surviving legal heirs. Contention is that the decree passed by the Debts Recovery Tribunal is valid since there was proper representation on behalf of the legal heirs. It is also contended that the petitioner is estopped from raising any such contention without challenging the decree passed by the Debts Recovery Tribunal, that too in a writ petition filed under Article 226 of the Constitution of India, at a stage when the sale has been confirmed and sale certificate has already been issued under the provisions of the SARFAESI Act. According to respondents 1 and 2, the contention regarding the question of limitation has no legal basis since the order in O.A was passed only on 07-08-2007 and the period of limitation of 12 years will starts to run only from the date of the decree. In view of the settled legal position the secured creditor is entitled to invoke provisions of the SARFAESI Act for realising the decree amount within the W.P.(c) Nos.31258/2010 & 6360/2011 -6- period of limitation computed from the date of decree. Respondents 1 and 2 have enumerated the various stages of the proceedings and copies of various statutory notices issued at different stages are also produced. It is contended that there was no material irregularity and illegality with respect to conduct of the sale and that the contention raised in the writ petition is unsustainable. 5. In W.P (c) No.6360/2011 the 4th respondent had filed I.A No.15446/2011 seeking direction to respondents 2 and 3 to hand over the possession of the secured assets which is the subject matter of the sale. The petitioner had filed a reply affidavit refuting the contentions in connection with dismissal of W.P (c) No.27231/2010. 6. The main issue arising for consideration is as to whether the proceedings initiated under the SARFAESI Act as well as the sale conducted on 13-08-2010 is valid or not. A substantial challenge has been raised by respondents 1 and 2 regarding maintainability of the writ petitions. The petitioner had failed to avail the effective and alternative W.P.(c) Nos.31258/2010 & 6360/2011 -7- remedy provided under the SARFAESI Act. In this regard I take note of the settled legal position, as held by the Hon'ble Apex Court that the remedy provided under Section 17 (1) of the SARFAESI Act is a statutory remedy which is effective and efficacious. In a recent decision in United Bank of India V. Satyawati Tondon (2010) 8 SCC 110) the Hon'ble apex Court had deprecated the practice of the High Courts interdicting with the proceedings under the SARFAESI Act, in very strong language. There is no reasonable explanation forthcoming from the side of the petitioner for not availing the remedy as provided under Section 17(1). 7. However, since a substantial question has been raised on the allegation of non-representation of a legal heir, as well as the question of limitation with respect to the proceedings, I am inclined to consider those matters on merits. Contention of the petitioner is that he is one of the legal heirs of the guarantor who had mortgaged the secured asset in question. Evidently the amount now sought to be W.P.(c) Nos.31258/2010 & 6360/2011 -8- recovered is the amount settled through the decree passed by the Debts Recovery Tribunal, Ext.R1 (c). It is also evident that the mother of the petitioner who is one among the legal heirs of the deceased guarantor was a party to the proceedings before the Debts Recovery Tribunal, and she remained ex parte. She has not chosen to contest the matter before the Debts Recovery Tribunal even after proper service of notice. It is evident that the decree was passed by as early as in August, 2007. The notice as contemplated under Section 13 (2) of the SARFAESI Act and the SARFAESI proceedings were initiated as early as in July, 2007. Ultimately the sale was conducted on 13-08-2010. The question is as to whether the petitioner can be permitted to raise a contention challenging the sale proceedings at this stage. According to the learned counsel for the petitioner the fact that the mother was a party to the proceedings before the Debts Recovery Tribunal is not sufficient for the respondent Bank to contend that there was substantial representation of the legal heirs. He placed W.P.(c) Nos.31258/2010 & 6360/2011 -9- reliance on the decision of the Hon'ble Supreme Court in N.K. Mohd. Sulaiman Sahib V. N.C. Mohd. Ismail Saheb and others (AIR 1966 SC 792). It is held therein that the principles of representation of estate by the heirs who were joined as parties to the lis, will apply and the decree will be binding only on those who were parties and not otherwise. He also pointed out the decision in Mary Metilda V Kunjiran Kunju Kathija Ummal reported in 1969 KLT 241 wherein it is held that first requisite for application of theory of substantial representation is that the omission to bring all the heirs on the party array should be a bonafide error due to want of information, despite diligent enquiries, regarding existence of the omitted heirs. 8. Sri. S. Easwaran, learned counsel appearing for respondents 1 and 2 on the other hand contended that on the facts of the case at hand, it is evident that there was substantial representation of the deceased mortgagor. He relied on a decision of the Hon'ble Supreme Court in Mohd. Hussain and others (dead) by LRS V. Gopibai and W.P.(c) Nos.31258/2010 & 6360/2011 -10- others (2008) 3 SCC 233), wherein it is held that, ordinarily the court does not regard a decree binding upon a person who was not impleaded in the action. But, there exist some exemptions like, if there be a debt justly due and no prejudice is shown to the absent heir, the decree in an action, where the plaintiff has after bonafide enquiry impleaded all the heirs known to him, will ordinarily be held binding upon all persons interested in the estate. 9. I am of the view that I need not decide the question as to whether the decree passed by the Tribunal is binding on the petitioner or not, since the challenge is only against the proceedings initiated under the SARFAESI Act. The petitioner had not chosen to challenge the decree of the Debts Recovery Tribunal, nor had raised a dispute before any appropriate forum challenging the SARFAESI proceedings on the basis of the contention regarding non- binding of the decree. Hence I am of the view that the writ petition cannot be entertained on the ground. W.P.(c) Nos.31258/2010 & 6360/2011 -11- 10. The next question need be decided is whether there was any material illegality or irregularity with respect to such proceedings. The main challenge raised against proceedings initiated under the SARFAESI Act is to the effect that the same is barred by limitation on the basis of Article 62 of the Limitation Act read with Section 36 of the SARFAESI Act. 11. Contention of the respondent Bank is to the effect that period of limitation will run only from the date of the decree passed by the Debts Recovery Tribunal. The question was considered by this Court in the case Sreedharan E.P. V. Manager, Indian Bank, Trichy and another (2011 (2) KHC 359). It was held that going by the definition of “financial asset” in the SARFAESI Act, it means any debt or receivables. Since 'decree' is also a 'debt' going by the definition under Section 2 (ha) of the SARFAESI Act, there is no doubt that a decree debt is also a 'financial asset' which is recoverable through proceedings under the SARFAESI Act. Since proceedings under the W.P.(c) Nos.31258/2010 & 6360/2011 -12- SARFAESI Act was initiated through notice contemplated under Section 13 (2) issued within the period of limitation reckoned from the date of the decree, which is the point of time when the financial asset became due as per Section 36, the proceedings is well within the period of limitation prescribed under Section 36 of the SARFAESI Act. The principles laid in the above cited decision has got support of a Division Bench ruling of the High Court of Gujarat reported in (2006) 129 Comp Case Cas 528 as well as a decision of the High Court of Madras reported in 2009 (1) Bankers' Journal 431. Therefore, I am of the view that the contention raised regarding question of limitation has no basis. 12. Yet another contention raised is with respect to non-maintainability of proceedings under Section 14 of the SARFAESI Act, after confirmation of the sale and after issuance of the sale certificate. The question now stands covered thorough a decision of this Court in Kottakkal Co-op. Urban Bank Ltd. V. Balakrishnan reported in W.P.(c) Nos.31258/2010 & 6360/2011 -13- 2008 (2) KLT 456 wherein it is held that if the secured creditor had not obtained possession and only a symbolic sale was effected, it could seek assistance of the Court under Section 14 for the purpose of taking over possession of the secured assets. It is held that, even if de jure possession has already been taken by the secured creditor by recourse to procedure contemplated under Section 13 (4), it is open for such secured creditor to invoke the provisions of Section 14 in order to dispossess the creditor or anybody else for the purpose of securing de facto possession by invoking Section 14 of the Act. 13. From the discussions in the aforementioned paragraphs it is evident that the attempt of the petitioner in filing these writ petitions at a stage after issuance of the sale certificate, when proceedings under Section 14 is invoked cannot be held as genuine and bonafide. The long chequered history of the loan transaction which culminated in a decree of Debts Recovery Tribunal and the subsequent proceedings initiated under the SARFAESI Act as early as in W.P.(c) Nos.31258/2010 & 6360/2011 -14- the year 2009, indicate that the attempt now made by the petitioner to resist the dispossession, without resorting to any of the statutory remedies, cannot be entertained for exercising the discretionary jurisdiction vested on this court under Article 226. I find no exceptional circumstances to deviate from the settled legal position to bye-pass the effective and alternative remedy provided under Section 17 (1) of SARFAESI Act. Hence these writ petitions deserves no merit and are accordingly dismissed. Sd/- C.K. ABDUL REHIM, JUDGE. AMG True copy P.A to Judge