Calcutta HC Dismisses Plea Against Tribunal Order In SARFAESI Case | Fair Hearing Was Given | No Arbitrariness In Manner Of Disposal As Parties Argued Entire Matter On Merits
Sanchayita Lahkar
The High Court at Calcutta Single Bench of Justice Shampa Sarkar dismissed a revisional application challenging the composite order of the Debts Recovery Tribunal-II, Kolkata, which had adjudicated both a securitisation application and an interlocutory application together. The court declined to interfere under Article 227 of the Constitution, holding that the petitioners had an efficacious alternative remedy under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act. The court concluded that "disposing of the main S.A. when only the interlocutory application had been fixed for hearing, was a jurisdictional error," but such procedural grievances could be raised before the appellate tribunal. Consequently, the court dismissed the revisional application, granting liberty to approach the appellate forum.
The dispute originated from an order dated January 10, 2023, passed by the Presiding Officer (in-charge), Debts Recovery Tribunal-II, Kolkata, in S.A. No. 217 of 2021 and I.A. No. 1605 of 2022. The S.A. was filed under Section 17 of the SARFAESI Act, challenging various measures taken by the secured creditor, including a sale notice issued on November 7, 2022, and a subsequent e-auction held on November 28, 2022. The secured asset was sold to the opposite party No.3, Ashok Kumar Ghosh, for Rs. 5,53,22,000 against a reserve price of Rs. 3,03,97,000.
The learned tribunal held that the credit facility was admitted and that the secured creditor was entitled and obligated to recover dues by lawful means. It found no irregularity in the sale process and confirmed the auction.
Senior Advocate Mr. Jaydip Kar, appearing for the petitioners, submitted that the tribunal acted without jurisdiction by deciding the S.A. without specifically fixing it for hearing. He contended that only I.A. No. 1605 of 2022 had been listed for hearing on December 15, 2022. The sale notice had been challenged on several grounds, including violation of undertakings given in an earlier S.A. (No. 91 of 2015), procedural irregularities, and non-compliance with statutory provisions. The hearing was conducted virtually, and the order was reserved and subsequently uploaded on January 10, 2023.
Mr. Kar maintained that the S.A. was not argued on merits, and references to it during the I.A. hearing were made solely to demonstrate the illegality of the sale notice. He argued that this resulted in a breach of the principles of natural justice, as the petitioners were not afforded a full opportunity to contest the S.A. Mr. Kar relied on several judgments to support the maintainability of the revisional application under Article 227 despite the availability of an appellate remedy.
In response, Mr. Samrat Sen, Senior Advocate for the bank, opposed the maintainability of the revisional application, asserting that the SARFAESI Act provided a complete mechanism for appeal under Section 18, which barred the invocation of Article 227 except in exceptional circumstances. Mr. Sen contended that the petitioners had themselves invited the tribunal to consider the issues raised in the S.A., and therefore could not allege denial of opportunity once the decision went against them.
Mr. Bikash Ranjan Bhattacharya, Senior Advocate for the auction purchaser, argued that the revisional application was filed to bypass the statutory pre-deposit requirement under Section 18. He submitted that the High Court should exercise restraint in interfering with commercial matters governed by special statutes like SARFAESI, especially when the application was essentially an appeal camouflaged as a revisional petition.
The tribunal, in its impugned order, had observed that the matter was listed on December 15, 2022, for hearing I.A. No. 1605 of 2022. The parties had exchanged affidavits, and the tribunal had directed the filing of written arguments. The order of January 10, 2023, recorded that arguments were advanced on both the I.A. and the S.A., and objections in the S.A. were adjudicated under specific heads such as estoppel, limitation, non-performing asset classification, valuation, encumbrances, and one-time settlement.
Written notes submitted by the petitioners also addressed issues central to the S.A., including estoppel, limitation, compliance with Section 13(3A), valuation, and classification of the loan account. These submissions persuaded the tribunal to conclude that the merits of the S.A. had been argued and considered.
The High Court recorded: "upon perusal of the said order, it cannot be conclusively held that the tribunal had only restricted the hearing to the limited issue of the validity of the sale notice, and the petitioners were deprived of an opportunity to address on the merits of the SA."
"The conduct of the petitioners reflects otherwise," it stated, observing that extensive written submissions covered all issues.
The court noted, "although the I.A. was fixed for hearing on the point of validity of the sale notice, the hearing actually proceeded on the merits of the case and entire matter were argued by both parties." It concluded that there was no arbitrariness in the manner in which the tribunal disposed of the applications.
Regarding judicial review, the court held, "this court is not inclined to exercise jurisdiction under Article 227 of the Constitution of India and the points which have been raised by the petitioners before this court, are also available under Section 18 of the SARFAESI Act."
On the allegation that the tribunal decided the S.A. without fixing it for hearing, the court observed, "the prayer for remand of S.A. for further hearing, for the reason that the petitioners had not argued the S.A. to their fullest satisfaction... can be made before the learned appellate tribunal."
Citing multiple Supreme Court judgments, including Phoenix ARC Pvt. Ltd. v. Vishwa Bharati Vidya Mandir and Punjab National Bank v. O.C. Krishnan, the court reiterated, "when there is an alternative remedy available, judicial prudence demands that the Court refrains from exercising its jurisdiction under the said constitutional provisions."
The court dismissed the revisional application, stating, "the revisional application is dismissed with liberty to the petitioners to approach the learned appellate tribunal in accordance with law."
It further directed, "the pendency of the revisional application before this court shall be taken into consideration by the learned appellate tribunal while deciding the issue of limitation."
"The learned appellate tribunal shall not be influenced by this order," the court clarified.
Additionally, the court declared, "interim orders, if any, stand vacated."
It concluded, "there shall be no order as to costs," and instructed, "parties are to act on the basis of the sever copy of this order."
Advocates Representing the Parties
For the Petitioners: Mr. Jaydip Kar, Senior Advocate; Mr. Debasish Karmakar, Advocate; Mr. Parikshit Lakhotia, Advocate; Mr. Satyam Ojha, Advocate
For the Respondents: Mr. Samrat Sen, Senior Advocate; Mr. Abhishek Banerjee, Advocate; Ms. Parna Roychudhury, Advocate; Ms. Payel Ghosh, Advocate: Mr. Bikash Ranjan Bhattacharya, Senior Advocate; Mr. Uday Sankar Chatterjee, Advocate; Mr. Suman Sankar Chatterjee, Advocate
Case Title: Ambhi Impex Private Limited & Ors. v. Punjab National Bank & Ors.
Case Number: C.O. 553 of 2023
Bench: Justice Shampa Sarkar
[Read/Download order]
