Masetty Jaganmohan Rao V. State Bank of India, RASMECCC & SARC, 2/14, Brodipet, Guntur

WP/24163/2010

AI Insights

The case involves Masetty Jaganmohan Rao, who is the guarantor for a loan taken by his wife, the proprietrix of M/s.M.R.G. Exports, from the State Bank of India. The loan became a non-performing asset, leading to the issuance of notices under the SARFAESI Act for recovery. The petitioner contested the auction of the mortgaged property, arguing procedural lapses in the auction process. However, the court found that since the petitioner had already approached the DRT, he could not simultaneously seek relief through a writ petition under Article 226 of the Constitution.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 799624 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 31-01-2012
• Assessment Year: misc
• Other Referred Cases: K.S.Rashid & Son v ITI Commission, Jai Singh v Union of India, Carl Still G.M.B.H. v State of Bihar, Bombay Metropolitan Region Development Authority, Bombay v Gokak Patel Volkart
• Laws Referred To: Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, Security Interest (Enforcement) Rules, 2002
• Result in Favour of: Others
• Court: HIGH COURT
• Keywords: Auction; Mortgage; Non-performing asset; SARFAESI Act; Writ of Mandamus
• Section: 13(2); 17; 13(4)

Judgement Text

"THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE G.KRISHNA MOHAN REDDY WRIT PETITION No.24163 OF 2010 January 31, 2012 Between: Masetty Jaganmohan Rao, S/o.Rajagopal Rao ... Petitioner And The Authorised Officer cum Assistant General Manager, State Bank of India, RASMECCC & SARC, 2/14, Brodipet, Guntur, Guntur District And others ... Respondents THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE G.KRISHNA MOHAN REDDY WRIT PETITION No.24163 OF 2010 ORDER: (Per Hon’ble Sri Justice V.V.S.Rao) The petitioner’s wife; the Proprietrix of M/s.M.R.G. Exports, availed credit facilities from the State Bank of India, Bazar branch, Guntur. As security of it, the petitioner mortgaged two house plots by depositing the title deeds. The borrower’s account became non- performing asset. The first respondent-Bank issued notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) on 14.10.2008 demanding a total payment of about Rs.23,00,000/- . The borrower addressed letter on 15.9.2008 requesting 90 days time to discharge the loan. But she did not do so. Therefore, possession notice under Section 13(4) of the SARFAESI Act was issued on 17.12.2008. Aggrieved by the same, the petitioner herein filed an appeal under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal, Visakhapatnam (DRT). The same being S.A.No.63 of 2009 is pending. After possession notice under Section 13(4) of the SARFAESI Act, the first respondent issued notice of sale under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 (the Rules) on 30.8.2010. A copy of the notice was also served on the borrower. Aggrieved by the notice under Rule 8(6) of the Rules, the petitioner’s wife filed appeal being S.A.No.179 of 2009 before the DRT which is also pending. Be it also noted that in the petitioner’s appeal, he sought stay of all further proceedings. In I.A.No.258 of 2009, the DRT passed an interim order on 08.4.2009 staying all further proceedings pursuant to the notices under Sections 13(2) and 13(4) of the SARFAESI Act and the auction sale notice on condition of petitioner depositing an amount of Rs.1,00,000/- with the Bank on or before 06.5.2009. The first respondent was given liberty to proceed with the sale in the event of default. As the said order was not complied with, the first respondent issued sale notice on 30.8.2010 and conducted auction on 13.9.2010. Aggrieved by the same, the petitioner filed instant writ petition seeking a writ of Mandamus for invalidation of the auction as illegal and arbitrary. The petitioner mainly contends that Rules 8(6) and 9 of the Rules mandate a minimum period of 30 days before conducting auction and in the absence of such compliance, the auction is vitiated. The first respondent filed counter affidavit as well as additional counter affidavit opposing the writ petition. It is contended that as the petitioner and his wife already filed appeals under Section 17 of the SARFAESI Act which are pending before the DRT, writ petition would not lie. This Court while admitting the matter on 28.9.2010 stayed all further proceedings on condition of the petitioner depositing Rs.10,00,000/- within a period of six weeks. The petitioner, accordingly, submitted a Banker’s cheque dated 18.3.2011 drawn on City Union Bank Ltd., Guntur. The petitioner also gave a third party cheque drawn by one Azizuddin Ahmed on State Bank of India without any mandate for adjusting the said amount towards outstanding dues. There is no dispute that the petitioner as a guarantor as well as his wife as a principal borrower have already filed appeals under Section 17 of the SARFAESI Act which are pending. Therefore all the questions raised herein have to be necessarily raised before the DRT itself. It is well settled that when a statute provides a remedy of appeal to a citizen and when he avails such remedy, he cannot again approach this court under Article 226 of the Constitution for a similar relief. A reference may be made to the judgments of the Supreme Court in K.S.Rashid & Son v ITI Commission[1], Jai Singh v Union of India[2] and Carl Still G.M.B.H. v State of Bihar[3]. In K.S.Rashid & Son, a Constitution Bench of the Supreme Court held as follows. So far as the second point is concerned, the High court relies upon the ordinary rule of construction that where the legislature has passed a new statute giving a new remedy, that remedy is the only one which .could be pursued. It is said that the Taxation on Income (Investigation Commission) Act, 1947, itself provides a remedy against any wrong or' illegal order of the Investigating Commission and under section 8 (5) of the Act, the aggrieved party can apply to the appropriate Commissioner of Income-tax to refer to the High court any question of law arising out of such order and thereupon the provisions of S. 66 and 66-A of the Indian Income-tax Act shall apply with this modification that the reference shall be heard by a bench of not less than three Judges of the High court. We think that it is not necessary for us to express any final opinion in this case as to whether section 8 (5) of the Act is to be regarded as providing the only remedy available to the aggrieved party and that it excludes altogether the remedy provided for under article 226 of the Constitution. For purposes of this case it is enough to state that the remedy provided for in article 226 of the Constitution is a discretionary remedy and the High court has always the discretion to refuse to grant any writ if it is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere. In Jai Singh, the Supreme Court observed that when there are serious questions of disputed facts this Court need not exercise jurisdiction under Article 226 of the Constitution of India. The following passage from the said judgment needs excerption. The High court dismissed the writ petition on the ground that it involved determination of disputed questions of fact. It was also observed that the High court should not in exercise of its extraordinary jurisdiction grant relief to the appellant when he had an alternative remedy. After hearing Mr. Sobhagmal Jain on behalf of the appellant, we see no cogent ground to take a view different from that taken by the High court. There cannot, in our opinion, be any doubt on the point that the extent of purity of the gypsum won by the appellant is a question of fact. It has also been brought to our notice that after the dismissal of the writ petition by the High court, the appellant has filed a suit, in which he has agitated the same question which is the subject-matter of the writ petition. In our opinion, the appellant cannot pursue two parallel remedies in respect of the same matter at the same time. In Carl Still G.M.B.H., another Constitution Bench considered the question whether this Court can exercise jurisdiction under Article 226 of the Constitution even though authorities are constituted by special enactments to decide disputes. In paragraph 11 of the said judgment, it was observed thus: It is next contended for the respondents that, whatever the merits of the contentions based on the construction of the contract, the proper forum to agitate them would be the authorities constituted under the Act to hear and decide disputes relating to assessment of tax, that it was open to the appellants to satisfy those authorities that there have been no sales such as are liable to be taxed, that indeed they were bound to pursue the remedies under the Act before they could invoke the jurisdiction of the court under Art. 226 and that the learned Judges of the High court were, therefore, right in declining to entertain the present petitions. It is true that if a statute sets up a tribunal and confides to it jurisdiction over certain matters and if a proceeding is properly taken before it in respect of such matters, the High court will not, in the exercise of its extraordinary jurisdiction under Art. 226, issue a prerogative writ so as to remove the proceedings out of the hands of the tribunal or interfere with their course before it. But it is equally well settled that, when proceedings are taken before a tribunal under a provision of law, which is ultra vires, it is open to a party aggrieved thereby to move the court under Art. 226 for issuing appropriate writs for quashing them on the ground that they are incompetent, without his being obliged to wait until those proceedings run their full course. In Bombay Metropolitan Region Development Authority, Bombay v Gokak Patel Volkart[4] it was held as follows. We are of the view that the point taken by the appellant is of substance. This is a case, where there is not only the existence of an alternative remedy but the writ petitioner actually had availed of that remedy. The writ petitioner's appeal before the statutory authority was pending. In that view of the matter this writ petition should not have been entertained. During the Course of the arguments, the petitioner’s Counsel on behalf of the petitioner offered to liquidate the entire outstanding loan. Therefore, this Court directed the Bank to submit the statement of account. A statement to that effect is already submitted, which is made part of the record. Even if the petitioner is ready to liquidate the entire debt, we are not inclined to exercise the discretion in favour of the petitioner. The petitioner also cannot be permitted to avail both the remedies simultaneously. We leave all the questions raised herein open to be decided by the DRT. The writ petition, for the above reasons, is dismissed. _______________ (V.V.S.RAO, J) ________________________________ (G.KRISHNA MOHAN REDDY, J) January , 2012 YS [1] AIR 1954 SC 207 [2] AIR 1977SC 898 [3] AIR 1961 SC 1615 [4] (1995) 1 SCC 642 "