The High Court
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK WP(C) No. 31536 of 2024 Bhojaraj Luha …. Petitioner Mr. Milan Kanoongo, Sr. Advocate Mr. Yuvraj Parekh, Advocate -versus- Union of India & Others …. Opp. Parties Mr. B.S. Rayaguru, CGC For Opposite Parties Nos. 1 & 2 CORAM: THE HON’BLE MR. JUSTICE S.K. SAHOO THE HON’BLE MR. JUSTICE CHITTARANJAN DASH Order No. ORDER 16.12.2024 01. 1. This matter is taken up through Hybrid arrangement (video conferencing/physical mode).
Legal Reasoning
2. Heard learned counsel for the Parties. 3. This Writ Petition has been filed by the Petitioner inter alia, for a direction to set aside the order dated 25.10.2024 passed by the learned Chief Judicial Magistrate, Khurda in Misc. Case No.190 of 2024. 4. The main ground that has been taken by the Petitioner is that there is an illegal and arbitrary action taken by the Opposite Parties-Bank in classifying the loan account as Non Performing Asset (NPA) which is in clear violation of the mandatory norms as prescribed by the RBI and MSME Ministry. In support of such contention, the learned counsel for the Petitioner has placed reliance on the decision of the Hon’ble Supreme Court in case of M/s. Pro Knits -Vrs.- The Board of
Legal Reasoning
Directors of Canara Bank & Others. Mr. Kanoongo, learned Sr. Advocate placed Paragraph No.13 of the said judgment which reads as follows:-
Decision
“13. In view of the above, it is absolutely clear that the Instructions for the Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises as notified by the Central Government vide the Notification dated 29th May, 2015 in exercise of the powers conferred under Section 9 of the MSMED Act, as revised by the RBI Notification dated 17th March, 2016, and the Master Directions i.e. the Reserve Bank of India (Lending to Micro, Small and Medium Enterprises Sector) Directions, 2016, issued by the Reserve Bank of India in exercise of the powers conferred by Page 2 of 7 Section 21 and 35(A) of the Banking Regulation Act, having statutory force, are binding to all Scheduled Commercial Banks, licensed to operate in India by the Reserve Bank of India, as stated in the said Directions. It cannot be gainsaid that the Banking Regulation Act 1949 basically seeks to regulate banking business and mandates a statutory comprehensive and formal structure of banking regulation and supervision in India. Section 21 and Section 35A of the said Act empower the Reserve Bank of India to frame the policy and give directions to the banking companies in relation to the advances to be followed by the banking companies. Such directions have got to be read as supplement to the provisions of the Banking Regulation Act and accordingly are required to be construed as having statutory force and mandatory”. However, the Hon’ble Supreme Court has been pleased to hold in Paragraph-19 as follows:- “19. The impugned order therefore is set aside. Since, it has been submitted by the Page 3 of 7 Learned Counsels for the Respondents-banks that in all the cases, the proceedings under the SARFAESI Act have already been concluded and the possession of the respective premises of the petitioners has already been taken over, we do not propose to remand the matters to the High Court for deciding the Writ Petitions afresh. However, since the High Court has not dealt with the other issues based on the factual aspects of the writ petitions, we clarify that it would be open for the appellants to take recourse to any remedy as may be legally available to them for agitating the issues not decided by the High Court in the impugned order. All the appeals stand allowed to the aforesaid extent.” 5. The Hon’ble Supreme Court in the case of Celir LLP -Vrs.- Bafna Motors (Mumbai) (P) Ltd. reported in (2024) 2 Supreme Court Cases 1 held as follows:- “110.3. In accordance with the unamended Section 13(8) of the SARFAESI Act, the right Page 4 of 7 of the borrower to redeem the secured asset was available till the sale or transfer of such secured asset. In other words, the borrower's right of redemption did not stand terminated on the date of the auction-sale of the secured asset itself and remained alive till the transfer was completed in favour of the auction-purchaser, by registration of the sale certificate and delivery of possession of the secured asset. However, the amended provisions of Section 13(8) of the SARFAESI Act, make it clear that the right of the borrower to redeem the secured asset stands extinguished thereunder on the very date of publication of the notice for public auction under Rule 9(1) of the 2002 Rules. In effect, the right of redemption available to the borrower under the present statutory regime is drastically curtailed and would be available only till the date of publication of the notice under Rule 9(1) of the 2002 Rules and not till the completion of the sale or transfer of the secured asset in favour of the auction purchaser.” Page 5 of 7 6. Recently, the Hon’ble Supreme Court in the case of M/s. South Indian Bank Ltd. & Ors. -Vrs.- Naveen Mathew Philip & Anr. reported in 2023 LiveLaw (SC) 320 has deprecated the interference of the High Courts in matters pertaining to the SARFAESI Act, where efficacious alternative remedy has been prescribed in the statute itself. The Hon’ble Court went on to hold as follows: “16. Approaching the High Court for the consideration of an offer by the borrower is also frowned upon by this Court. A writ of mandamus is a prerogative writ. In the absence of any legal right, the Court cannot exercise the said power. More circumspection is required in a financial transaction, particularly when one of the parties would not come within the purview of Article 12 of the Constitution of India. When a statute prescribes a particular mode, an attempt to circumvent shall not be encouraged by a writ court. A litigant cannot avoid the non- compliance of approaching the Tribunal which requires the prescription of fees and use the constitutional remedy as an alternative.” Page 6 of 7 7. In view of the settled position of law as held hereinabove so also in the case of Kanaiyalal Lalchand Sachdev & Ors. -Vrs.- State of Maharashtra & Ors. reported in (2011) 2 Supreme Court Cases 782, since alternative and efficacious remedy is available to the Petitioner, we are not inclined to entertain this writ petition. However, we grant liberty to the Petitioner to approach the DRT by filing an appeal. If such an appeal is filed, the same shall be considered in accordance with law, if there is delay, appropriate application is to be filed. It is made clear that we have not expressed any opinion on the merits of the case. 8. Issue urgent certified copy as per Rules. Judge (S.K. Sahoo) Judge (Chittaranjan Dash) AKPradhan/ Bijay Signature Not Verified Digitally Signed Signed by: BIJAY KETAN SAHOO Reason: Authentication Location: HIGH COURT OF ORISSA Date: 18-Dec-2024 10:28:48 Page 7 of 7