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State Bank of IndiA. Vs. State of Rajasthan and ors. - Court Judgment

LegalCrystal Citation
SubjectPropertyCivil
CourtRajasthan Jaipur High Court
Decided On
Case NumberS.B. Civil Writ Petition No. 4159/2011.
Judge
ActsSecuritisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) - Sections 13 (2) (4), 17(1); Constitution of India - Article 226; Rajasthan Sales Tax Act - Sections 84, 85.
AppellantState Bank of IndiA.
RespondentState of Rajasthan and ors.
Advocates:Mr. G.K. Garg; Mr. Bipin Gupta; Mr. Vijay Jangid, Advs.
Excerpt:
.....of loan etc., did not have the effect of transferring of the ownership of the sugar bags to the bank and the recovery officer did not commit any illegality by attaching the same and the high courts was fully justified in directing payment of a portion of the sale price to the assistant commissioner for being appropriated towards the provident fund dues of the workers. section 11(2), 7-q & 14-b: provident fund dues priority in payment over all other debts held, sub-section (2) was inserted in section 11 by amendment act no.40 of 1973 with a view to ensure that payment of provident fund dues of the workers are not defeated by the prior claims of the secured and/or of the unsecured creditors. while enacting sub-section (2), the legislature was conscious of the fact that in terms of..........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.8. to curb it, the hon'ble apex court reminded the high courts in the following words46. 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.....
Judgment:
1. By way of the instant writ petition, the petitioner State Bank of India has sought the following relief:

i) By an appropriate writ, order or direction, the impugned proclamation of sale dated 18.2.2011 (Annexure-5) issued by the respondent no. 3 may kindly be quashed and set aside and be further pleased to declare that the respondents are not having any authority to auction the properties in dispute as they do not belong to the assessee company but belong to the guarantors / owners who have created equitable mortgage in favour of the petitioner bank. ii) By further appropriate writ, order or direction, the communication dated 8.6.2010 issued by the respondent no.3 may also be declared as null and void as the same has been issued under misconception treating the properties to be of M/s. Udai Edible Oil Products Limited. iii) Or any other appropriate relief may kindly be granted to the petitioner which this Hon'ble Court may deem fit and proper in the facts and circumstances of the case.

iv) Cost of the litigation may kindly be granted to the petitioner.

2. Having heard the learned counsel for the petitioner Bank and carefully perused the relevant material on record, it is noticed that the petitioner Bank sanctioned credit facility to M/s. Kundan Edible Products Limited (presently known as M/s. Uday Edible Products Limited) to the tune of 32.45 crores of rupees. The petitioner also gave one ad-hoc FLC limit of 4.00 crores to the said company for a period of three months. The company failed to maintain the financial discipline as per terms of the loan agreement and the account was classified as NPA. The petitioner issued a notice under Section 13 (2) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (here-in-after to be referred to for short as Act of 2002) to the borrowers. In the meantime, the Commercial Taxes Officer, Circle B, Bhiwadi raised a demand of Rs. 14,38,98,755/- against the company M/s. Uday Edible Products Limited and issued a proclamation of sale dated 18.2.2011. The petitioner-bank has implored to quash and set-aside the said proclamation of sale dated 18.2.2011.

3. Learned counsel for the petitioner canvassed that the land with regard to proclamation of sale has been issued by the Commercial Taxes Officer, Bhiwadi does not belong to the company Uday Edible Products Limited, on the contrary this property belongs to the guarantors of the company, who mortgaged the same with the bank. Hence the operation of proclamation of sale deserves to be stayed, in the interest of justice.

4. At the very outset, it is relevant to record that this Court under Article 226 of the Constitution is not required to determine the ownership of the land. The petitioner bank cannot be allowed to invoke the extraordinary jurisdiction imploring this Court to decide the ownership of the land nor can he be allowed to pray this Court under Article 226 restraining the Commercial Taxes Officer from realising the taxes due to the company. If the petitioner-bank is aggrieved with the proclamation order issued by the Commercial Taxes Officer, Bhiwadi, the same can be impugned by way of filing an appeal under Section 84 of the Rajasthan Sales Tax Act and if the petitioner feels further aggrieved with the order rendered by First Appellate Court, he can file second appeal under Section 85 of the Act before the Tax Board. The alternative efficacious remedy is available to the aggrieved petitioner-bank and unless the alternative efficacious remedy is exhausted, the petitioner cannot be permitted to invoke the extraordinary jurisdiction under Article 226 of the Constitution.

5. It is relevant to record that in plethora of judgments, the Hon'ble Apex Court has reiterated the well settled principle of law that ordinarily relief under Articles 226 of the Constitution of India is not available, if an efficacious alternative remedy is available to any aggrieved person.

6. In the case of United Bank of India Versus Satyawati Tondon and others reported in 2010 (8) SCC 110, the Hon'ble Apex Court has held thus:

42. There is another reason why the impugned order should be set aside. If respondent No.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).

7. The Hon'ble Apex Court further deprecated the practice of High Courts granting stay on the recovery of revenue in the following terms:

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 redresses 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.

8. To curb it, the Hon'ble Apex Court reminded the High Courts in the following words

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.

Emphasis supplied

9. In the latest judgment pronounced by the Hon'ble Supreme Court (Kanhaiya Lal Sachdev and others Versus State of Maharashtra and others : (2011) 2 SCC 782), not only the settled principle was upheld but was further strengthened as the Hon'ble Apex Court dismissed the appeals with costs quantified at Rs. 20,000/-.

10. Adverting to the facts of the instant case, it is found that instead of availing the alternative efficacious remedy, the petitioner has filed the writ petition under Article 226 of the Constitution invoking the extraordinary jurisdiction of this Court. It has consistently been held by the Hon'ble Apex Court that the petitioner cannot be permitted to invoke the extraordinary jurisdiction under Article 226 of the Constitution when the alternative efficacious statutory remedy is already available to the aggrieved person. In view of afore-stated pronouncements of the Hon'ble Apex Court, the writ petition, to my firm view, is not at all maintainable and deserves to be dismissed in limine.

11. For the reasons afore-stated, the writ petition being bereft of any substance/merit stands dismissed.


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