Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – ss.13(4), 17, 18 – Grant of loans by financial institution – Failure of the borrower to pay the dues – Case of borrower that he was desirous to pay loan amount, as such sought regularization of the loan amount but bank failed to consider the same – Writ petition u/Art.226 by borrower – Interim order passed, staying further proceedings at the stage of s.13(4), on deposit of Rs.3,50,000/- – Appeal thereagainst dismissed by the Division Bench – On appeal, held: In financial matters grant of exparte interim orders can have a deleterious effect and it is not sufficient to say that the aggrieved has the remedy to move for vacating the interim order – Such loan are granted from public money generated at tax payers’ expense – Timely repayment cannot be permitted to be blocked by frivolous litigation – It is the solemn duty of the court to apply the correct law without waiting for an objection – Any departure, if permissible, has to be for reasons discussed, of the case falling under a defined exception – High Court ought not to have entertained the writ petition in view of the adequate alternate statutory remedies available to the borrower and without granting opportunity to the bank to contest the maintainability of the writ petition – Opinion of the Division Bench that the counter affidavit having subsequently been filed, stay/modification could be sought of the interim order cannot be considered sufficient justification to decline interference – Thus, the impugned orders are unsustainable, and set aside – Constitution of India – Art.226 – Alternative Remedy.
Allowing the appeal, the Court
HELD: 1.1 The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is a complete code by itself, providing for expeditious recovery of dues arising out of loans granted by financial institutions, the remedy of appeal by the aggrieved under Section 17 before the Debt Recovery Tribunal, followed by a right to appeal before the Appellate Tribunal u/s. 18. The High Court ought not to have entertained the writ petition in view of the adequate alternate statutory remedies available to the Respondent. [Para 4][237-E]
1.2 Normally this Court in exercise of jurisdiction under Article 136 of the Constitution is loathe to interfere with an interim order passed in a pending proceeding before the High Court, except in special circumstances, to prevent manifest injustice or abuse of the process of the court. The discretionary jurisdiction under Article 226 is not absolute but has to be exercised judiciously in the given facts of a case and in accordance with law. The normal rule is that a writ petition under Article 226 ought not to be entertained if alternate statutory remedies are available, except in cases falling within the well defined exceptions. [Para 6][238-C-D]
1.3 The pleadings in the writ petition are very bald and contain no statement that the grievances fell within any of the well defined exceptions. The allegation for violation of principles of natural justice is rhetorical, without any details and the prejudice caused thereby. It harps only on a desire for regularisation of the loan account, even while the Respondent acknowledges its own inability to service the loan account for reasons attributable to it alone. The writ petition was filed in undue haste immediately after disposal of objections under Section 13(3A). The legislative scheme, in order to expedite the recovery proceedings, does not envisage grievance redressal procedure at this stage, by virtue of the explanation added to Section 17 of the Act. [Para 7][239-B-C]
1.4 The Section 13(4) notice along with possession notice u/r.8 was issued. The remedy u/s.17 was now available to the respondent if aggrieved. These developments were not brought on record or placed before the Court when the interim order came to be passed. The writ petition was clearly not instituted bonafide, but patently to stall further action for recovery. There is no pleading why the remedy available u/s. 17 before the Tribunal was not efficacious and the compelling reasons for by-passing the same. Unfortunately, the High Court also did not dwell upon the same or record any special reasons for grant of interim relief by direction to deposit. [Para 8][239-E-F]
1.5 It is the solemn duty of the Court to apply the correct law without waiting for an objection to be raised by a party, especially when the law stands well settled. Any departure, if permissible, has to be for reasons discussed, of the case falling under a defined exception, duly discussed after noticing the relevant law. In financial matters grant of ex-parte interim orders can have a deleterious effect and it is not sufficient to say that the aggrieved has the remedy to move for vacating the interim order. Loans by financial institutions are granted from public money generated at the tax payers expense. Such loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as entrustment by the public. Timely repayment also ensures liquidity to facilitate loan to another in need, by circulation of the money and cannot be permitted to be blocked by frivolous litigation by those who can afford the luxury of the same. [Para 16][243-C-E]
1.6 The writ petition ought not to have been entertained and the interim order granted for the mere asking without assigning special reasons, and that too without even granting opportunity to the appellant to contest the maintainability of the writ petition and failure to notice the subsequent developments in the interregnum. The opinion of the Division Bench that the counter affidavit having subsequently been filed, stay/modification could be sought of the interim order cannot be considered sufficient justification to have declined interference. The impugned orders are therefore contrary to the law laid down by this Court under Article 141 of the Constitution and unsustainable. They are therefore, set aside. [Paras 17, 19][244-B-C, F]
United Bank of India v. Satyawati Tandon and others (2010) 8 SCC 110 : [2010] 9 SCR 1; General Manager, Sri Siddeshwara Cooperative Bank Limited and another v. Ikbal and others (2013) 10 SCC 83 : [2013] 8 SCR 532; Commissioner of Income Tax and Others v. Chhabil Dass Agarwal (2014) 1 SCC 603; Punjab National Bank v. O.C. Krishnan and others (2001) 6 SCC 569 : [2001] 1 Suppl. SCR 466; Union Bank of India and another v. Panchanan Subudhi (2010) 15 SCC 552; Kanaiyalal Lalchand Sachdev and others v. State of Maharashtra and others (2011) 2 SCC 782 : [2011] 2 SCR 602; Punjab National Bank and another v.
Imperial Gift House and others (2013) 14 SCC 622; Dwarikesh Sugar Industries Ltd. v. Prem Heavy Engineering Works (P) Ltd. and Another (1997) 6 SCC
450 : [1997] 1 Suppl. SCR 184 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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