Rohit Ranjan Agarwal, J.:— Heard Mohd. Aqueel Khan, learned counsel for the petitioner, learned standing counsel for respondent nos. 1, 3 and 5 and Sri. Ashish Agarwal, learned counsel for the respondent-Bank.
2. By means of present petition, the petitioner has assailed order dated 26.9.2015 passed under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the “SARFAESI Act”) by the Chief Metropolitan Magistrate, Kanpur Nagar in Case No. 605 of 1993, Union of India v. Haseena Bano.
3. In brief the case of petitioner is that he had taken a housing loan from respondent bank to the tune of Rs. 6,40,000/-. According to the petitioner he had repaid about 2,30,000/- to the bank out of which he has receipt of Rs. 2,20,000/-. He received a notice dated 30.3.2012 under Section 13(2) of the SARFAESI Act for payment of the alleged loan taken along with interest.
4. Petitioner further contends that he received another notice on 6.6.2012 from the bank demanding Rs. 6,39,477/- + interest along with expenditure of notice. On 26.6.2012 a notice was given to the petitioner stating that as 60 days has expired and he has not repaid as such bank has no option but to proceed by way of enforcement of securities by taking possession and selling the securities.
5. Sri. Mohd. Aqueel Khan, learned counsel for the petitioner submits that the petitioner has already deposited Rs. 2,30,000/- with the bank and bank should not have proceeded straightaway taking possession of the premises in question.
6. Sri. Khan, further relied upon a Division Bench decision of this Court in Misc. Bench No. 6411 of 2014, Jagdish Prasad Sharma v. District Magistrate/Collector, Lucknow, dated 22.7.2014. In the said case proceedings under Section 14 was initiated against the lessee and the District Magistrate directed for possession of the property in question under Section 14 of the SARFAESI Act. He further relied upon another Division Bench decision of this Court in Writ-C No. 52512 of 2011, Punjab National Bank v. State of U.P.
7. Per contra, Sri. Ashish Agarwal, learned counsel for the bank submits that before issuance of the notice under Section 13(2) of the SARFAESI Act, bank had called upon the petitioner by notice dated 25.11.2011 for making payment of the defaulted instalments. He further contends that after the issuance of notice under Section 13(2) of the Act, petitioner intentionally and deliberately did not avail the remedy as provided under Section 13(3A) of the SARFAESI Act. The notice for auction was published on 18.2.2014 in newspaper and on the date fixed, the bid of the highest bidder was accepted and once auction purchaser made the entire payment. In view of Rule 9 (6) of the Security Interest (Enforcement) Rules, 2002, the sale certificate was drawn on 7.10.2014.
8. Sri. Agarwal further contends that in the year 2013 bank applied under Section 14 of the SARFAESI Act before Chief Metropolitan Magistrate, Kanpur Nagar for actual and physical delivery of possession pursuant to which on 26.9.2015 the order impugned was passed by Chief Metropolitan Magistrate, Kanpur.
9. Sri. Ashish Agarwal, learned counsel for the bank submits that the petitioner neither availed the remedy of filing objection under Section 13(3-A) of the SARFAESI Act after notice under Section 13(2) was issued nor filed any appeal under Section 17 of the Act. He further contends that there is no provision of hearing the borrower at the stage of Section 14 of the SARFAESI Act and his only remedy is that he should file an appeal under Section 17 of the Act.
10. Reliance has been placed on the judgment of the Supreme Court in the case of Mathew Varghese v. M. Amritha Kumar, 2014 Law Suit (SC) 115, where the Apex Court held as Under:
“35. On a reading of the above paragraphs, we are able to discern the Ratio to the effect that a mere conferment of power to sell without intervention of the Court in the mortgage deed by itself will not deprive the mortgagor of his right to redemption, that the extinction of the right of redemption has to be subsequent to the deed conferring such power, that the right of redemption is not extinguished at the expiry of the period, that the equity of redemption is not extinguished by mere contract for sale and that the mortgagor's right to redeem will survive until there has been completion of sale by the mortgagee by a registered deed. The ratio is also to the effect that the power to sell should not be exercised unless and until notice in writing requiring payment of the principal money has been served on the mortgagor. The above proposition of law of course was laid down by this Court while construing Section 60 of the T.P. Act. But as rightly contended by Mr. Shyam Divan, we fail to note any distinction to be drawn while applying the abovesaid principles, even in respect of the sale of SECURED ASSETS created by way of a secured interest in favour of the SECURED CREDITOR under the provisions of the SARFAESI Act, read along with the relevant Rules. We say so, inasmuch as, we find that even while setting out the principles in respect of the redemption of a mortgage by applying Section 60 of the T.P. Act, this Court has envisaged the situation where such mortgage deed providing for resorting to the sale of the mortgage property without the intervention of the Court. Keeping the said situation in mind, it was held that the right of redemption will not get extinguished merely at the expiry of the period mentioned in the mortgage deed. It was also stated that the equity of redemption is not extinguished by mere contract for sale and the most important and vital principle stated was that the mortgagor's right to redeem will survive until there has been completion of sale by the mortgagee by a registered deed. The completion of sale, it is stated, can be held to be so unless and until notice in writing requiring payment of the principal money has been served on the mortgagor. Therefore, it was held that until the sale is complete by registration of sale, the mortgagor does not lose the right of redemption. It was also made clear that it was erroneous to suggest that the mortgagee would be acting as the agent of the mortgagor in selling the property.
36. When we apply the above principles stated with reference to Section 60 of the T.P. Act in respect of a secured interest in a SECURED ASSET in favour of the SECURED CREDITOR under the provisions of the SARFAESI Act and the relevant Rules applicable, under Section 13(1), a free hand is given to a SECURED CREDITOR to resort to a sale without the intervention of the Court or Tribunal. However, under Section 13(8), it is clearly stipulated that the mortgagor, i.e. the borrower, who is otherwise called as a debtor, retains his full right to redeem the property by tendering all the dues to the SECURED CREDITOR at any time before the date fixed for sale or transfer. Under sub-section (8) of Section 13, as noted earlier, the SECURED ASSET should not be sold or transferred by the SECURED CREDITOR when such tender is made by the borrower at the last moment before the sale or transfer. The said sub-section also states that no further step should be taken by the SECURED CREDITOR for transfer or sale of the SECURED ASSET. We find no reason to state that the principles laid down with reference to Section 60 of the T.P. Act, which is general in nature in respect of all mortgages, can have no application in respect of a secured interest in a SECURED ASSET created in favour of a SECURED CREDITOR, as all the above-stated principles apply in all fours in respect of a transaction as between the debtor and SECURED CREDITOR under the provisions of the SARFAESI Act.”
11. Further, reliance has been placed on the judgment of the Supreme Court in the case of Authorised Officer, State Bank of Travancore v. Mathew K.C., Civil Appeal No. 1281 of 2018, where the Supreme Court held as under:
“10. Even prior to the SARFAESI Act, considering the alternate remedy available under the DRT Act it was held in Punjab National Bank v. O.C. Krishnan, (2001) 6 SCC 569, that:—
“6. The Act has been enacted with a view to provide a special procedure for recovery of debts due to the banks and the financial institutions. There is a hierarchy of appeal provided in the Act, namely, filing of an appeal under Section 20 and this fast-track procedure cannot be allowed to be derailed either by taking recourse to proceedings under Articles 226 and 227 of the Constitution or by filing a civil suit, which is expressly barred. Even though a provision under an Act cannot expressly oust the jurisdiction of the court under Articles 226 and 227 of the Constitution, nevertheless, when there is an alternative remedy available, judicial prudence demands that the Court refrains from exercising its jurisdiction under the said constitutional provisions. This was a case where the High Court should not have entertained the petition under Article 227 of the Constitution and should have directed the respondent to take recourse to the appeal mechanism provided by the Act.”
11. In Satyawati Tandon (supra), the High Court had restrained further proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the SARFAESI Act, the availability of remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal, the object and purpose of the legislation, it was observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available holding:—
“43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.
55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection.”
12. In Union Bank of India v. Panchanan Subudhi, (2010) 15 SCC 552, further proceedings under Section 13(4) were stayed in the writ jurisdiction subject to deposit of Rs. 10,00,000/- leading this Court to observe as follows:
“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.”
13. The same view was reiterated in Kanaiyalal Lalchand Sachdev v. State of Maharashtra, (2011) 2 SCC 782 observing:
“23. In our opinion, therefore, the High Court rightly dismissed the petition on the ground that an efficacious remedy was available to the appellants under Section 17 of the Act. It is well settled that ordinarily relief under Articles 226/227 of the Constitution of India is not available if an efficacious alternative remedy is available to any aggrieved person. (See Sadhana Lodh v. National Insurance Co. Ltd.; Surya Dev Rai v. Ram Chander Rai and SBI v. Allied Chemical Laboratories.)”
14. In Ikbal (supra), it was observed that the action of the Bank under Section 13(4) of the “SARFAESI Act’ available to challenge by the aggrieved under Section 17 was an efficacious remedy and the institution directly under Article 226 was not sustainable, relying upon Satyawati Tandon (Supra), observing:
“27. No doubt an alternative remedy is not an absolute bar to the exercise of extraordinary jurisdiction under Article 226 but by now it is well settled that where a statute provides efficacious and adequate remedy, the High Court will do well in not entertaining a petition under Article 226. On misplaced considerations, statutory procedures cannot be allowed to be circumvented.
28…….In our view, there was no justification whatsoever for the learned Single Judge to allow the borrower to bypass the efficacious remedy provided to him under Section 17 and invoke the extraordinary jurisdiction in his favour when he had disentitled himself for such relief by his conduct. The Single Judge was clearly in error in invoking his extraordinary jurisdiction under Article 226 in light of the peculiar facts indicated above. The Division Bench also erred in affirming the erroneous order of the Single Judge.”
12. The Hon'ble Apex Court in the case of Dwarika Prasad v. State of U.P., 2018 Law Suit (SC) 195, held as under:
5. Section 13(8) of the SARFAESI Act provides as follows:
“(8) If the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the secured creditor at any time before the date fixed for sale or transfer, the secured asset shall not be sold or transferred by the secured creditor, and no further step shall be taken by him for transfer or sale of that secured asset.”
13. These provisions have fallen for interpretation before this Court in Mathew Varghese (supra). Dwelling on Section 60 of the Transfer of the Property Act, this Court held that the right of redemption is available to a mortgagor unless it stands extinguished by an act of parties. The right of the mortgagor to redeem the property survives until there has been a transfer of the mortgagor's interest by a registered instrument of sale. Applying these principles in the context of the SARFAESI Act this Court held as follows:
“39. When we apply the above principles stated with reference to Section 60 of the T.P. Act in respect of a secured interest in a secured asset in favour of the secured creditor under the provisions of the SARFAESI Act and the relevant Rules applicable, under Section 13(1), a free hand is given to a secured creditor to resort to a sale without the intervention of the Court or Tribunal. However, under Section 13(8), it is clearly stipulated that the mortgagor, i.e. the borrower, who is otherwise called as a debtor, retains his full right to redeem the property by tendering all the dues to the secured creditor at any time before the date fixed for sale or transfer. Under sub-section (8) of Section 13, as noted earlier, the secured asset should not be sold or transferred by the secured creditor when such tender is made by the borrower at the last moment before the sale or transfer. The said Sub-section also states that no further step should be taken by the secured creditor for transfer or sale of that secured asset. We find no reason to state that the principles laid down with reference to Section 60 of the T.P. Act, which is general in nature in respect of all mortgages, can have no application in respect of a secured interest in a secured asset created in favour of a secured creditor, as all the above-stated principles apply in all fours in respect of a transaction as between the debtor and secured creditor under the provisions of the SARFAESI Act”.
6. In the present case, the appellant failed to comply with the provisions of Section 13(8). The statute mandates that it is only where the dues of the secured creditor are tendered together with costs, charges and expenses before the date fixed for sale or transfer that the secured asset is not to be sold or transferred. The appellant was aware of the proceedings initiated by the bank for asserting its right to recover its dues by selling the property. The appellant moved the DRT in Securitization Application 176 of 2015. During the pendency of those proceedings, orders were passed by the Tribunal on 1 February 2016 and 3 February 2016. The appellant moved the Allahabad High Court which by its order dated 9 March 2016 restrained the bank and the auction purchaser from executing the sale deed until 15 March 2016. The stay was extended till 28 March 2016 by which date the appellant was to deposit an amount of Rs. 7,00,000. The balance was required to be deposited by 30 April 2016. While appellant deposited an amount of Rs. 7,00,000 with the bank, he failed to deposit the balance in accordance with the provisions of Section 13(8). Even after the writ proceedings before the High Court was withdrawn, the appellant did not deposit the balance due together with the costs, charges and expenses. The sale was confirmed, a sale certificate was issued and a registered sale deed was executed on 12 April 2016. The appellant failed to ensure compliance with Section 13(8). The right to redemption stands extinguished on the execution of the registered sale deed. This is also the view which has been expressed in the judgment in Mathew Varghese.
14. That the view taken by the Apex Court in Dwarika Prasad was in concurrence with the earlier judgment in case of Mathew Varghese as regards the right to redemption stands extinguished on execution of the registered sale deed.
15. This Court in Writ C No. 43347 of 2018 (Kajal Food Products v. Union Bank of India) held that writ petition is not maintainable challenging proceedings under Section 13(4) of the SARFAESI Act and the appropriate remedy is by filing an appeal under Section 17(1) of the SARFAESI Act.
16. In the case of Standard Chartered Bank v. V. Noble Kumar, (2013) 9 SCC 620, Supreme Court in Para 27 held as under:—
“27.The “appeal” under section 17 is available to the borrower against any measure taken under section 13(4). Taking possession of the secured asset is only one of the measures that can be taken by the secured creditor. Depending upon the nature of the secured asset and the terms and conditions of the security agreement, measures other than taking the possession of the secured asset are possible under section 13(4). Alienating the asset either by lease or sale, etc. and appointing a person to manage the secured asset are some of those possible measures. On the other hand, section 14 authorises the Magistrate only to take possession of the property and forward the asset along with the connected documents to the borrower (sic the secured creditor). Therefore, the borrower is always entitled to prefer an “appeal” under section 17 after the possession of the secured asset is handed over to the secured creditor. Section 13(4)(a) declares that the secured creditor may take possession of the secured assets. It does not specify whether such a possession is to be obtained directly by the secured creditor or by resorting to the procedure under section 14. We are of the opinion that by whatever manner the secured creditor obtains possession either through the process contemplated under section 14 or without resorting to such a process obtaining of the possession of a secured asset is always a measure against which a remedy under section 17 is available.”
17. Thus it is clear that not only the proceedings under Section 13(4) of the Act can be challenged by way of appeal under Section 17(1) of the Act but also proceedings under Section 14 of the Act can also be challenged under Section 17.
18. That the Apex Court in case of Hindon Forge Pvt. Ltd. v. The State of Uttar Pradesh through District Magistrate Ghaziabad, in Civil Appeal No. 10873 of 2018 held as under:—
“This appendix makes it clear that statutorily, constructive or physical possession may have been taken, pursuant to which a sale notice may then be issued under rule 8(6) of the 2002 Rules. Appendix IV-A, therefore, throws considerable light on the controversy before us and recognises the fact that rule 8(1) and 8(2) refer to constructive possession whereas rule 8(3) refers to physical possession. We are therefore of the view that the Full Bench judgment is erroneous and is set aside. The appeals are accordingly allowed, and it is hereby declared that the borrower/debtor can approach the Debts Recovery Tribunal under section 17 of the Act at the stage of the possession notice referred to in rule 8(1) and 8(2) of the 2002 Rules. The appeals are to be sent back to the Court/Tribunal dealing with the facts of each case to apply this judgment and thereafter decide each case in accordance with the law laid down by this judgment.”
19. Thus the Apex Court had laid down that the borrower/debtor can approach the Debts Recovery Tribunal under Section 17 not only when the physical position is taken under Rule 8(3) but also at the stage of rule 8(1) and 8(2) of 2002 Rules.
20. Having heard the rival contentions of the parties and going through the material on record as well as the judgments of the Apex Court and the Division Bench of this Court, it is clear that the petitioner who has taken the housing loan had not repaid the installment as such proceedings under the SARFAESI Act was initiated by the Bank. It is not disputed that the petitioner ever availed the remedy of filing objection under Section 13(3A) of the SARFAESI Act, to the notice under Section 13(2), nor he challenged the notice under Section 13(4) of the SARFAESI Act. It is also an admitted case that the petitioner never challenged the order dated 26.9.2015 passed in proceedings under Section 14 of the Act and has straightaway approached this Court under Article 226 of the Constitution of India.
21. Petitioner having a remedy under Section 17(1) of the Act did not file the appeal as contemplated. The Apex Court right from the case of Mathew Varghese (supra), Authorised Officer, State Bank of Travancore (supra), Dwarika Prasad (supra) and Standard Chartered Bank (supra) has categorically held that the remedy provided to a borrower/debtor in proceedings under the SARFAESI Act is by way of filing an appeal under Section 17 of the Act and not by approaching the High Court under Article 226 of the Constitution of India.
22. The reliance placed by the petitioner on the judgment of Jagdish Prasad Sharma (supra) is not applicable in the facts of the present case, as it was a case of lessee against whom the proceedings were initiated who could not take the remedy of filing objections under Section 13(3A) of the Act. In the present case, the petitioner is a borrower/debtor to whom opportunity was granted at every stage of proceedings under the SARFAESI Act but he did not avail the same and after the proceedings under Section 14 were held he has directly approached this Court.
23. Further the case of Punjab National Bank (supra) relied upon by the petitioner is also of no help to him. In that case, the Bank had approached the Court as the District Magistrate in proceedings under Section 14 had directed the borrower to deposit the amount which was contrary to the provisions of the Act as such the Division Bench set aside the order of the District Magistrate and remanded back the same for passing an order afresh.
24. As far as the contention of the petitioner that he is ready to pay at this stage cannot be accepted, as the present petition is not maintainable and the petitioner has right of approaching the Debts Recovery Tribunal under Section 17(1) of the SARFAESI Act. Time and again, the Apex Court had warned that the High Court should not entertain petitions under Article 226 and in case of Authorised Officer, State Bank of Travancore (supra), the Apex Court had categorically restrained the courts not to interfere in the matters arising out of SARFAESI Act in view of law laid down in case of United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110.
25. In view of the above I am of the opinion that no interference is required at this stage as law laid down by the Apex Court as well as the view taken by Division Bench of this Court, petitioner has a remedy under Section 17(1) of the SARFAESI Act for filing appeal before the Debt Recovery Tribunal.
26. In view of the above, writ petition stands dismissed.
27. However, no order as to cost.
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