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Judgment
In this petition, filed under Article 226 of the Constitution of India read with Section 103 of the constitution of Jammu and Kashmir, the petitioners
have craved the indulgence of this Court in granting them the following relief(s):
“A. To quash the Notice dated 15-05-2018 issued by respondent no.4-Authorized Officer (Annexure-A);
B. To direct the respondents to acknowledge the one Time settlement arrived between the Bank and Petitioner and grant six months’ time to the
petitioner to deposit the pe4nding amount to the tune of Rs. 28,44,000/-;
C. To quash the Lok Adalat order dated: - 09-01-2017 as same is succeeded by one Time settlement arrived at between the Bank and Petitioner;
D. To quash the execution proceeding in the Court of Learned District Judge, Kathua in case titled J&K Bank Ltd V/s Mahalazmi Education and
Welfare Trust and others.â€
The facts as these stem out from the instant petition, are that the petitioner No.1 is the Chairman of Maha Laxmi Educational and Welfare Trust
and the petitioner No.2 is the General Secretary of Maha Laxmi Educational and Welfare Trust and M/S Indian Institute of Paramedical Sciences,
Village Padri Bala, Parole, Tehsil Parole, Distt. Kathua (J&K), which is a Unit of Maha Laxmi Educational and Welfare Trust. The petitioners availed
a loan facility for an amount of Rs.45 lacs from the respondent-Jammu & Kashmir Bank Ltd., Branch Officer, Parole, which was secured by the third
party guarantee and primary & collateral security of Mortgage of properties. It is stated that due to some financial loss, the petitioners failed to pay
instalments on time, as a consequence of which the respondent No.4, through its attorney, filed a suit before the Court of learned District Judge,
Kathua, which was decided in the Lok Adalat on 9th of January, 2017, in terms of the settlement arrived at between the parties. Thereafter, the
petitioners were served a notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (hereinafter referred to as the Act). Subsequently, the petitioners made a representation on 11th of May, 2017, before the
Chairman of the respondent Bank, requesting him to settle the petitioners‟ case under „One Time Settlement Scheme‟ of the Bank and also to
grant a time of oneyear for the repayment of loan. The Chairman, J&K Bank, forwarded the application to Sh. Ashraf Ali (Vice-President, J&K
Bank), who agreed to settle the petitioners‟ loan under „One Time Settlement Scheme‟ and, the petitioners‟ loan was, ultimately, settled at an
amount of Rs.40.00 lacs (approximately). In pursuance of the aforesaid One Time Settlement Scheme arrived at between the parties, i.e. the
petitioners and the Bank, the petitioners deposited an amount of Rs.9,70,000/- (Rupees nine lacs and seventy thousand only) in the J&K Bank, Branch
Nagri Parole, Kathua in the „Loan Account‟ on 27th of June, 2017. The Respondent Bank accepted the aforesaid amount in terms of the aforesaid
settlement.
The respondent No.4, in the month of July, 2017, deducted an amount of Rs.l,30,000/-(rupees one lac thirty thousand only), from the Savings Bank
account of the petitioner, namely, Madhu Sudan, and adjusted the same in the loan account of the petitioners illegally, without any authority and in
violation of the terms and conditions of the loan agreement and other security documents. The petitioner No.2 in the month of December, 2017,
deposited an amount of Rs.56,400/-(fifty six thousand and four hundred only), through a cheque in the loan account for the liquidation of aforesaid loan
with the J&K Bank, Branch Parole. The petitioner further approached the respondent No.4, in the month of September, 2017, for depositing the
2ndinstalment of an amount of Rs.10,00,000/-(Rupees ten lac only), which was to be paid by the petitioner to the respondents, in terms of the
settlement/agreement but to the utter surprise of the petitioner No.2, the respondent No.4 expressed his reluctance to accept its earlier commitments.
The petitioners again approached the Vice President of the respondent Bank, at Srinagar, and submitted their claim of settlement/agreement entered
into between the respondents and the petitioners, who assured the petitioners that they will honour the settlement, but nothing concrete was done till
date, except the hollow assurances given by him to redress the grievance of the petitioners as per the „One Time Settlement Scheme‟. Despite
repeated requests of the petitioners, the respondents did not honour the settlement/agreement arrived at between the parties and, without affording any
opportunity of being heard to the petitioners, proceeded further to issue the notice dated 17th of January, 2018, thereby taking the symbolic possession
of the mortgaged property, belonging to the petitioners, constraining the petitioners to file the present writ petition for the above stated relief(s).
The moot question that arises for consideration in this petition is whether the same is, or is, not maintainable in the present form. We have heard
the learned counsel for the petitioner on that count and considered the material on record.
A notice under Section 13(2) of the Act was issued in favour of the petitioners by the respondent Jammu & Kashmir Bank on 4th of April, 2017.
Prior to the date of the issuance of the notice under Section 13(2) of the Act, the respondent, Jammu & Kashmir Bank instituted a suit for the
recovery of the amount from the petitioners in the Court of learned Principal District Judge, Kathua, which came to be decided and determined by an
order dated 9th of January, 2017, on the following terms and conditions:
“1. That defendants shall pay an amount of Rs.60 lac within a period of 18 months. The period shall commence from 1st of January 2017. Out of
the amount of Rs. 60 lac, defendants shall pay an amount of Rs.10 lac by or before 31st March, 2017.
In the event of failure on part of defendants to pay the amount of Rs. 10 lac by or before 31st of March 2017, the plaintiff bank shall be entitled to
recover the whole amount along with interest as well as costs.
The remaining amount of Rs. 50 lac shall be paid by defendants in equal monthly installments and the last installment, will be due on 30th of June,
2018.
In case defendants make of two consecutive defaults in payment of the installment, plaintiff bank shall be entitled to recover whole of the amount
along with interest.
The statements of the parties and their counsel have been recorded. In view of the statements of the parties, the matter stands settled and suit is
accordingly decreed in terms of the agreements/ settlement arrived at between the parties. The decree sheet be prepared accordingly. No order as to
costs. File be consigned to records.â€
Since the petitioners did not follow the mandate of the order dated 9th of January, 2017 cited above, the respondent Bank issued a notice under
Section 13(2) of the Act on the date as specified above, which was followed by another notice dated 17th of January, 2018 issued under Section 13(4)
of the Act. Thereafter, another notice was issued to the petitioners by the respondent, Jammu & Kashmir Bank on 15th of May, 2018, the relevant
excerpts of which are reproduced hereinbelow, verbatim:
“Please refer to our Possession Notice dated 17.01.2018 under Section 13 (4) of the SARFAESI Act, 2002, which was served upon you as well as
published on 18.01.2018 in the newspapers (Daily Excelsior and Amar Ujala) whereby symbolic possession of the secured assets detailed therein was
taken by the authorized office due to your failing to pay in full and discharge your liabilities to the Bank. Even thereafter you have not made any
sincere effort to liquidate your liability and redeem the secured assets. Since you have failed to discharge your liabilities in full, we as secured creditors
have decided to take physical possession of the secured assets over which security interests has been created.
As authorized officer of the secured creditor empowered to exercise powers of the secured creditors under the provisions of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and the rules made there-under, I, the undersigned authorized
officer hereby call upon M/S Indian Paramedical Institute through its Trustees to peacefully hand over physical possession of the secured assets to the
undersigned by or before 25.05.2018.â€
The law is that the purpose of serving a notice upon the borrower under Section 13 (2) of the Act is that a reply may be submitted by him
explaining the reasons as to why measures may or may not be taken under Section 13 (4) of the Act, in case of non-compliance with the notice within
60 days. The creditor must apply its mind to the objections raised in reply to such a notice and an internal mechanism has to be evolved to consider
such objections raised in the reply to the notice. Some meaningful consideration has to be accorded to the objections raised by the borrower rather
than to ritually reject them and proceed to take drastic measures under Section 13 (4) of the Act. Once a duty to meaningfully consider the objections
raised by the borrower in reply to a notice under Section 13 (2) is envisaged on the part of the creditor, it would only be conducive to the principles of
fairness, on the part of the banks and financial institutions in dealing with their borrowers, to apprise them of the reason for not accepting the
objections or points raised in the reply to the notice served upon them before proceeding to take measures under Section 13 (4), especially, since, till
the stage of making of the demand and notice under Section l3 (2) of the Act, no hearing can be claimed by the borrower. This remedy available to
the borrower is provided in terms of Section 13 (3A) of the Act which provides that if, on receipt of the notice under Sub-Section (2), the borrower
makes any representation or raises any objection, the secured creditor shall consider such representation or objection and if the secured creditor
comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate within one week of receipt of such
representation or objection the reasons for non-acceptance of the representation or objection to the borrower. The rider added to Section 13(3A)
provides that the reasons so communicated or the likely action of the secured creditor at the stage of communication of reasons shall not confer any
right upon the borrower to prefer an application to the Debt Recovery Tribunal under Section 17 or the Court of District Judge under Section 17A of
the Act. A person in respect of whom steps under Section 13 (4) of the Act are likely to be taken cannot be denied the right to know the reasons of
the non-acceptance of his objections. Communications of reasons not to accept the objections of the borrower would certainly be for the purpose of
his knowledge which would be a step forward towards his right to know why his objections have not been accepted by the secured creditors who
intend to take resort to harsh steps of taking over the management/business of his secured assets, without the intervention of the Court, and would
certainly provide guidance to secured debtors in general in conducting the affairs in a manner that they may not be found defaulting and being made
liable for unsavory steps contained under Section 13 (4) of the Act. It will only be a fulfillment of a requirement of reasonableness and fairness in
the dealings of the institutional financing which is so important from the point of view of the economy of the country and would serve the purpose in
the growth of a healthy economy. It is not the case of the petitioners that they filed any representation before the bank and the same was not
considered by the respondents but the petitioners have taken shelter and refuge under and in terms of the “One Time Settlement Scheme†and the
orders of this court passed from time to time the effect of which evaporates under the colour and shade of the judgment delivered by the Supreme
Court which will be referred to herein after. Â
Section 17 of the Act which is an additional safeguard gives a person including the borrower, aggrieved by any of the measures referred to in Sub-
Section (4) of Section 13 taken by the secured creditor or his authorized officer under this Chapter, an option to make an application along with such
fee, as may be prescribed to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such
measures had been taken. In view of the above scheme, the borrower could have made an application to the concerned Sessions Judge of the area
holding the powers of Debts Recovery Tribunal in the State of Jammu and Kashmir in case he had any objection against the action taken by the Bank.
It is a remedy available under the statute and on the strength of such a scheme, the petitioners were obliged to take shelter under the said provision.Â
The petitioners, in the present case, have preferred the petition under Section 103 of the Constitution of the Jammu and Kashmir. The Supreme
Court in Hameed Kunju v. Nazim (2017) 8 SCC 611, held that the High Court not only erred in entertaining the petition under Article 227 but also
erred in exercising its supervisory jurisdiction by interfering with the orders impugned therein. The Supreme Court also held that the High Court should
have dismissed the petition in limine on the ground that since all the four orders impugned in the petition were amenable to their challenge before the
appellate authority, the petition was not the proper remedy and the High Court should have declined to entertain the petition under Article 227 on the
ground of availability of an alternative remedy of appeal and therefore, there was no reason muchless justifiable one for the High Court to have
entertained the writ under Article 227. Section 103 or 104 of the State Constitution would leave little scope to interfere with an order as a matter of
routine. The power cannot be taken as a right of another appeal to the aggrieved party. Where a statutory right to file an appeal has been provided
for, it is not open to the High Court to entertain a petition either under Article 226 or 227 of the Constitution. It has been held by the Supreme Court in
Mohd. Younus v. Mohd. Mustaqim AIR 1984 SC 38, that the High Court should not exercise its jurisdiction under Article 227 if an alternative remedy
is available. Â
Looking at the petition of the petitioners from another perspective, the question whether the Act is or is not applicable to the residents of the State
of Jammu & Kashmir, has been decided and determined by the Apex Court of the country on 16th of December, 2016, in Civil Appeal Nos. 12240-
12246 of 2016 arising out of SLP (Civil) Nos. 30810-30815 & 30817 of 2015, wherein the Supreme Court, while setting aside the judgment of the
Division Bench of this High Court, held that the notices issued by the banks in terms of Section 13 of the Act and other coercive methods taken under
the said Section are valid and can be proceeded with further. Notice under Section 13(2) of the Act had been sent to the petitioner on the 4th of April,
2017, calling upon the petitioner to pay the entire amount of Rs. 59,61,350/- with further interest at the contracted rate until payment in full within sixty
days from the date of the notice, with a further stipulation that, in default, besides exercising other rights which are available with the Bank under law,
the Bank is intending to exercise any or all of the powers as provided under Section 13(4) of the Act. The respondent Bank issued the notice under
Section 13(4) of the Act on the 17th day of January, 2018. The Apex Court of the Country delivered the judgment aforesaid on December 16th,
2016, holding that the notices issued by the Bank under Section 13 of the Act and other coercive methods taken under the Section are valid and can be
proceeded further meaning thereby that the notices issued under Sections 13(2) and 13(4) of the Act are valid in law including any action taken in
pursuance of these notices. Therefore, on the analogy and plain phraseology of the law laid down above the notices issued by the bank under Section
13(2) and 13(4) of the Act are lawful and irrefutable and cannot be called in Question.
Viewed in the above context nothing survives in this petition which on the face of the judgment cited above buttressed with the above analysis is
not maintainable. Not only this as per his own admission, the petitioner has failed to comply with the terms of the „One Time Settlement Scheme‟
offered to him by the Bank whereby a breathing space was given to him to liquidate the liability. The petition of the petitioner as such entails dismissal
in limini and is accordingly dismissed.