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Mukesh Kumar and Others Vs. The Debts Recovery Tribunal rep., by its Registrar Triveni Complex and Others - Court Judgment

LegalCrystal Citation
CourtAndhra Pradesh High Court
Decided On
Case NumberReview WPMP No. 25025 of 2014 in W.P.No. 35413 of 2013
Judge
AppellantMukesh Kumar and Others
RespondentThe Debts Recovery Tribunal rep., by its Registrar Triveni Complex and Others
Excerpt:
(a) constitution of india, 1950 €“ article 226 €“ securitization and reconstruction of financial assets and enforcement of security interest act, 2002 €“ section 17 €“ section 13(4) €“ writ jurisdiction €“ petitioners filed appeal under section 17 of the act to set aside the proceedings initiated by the second respondent under section 13(4) of the act, against the scheduled property as void, illegal and arbitrary and to direct second respondent to give a valid discharge of the liability over the scheduled property and to deliver the documents in favour of petitioners €“ while dismissing appeal trial court directed the second respondent to return certain sum deposited by the petitioners pursuant to the.....ramesh ranganathan, j. this petition is filed seeking review of the order passed in w.p. no.35413 of 2013 dated 23.06.2014. the petitioners herein filed w.p.no.35413 of 2013 seeking a writ of mandamus to set aside the order passed, by the debts recovery tribunal, hyderabad, in s.a. no.97 of 2009 dated 20.09.2009. s.a. no.97 of 2009 was filed by the petitioners herein, under section 17 of the securitization and reconstruction of financial assets and enforcement of security interest act, 2002 (for short the sarfaesi act ?), to set aside the proceedings initiated by the 2nd respondent-bank herein, under section 13(4) of the sarfaesi act, against the scheduled property as void, illegal and arbitrary; to direct the 2nd respondent-bank to give a valid discharge of the liability over the.....
Judgment:

Ramesh Ranganathan, J.

This petition is filed seeking review of the order passed in W.P. No.35413 of 2013 dated 23.06.2014. The petitioners herein filed W.P.No.35413 of 2013 seeking a writ of mandamus to set aside the order passed, by the Debts Recovery Tribunal, Hyderabad, in S.A. No.97 of 2009 dated 20.09.2009. S.A. No.97 of 2009 was filed by the petitioners herein, under Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short the SARFAESI Act ?), to set aside the proceedings initiated by the 2nd respondent-bank herein, under Section 13(4) of the SARFAESI Act, against the scheduled property as void, illegal and arbitrary; to direct the 2nd respondent-bank to give a valid discharge of the liability over the scheduled property; and to deliver the documents/execute a sale deed in favour of the petitioners.

In its order, in S.A. No.97 of 2009 dated 20.09.2013, the Debts Recovery Tribunal observed that the petitioners had challenged the action of the 2nd respondent-bank in invoking the jurisdiction of the SARFAESI Act, and in taking measures under Section 13(4) thereof, against the scheduled property solely on the ground of exclusive ownership of the said property by virtue of an agreement of sale dated 31.12.2007; the petitioners had not pointed out any irregularity committed by the 2nd respondent-bank, while initiating proceedings for taking measures under Section 13(4) of the SARFAESI Act and the Rules made thereunder; the petitioners had no right over the scheduled property as ownership was not conveyed in their favour; they had no absolute right over the property by virtue of the agreement of sale dated 31.12.2007; and they were not entitled to challenge the proceedings of the 2nd respondent-bank, when proceeding against the scheduled property by invoking the provisions under the SARFAESI Act, because of the default committed by the borrowers in servicing their loan account as they were due a large sum of money to the 2nd respondent-bank. While dismissing S.A. No.97 of 2009, the Division bench directed the 2nd respondent-bank to return Rs.10.00 Lakhs deposited by the petitioners pursuant to the interim order dated 19.03.2009.

Aggrieved thereby, the petitioners invoked the jurisdiction of this Court by way of W.P. No.35413 of 2013. The Division Bench, in its order in W.P. No.35413 of 2013, framed three points for consideration. Firstly, whether the second respondent bank “ a private bank - was an instrumentality of the State amenable to the writ jurisdiction of this Court under Article 226 of the Constitution of India; secondly, whether the agreement of sale, obtained by the petitioners from respondents 8 and 9, is hit by Section 13(13) of the SARFAESI Act? and, if so, whether the petitioners were entitled to challenge the proceedings initiated by the 2nd respondent-bank under the Recovery of Debts due to the Banks and Financial Institutions Act, 1993, and under the SARFAESI Act?; and thirdly, whether the petitioners were entitled to challenge the order of the Debts Recovery Tribunal, in S.A. No.97 of 2009 dated 20.09.2013, without exhausting the alternative remedy provided by way of an appeal under Section 18 of the SARFAESI Act. On all the three points, the Division bench held in favour of the 2nd respondent bank and against the petitioners. Aggrieved thereby the petitioners have filed this review petition.

Before examining the contentions urged on behalf of the petitioners, on the reasons why the order of the Division bench in W.P. No.35413 of 2013 dated 23.06.2014 necessitates review, it is necessary to examine the scope of enquiry in review proceedings. Nothing in Article 226 of the Constitution precludes a High Court from exercising the power of review which inheres in every court of plenary jurisdiction to prevent miscarriage of justice or to correct grave palpable errors committed by it. (Shivdeo Singh v. State of Punjab (AIR 1963 SC 1909); State of Rajasthan v. Surendra Mohnot (2014) 14 SCC 77). A review of a judgment is a serious step, and reluctant resort to it is proper only where a glaring omission or a patent mistake or like grave error has crept in earlier by judicial fallibility. The present stage is not a virgin ground, but review of an earlier order which has the normal feature of finality. (Sow Chandra Kante v. Sk. Habib (1975) 1 SCC 674); Kamlesh Verma v. Mayawati (2013) 8 SCC 320). The earlier order cannot be reviewed unless the court is satisfied that material error, manifest on the face of the order, undermines its soundness or results in miscarriage of justice. (Kamlesh Verma (supra); Col. Avtar Singh Sekhon v. Union of India (1980) Supp SCC 562). Error apparent on the face of the proceedings is an error which is based on clear ignorance or disregard of the provisions of law. Such error is an error which is a patent error and not a mere wrong decision. (T.C. Basappa v. T. Nagappa (AIR 1954 SC 440); Kamlesh Verma (supra). It is essential that it should be something more than a mere error; it must be one which must be manifest on the face of the record. (Hari Vishnu Kamath v. Ahmad Ishaque (AIR 1955 SC 233); Kamlesh Verma (supra).

Bearing these aspects in mind, let us now examine the order of the Division bench on each of the three points, the contentions of the Learned Counsel on either side for and against its being reviewed, and whether or not each of the points, decided by the earlier Division bench, necessitates review.

On Point No.1 the Division Bench, following the judgment in B.S.K. Madhavi v. Kotak Mahindra Bank Ltd, Vijayawada (2012 (5) ALD 537 (DB)which in turn followed the judgment of the Supreme Court in Federal Bank Limited v. Sagar Thomas (AIR 2003 SC 4325), held that the 2nd respondent (ING Vysya Bank Limited) was a private bank, and a bank within the meaning of Section 2[c] read with Section 6 of the SARFAESI Act; a private bank does not perform public functions merely by providing banking services; the 2nd respondent-bank was not a State within the meaning of Article 12 of the Constitution of India; though the 2nd respondent bank, was a bank within the definition under Section 2[c] read with Section 6 of the SARFAESI Act, a Writ Petition was not maintainable; the impugned order was an order passed by the Debts Recovery Tribunal under the SARFAESI Act; Courts have consistently held that a Writ Petition was not maintainable though the challenge was against the order passed by the Debts Recovery Tribunal; though private individuals and the Debts Recovery Tribunal were parties, the substantive relief was claimed only against the 2nd respondent- bank; the other parties were proforma parties impleaded to avoid procedural difficulties; and applying the law, and the principles laid down in Federal Bank Ltd (supra), the Writ Petition was not maintainable, under Article 226 of the Constitution of India, against a private bank i.e. ING Vysya Bank Limited. Sri Krishna Murthy, Learned Counsel appearing on behalf of the petitioners, would submit that, even if the 2nd respondent-bank is not an instrumentality of the State under Article 12 of the Constitution of India, they are nonetheless required to discharge the statutory duties specified in the SARFAESI Act and the Rules made thereunder; a Writ Petition, under Article 226 of the Constitution of India, is maintainable for violation of a statutory duty; the Supreme Court, in Federal Bank Ltd (supra), has also held that, for statutory violations, a writ is maintainable; a Writ Petition would lie against the 2nd respondent-bank for any action taken by them contrary to the provisions of the SARFAESI Act and the Rules made thereunder; Section 13 of the SARFAESI Act enables the banks to exercise statutory power; Rule 8 of the SARFAESI Rules, and Rule 3 in Schedule-II of the Income Tax Act, are statutory provisions which necessitate compliance; the SARFAESI Act makes no distinction between a public sector bank and a private sector bank in the case of a nonperforming asset; even otherwise, the order under challenge was the order passed by the Debts Recovery Tribunal in S.A.No.97 of 2009 dated 20.09.2013; the order passed by the Debts Recovery Tribunal (which was under challenge in the Writ Petition), was in exercise of the powers conferred on it under Section 17 of the SARFAESI Act; the Debts Recovery Tribunal is a statutory Tribunal against whose order a Writ Petition, under Article 226 of the Constitution of India, would lie; and the Division Bench had erred in holding that the Writ Petition was not maintainable against the 2nd respondent-bank. Learned Counsel would rely on Mardia Chemicals Ltd v. Union of India (AIR 2004 SC 2371 = (2004) 4 SCC 311); Edara Haribabu v. District Collector-cum-Presiding Officer (2015(1) ALD 595); Bhopal Sugar Industries Ltd. v. Income Tax Officer, Bhopal (AIR 1961 SC 182); and M/s. East India Commercial Co. Ltd v. Collector of Customs, Calcutta (AIR 1962 SC 1893). On the other hand Sri K.V. Subramanya Narusu, Learned Counsel for the 2nd respondent bank, would submit that the 2nd respondent bank is a private bank and is not an instrumentality of the State under Article 12 of the Constitution of India; and as has been rightly held by the Division bench, in the order under review, a Writ Petition would not lie against the 2nd respondent bank.

Mandamus and certiorari are public law remedies. They are not available to enforce private law rights. Every act of a company/society, which may be a 'State' within the meaning of Article 12 of the Constitution, does not necessarily belong to the public law field. A company/society, which is a 'State', may have its private law rights just like the Government. A contractual obligation, which is not statutory, cannot, ordinarily, be enforced by way of a writ petition under Article 226 of the Constitution. (Sri Konaseema Co-operative Central Bank Ltd. v. N. Seetharama Raju (FB) (AIR 1990 A.P. 171). It is no doubt true that the 2nd respondent-bank is not an instrumentality of the State within the meaning of Article 12 of the Constitution of India and, with regards its private functions, the jurisdiction of this Court, under Article 226 of the Constitution of India, cannot be invoked. In this context, the distinction between public law functions and those in the private law realm must be borne in mind.

Public law is confined to 'public authorities'. The 'nature of the persons and bodies against whom relief may be granted by such orders', that is, by mandamus, prohibition or certiorari, are divided into two main categories. First, the persons or bodies who have legal authority to determine questions affecting the common law or statutory rights or obligations of other persons as individuals. Second, the persons or bodies who are entrusted by Parliament with functions, powers and duties which involve the making of decisions of a public nature. (Sri Konaseema Co-operative Central Bank Ltd. (supra); The Closing Chapter" : Lord Denning; R. v. Electricity Commissioners (1924) 1 KB 171/205), ex parte London Electricity Joint Committee Co., (1920) Ltd; O'Reitly v. Mackman (1982) 3, WLR 1096/1104).

Public law is the system which enforces the proper performance by public bodies of the duties which they owe to the public. Private law is the system which protects the private rights of private individuals or the private rights of public bodies. The critical distinction arises out of the fact that it is the public as a whole or, in the case of local government, the public in the locality who are the beneficiaries of what is protected by public law and it is the individuals or bodies entitled to the rights who are the beneficiaries of the protection provided by private law. ("Public Law Private Law : Why the Divide? A personal View (published in "Public Law" Summer : (1986)" : Sir Harry Woolf; Sri Konaseema Co-operative Central Bank Ltd. (supra). While public law deals only with public bodies, this does not mean that the activities of public bodies are never governed by private law. Like public figures, at least in theory, public bodies are entitled to have a private life. The servant employed by a public body ordinarily has the same private rights as any other servant. The position may, however, be different if such relationship is circumscribed by a statutory provision. ("Public Law Private Law: Why the Divide? A personal View (published in "Public Law" Summer : (1986)" : Sir Harry Woolf; Sri Konaseema Co-operative Central Bank Ltd. (supra).

The bodies to which the remedies of these prerogative writs have been applied have all been statutory bodies on whom Parliament has conferred statutory powers and duties which, when exercised, may lead to the detriment of the subjects who may have to submit to their jurisdiction. (R. v. National Joint Council for Dental Technicians, ex parte Neate (1983) Times, 16 May); Sri Konaseema Co-operative Central Bank Ltd. (supra). Every body which is created by a statute, and whose powers and duties are defined by a statute, is a 'public authority'. Government departments, local authorities, police authorities, and statutory undertakings and corporations, are all 'public authorities'. So are members of a statutory tribunal. So also, a university incorporated by statute. But a limited liability company incorporated under the Companies Acts is not a 'public authority'. Nor is an unincorporated association. (Sri Konaseema Co-operative Central Bank Ltd. (supra); The Closing Chapter": Lord Denning; Tozer v. National Greyhound Racing Club Ltd. These categories are not exhaustive. The Court has been extending them to any other person or body of a public nature exercising public duties which it is desirable to control by the remedy of judicial review. (Sri Konaseema Co-operative Central Bank Ltd. (supra); The Closing Chapter" : Lord Denning).

While private law functions, of a private body corporate, cannot be subjected to challenge in proceedings under Article 226 of the Constitution of India, its public law function is amenable to the writ jurisdiction of the High Court. Statutory obligations may be cast even on private banks, which are not instrumentalities of the State under Article 12 of the Constitution of India, by the provisions of a statute. Violation of statutory duties by private bodies can be questioned in proceedings under Article 226 of the Constitution of India.

The order under challenge before the Division Bench was an order passed by the Debts Recovery Tribunal in S.A.No.97 of 2009 dated 20.09.2013. The Debts Recovery Tribunal is a statutory body created, by the Central Government, under Section 3(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, and its jurisdiction can be invoked by any person aggrieved under Section 17 of the SARFAESI Act, 2002. The Debts Recovery Tribunal is a statutory Tribunal, and its orders can be corrected in certiorari proceedings under Article 226 of the Constitution. Certiorari lies to remove, for the purpose of quashing, the proceedings of inferior courts of record or other persons or bodies exercising judicial or quasi-judicial functions. A certiorari lies only in respect of a judicial or quasi-judicial act as distinguished from an administrative act. (Udit Narain Singh Malpaharia v. Additional Member Board of Revenue, Bihar (AIR 1963 SC 786). Wherever any body of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially, act in excess of their legal authority they are subject to the controlling jurisdiction of the Court exercised in a writ of Certiorari. (The King v. The Electricity Commissioner (1924) 1 KB 171); Udit Narain Singh Malpaharia (supra).

In order to establish that certiorari will issue, it is enough to show that the body in question was obliged to act in a judicial manner, in the sense that it was under an express duty to adopt a procedure analogous to a judicial procedure, or that it was required to determine questions of law and fact or otherwise to exercise a limited yet judicial discretion, or that it was under an implied duty to act judicially in accordance with natural justice, or even under a more loosely formulated duty to act fairly. A duty to act judicially may be inferred from the severity of the impact made by the exercise of a power or duty on individual interests. (Halsbury's Laws of England. 4th Edition at page 104; Harijander Singh v. Selection Committee, Kakatiya Medical College, Warangal (AIR 1975 AP 35).

The ambit of certiorari can be said to cover every case in which a body of persons, of a public as opposed to a purely private or domestic character, has to determine matters affecting subjects, provided always that it has a duty to act judicially. If tribunals are established by Acts of Government, the supervisory jurisdiction of the High Court extends to them if they possess the essential characteristics on which the subjection of inferior tribunals to the supervisory control of the High Court is based. (Sri Konaseema Co-operative Central Bank Ltd. (supra); R. v. Criminal Injuries Compensation Board, ex parte Lain (1967) 2 All ER 770); R. v. Panel on takeovers (1987) 1 AH ER 564). The jurisdiction to supervise, the exercise of jurisdiction by inferior tribunals, has never been dependent upon the source of the tribunal's authority to decide issues submitted to its determination except where such authority is derived solely and exclusively from agreement of the parties to the determination. This latter case falls within the field of private contract and is within the jurisdiction either of an arbitrator or the civil court. (Harijander Singh (supra).

A writ of certiorari can be issued for correcting errors of jurisdiction committed by tribunals. These are cases where orders are passed by inferior courts or tribunals without jurisdiction, or in excess of it, or as a result of failure to exercise jurisdiction. A writ can similarly be issued where, in exercise of the jurisdiction conferred on it, the Tribunal acts illegally or improperly, or where the procedure adopted in dealing with the dispute is opposed to principles of natural justice. (Syed Yakoob v. K.S. Radhakrishnan (AIR 1964 SC 477). The certiorari jurisdiction of the High Court, under Article 226 of the Constitution of India, can be invoked against orders of statutory tribunals, even if the order passed by such tribunal is in a lis between two private parties.

It is no doubt true that the petitioner did not invoke the certiorari jurisdiction of this Court, but had sought a writ of mandamus. A writ of mandamus is a writ which commands a public body to perform a public duty imposed on it by law. A distinction must, therefore, be made between a duty and a mere power. Mandamus is not limited to judicial acts. It will issue at the instance of a person whose legal right is involved and a corresponding statutory obligation is also involved. There must be a legal right existing in the petitioner and a corresponding legal duty upon the authority in order to issue a mandamus. (Harijander Singh (supra). A writ can issue against a public body or authority or bodies created under statute apart from the State. Violation of any statutory provision or rule can be a ground for the issue of such a writ. (Harijander Singh (supra). Where the authority has failed to carry out a legal duty imposed on him, and such failure is destructive of a basic principle of justice, a writ of mandamus should issue ex debito justitiae to compel him to carry out the duty. (Bhopal Sugar Industries Ltd (supra).

A writ of mandamus can also be issued for statutory violation by a private body, including private banks such as the second respondent-bank. In Federal Bank Ltd. (supra), the 1st respondent, who was working as the branch manager of Federal Bank, was placed under suspension, and disciplinary action was initiated against him. On his being found guilty of the charge, he was imposed the punishment of dismissal from service. The 1st respondent challenged the order of dismissal by way of a Writ Petition before the High Court. The objection taken by the appellant bank, to the maintainability of the Writ Petition, was negatived by the Learned Single judge holding that Federal Bank performed a public duty. The appeal preferred there against was dismissed by a Division bench of the High Court. On Federal bank questioning the said order in appeal, the Supreme Court observed:-

From the decisions referred to above, the position that emerges is that a writ petition under Article 226 of the Constitution of India may be maintainable against (i) the State (Government); (ii) an authority; (iii) a statutory body; (iv) an instrumentality or agency of the State; (v) a company which is financed and owned by the State; (vi) a private body run substantially on State funding; (vii) a private body discharging public duty or positive obligation of public nature; and (viii) a person or a body under liability to discharge any function under any statute, to compel it to perform such a statutory function.

A company registered under the Companies Act for the purposes of carrying on any trade or business is a private enterprise to earn livelihood and to make profits out of such activities. Banking is also a kind of profession and a commercial activity, the primary motive behind it can well be said to earn returns and profits. Since time immemorial, such activities have been carried on by individuals generally. It is a private affair of the company though the case of nationalized banks stands on a different footing. There may well be companies, in which majority of the share capital may be contributed out of the State funds and in that view of the matter there may be more participation or dominant participation of the State in managing the affairs of the company. But in the present case we are concerned with a banking company which has its own resources to raise its funds without any contribution or shareholding by the State. It has its own Board of Directors elected by its shareholders. It works like any other private company in the banking business having no monopoly status at all. Any company carrying on banking business with a capital of five lakhs will become a scheduled bank ..

.Such private companies would normally not be amenable to the writ jurisdiction under Article 226 of the Constitution. But in certain circumstances a writ may issue to such private bodies or persons as there may be statutes which need to be complied with by all concerned including the private companies. For example, there are certain legislations like the Industrial Disputes Act, the Minimum Wages Act, the Factories Act or for maintaining proper environment, say the Air (Prevention and Control of Pollution) Act, 1981 or the Water (Prevention and Control of Pollution) Act, 1974 etc. or statutes of the like nature which fasten certain duties and responsibilities statutorily upon such private bodies which they are bound to comply with. If they violate such a statutory provision a writ would certainly be issued for compliance with those provisions. For instance, if a private employer dispenses with the service of its employee in violation of the provisions contained under the Industrial Disputes Act, in innumerable cases the High Court interfered and has issued the writ to the private bodies and the companies in that regard. But the difficulty in issuing a writ may arise where there may not be any non-compliance with or violation of any statutory provision by the private body. In that event a writ may not be issued at all. Other remedies, as may be available, may have to be resorted to

..For the discussion held above, in our view, a private company carrying on banking business as a scheduled bank, cannot be termed as an institution or a company carrying on any statutory or public duty. A private body or a person may be amenable to writ jurisdiction only where it may become necessary to compel such body or association to enforce any statutory obligations or such obligations of public nature casting positive obligation upon it. We don't find such conditions are fulfilled in respect of a private company carrying on a commercial activity of banking. Merely regulatory provisions to ensure such activity carried on by private bodies work within a discipline, do not confer any such status upon the company nor put any such obligation upon it which may be enforced through issue of a writ under Article 226 of the Constitution. Present is a case of disciplinary action being taken against its employee by the appellant Bank. The respondent's service with the Bank stands terminated. The action of the Bank was challenged by the respondent by filing a writ petition under Article 226 of the Constitution of India. The respondent is not trying to enforce any statutory duty on the part of the Bank. That being the position, the appeal deserves to be allowed .. (emphasis supplied)

Service conditions of employees in Federal Bank (a private scheduled bank) are not governed by statutory regulations. The Supreme Court, therefore, held that, in case of disciplinary action being taken against its employees, Federal Bank was not trying to enforce any statutory duty on its part; and, in the absence of violation of any statutory provision, the jurisdiction of the High Court, under Article 226 of the Constitution of India, could not have been invoked. The law declared by the Supreme Court in Federal Bank Ltd (supra), as is evident from the afore-extracted portions of the judgment, is that a Writ Petition, under Article 226 of the Constitution of India, may be maintained against a statutory body or a person or a body under liability to discharge any function under any statute, to compel it to perform a statutory function; in certain circumstances a writ may issue, to such private bodies or persons, as there may be statutes which need to be complied with by all concerned including private companies; in cases where there is no violation of any statutory provision by a private body, a writ may not be issued, and other remedies may have to be resorted to; and a private body would be amenable to the writ jurisdiction only where it becomes necessary to compel such body to enforce any statutory obligation and its obligations of a public nature.

In Sri Konaseema Co-operative Central Bank Ltd. (supra)a Full Bench of this Court held that the bye-laws of a co-operative society, registered under the A. P. Cooperative Societies Act, did not have the force of law; they were in the nature of a contract; and, where a Society could not be characterised as a 'State', the service conditions of its employees, governed by bye-laws, could not be enforced through a writ petition. It is evident, therefore, that service conditions of employees of companies/societies, which are either governed by bye laws or by provisions which do not have the force of law, are in the nature of a contract; and in cases where a company or a society cannot be characterised as a State ?, the service conditions of its employees cannot be enforced in writ proceedings.

In B.S.K. Madhavi (supra), the Writ Petitions were filed against ICICI Bank Limited, Asset Reconstruction Management Services, which was a division of Asset Reconstruction Company (India) Limited, Dhana Lakshmi Bank Limited, Axis Bank Limited, Citi Bank, Federal Bank, Karur Vysya Bank, ICICI Home Finance and Sundaram Finance. In all the Writ Petitions, the grievance of the petitioners was regarding the improper initiation of recovery under the SARFAESI Act and declaration of the loan amount, borrowed by the borrowers, as a Non-Performing Asset. The Division Bench, after referring to several judgments, held that a banking company was a legal entity specialising in banking business; it was required to obtain a licence from Reserve Bank of India, which exercised absolute control and regulation over its banking operations; the rules and regulations, and the guidelines, of Reserve Bank of India were non-negotiable and non-discriminatory; they were binding on all the banks which were included in the II Schedule to the Reserve Bank of India Act; a bank, like any other company, can issue shares to the public, borrow loans, accept deposits and also engage in other permissible financial business; as held by the Supreme Court, in Federal Bank Ltd (supra), a private bank is not a State within the meaning of Article 12 of the Constitution of India; and such private banks do not perform public functions by providing banking services.

As held by the Division Bench, in B.S.K. Madhavi (supra), a private scheduled bank is not a State within the meaning of Article 12 of the Constitution of India; and, in providing banking services, it does not perform public functions. Any complaint regarding inadequacy of non-statutory banking services provided by a private bank, including declaring the account of a borrower as a non-performing asset, cannot be questioned in writ proceedings under Article 226 of the Constitution of India. However for failure of private scheduled banks to discharge statutory functions, or duties prescribed by law (either plenary or subordinate), the jurisdiction of the High Court, under Article 226 of the Constitution of India, can be invoked. To the extent the Division bench held otherwise, the order in W.P. No.35413 of 2013 dated 23.06.2014 necessitates review.

On Point No.2, the Division Bench held that, by filing a petition under Section 17(1) of the SARFAESI Act before the Debts Recovery Tribunal, the petitioners could not defeat the claim of the secured creditor i.e. the 2nd respondent-bank; time and again, the Supreme Court had held that sale of property, in contravention of Section 13(13) of the SARFAESI Act, was invalid; the sale in favour of the petitioners, by respondents 4 to 7, was invalid and hit by Section 13(13) of the SARFAESI Act; and, on the basis of a void agreement, the petitioners were not entitled to claim any preferential right over the claim of the 2nd respondent-bank. Point No.2 was also held in favour of the 2nd respondent-bank, and against the petitioners.

Sri Krishna Murthy, Learned Counsel appearing for the petitioners, would submit that, in W.P. No.27307 of 2011 filed by the 2nd respondent-bank against the petitioners herein, the Division Bench, by its order dated 27.08.2012, had specifically rejected the contention, urged on behalf of the 2nd respondent-bank, that the agreement of sale was null and void under Section 13(13) of the SARFAESI Act; and as the order passed by the Division Bench in W.P. No.27307 of 2011 dated 27.08.2012 is a judgment inter-parties, it is not open to the subsequent Division Bench to take a view contrary thereto. On the other hand Sri K.V. Subramanya Narusu, Learned Counsel for the 2nd respondent bank, would submit that no error of law has been committed by the Division Bench in holding that sale of property, in contravention of Section 13(13) of the SARFAESI Act, is not valid.

The petitioners herein were the respondents, and the 2nd respondent herein was the petitioner, in W.P. No.27307 of 2011 which was filed to quash the proceedings in R.A(SA) No.62 of 2010 on the file of the Debt Recovery Appellate Tribunal, Chennai, and to declare the action of the Tribunal, in entertaining such an appeal without fulfilling the conditions mandated under the provisions of Section 18 of the SARFAESI Act, 2002 and in remanding SA No.97 of 2009 to the Debt Recovery Tribunal, Hyderabad, as illegal, high-handed and without jurisdiction. Before the Division bench, in W.P.No.27307 of 2011, it was contended that the agreement of sale should be declared null and void under Section 13(13) of the SARFAESI Act. The Division bench, in its order in W.P. No.27307 of 2011 dated 27.08.2012, held that an agreement for sale is not prohibited by the said provision and, if at all entered into, that would be subject to the mortgage already created by the borrower in favour of the petitioner; it cannot, therefore, curtail the rights of the banks in any manner whatsoever; and the contention, to declare such an agreement of sale as null and void, was also not tenable. The Division bench further held that the Appellate Tribunal had found that the Debt Recovery Tribunal had not considered the matter on merits. Hence, they remanded the matter only on merits, and found in favour of the respondents therein (petitioners herein) on the question regarding Section 13(13) as well as Section 17 of the SARFAESI Act. In the opinion of the Division Bench, the remand order was justified.

The order of the Division bench, in W.P. No.27307 of 2011 dated 27.08.2012, is a judgment inter-parties and is binding both on the petitioners and the respondents herein. In so far as the parties to a lis are concerned, they will always be bound by the decision of a Court. In other words, either of the parties will not be permitted to reopen the issue decided by such a decision. (Supreme Court Employees Welfare Association v. Union of India (AIR 1990 SC 334). A previous decision on a matter in issue is a composite decision; the decision of law cannot be dissociated from the decision on facts on which the right is founded. A decision on an issue of law will be res judicata in a subsequent proceeding if it be the same as in the previous proceeding. (Sushil Kumar Mehta v. Gobind Ram Bohra (1990) 1 SCC 193); Mathura Prasad Sarjoo Jaiswal v. Dossibai N. B. Jeejeebhoy (AIR 1971 SC 2355); Supreme Court Employees Welfare Association (supra). The earlier Judgment, on the points decided on fact or of law or of fact and law, is conclusive in every subsequent proceeding between the same parties. (Swamy Atmananda v. Swami Bodhananda (AIR 2005 SC 2227); Ishwar Dutt v. Land Acquisition Collector (2005) 7 SCC 190). An order of a Court/Tribunal of competent jurisdiction directly upon a point creates a bar, as regards a plea, between the same parties in some other matter in another Court/Tribunal, where the said plea seeks to raise afresh the very point that was determined in the earlier order. (Swamy Atmananda (supra); Iswar Dath (supra). An order passed by a Court/Tribunal having jurisdiction over the subject matter, and over the parties, cannot be ignored as a nullity unless such erroneous orders are corrected in accordance with law. Such orders bind the parties in a subsequent litigation. (Barkat Ali Vs. Badrinarain (AIR 2001 Rajasthan 51).

Issues which have been concluded inter-parties cannot be raised again in proceedings inter-parties. (State of Haryana v. State of Punjab (2004(12) SCC 673). In its order in W.P. No.27307 of 2011 dated 28.08.2012, the Division bench held that an agreement of sale was not prohibited by Section 13(13) of the SARFAESI Act; if at all entered into, that would be subject to the mortgage already created by the borrower in favour of the bank; and it could not, therefore, curtail the rights of the banks in any manner whatsoever. As this finding is binding inter-parties, this question could not have been re-agitated before the Division bench in W.P. No.35413 of 2013, and the Division Bench ought not to have re-examined this question to hold that the sale in favour of the petitioners was void ab initio in view of the interdict contained under Section 13(13) of the SARFAESI Act. To the extent the Division bench, in W.P. No.35413 of 2013, examined this question, in a subsequent proceeding inter-parties, the order under review suffers from an error apparent on the face of the record and necessitates being reviewed. Point No.2 is answered in favour of the review petitioners.

On Point No.3 the Division Bench, relying on the judgments of the Supreme Court in Narayana Chandra Ghosh v. UCO Bank (2011) 4 SCC 548); Kanaiyalal Lalchand Sachdev v. State of Maharashtra (2011) 2 SCC 782); United Bank of India v. Satyawati Tandon (2010) 8 SCC 110); and Commissioner of Income Tax v. Chhabil Dass Agarwal (MANU/SC/0802/2013), held that, against the order passed by the Debt Recovery Tribunal under Section 17(1) of the SARFAESI Act, an appeal would lie to the appellate authority under Section 18 of the SARFAESI Act, and hence the same cannot be questioned before the Court compelling it to invoke the extraordinary jurisdiction under Article 226 of the Constitution of India; the High Court could not pass an order, exercising its extraordinary power under Article 226 of the Constitution of India, since there is an alternative, effective and efficacious statutory remedy available to the petitioners to prefer an appeal before the Appellate Authority under Section 18 of the SARFAESI Act; and they found no ground to grant any relief in the Writ Petition.

Sri Krishna Murthy, Learned Counsel appearing on behalf of the petitioners, would submit that existence of an alternative remedy is not a bar for invoking the jurisdiction of the High Court under Article 226 of the Constitution of India; the remedy of an appeal is neither effective nor efficacious; when the Debts Recovery Tribunal had specifically recorded findings contrary to its earlier order, and the order of this Court, the petitioners cannot be relegated to the alternative remedy of an appeal all over again; the conditions imposed under the second proviso to Section 18, regarding pre-deposit, renders the remedy of an appeal ineffective; and the order of the Division Bench necessitates review on this ground also. On the other hand, Sri K.V. Subrahmanya Narusu, Learned Counsel for the 2nd respondent - bank, would submit that the statutory remedy of appeal, under Section 18 of the SARFAESI Act, is effective and efficacious; and the petitioners cannot, without exhausting the alternative remedy, straightaway invoke the extra-ordinary jurisdiction of this Court under Article 226 of the Constitution of India.

It is not in dispute that, against the order passed by the Debt Recovery Tribunal, in S.A. No.97 of 2009 dated 20.09.2013, the petitioners herein have the remedy of a statutory appeal under Section 18 of the SARFAESI Act. It is no doubt true that existence of an alternative statutory remedy of an appeal would not bar exercise of jurisdiction under Article 226 of the Constitution of India. The power of the High Court, under Article 226 or 227 of the Constitution, has not been taken away because of the alternative efficacious remedy provided under the statute. The power of judicial review and/or superintendence are the basic features of the Constitution which cannot be taken away absolutely but should be exercised in exceptional cases. (State of Karnataka v. Vishwabharathi House Building Co-op. Society (2003) 2 SCC 412); LandT Finance Limited v. Anup Kumar Bera (AIR 2014 Calcutta 78). While the powers conferred upon the High Court, under Article 226 of the Constitution, to issue to any person or 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 the exercise of that power, at the same time every High Court is bound to keep in view the rule of self-imposed restraint evolved by Courts while exercising power under Article 226 of the Constitution. (Satyawati Tondon (supra)). While Courts have recognised some exceptions to the rule of alternative remedy, ordinarily the High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute, under which the action complained of has been taken, itself contains a mechanism for redressal of grievance. When a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation. (Chhabil Dass Agarwal(supra) Thansingh Nathmal v. Superintendent of Taxes (AIR 1964 SC 1419); Titaghur Paper Mills v. State of Orissa (1983) 2 SCC 433).

It is in the discretion of the Court either to entertain a Writ Petition or to relegate the petitioners to the remedy of a statutory appeal. While exercising power under Article 226, the High Court would certainly take note of the legislative intent manifested in the provisions of the Act, and would exercise their jurisdiction consistent with the provisions of the enactment. (Mafatlal Industries Ltd. v. Union of India (1997) 5 SCC 536); Chhabil Dass Agarwal (supra); G. Veerappa Pillai v. Raman and Raman Ltd. (AIR 1952 SC 192); CCE v. Dunlop India Ltd. (1985) 1 SCC 260); Ramendra Kishore Biswas v. State of Tripura (1999) 1 SCC 472); Shivgonda Anna Patil v. State of Maharashtra (1999) 3 SCC 5); C.A. Abraham v. ITO (AIR 1961 SC 609); Titaghur Paper Mills Co. Ltd. (supra); Excise and Taxation Officer-cum-Assessing Authority v. Gopi Nath and Sons (1999) Supp (2) SCC 312); Whirlpool Corpn. v. Registrar of Trade Marks; [image] (1998) 8 SCC 1).

Tin Plate Co. of India Ltd. v. State of Bihar (1998) 8 SCC 272); Sheela Devi v. Jaspal Singh (1999) 1 SCC 209)and Punjab National Bank v. O.C. Krishnan (2001) 6 SCC 569). Writ jurisdiction cannot normally be invoked if a statutory remedy of appeal is provided under the Act. If a statutory appeal lies, then, ordinarily, the aggrieved party has to challenge the order in an appeal and not by filing a writ petition. (Civily Kallarackal v. Vehicle Factory (2012) 8 SCC 524); Whirlpool Corporation (supra); Paschim Gujarat Vij Co. Ltd. v. Devabhai Memabhai Myatra (AIR 2014 Gujarat 26). The Rule 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, 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. While dealing with such petitions, 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 in as much as they not only contain a comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. In all such cases, the High Court must insist that, before availing the remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute. (Satyawati Tondon (supra).

The mere fact that the second proviso to Section 18(1) of the SARFAESI Act stipulates that no appeal shall be entertained unless the borrower has deposited, with the Appellate Tribunal, 50% of the amount of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less and can reduce the amount to not less than 25% of the debt, does not render the remedy of an appeal ineffective or not efficacious. The right to appeal is a statutory right, and can be circumscribed by the conditions in the grant. If the statute gives a right to appeal upon certain conditions, it is upon fulfilment of those conditions that the right becomes vested and exercisable to the appellant. (Vijay Prakash D. Mehta v. Collector of Customs (1988) 4 SCC 402). As the right of appeal is a creature of a statute, there is no reason why the legislature, while granting the right, should not impose conditions for its exercise. (Seth Nand Lal v. State of Haryana (1980 Supp SCC 574); Shyam Kishore v. Municipal Corpn. of Delhi (1993) 1 SCC 22); Anant Mills Co. Ltd. v. State of Gujarat (1975) 2 SCC 175). Without a statutory provision, creating a right of appeal, the person aggrieved is not entitled to file an appeal. In the absence of any special reasons, there is no legal or constitutional impediment to the imposition of conditions for the exercise of the right to appeal. Such conditions merely regulate the exercise of the right of appeal so that the same is not abused by a recalcitrant litigant, and there is no difficulty in the enforcement of the order appealed against in case the appeal is ultimately dismissed. It is open to the Legislature to impose an accompanying liability upon a party upon whom a legal right is conferred or to prescribe conditions for the exercise of the right. Any requirement for the discharge of that liability or the fulfilment of that condition, in case the party concerned seeks to avail of the said right, is a valid piece of legislation. (Anant Mills Co. Ltd. (supra). The requirement of pre-deposit under sub-section (1) of Section 18 of the SARFAESI Act is mandatory and there is no reason whatsoever for not giving full effect to the provisions contained in Section 18 of the Act. Deposit, under the second proviso to Section 18(1) of the Act, is a condition precedent for preferring an appeal under the said section. (Narayan Chandra Ghosh (supra). As the conditions of pre-deposit, under Section 18(1) of the SARFAESI Act, have been upheld by the Supreme Court in Narayana Chandra Ghosh (supra), it cannot be said that imposition of such a condition would render the remedy of an appeal ineffective.

It is only where there can reasonably be no two opinions entertained about it, is a clear case of an error apparent on the face of the record made out. (M/s. Thungabhadra Industries Ltd v. Govt. of A.P (AIR 1964 SC 1372); Surendra Mohnot (supra) . If the view adopted by the Court in the original judgment is a possible view it is difficult to hold that there is an error apparent. (Northern Indian Caterers (India) Ltd. v. Ltd. Governor of Delhi (1980) 2 SCC 167). The possibility of two views on the subject is not a ground for review. (Kamlesh Verma (supra); Lily Thomas v. Union of India (2000) 6 SCC 224). Mere disagreement with the view expressed in the judgment is not a ground for invoking the review jurisdiction. (Union of India v. Sandur Manganese and Iron Ores Ltd (2013) 8 SCC 337). Exercise of discretion by the Division Bench, to relegate the petitioner to the statutory remedy of appeal, and to refrain from exercising jurisdiction under Article 226 of the Constitution of India, is undoubtedly a possible view. Even if the view expressed by Sri Krishna Murthy, Learned Counsel appearing on behalf of the petitioner, is also presumed to be a possible view, no interference is called for where the view of the High Court is one of the two or more possible views, and the order passed by it cannot be said to suffer from an error apparent on the face of the record necessitating its review.

While point Nos.1 and 2, decided by the Division bench in W.P. No.35413 of 2013 dated 23.06.2014, necessitate being reviewed, and the conclusions recorded thereunder being set aside, we see no reason to review the order on point No.3. Consequently the contentions urged by the petitioner, on the validity of the order of the Debt Recovery Tribunal in S.A.No.97 of 2009 dated 20.09.2013, cannot be examined on merits. To the extent that the petitioner has been relegated to the remedy of a statutory appeal, under Section 18(1) of the SARFAESI Act, the review petition fails and is, accordingly, dismissed.


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