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Union Bank Of India And Another v. Panchanan Subudhi .
Factual and Procedural Background
The appellant Bank granted the respondent a financial facility of Rs 10 lakhs against equitable mortgage of land and building. The loan account was declared a non-performing asset on 31-12-2000, prompting the Bank to file OA No. 70 of 2002 before the Debts Recovery Tribunal, Cuttack (“the Tribunal”). While the OA was pending, the Bank issued notices dated 3-9-2004 under Section 13(2) and 4-12-2004 under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”).
On 30-5-2005 the Tribunal decreed Rs 16,10,957 with pendente lite and future interest at 12% p.a. in favour of the Bank. The respondent challenged the SARFAESI proceedings in W.P. No. 7435 of 2005; the High Court stayed those proceedings on condition that the respondent deposit Rs 10 lakhs, a condition he never fulfilled.
Subsequently, the respondent sought a one-time settlement, which the Bank accepted, but he again defaulted. The Bank therefore issued a possession notice dated 12-2-2007. The respondent questioned that notice in W.P. (C) No. 2322 of 2007. The High Court disposed of the writ petition by directing the respondent to liquidate the Bank’s dues in instalments of Rs 10 lakhs. The Bank appealed to the Supreme Court, resulting in the present order.
Legal Issues Presented
- Whether the High Court erred in entertaining the respondent’s writ petition under Article 226 of the Constitution despite the statutory alternative remedy available under Section 17 of the SARFAESI Act.
- Whether the High Court’s direction allowing the respondent to pay Rs 10 lakhs in instalments was justified when the respondent had already breached the terms of a one-time settlement with the Bank.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Supreme Court held that the High Court adopted an erroneous approach by granting relief in a writ petition when the respondent had an efficacious statutory remedy under Section 17 of the SARFAESI Act. The Court emphasised that, having failed to comply with the one-time settlement terms, the respondent was not entitled to judicial intervention under Article 226. Ignoring the availability of the alternate remedy, the High Court effectively insulated the respondent from statutory recovery measures, a course the Supreme Court deemed unjustified.
Holding and Implications
Appeal Allowed; High Court’s order set aside; Writ Petition dismissed.
The immediate consequence is that the Bank may proceed under the SARFAESI Act or execute the Tribunal’s decree without the instalment plan imposed by the High Court. The decision reinforces the principle that High Courts should normally decline writ jurisdiction where a specialised, statutory alternative remedy exists. No new precedent beyond this reaffirmation was set.
Order
1. Leave granted. Heard the learned counsel for the parties.
2. By the impugned order WP (C) No. 2322 of 2007, the High Court disposed of the writ petition filed by the respondent herein by directing him to pay a sum of Rs 10 lakhs in instalments for liquidating the dues of the appellant Bank.
3. A perusal of the record shows that the appellant Bank extended financial facility to the respondent to an extent of Rs 10 lakhs. The respondent deposited the title deeds of land and building as security. On 31-12-2000, the account of the respondent was declared as non-performing asset and OA No. 70 of 2002 was filed before the Debts Recovery Tribunal, Cuttack (for short “the Tribunal”). During the pendency of the OA, the appellant Bank issued notice dated 3-9-2004 under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “the Act”). This was followed by the notice dated 4-12-2004 issued under Section 13(4) of the Act.
4. By an order dated 30-5-2005, the Tribunal passed a decree in favour of the appellant for a sum of Rs 16,10,957 along with pendente lite and future interest @ 12% per annum from the date of the application.
5. The respondent challenged the proceedings initiated under the Act in Writ Petition No. 7435 of 2005. The High Court stayed the proceeding subject to the respondent depositing a sum of Rs 10 lakhs, which the latter never deposited.
6. In the interregnum, the respondent approached the Bank for one-time settlement. The Bank agreed for settlement, but the respondent failed to abide by the conditions of the settlement. Consequently, Bank issued the notice dated 12-2-2007 for possession of the secured assets. The respondent challenged the said action in WP No. 2322 of 2007 which has been disposed of by the High Court in the manner indicated hereinabove.
7. In our view, the approach adopted by the High Court was clearly erroneous. When the respondent failed to abide by the terms of one-time settlement, there was no justification for the High Court to entertain the writ petition and that too by ignoring the fact that a statutory alternative remedy was available to the respondent under Section 17 of the Act.
8. Accordingly, the appeal is allowed and the impugned order is set aside and the writ petition filed by the respondent before the High Court is dismissed.
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