Padam Motors Pvt. Ltd. vs Canara Bank And Ors.

Ranjit Singh, J

The appellant had approached the Tribunal below by filing an application under Section 17 of the SARFAESI Act against the action initiated by the Bank by issuing notice under Section 13(4) of the said Act. The appellant claims that it is tenant in the property against which action has been initiated under the SARFAESI Act. Reference is made to lease agreement with respondents 3 and 4 for taking part of premises 412 x 70 sq.ft. situated at ground floor excluding 32 x 50 sq.ft. front area at Plot No. 185, Industrial Area, Phase I, Chandigarh for a period of 5 years. The appellant would urge that being a tenant he is nether borrower nor the guarantor or mortgagor. The appellant is otherwise engaged in sale/purchase of the cars and running workshop which cannot be immediately shifted as he has employed 300 persons.

The Tribunal below has considered the pleas raised by the appellant and has held that the action taken by the Bank is absolutely in accordance with law, just and proper. The Tribunal thus has dismissed the S.A. with cost of Rs. 1 lac to be paid to the Supreme Court Legal Service Authority. The appellant has accordingly filed the present appeal to impugn this order.

In fact, the appellant had earlier approached this Tribunal by filing Miscellaneous Appeal No. 400/2014. The said appeal was dismissed in limine by observing that the Tribunal below ought to have examined the issue whether this S.A. was maintainable in view of the judgment passed by the Hon'ble Supreme Court in the case of Harshad Goverdhan Sondagar v. International Assets Reconstruction Company Ltd. & Ors., II (2014) CCR 137 (SC) : II (2014) BC 340 (SC) : II (2014) DLT (Cri) 836 (SC) : III (2014) SLT 469 : (2014) 6 SCC 1. The case was remanded back to the Tribunal below to consider if the appellant could maintain the S.A. or not.

The Counsel for the appellant would submit that the Tribunal below has gone on to decide the S.A. on merit without taking into consideration the observation made by this Tribunal to consider if the S.A. is maintainable or not. The first hurdle the appellant accordingly would face to show if it being a tenant would be entitled to file this S.A. and maintain the same or not.

The Counsel for the appellant did not project any positive stand in this regard and pleaded that the appellant cannot be left without any remedy. Otherwise, the Counsel has placed before me a Division Bench judgment passed by the High Court of Punjab and Haryana in the case of Punjab Chemical Industries v. District Magistrate-cum-Deputy Commissioner, CWP No. 15921 of 2014 decided on 12.8.2014, where the High Court, after referring to the law laid down in the case of Harshad Govardhan Sondagar (supra) and another case titled Jagdish Singh v. Heeralal & Ors., IV (2013) BC 744 (SC) : IX (2013) SLT 253 : (2014) 1 SCC 479, besides some other judgments, has held that there is apparent conflict between the Coordinate Benches of the Hon'ble Supreme Court in regard to this issue.

Referring to the case of M/s. Indo Swiss Time Limited, Dundahera v. Umrao & Ors., 1981 PLR 335, the High Court has noted the procedure in such case is to be followed when contradictory judgments are passed by Coordinate Benches of the Superior Court. The Court in Indso Swiss Time's case (supra) has observed that in principle the High Court must follow the judgment which appears to it to lay down the law more elaborately and accurately. It is also observed that mere incidence of time whether the judgments of co-equal Benches of the Superior Court are earlier or later is a consideration which appears to be hardly relevant. In this judgment only it is observed that when the judgment of the Superior Court are of co-equal Benches and therefore of matching authority then their weight inevitably must be considered by the rationale and the logic thereof and not by the mere fortuitous circumstances of the time and date on which they were rendered.

In this background of this law, the High Court has held that it is inclined to follow the earlier judgments of the Hon'ble Supreme Court, which would provide a remedy to the borrower/lessee against an action of the District Magistrate under Section 14 of the SARFAESI Act.

I have minutely considered the judgment passed by the Hon'ble High Court of Punjab and Haryana. I have also gone through the judgment passed by the Hon'ble Supreme Court in Jagdish Singh's case (supra) as well as the judgment in the case of Harshad Govardhan Sondagar's case (supra). The issue under consideration before the Supreme Court in the case of Jagdish Singh's case was primarily concerning the jurisdiction of a Civil Court which had been invoked by the auction purchaser. In this context, the Supreme Court has made observation in regard to the expression 'any person' used in Section 17 of the SARFAESI Act that it is of wide import and takes within its fold not only the borrower but also the guarantor or any other person who may be affected by action taken under Section 13(4) of the SARFAESI Act. Taking note of provisions of Section 13(4) of the SARFAESI Act, the Hon'ble Supreme Court has held that the jurisdiction of the Civil Court is completely barred so far as the measure taken by the secured creditor under Section 13(4) of the SARFAESI Act and the aggrieved person has a right of appeal before the DRT or the Appellate Tribunal to determine as to whether there has been any illegality in the measures taken.

On the other hand, the issue before the Supreme Court in Harshad Govardhan Sondagar (supra) directly being considered was the right of tenant and lessee. The High Court has taken note of the law laid down by the Supreme Court in this regard and thereafter has found a conflict between the Coordinate Benches of the Hon'ble Supreme Court. The Hon'ble High Court has taken note of the earlier judgment in the case of United Bank of India v. Satyawati Tandon, III (2010) BC 495 (SC) : VI (2010) SLT 52 : (2010) 8 SCC 110, where also the expression 'any person' used in Section 17(1) of the SARFAESI Act was found to be of wide import as is observed in the case of Jagdish Singh's case (supra).

Having considered the issue from all angles, I am of the view that on the face of direct view expressed by the Hon'ble Supreme Court on right of the lessee or tenant, the interpretation of 'any person' given in Section 17 of the Act to impliedly include tenant or lessee may not be called for. The view which is direct on the point in the case of Harshad Govardhan Sondagar (supra) may have preferential precedent compared to the case where the 'tenant' etc. are sought to be included in the term 'any person' by implication. Hon'ble Supreme Court in this case has clearly and unambiguously held that there is no remedy available under Section 17 of the SARFAESI Act to the lessee to 'protect' his lawful possession under a valid lease. This judgment, therefore, is direct on the point. To me, there does not appear to be a conflict on this issue. In Jagdish Singh's and Satyawati Tandon's cases (supra), the Supreme Court has made such observations in the context of jurisdiction of a Civil Court which was held to be barred. The Hon'ble Supreme Court did not address the issue regarding right of the tenant which is the issue decided in Harshad Goverdhan Sondagar's case (supra). The Supreme Court did not deal with the cases of tenant in the other cases.

I am of the view that the law laid down by the Supreme Court in the case of Harshad Govardhan Sondagar (supra) will have to be preferred which is being consistently followed by this Tribunal. The Tribunal below may have been persuaded to deal with the S.A. without going into the maintainability thereof in view of law laid down by the Hon'ble High Court, but, to me, it would not sound appropriate to ignore the direct judgment passed by Hon'ble Supreme Court on the issue which is law of the land to be followed by all the Courts and Tribunals. The S.A. filed by the appellant and consequently the appeal now filed against the said order is held not maintainable. The appeal is accordingly dismissed in limine. The appellant would be at liberty to invoke his remedy in accordance with the law laid down by the Hon'ble Supreme Court in the case of Harshad Govardhan Sondagar (supra).