* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ LETTERS PATENT APPEAL NO. 814/2010
Reserved on: 31st January, 2011
% Date of Decision:30th March, 2011
TRITON CORPORATION LIMITED ....Appellant Through Mr. Chander Prakash, Advocate.
KARNATAKA BANK LIMITED .....Respondent Through Mr. V. Sudeer, Advocate.
HON'BLE MR. JUSTICE DIPAK MISRA, THE CHIEF JUSTICE HON'BLE MR. JUSTICE SANJIV KHANNA
1. Whether Reporters of local papers may be allowed to see the judgment?
2. To be referred to the Reporter or not ? Yes.
3. Whether the judgment should be reported in the Digest ? Yes.
SANJIV KHANNA, J.
In the present Intra Court Appeal, the challenge is to the
order dated 14th September, 2010, dismissing the Writ Petition
(Civil) No. 6206/2010, filed by the appellant M/s Triton
Corporation Limited, against the respondent M/s Karnataka
2. The prayers made in the intra-Court appeal read as
"a) Expunge the remarks/observation
of the Ld. Single Judge made on merits LETTERS PATENT APPEAL NO. 814/2010 Page 1 of 18 of the matter in the impugned order
dated 14.9.2010 passed in W.P. (C) No. 6206 of 2010;
b) Direct the Ld. Debt Recovery
Tribunal, New Delhi to hear the appeal without being influenced by the
observation of the Ld. Single Judge
made in the order dated 14.9.2010;
c) Pass such order or orders as this Hon‟ble Court may deem fit and proper in the interest of justice."
3. The appellant has, however, has filed an additional
affidavit dated 6th January, 2011 in which the appellant has
made the following prayers:-
"a. Allow this appeal and after
quashing the judgment and order dated 14.09.2010 recorded by the Hon‟ble
Single Judge of this Hon‟ble Court in W.P. (C) No. 6206 of 2010, be pleased to adjudge that the respondent bank is not competent and lacks jurisdiction
under the NPA Act to proceed with any recovery measures under section 13(4) of the Act;
b. Furthermore, all acts and commissions, including the notice under section 13(2) and the symbolic
possession under section 13(4), thus far taken and pressed be quashed and set
aside as without jurisdiction and illegal.
c. Furthermore, be pleased to stay, as an interim measure, all further
proceedings by the respondent bank
against the appellant company and the LETTERS PATENT APPEAL NO. 814/2010 Page 2 of 18 subject property; And be further pleased to pass such other Order as this Hon‟ble Court may deem expedient and proper
in the interest of justice.
ALTERNATIVELY and in the
event of the expression of view on the various aspects referred to above by the Hon‟ble Single Judge, in his Order dated 14.09.2010, being found to be simply in the nature of simple observations, the relief, herein below, is prayed for-
Expunge the observations of the
Hon‟ble Single Judge made on the
merits of the matter by his Order dated 14.09.2010.
It is therefore most respectfully
preyed that the aforementioned facts
may be kindly taken on records and be considered during arguments."
4. The respondent bank has initiated proceedings under
Section 13(2) and 13(3) of the Securitization & Reconstruction of
Financial Assets & Enforcement of Security Interest Act, 2002
(SARFAESI Act, for short). The appellant had challenged the
notice dated 19th March, 2010 under Sections 13(2) and 13(3) of
the SARFAESI Act, in respect of the secured asset, property No.
113, Udyog Vihar Phase I, Gurgaon, Haryana.
5. The contentions raised by the appellant before the learned
single Judge and before us are:
LETTERS PATENT APPEAL NO. 814/2010 Page 3 of 18 (i) Respondent bank is not a secured creditor and,
therefore, the provisions of SARFAESI Act are not
(ii) The respondent bank has not classified the appellant‟s
account with them as a non-performing asset in
accordance with the mandate of law and particularly
SARFAESI Act and, therefore, there is lack of
jurisdiction and the proceedings in the SARFAESI Act
are void for want of jurisdiction.
(iii) The notice dated 19th March, 2010 under Section
13(2)/13(3) is defective as necessary details of the
amount demanded have not been placed on record.
(iv) The respondent bank failed to comply with the mandate
as contained in Section 13(3)(a) of the SARFAESI Act
as it failed to furnish requisite details and the reply
given by the respondent bank was evasive.
6. It is clear from the aforesaid facts stated above that the
appellant has been oscillating and vacillating. Before the
learned single Judge, the appellant had pressed the writ petition
and, therefore, the contentions raised were examined on merits
and answered against the appellant in the impugned judgment
LETTERS PATENT APPEAL NO. 814/2010 Page 4 of 18 dated 14th September, 2010. Thereafter, the appellant filed an
appeal and in the appeal the only prayer made was to expunge
the remarks and observations of the learned single Judge and in
this connection reliance was placed on Tin Plate Company of
India Limited versus State of Bihar and Others, (1998) 8
SCC 272. It is stated in the grounds of appeal that as the writ
petition was dismissed on the ground of alternative forum,
learned single Judge should not have expressed his opinion on
the merits of the pleas raised. At the same time, in the
additional affidavit the appellant wants the appellate court to
examine the merits and in the alternative it is submitted that the
observations of the learned single Judge on merits should be
expunged. The appellant wants to sail in two different boats
and, therefore, should be ready for the consequences when a
matter is decided. Reasons have to be given by the Court for
their decision. The appellant cannot insist that the Court should
decide the appeal on merits at the same time not make
observations or give findings.
7. The first contention of the appellant is based on the
contention that there was no equitable mortgage by deposit of
title deed, but the mortgage was as a result of the document LETTERS PATENT APPEAL NO. 814/2010 Page 5 of 18 dated 25th July, 2007 written by the respondent bank in
response to the proposal given by the appellant for finance
facilities. Learned single Judge in this regard has held that the
letter was a mere precursor and did not create mortgage. We
have also examined the letter and the judgments relied upon by
the counsel for the parties, viz., Rachpal Maharaj versus
Bhagwandas Daruka and Others, AIR 1950 SC 272 and
United Bank of India Limited versus Lekhram Sonaram and
Company and Others, AIR 1965 SC 1591. It has been held by
the Supreme Court that Section 58(f) of the Transfer of Property
Act, 1882 permits mortgage by deposit of title deeds and in such
cases there is no requirement for registration under the
Registration Act, 1908. However, if parties choose to reduce
the contract in writing, then the document will be the sole
evidence of terms and should be registered under Section 17 of
the Indian Registration Act, 1908. The contention of the
respondent bank is that the letter dated 27th July, 2007 is merely
a precursor and did not create any mortgage and at best it can
be regarded as an agreement that in future, the parties would
enter into an equitable mortgage. It will not be appropriate and
proper for the writ court to go into the said aspects while
LETTERS PATENT APPEAL NO. 814/2010 Page 6 of 18 exercising writ jurisdiction under Article 226 of the Constitution of
India. This is a matter which can be gone into and examined
under Section 14 of the SARFAESI Act. Ordinarily, a writ
petition under Article 226 of the Constitution is not entertained if
an effective remedy is available to an aggrieved person. This
principle applies with greater vigour in matters relating to
recovery of taxes, cess, fees and dues of the banks and
financial institutions. The contention raised and the reply given
by the respondent bank clearly shows that this is not a fit case
which falls under one of the exceptions carved out in the cases
of Baburam Prakash Chandra Maheshwari versus Antarim
Zila Parishad, AIR 1969 SC 556, Whirlpool Corporation
versus Registrar of Trade Marks, (1998) 8 SCC 1 and
Harbanslal Sahnia versus Indian Oil Corporation Limited
(2003) 2 SCC 107 and some other judgments.
8. The exceptions pointed out in the aforesaid cases are
when there is inherent lack of jurisdiction or vires of
enactment is challenged, principles of natural justice are
violated and where the writ petitioner seeks enforcement of
fundamental rights. None of the exceptions are applicable to
the facts of the present case. It is not possible to accept LETTERS PATENT APPEAL NO. 814/2010 Page 7 of 18 that the contentions raised by the appellant relate to inherent
lack of jurisdiction. The aforesaid contention fails to notice the
distinction between a „jurisdictional fact‟ and an „adjudicatory
fact‟. A jurisdictional fact is a primary fact and is a condition
precedent for exercise of jurisdiction by a particular authority
under the statute. It relates to existence of pre-conditions before
a court, tribunal or authority can exercise jurisdiction.
„Adjudicatory facts‟ cannot be equated with „jurisdictional facts‟.
They relate to exercise of jurisdiction on merits. Error or a
mistake on „adjudicatory fact‟ can make the decision vulnerable
to challenge on the ground of error in exercise of jurisdiction but
it is not an error of lack of jurisdiction. The aforesaid distinction
has been clearly brought out in the case of Ramesh Chandra
Sankla versus Vikram Cement, (2008) 14 SCC 58. It has
"68. A "jurisdictional fact" is one on the existence of which depends the jurisdiction of a court, tribunal or an authority. If the jurisdictional fact does not exist, the court or tribunal cannot act. If an inferior court or tribunal wrongly assumes the existence of such fact, a writ of certiorari lies. The underlying principle is that by erroneously assuming existence of jurisdictional fact, a subordinate court or an inferior tribunal cannot
LETTERS PATENT APPEAL NO. 814/2010 Page 8 of 18 confer upon itself jurisdiction which it otherwise does not possess.
69. The counsel referred to a recent decision of this Court in Arun Kumar v. Union of India. Speaking for the Court, one of us (C.K. Thakker, J.) observed:
"74. A „jurisdictional fact‟ is a fact which must exist before a court, tribunal or an authority assumes jurisdiction over a particular matter. A jurisdictional fact is one on existence or non-existence of
which depends jurisdiction of a court, a tribunal or an authority. It is the fact upon which an administrative agency‟s power to act depends. If the
jurisdictional fact does not exist, the court, authority or officer cannot act. If a court or authority wrongly assumes
the existence of such fact, the order can be questioned by a writ of
certiorari. The underlying principle is that by erroneously assuming existence of such jurisdictional fact, no authority can confer upon itself
jurisdiction which it otherwise does not possess."
It was further observed:
"76. The existence of jurisdictional fact is thus sine qua non or condition
precedent for the exercise of power by a court of limited jurisdiction."
70. Drawing the distinction between
"jurisdictional fact" and "adjudicatory fact", the Court stated: (Arun Kumar case)
"84. ... it is clear that existence of „jurisdictional fact‟ is sine qua non for the exercise of power. If the
LETTERS PATENT APPEAL NO. 814/2010 Page 9 of 18 jurisdictional fact exists, the authority can proceed with the case and take
an appropriate decision in accordance with law. Once the
authority has jurisdiction in the matter on existence of „jurisdictional fact‟, it can decide the „fact in issue‟ or
„adjudicatory fact‟. A wrong decision on „fact in issue‟ or on „adjudicatory fact‟ would not make the decision of
the authority without jurisdiction or vulnerable provided essential or
fundamental fact as to existence of
jurisdiction is present."
The principle was reiterated in Carona Ltd. v. Parvathy Swaminathan & Sons."
9. The contention No. (i) of the appellant mentioned in
paragraph 5 has been discussed above. Contention Nos. (ii) to
(iv) mentioned in paragraph 5 in the present case cannot be
classified as jurisdictional but fall in the category of adjudicatory
facts. These relate to the merits. These contentions have been
specifically dealt with and rejected by the learned single Judge
in the impugned order dated 14th September, 2010. Merits of
these contentions can be examined in accordance with the
procedure and the provisions under the SARFAESI Act, which
have been discussed below. Further, tribunal or an authority of
limited jurisdiction can be given power and authority to
determine existence of conditions precedent or existence of a
particular fact on which its jurisdiction at the inception depends LETTERS PATENT APPEAL NO. 814/2010 Page 10 of 18 and the tribunal is entitled to make up its mind and decide the
10. As far as the provisions of SARFAESI Act are concerned,
two decisions of the Supreme Court in Mardia Chemicals
Limited and Others versus Union of India and Others, (2004)
4 SCC 311 and Transcore versus Union of India and
Another, (2008) 1 SCC 125 are apposite. The provisions of
SARFAESI Act have been examined threadbare and have been
interpreted. After the decision in Mardia Chemicals (supra),
Section 13(3-A) was inserted in the SARFAESI Act. The said
Section provides for a last opportunity to the borrower to make a
representation to the secured creditor against classification of
his account as a non-performing asset. The secured creditor is
required to consider the representation and if the secured
creditor comes to the conclusion that the representation does
not merit acceptance and should be rejected, then within a week
of the receipt of the communication, the reasons for rejecting the
same have to be communicated.
11. Section 13(4) of the SARFAESI Act postulates the
remedies available to a secured creditor when the borrower fails
to discharge his liability within the periods specified under LETTERS PATENT APPEAL NO. 814/2010 Page 11 of 18 Section 13(2). Section 14 of the SARFAESI Act provides that the
secured creditor can file an application before the Chief
Metropolitan Magistrate or the District Magistrate having
jurisdiction and the said authority is then obliged to proceed (see
United Bank of India versus Satyawati Tandon and Others,
(2010) 8 SCC 110). A secured creditor in order to enforce his
right under Section 13(4) and in particular Section 13(4) sub-
section (a) is to take recourse to Section 14 of SARFAESI Act.
Section 17 of the SARFAESI Act provides for an appeal to a
Debt Recovery Tribunal. In view of the said provisions, in
Indian Overseas Bank versus Ashok Saw Mill, (2009) 8 SCC
366, it has been held in paragraphs 35, 36 and 39 as under:-
"35. In order to prevent misuse of such wide powers and to prevent prejudice being caused to a borrower on account of an error on the part of the banks or financial institutions, certain checks and balances have been introduced in Section 17 which allow any person, including the borrower, aggrieved by any of the measures referred to in sub-section (4) of Section 13 taken by the secured creditor, to make an application to the DRT having jurisdiction in the matter within 45 days from the date of such measures having taken for the reliefs indicated in sub-section (3) thereof.
36. The intention of the legislature is, therefore, clear that while the banks and financial institutions have been vested with LETTERS PATENT APPEAL NO. 814/2010 Page 12 of 18 stringent powers for recovery of their dues, safeguards have also been provided for rectifying any error or wrongful use of such powers by vesting the DRT with authority after conducting an adjudication into the matter to declare any such action invalid and also to restore possession even though possession may have been made over to the transferee.
39. We are unable to agree with or accept the submissions made on behalf of the appellants that the DRT had no jurisdiction to interfere with the action taken by the secured creditor after the stage contemplated under Section 13(4) of the Act. On the other hand, the law is otherwise and it contemplates that the action taken by a secured creditor in terms of Section 13(4) is open to scrutiny and cannot only be set aside but even the status quo ante can be restored by the DRT."
12. In United Bank of India (supra), the appellant bank had
challenged the interim order and the interdiction to the
proceedings under the SARFAESI Act. The Supreme Court set
aside the interim order and held that the writ petition should not
have been entertained. It has been observed:-
"42. There is another reason why the
impugned order should be set aside. If Respondent 1 had any tangible grievance against the notice issued under Section 13(4) or action taken under Section 14, then she could have availed remedy by filing an application under Section 17(1). The
LETTERS PATENT APPEAL NO. 814/2010 Page 13 of 18 expression "any person" used in Section 17(1) is of wide import. It takes within its fold, not only the borrower but also the guarantor or any other person who may be affected by the action taken under Section 13(4) or Section
14. Both, the Tribunal and the Appellate Tribunal are empowered to pass interim orders under Sections 17 and 18 and are required to decide the matters within a fixed time schedule. It is thus evident that the remedies available to an aggrieved person under the SARFAESI Act are both expeditious and effective.
43. Unfortunately, the High Court
overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi- judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.
44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or LETTERS PATENT APPEAL NO. 814/2010 Page 14 of 18 authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution.
45. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance.
46. It must be remembered that stay of an action initiated by the State and/or its agencies/instrumentalities for recovery of taxes, cess, fees, etc. seriously impedes execution of projects of public importance and disables them from discharging their
constitutional and legal obligations towards the citizens. In cases relating to recovery of the dues of banks, financial institutions and secured creditors, stay granted by the High Court would have serious adverse impact on the financial health of such bodies/institutions, which (sic will) ultimately prove detrimental to the economy of the nation. Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters. Of course, if the petitioner is able to show that its case falls LETTERS PATENT APPEAL NO. 814/2010 Page 15 of 18 within any of the exceptions carved out in Baburam Prakash Chandra Maheshwari v. Antarim Zila Parishad, Whirlpool Corpn. v. Registrar of Trade Marks and Harbanslal Sahnia v. Indian Oil Corpn. Ltd. and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order."
13. Several judgments of the Supreme Court on the question
of alternative remedy and when it is desirable not to exercise
discretionary jurisdiction under Article 226 of the Constitution
have been highlighted.
14. Recently, again the Supreme Court in Kanaiyalal
Lalchand Sachdev versus State of Maharashtra, (2011) 2
SCC 782 had the occasion to examine the provisions of
SARFAESI Act and whether in spite of alternative remedy, a writ
court should interfere. It was opined as under:-
"22. We are in respectful agreement with the above enunciation of law on the point. It is manifest that an action under Section 14 of the Act constitutes an action taken after the stage of Section 13(4), and therefore, the same would fall within the ambit of Section 17(1) of the Act. Thus, the Act itself contemplates an efficacious remedy for the borrower or any person affected by an action under Section 13(4) of the Act, by providing for an appeal before the DRT.
LETTERS PATENT APPEAL NO. 814/2010 Page 16 of 18
23. In our opinion, therefore, the High Court rightly dismissed the petition on the ground that an efficacious remedy was available to the appellants under Section 17 of the Act. It is well settled that ordinarily relief under Articles 226/227 of the Constitution of India is not available if an efficacious alternative remedy is available to any aggrieved person. (See Sadhana Lodh v. National Insurance Co. Ltd., Surya Dev Rai v. Ram Chander Rai and SBI v. Allied Chemical Laboratories.)
24. In City and Industrial Development Corpn. v. Dosu Aardeshir Bhiwandiwala this Court had observed that:
"30. The Court while exercising its
jurisdiction under Article 226 is duty- bound to consider whether:
(a) adjudication of the writ petition involves any complex and disputed
questions of facts and whether they can be satisfactorily resolved;
(b) the petition reveals all material facts;
(c) the petitioner has any alternative or effective remedy for the resolution of the dispute;
(d) the person invoking the
jurisdiction is guilty of unexplained delay and laches;
(e) ex facie barred by any laws of
(f) grant of relief is against public policy or barred by any valid law; and host of other factors."
25. In the instant case, apart from the fact that admittedly certain disputed questions of fact viz. non-receipt of notice under Section 13(2) LETTERS PATENT APPEAL NO. 814/2010 Page 17 of 18 of the Act, non-communication of the order of the Chief Judicial Magistrate, etc. are involved, an efficacious statutory remedy of appeal under Section 17 of the Act was available to the appellants, who ultimately availed of the same. Therefore, having regard to the facts obtaining in the case, the High Court was fully justified in declining to exercise its jurisdiction under Articles 226 and 227 of the Constitution."
15. Accordingly, we do not find any merit in the present appeal
and the same is dismissed. It is, however, clarified that the
observations made by the learned single Judge and in this order
are for the purpose of disposal of the writ petition and the
appeal. The authorities under the Act will independently apply
their mind without being bound by the observations. There will
be no order as to costs.
( DIPAK MISRA )
MARCH 30th, 2011
LETTERS PATENT APPEAL NO. 814/2010 Page 18 of 18