IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM MONDAY, THE 22ND NOVEMBER 2010 / 1ST AGRAHAYANA 1932 WP(C).No. 27021 of 2010(C) ---------------------------------------- PETITIONER(S): ------------------------ BPL LIMITED, HAVING ITS REGISTERED OFFICE AT BPL WORKS, PALAKKAD-678 007, REPRESENTED BY MR.S. HARIHARAN, GENERAL MANAGER CORPORATE TAXATION & LEGAL. BY ADV. SRI.E.K.NANDAKUMAR, SRI.A.K.JAYASANKAR NAMBIAR, SRI.K.JOHN MATHAI, SRI.P.BENNY THOMAS, SRI.P.GOPINATH, SRI.NITHIN GEORGE. RESPONDENT(S): -------------------------- 1. PEGASUS ASSETS RECONSTRUCTION PRIVATE LIMITED, HAVING ITS REGISTERED OFFICE AT 507, DALAMAL HOUSE, NARIMAN POINT, MUMBAI-400 021, REPRESENTED BY MR.ANSHUL BHIMJYANI, DIRECTOR. 2. DEUTSCHE BANK AG, GLOBAL MARKETS HAVING ITS REGISTERED OFFICE AT KODAK HOUSE, 222, DR. D.N. ROAD, FORT, MUMBAI-400 001, REPRESENTED BY MR.GAUTAM V.PATEL, DIRECTOR INDIA HEAD, STRATEGIC INVESTMENTS GROUP. 3. RESERVE BANK OF INDIA, HAVING ITS CENTRAL OFFICE AT CENTRAL OFFICE, MUMBAI-400 001. (P.T.O.) WP(C).No. 27021 of 2010(C) *ADDL. R4 IMPLEADED ADDL. R4: ICICI BANK LTD., ICICI BANK TOWERS, BANDRA-KURLA COMPLEX, MUMBAI-400 051. * ADDL. R4 IS IMPLEADED, VIDE ORDER DATED 28/09/2010 IN I.A.NO.13041/2010. R1 BY SRI.PRAVIN SAMADANI, SENIOR ADVOCATE, ADV. SRI.GEORGE THOMAS MEVADA, SR I.SUSHEEL JOSEPH CYRIAC. R2 BY SRI.V.CHITAMBARESH, SENIOR ADVOCATE, ADV. SRI.H.RAMANAN, SRI.MANU GEORGE KURUVILLA. ADDL. R4 BY SRI.M.PATHROSE MATTHAI, SENIOR ADVOCATE, ADV. SRI.SAJI VARGHESE, SMT.MARIAM MATHAI. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 26/10/2010, ALONG WITH WPC NO. 25000 OF 2010, THE COURT ON 22/11/2010 DELIVERED THE FOLLOWING: rs WP(C).No. 27021 of 2010(C) APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF THE JUDGMENT DATED 23/08/2005 IN C.P.NO.13/2005. EXT.P2: COPY OF THE SCHEME OF ARRANGEMENT AS AMENDED DATED 23/08/2005. EXT.P3: COPY OF THE AGREEMENT DATED 05/04/2008 EXECUTED BETWEEN ARCIL AS ASSIGNOR AND 2ND RESPONDENT AS ASSIGNEE. EXT.P4: COPY OF THE AGREEMENT DATED 07/04/2008 EXECUTED BETWEEN ARCIL AS ASSIGNOR AND 2ND RESPONDENT AS ASSIGNEE. EXT.P5: COPY OF THE ASSIGNMENT AGREEMENT DATED 30/06/2008 BETWEEN 1ST RESPONDENT AND 2ND RESPONDENT. EXT.P6: COPY OF THE LETTER DATED 15/03/2010 ISSUED BY THE PETITIONER TO THE 2ND RESPONDENT. EXT.P7: COPY OF THE LEGAL NOTICE DATED 26/05/2010 ISSUED ON BEHALF OF 1ST RESPONDENT TO THE PETITIONER. EXT.P8: COPY OF THE REPLY DATED 10/06/2010 SENT BY PETITIONER TO THE 1ST RESPONDENT. EXT.P9: COPY OF THE NOTICE DATED 16/06/2010 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER. EXT.P10: COPY OF THE LETTER DATED 22/06/2010 ISSUED BY THE PETITIONER TO THE 2ND RESPONDENT. EXT.P11: COPY OF THE LETTER DATED 25/06/2010 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXT.P12: COPY OF THE REPLY DATED 07/08/2010 ISSUED THROUGH THE ADVOCATE'S OF THE PETITIONER. EXT.P13: COPY OF THE LETTER DATED 16/08/2010 ISSUED ON BEHALF OF THE 1ST RESPONDENT. EXT.P14: COPY OF THE POSSESSION NOTICE DATED 22/08/2010 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER. EXT.P14(a): COPY OF THE POSSESSION NOTICE DATED 22/08/2010 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER. EXT.P14(b): COPY OF THE POSSESSION NOTICE DATED 22/08/2010 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER. EXT.P14(c): COPY OF THE POSSESSION NOTICE DATED 22/08/2010 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER. (P.T.O.) WP(C).No. 27021 of 2010(C) EXT.P14(d): COPY OF THE POSSESSION NOTICE DATED 22/08/2010 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER. EXT.P15: COPY OF THE PAPER PUBLICATION DATED 27/08/2010 IN DECCAN HERALD NEWS PAPER PUBLISHED BY THE 1ST RESPONDENT. EXT.P16: COPY OF THE MASTER CIRCULAR DATED 01/07/2010 ISSUED BY THE 3RD RESPONDENT. RESPONDENT'S EXHIBITS: EXT.R1(A): COPY OF THE JUDGMENT IN COMPANY APPEAL 1 OF 2006 DATED 19TH DECEMBER, 2006. EXT.R1(B): COPY OF THE RESPONDENT NO.1'S REQUEST TO THE RBI DATED 20TH MAY, 2008. EXT.R1(C): COPY OF THE RESPONDENT'S APPROVAL DATED 3RD JUNE, 2008. EXT.R1(D): COPY OF THE LIST OF PRIOR LENDERS OF THE PETITIONER. EXT.R1(E1): COPY OF THE LETTER NO.2440 SENT BY THE PETITIONER TO THE 1ST RESPONDENT DATED 30/11/2009. EXT.R1(E2): COPY OF THE LETTER NO.2441 SENT BY THE PETITIONER TO THE 1ST RESPONDENT DATED 30/11/2009. EXT.R1(E3): COPY OF THE LETTER NO.2442 SENT BY THE PETITIONER TO THE 1ST RESPONDENT DATED 30/11/2009. EXT.R1(E4): COPY OF THE LETTER NO.2443 SENT BY THE PETITIONER TO THE 1ST RESPONDENT DATED 30/11/2009. EXT.R1(E5): COPY OF THE LETTER NO.2444 SENT BY THE PETITIONER TO THE 1ST RESPONDENT DATED 30/11/2009. EXT.R1(E6): COPY OF THE LETTER NO.2445 SENT BY THE PETITIONER TO THE 1ST RESPONDENT DATED 30/11/2009. EXT.R1(E7): COPY OF THE LETTER NO.2446 SENT BY THE PETITIONER TO THE 1ST RESPONDENT DATED 30/11/2009. EXT.R1(E8): COPY OF THE LETTER NO.2447 SENT BY THE PETITIONER TO THE 1ST RESPONDENT DATED 30/11/2009. EXT.R1(E9): COPY OF THE LETTER NO.2448 SENT BY THE PETITIONER TO THE 1ST RESPONDENT DATED 30/11/2009. EXT.R1(E10): COPY OF THE LETTER NO.2449 SENT BY THE PETITIONER TO THE 1ST RESPONDENT DATED 30/11/2009. (P.T.O.) WP(C).No. 27021 of 2010(C) EXT.R1(E11): COPY OF THE LETTER NO.2450 SENT BY THE PETITIONER TO THE 1ST RESPONDENT DATED 30/11/2009. EXT.R1(E12): COPY OF THE LETTER NO.2451 SENT BY THE PETITIONER TO THE 1ST RESPONDENT DATED 30/11/2009. EXT.R1(E13): COPY OF THE LETTER NO.2452 SENT BY THE PETITIONER TO THE 1ST RESPONDENT DATED 30/11/2009. EXT.R1(E14): COPY OF THE LETTER NO.2453 SENT BY THE PETITIONER TO THE 1ST RESPONDENT DATED 30/11/2009. EXT.R1(E15): COPY OF THE LETTER NO.2454 SENT BY THE PETITIONER TO THE 1ST RESPONDENT DATED 30/11/2009. EXT.R1(E16): COPY OF THE LETTER NO.2455 SENT BY THE PETITIONER TO THE 1ST RESPONDENT DATED 30/11/2009. EXT.R1(F): COPY OF THE LETTER DATED 25TH JUNE, 2010 SENT BY THE 1ST RESPONDENT. EXT.R1(G): COPY OF THE LETTER DATED 23RD JUNE, 2010 SENT BY THE PETITIONER. EXT.R1(H): COPY OF THE LETTER DATED 29TH JUNE, 2010 SENT BY THE 1ST RESPONDENT TO THE PETITIONER. EXT.R1(I): COPY OF THE INTERLOCUTORY APPLICATION FILED BY RESPONDENT NO.3 IN SLP NO.2240/2009. EXT.R1(J): COPY OF THE JUDGMENT OF THE HONOURABLE SUPREME COURT OF INDIA DATED 30TH SEPTEMBER, 2010 PASSED IN THE CASE OF ICICI BANK LIMITED v. OFFICIAL LIQUIDATOR OF APS STAR INDUSTRIES LTD. & ORS. EXT.R1(K-1): COPY OF THE LETTER DATED 22ND SEPTEMBER, 2009 ADDRESSED BY THE PETITIONER TO RESPONDENT NO.1. EXT.R1(K-2): COPY OF THE LETTER DATED 1ST OCTOBER, 2009 ADDRESSED BY RESPONDENT NO.1 TO THE PETITIONER. EXT.R2 A: COPY OF THE INTERIM ORDER OF HONOURABLE SUPREME COURT DATED 16/02/2009 IN SLP NO.2240/2009. //TRUE COPY// P.S. TO JUDGE rs C.R. C.K.ABDUL REHIM, J. ------------------------------------------------------- W.P.(C).Nos. 25000 & 27021 of 2010 ------------------------------------------------------- Dated this the 22nd day of November, 2010 J U D G M E N T ---------------------- The petitioner in WP(C).No.27021/2010 is a Public Limited Company incorporated under the provisions of the Companies Act 1956, carries on business inter alia in manufacturing medical equipments in the field of cardiology, patient monitoring, imaging etc (hereinafter referred to as the petitioner company). They are also manufactures of Printed Circuit Boards and alkaline Batteries. The company claims to be providing employment to about 1200 persons, directly and indirectly. The factory of the petitioner company is located at Palakkad in Kerala. The petitioner in WP(C).No.25000/2010 is a trade union registered under the provisions of the Trade Unions Act 1926, representing workers of the petitioner company. 2. The challenge in these writ petitions is against proceedings initiated under section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of W.P.(C).25000 & 27021/10 -2- Security Interest Act (SARFAESI Act) by M/s. Pegasus Assets Reconstruction Private Limited (respondent No.1 in WPC.27921/2010 and respondent No.3 in WPC.No.25000/2010) against the assets of the petitioner company. 3. Parties in both these writ petitions are one and the same. The pleadings on facts and grounds, as well as exhibits produced are more or less the same in both these cases. For the sake of convenience, the order of the parties as well as the order of exhibits is referred hereinafter as in its order in WP(C). No.27021/2010. 4. A brief history on the facts of the case is as follows. With respect to liquidating debts of the petitioner company, an arrangement with its secured creditors and preferential share holders were evolved in the form of a scheme, which was filed before this court under the provisions of section 391 to 394 of the Companies Act. The scheme was approved with effect from 31.3.2003, through Ext.P1 judgment in C.P.No.13/2005. By virtue of the scheme, the debts of the petitioner company as on 31.3.2003 along with underlying securities were restructured and the rights and liabilities between the petitioner and its secured creditors and preferential share holders were settled. The scheme in question is produced as Ext.P2. W.P.(C).25000 & 27021/10 -3- 5. An Assets Reconstruction Company, viz. M/s. Assets Reconstruction Company of India Limited (ARCIL) had acquired debts and secured assets of the petitioner company from its various secured creditors (Banks and other financial institutions) by virtue of separate agreements. M/s. ARCIL, through agreements dated 5.4.2008 and 7.4.2008 had assigned their rights along with the underlying securities, which constitute 55% of the total debts of the petitioner company, in favour of the 2nd respondent, which is a banking company constituted under the provisions of the Banking Regulation Act 1949 (BR Act) . Exts. P3 and P4 are the agreements executed between ARCIl and the 2nd respondent. The 2nd respondent in turn assigned the above debts and underlying securities in favour of the 1st respondent, which again is another asset reconstruction company, by virtue of Ext.P5 agreement. 6. According to the petitioner company, they were negotiating with the 2nd respondent Bank for settlement of the liabilities. But pursuant to Ext.P5 agreement the 1st respondent caused Ext.P7 legal notice calling upon the petitioner company to make payment of outstanding balance of Rs.275,47,28,329.14 (Rupees Two Hundred and Seventy Five crores, Forty Seven lakhs, Twenty Eight Thousand, Three Hundred and Twenty Nine W.P.(C).25000 & 27021/10 -4- and paise Fourteen only). The petitioner company had caused Ext.P8 reply requesting the 1st respondent not to precipitate the issue since negotiations with the 2nd respondent was at close to finalisation of settlement. The 1st respondent was requested to wait till finalisation of the proposed settlement. But the 1st respondent issued demand notice under Section 13(2) of the SARFAESI Act as per Ext.P9. Eventhough the petitioner company had addressed the 2nd respondent Bank to permit settlement of the liabilities in terms of the 'one time settlement' arrived upon, the 2nd respondent, through Ext.P11 letter, had denied of having any such settlement. The petitioner company thereupon caused reply to the demand under section 13(2), which was considered and rejected by the 1st respondent through Ext.P13. Subsequently the 1st respondent had issued Ext.P14 series notices under the Security Interest (Enforcement) Rules 2002 intimating steps taken as contemplated under section 13(4) of the SARFAESI Act. The publication of possession notice was effected through Ext.P15. 7. In both these writ petitions the proceedings initiated under section 13 of the SARFAESI Act is challenged more or less on the same grounds. Specific contention is that, the acquisition of financial assets by a securitisation/reconstruction company W.P.(C).25000 & 27021/10 -5- from another securitisation/reconstruction company is not permissible under the provisions of the SARFAESI Act, as clarified by Reserve Bank of India in its Master Circular dated 1.7.2010 (Ext.P16). It was also contended that Section 5 of the SARFAESI Act which permits acquisition of any financial assets of a bank or a financial institution by any securitisation or reconstruction company, does not contemplates a further transfer of such financial assets to any other Bank or a financial institution or a transfer by one securitisation or reconstruction company to another securitisation or reconstruction company. In other words, the provisions does not contemplate transfer of a financial asset already acquired by a securitisation company or a reconstruction company to any other Bank, or to any other securitisation/reconstruction company. The contention is that the provision contemplates only one transfer and not any subsequent transfers. There is no provision enabling an Asset Reconstruction Company (ARC) or a securitisation company for a subsequent transfer of the secured assets and for that reason subsequent transfers if any effected is without jurisdiction and illegal. The powers conferred on a Securitisation/ARC under section 13 of the Act is only to proceed against the borrower, notwithstanding anything contained in section 69 or 69A of the W.P.(C).25000 & 27021/10 -6- Transfer of Property Act, in order to enforce a security without intervention of the court or Tribunal, and such power can only be exercised in the manner prescribed under the provisions contained in the Act, and any deviation from the same cannot be permitted, is the contention. 8. In view of the above proposition canvassed, contention of the petitioner is that; the transfer of the debts and underlying securities of the petitioner company by M/s. ARCIL to the 2nd respondent and the subsequent transfer by the 2nd respondent to the 1st respondent are illegal and invalid, and therefore the 1st respondent is not entitled to invoke section 13 of the SARFAESI Act. According to the petitioner, the contents of Ext.P13 letter to the effect that the petitioner had already accepted and acquiesced the transaction, could not be of no avail, because the agreement between ARCIL and the 2nd respondent or between the 2nd respondent and the 1st respondent does not indicate any transfer of the rights to initiate proceedings under the SARFAESI Act. When a statute does not permit certain transfers, mere waiver or acquiescence will not amount to legalising such illegal transfer. Since the transfers are void ab initio, the question of consent or acquiescence does not arise, is the contention. W.P.(C).25000 & 27021/10 -7- 9. It is further contended that the 2nd respondent is a banking company under the BR Act and its activity is strictly confined to that of “Banking” as defined under section 5 (b) of the BR Act. Being a Bank, the 2nd respondent is restrained from undertaking any activity not permitted under section 6 of the BR Act. Under section 8 of the BR Act the Banks are prohibited from engaging in any trading or buying and selling, subject to certain exceptions set out therein. Therefore, the acquisition of debts by respondent No.2 from ARCIL is not an activity coming within the purview of the BR Act. The agreement between ARCIL and the 2nd respondent is in the nature of a speculative trading activity which is prohibited under the provisions of the BR Act. It is also contended that such an activity is prohibited under the provisions of the SARFAESI Act since section 5 of that Act permits only securitisation/reconstruction companies to acquire financial assets. Since the 2nd respondent had never validly acquired any title to the debts of the petitioner, any subsequent transfer made by the 2nd respondent is void ab initio. The alleged acquisition by way of agreement between respondents 1 and 2 is a 'non est' in the eye of law and it will not confer any right on the 1st respondent, is the contention. 10. According to the petitioner the entire transaction of W.P.(C).25000 & 27021/10 -8- assignment of debts of petitioner Company by ARCIL to the 2nd respondent, and the further transaction of assignment by the 2nd respondent to the 1st respondent, were done only to circumvent the provisions of law restricting such transfers. Therefore it is contended that the transactions are colourable and carried out in order to defeat the legal restrictions. It is contended that such transactions were done only with an unlawful intention of circumventing provisions of the SARFAESI Act and such contract is therefore void ab initio under the provisions of Section 23 of the Indian Contract Act 1872. Further contention is that, since the 2nd respondent held the debts only for a short period of less than three months, it is evident that the said respondent was trading in debts, circumventing the guidelines and the norms prescribed by Reserve Bank of India. Therefore the petitioner is seeking to quash the proceedings initiated under the SARFAESI Act. 11. In the counter affidavit filed by respondents 1 and 2, maintainability of these writ petitions were challenged on the basis of availability of efficacious remedies provided under the SARFAESI Act. Various legal precedents were pointed out in which the Hon'ble Supreme Court had deprecated the practice followed by some of the High Courts in interfering with steps W.P.(C).25000 & 27021/10 -9- initiated under the SARFAESI Act, exercising power under Article 226 of the Constitution of India. The restrictions imposed under section 34 of the SARFAESI Act barring interference of the civil courts, was also pointed out. Further contention is that the petitioner company had accepted the 1st respondent as the ultimate assignee of its debts and also made repayments to the 1st respondent. On the basis of such acceptance and acquiescence the petitioner company could not challenge the transfer of debts and assets in favour of the 1st respondent, is the contention. The petitioner company was also accused with suppression of material facts from this court, like filing of WP(C).No.25000/2010 by the trade union seeking identical reliefs on the very same grounds. 12. According to respondents there was a clear attempt of misleading, which had resulted in multiplicity of proceedings and abuse of the process of law. Impleading of the 2nd respondent and the non impleading of ARCIL were pointed out in order to contend that there is mis-joinder as well as non-joinder of necessary parties. It is further contended that, the acquisition of debts of the petitioner company was done after obtaining sanction from the 3rd respondent, the Reserve Bank of India. Copy of the request made by the 1st respondent in this regard W.P.(C).25000 & 27021/10 -10- and the sanction issued by the 3rd respondent are produced along with the counter affidavit of the 1st respondent as Exts.R1(B) and R1(C) respectively. It is further contended that subsequent to the transfer of assets, the petitioner company had effected part repayments to the 1st respondent, to the tune of a sum of Rs.30,01,55,000/-. Ext.R1(E) series letters are produced to show that the petitioner company had confirmed/acknowledged the debt due to the 1st respondent and also acknowledged the amounts outstanding, as on 30.11.2009. It is further pointed out that the petitioner company, in its annual report for the financial year 2008-09, had recognised the first respondent as its creditor and in the auditors report it is admitted that the petitioner company had defaulted repayments of amounts due to the consortium lenders comprised of the first respondent. The first respondent also points out that replies issued by the petitioner to the statutory notices, Ext.R1(G) and R1(H) will indicate acknowledgment of the outstanding liability due to the first respondent. 13. According to the 1st respondent, acquisition of any debt by a Bank and/or a subsequent assignment thereof is only an act incidental/conducive to advancement of business of banking, which is permitted under section 6(1)(n) of the BR Act. W.P.(C).25000 & 27021/10 -11- The assignment of security is a legally accepted right when the debt is sold or purchased among banks. The sale and purchase of debt/non performing debt is not an independent activity carried out by the Banks, but it is a banking activity arising out of and closely related to banking business, is the contention. Since respondent No.3 had approved the assignment in favour of respondent No.1, through Ext.R1(C), the petitioner can hardly contend that the assignment is violative of the BR Act. It is stated that, the BR Act does not prohibit in any manner a banking company from dealing on its debts. On the other hand, section 8 of the BR Act specifically permits such dealing, and therefore the argument of the petitioner that the banking company is not permitted to deal with debts under the BR Act, is highly misconceived and untenable, is the contention. 14. It is further contended that the provisions of the SARFAESI Act does not prohibit a banking company from acquiring or otherwise dealing in securities. A financial asset within the meaning of the SARFAESI Act includes a debt with underlying security. Therefore contention of the 1st respondent that the SARFAESI Act does not envisage dealing in debt by a Bank, is incomprehensible. Section 13 of the Act provides enforcement of a security interest by any secured creditor W.P.(C).25000 & 27021/10 -12- including a banking company or an asset reconstruction company, and the same does not draw a distinction between the powers of a banking company and an asset reconstruction company, as far as enforcement of the securities held by them. Therefore the contentions attempting any such distinction is not legally tenable, is the argument. 15. The contentions of the petitioner that, section 5 will prohibit acquisition of any financial asset by a Bank or a financial institution from an asset reconstruction company, is refuted. It is also refuted that section 5(2) does not contemplate transfer of financial assets in between securitisation company or reconstruction company or bank or financial institution inter se. According to the respondents, it is well settled law that unless the Act expressly prohibit such transfers, they are deemed to be permitted. The SARFAESI Act does not restrict in any manner any number of transfers, is the contention. 16. According to the 1st respondent the proceedings initiated under section 13 of the SARFAESI Act is perfectly legal and valid, because the transfers and acquisitions through which the debts and the underlying securities were assigned to the 1st respondent is legal and valid. The allegations of the petitioner describing the assignment as a colourable transaction is stoutly W.P.(C).25000 & 27021/10 -13- denied and the further allegations that such transfer was carried out in order to defeat the legal restrictions on assignments of debts, is also denied. The allegation that such transactions were initiated only for circumventing the provisions, norms etc. are totally baseless. The further allegation that the assignment agreements were executed with an unlawful object is denied. The contentions that such agreements are hit by the provisions of section 23 of the Indian Contract Act is also refuted. The allegation that the assignment is non est and it is a sham transaction was stoutly denied. There is no basis for the contention that such assignments will not confer any valid rights on respondent No.1, is the argument. The contentions based on alleged violation of section 13(9) of the SARFAESI Act was also denied by the 1st respondent. 17. Heard Mr. A.M. Shaffique, senior counsel appearing for the petitioner in WP(C).No.27021/10 and Mr.P.K.Suresh Kumar, counsel appearing for the petitioner in WP(C). No.25000/10. On behalf of the 1st respondent, Mr.Pravin Samdani, senior counsel addressed elaborate arguments. M/s.ICICI Bank Limited, who got themselves impleaded as additional respondents in both these cases was represented by Mr.Pathrose Mathai, Senior Advocate. The 2nd respondent Bank W.P.(C).25000 & 27021/10 -14- was represented through Mr.V.Chithambaresh, Senior Advocate. 18. I am inclined to consider the question regarding maintainability of these writ petitions as a foremost issue. Mr.Samdani raised a contention that, challenge against the proceedings under Section 13 of the SARFAESI Act could not be entertained under Article 226 of the Constitution of India, in view of Section 17(1) of the said Act. It is provided under Section 17(1) that any person including the borrower if aggrieved by any of the measures referred to in sub-section 4 of Section 13, is at liberty to approach the Debts Recovery Tribunal making an application in the matter, within 45 days from the date on which such measures are taken. Placing reliance on Mardia Chemicals Ltd. and others Vs. Union of India and others [(2004) 4 SCC 311], learned counsel contended that the proceedings under Section 17 of the Act, is not an appellate in nature. The Hon'ble Supreme Court observed that it seems to be a misnomer and in fact it is the initial action which is brought before a forum as prescribed under the Act. It is the stage of initial proceedings like filing of a suit in civil court. The Hon'ble Supreme Court observed that, as a matter of fact, a proceedings under Section 17 of the Act are in lieu of a civil suit, which remedy is ordinarily available, but for the bar under Section 34 W.P.(C).25000 & 27021/10 -15- of the Act. It is pointed out that, the Hon'ble Supreme Court had struck down the provisions contained under Section 17(2) (which then existed) insisting a pre-condition for payment of 75% of the amount. Further, amendments brought in,