when all
the subject secured assets are located outside its territorial limits
and within the State of Chattisgarh, has been put in issue.
The DRT, Hyderabad lacks territorial jurisdiction to entertain
all the three S.As i.e., S.A.Nos.759 and 760 of 2013 and SAIR
No.442 of 2014. As the D.R.T, Hyderabad lacks jurisdiction to
entertain the S.As, it also lack jurisdiction to pass any interim
orders therein. Consequently, the interim orders passed by the
D.R.T, Hyderabad, in all the three S.As, are vacated and cease to
remain in force. The D.R.T., Hyderabad shall forthwith return the
papers, in all the three S.As, to enable the respondent-companies
to invoke the jurisdiction of the appropriate D.R.T within whose
territorial limits the subject secured assets are located. The Writ
Petitions are, accordingly, allowed. However, in the circumstances,
without costs. Miscellaneous Petitions, if any pending, shall also
stand disposed of.
THE HONBLE SRI JUSTICE RAMESH RANGANATHAN AND THE HONBLE SRI JUSTICE M.SATYANARAYANA MURTHY
WRIT PETITION No.6350 of 2015
01-06-2015
Indiabulls Housing Finance Ltd..Petitioner
Surya Chakra Power Corporation Ltd. .Respondent
Counsel for the petitioner: Sri S.Niranjan Reddy and Sri Mehfooz Nazki.
Counsel for respondent: Sri P.S.Rajasekhar.
<GIST:
>HEAD NOTE:
? Citations:
1) AIR 1967 SC 1
2) AIR 1962 SC 1621
3) AIR 1965 SC 1942
4) ILR (2012) 6 Delhi 377
5) (Judgment in W.P. No.24279 of 2013 and WP. No.11098 of 2014 dated
24.11.2014)
6) (Judgment in Civil Revision Petition (MD). No.694 of 2014 (PD) dated 24
June,
2014)
7) (2008) 12 SCC 481
8) (2004) 7 SCC 166
9) (2007) 8 SCC 449
10) (1917) 1 KB 486 : 86 LJ KB 257 : 116 LT 136 (CA)
11) (2007) 6 SCC 120
12) (1973) 1 SCC 840
13) (1917) 2 Ch 71 = (1916-17) All ER Rep. 548 (CA)
14) AIR 1963 SC 786
15) (1995) 2 SCC 326
16) (1999) 2 SCC 577
17) (1984) 4 SCC 251
18) AIR 1966 SC 81
THE HONBLE SRI JUSTICE RAMESH RANGANATHAN
AND
THE HONBLE SRI JUSTICE M.SATYANARAYANA MURTHY
WRIT PETITION Nos.6350, 10278 & 10281 of 2015
COMMON ORDER: (per Honble Sri Justice Ramesh Ranganathan)
The order, under challenge in W.P.No.10278 of 2015, was
passed by the Debt Recovery Tribunal, Hyderabad (DRT for short)
in S.A.No.759 of 2013 dated 16.12.2013. In the said order, the
DRT noted the contentions urged on behalf of the petitioner herein
that, since the schedule property was situated in the State of
Chattisgarh, the DRT lacked jurisdiction to entertain the
securitization application. It also took note of the contentions
urged on behalf of the respondent-company that it had jurisdiction
over the subject matter since the cause of action took place within
its jurisdiction. The DRT, thereafter, observed that the crucial
issue, raised by both sides, was with regards its jurisdiction over
the subject matter; however, arguments in the present matter,
were heard at late hours; in view of paucity of time, a detailed
order could not be passed in the present petition; considering the
fact that auction of the schedule property was fixed on 17.12.2013,
the petitioner could receive the bids from the intending purchasers
of the schedule property on 17.12.2013, but should not open the
same till 26.12.2013, on which day detailed orders would be
passed. The S.A. was directed to be called on 26.12.2013. S.A.
No.759 of 2013 underwent 23 adjournments thereafter till
29.03.2014, mostly with the endorsement no time-reposted or
orders are not ready. Thereafter, on 09.10.2014, the matter was
referred to the Lok Adalat, and status quo was directed to be
continued. On its being returned by the Lok Adalat on
20.11.2014, S.A. No.759 of 2013 again suffered several
adjournments. We are now informed that the Presiding Officer of
the DRT retired on 30.04.2015 without pronouncing orders on the
question of its jurisdiction to entertain S.A. No.759 of 2013. The
order, under challenge in W.P.No.10281 of 2015, was passed by
the DRT, Hyderabad in S.A.No.760 of 2013 dated 16.12.2013.
Identical orders, as were passed in S.A.No.759 of 2013, were
passed in S.A. No.760 of 2013 also. Like S.A.No.759 of 2013, S.A.
No.760 of 2013 also suffered repeated adjournments.
The order, under challenge in W.P.No.6350 of 2015, was
passed by the DRT in SAIR No.442 of 2014 dated 18.07.2014. In
the said order, the DRT observed that when SAIR No.442 of 2014
was taken up, since the maintainability on the question of
territorial jurisdiction was under consideration, the matter was
posted to 18.07.2014; the learned counsel for the respondent
(petitioner in the Writ Petitions) had filed a petition to reopen the
SAIR for hearing them even with regards maintainability; and
hence orders could not be passed. The DRT further observed that
however, considering the fact that the schedule property was being
subjected to public auction on 21.07.2014 pursuant to the sale
notice dated 08.06.2014, as the maintainability of the SAIR has
not yet been decided and it was reposted to 23.07.2014 on the
appearance of the respondent, it was felt not justified and
reasonable to allow the respondent to proceed with the sale of
schedule property in the meanwhile. The DRT directed that the
auction be postponed till 23.07.2014. On 23.07.2014 the matter
was adjourned to 28.07.2014 and status quo was extended till
then. Thereafter, the matter suffered several adjournments till
08.09.2014 either on the ground that orders were not ready or that
there was no time. On 09.10.2014 the matter was referred to the
Lok Adalat. Thereafter, on the S.A. being returned by the Lok
Adalat, the matter again underwent several adjournments. We are
informed by Sri P.S. Rajasekhar, Learned Counsel for the
respondent-applicant, that the matter was reopened on
16.04.2015, on the eve of the retirement of the Presiding Officer of
the DRT on 30.04.2015, and SAIR is still pending before the DRT
with regards maintainability on the question of its territorial
jurisdiction.
Facts, to the extent necessary, are that the Delhi High Court,
sanctioned a scheme of arrangement between Indiabulls Financial
Services Limited (IFSL) and Indiabulls Housing Finance Ltd (the
petitioner herein and, hereinafter, referred to as IHFL) under the
provisions of Sections 391 to 394 of the Companies Act. In terms
of the said scheme, IFSL along with all its assets and debts,
outstanding credits, liabilities etc., was transferred/assigned to
and vested in IHFL on a going concern basis. The respondent in
W.P. No.6350 of 2015 i.e., Surya Chakra Power Corporation Ltd
(for short SPCL) is a private limited company holding 78% of the
share capital in Surya Chakra Global Enviro Private Ltd (for short
SGEPL) which in turn holds 100% of the share capital in South
Asian Agro Industries Ltd (for short SAAIL).
It is the petitioners case that SGEPL and SAAIL had availed
a loan facility of Rs.35 crores from Indiabulls Infrastructure Credit
Ltd (IICL for short) in the year 2010 for the purpose of taking over
the existing loan limits availed from other banks, and for partly
augmenting their working capital requirements. Both SGEPL and
SAAIL had defaulted in repayment of the debt due to IICL.
Thereafter IFSL, one of the group companies of IICL, sanctioned a
loan facility of Rs.50 crores for the purpose of repayment of the
IICL facility and augmentation of working capital requirements of
SGEPL and SAAIL. The sanction letter dated 28.03.2012 required
both SGEPL and SAAIL to create a first charge by equitable
mortgage of the fixed assets of the power plant located at Madwa
village of Janggir District in the State of Chhattisgarh; security
interest, by way of assignment/ hypothecation, on the power
purchase agreements entered into between them and the
Chhattisgarh State Power Distribution Company; and by pledge of
25% of the share capital of SAAIL and the personal guarantees of
the promoter directors. The loan agreement required the loan
facility of Rs.50 crores each to be repaid with interest in 102
months. Both SGEPL and SAAIL are said to have furnished letters
of undertaking on 30.03.2012 for creation of security interest to
secure the loan amounts. Rs.45.73 crores is said to have been
disbursed to SGEPL, and Rs.48.73 crores to SAAIL. SPCL pledged
1,56,77,000 equity shares of SGEPL held by them, and 3005125 of
its own equity shares, in favour of IFSL to secure the loan of
Rs.100 crores.
The other disputes between IHFL and SAAIL and SGEPL are
not relevant to these proceedings. It would suffice to note that a
notice, under Section 13(2) of the SARFAESI Act, was issued to
SGEPL on 10.07.2013 in reply to which they submitted their
representation. A notice of possession under Section 8(1) of the
SARFAESI Rules was issued, and a copy thereof was pasted on the
conspicuous part of the schedule property on 22.10.2013.
Thereafter a letter, intimating the taking of possession, was sent to
SAAIL and SGEPL on 25.10.2013. These notices were also
published in two newspapers. Aggrieved thereby, both SAAIL and
SGEPL approached the DRT and filed S.A. Nos.759 of 2014 and
760 of 2014. The petitioner entered appearance and filed a
detailed reply raising objections, including to the very jurisdiction
of the DRT to entertain the S.As in as much as the property, which
was the subject matter of dispute, was situated in the State of
Chattisgarh. The DRT heard the matter on 16.12.2013, and
directed the petitioner herein not to finalise the bids till
26.12.2013. In its order dated 05.03.2014 the DRT recorded that
an order, on the issue of jurisdiction, would be passed before the
matter was decided on merits. Thereafter, both SA Nos.759 and
760 of 2014 suffered repeated adjournments from time to time.
The petitioner filed a complaint in FIR No.278 of 2013 dated
02.10.2013 before the Station House Officer, Gurgaon, Haryana.
The directors of SGEPL and SAAIL were arrested and, while
seeking bail before the Punjab & Haryana High Court, they gave an
undertaking to repay the amounts in accordance with the
settlement arrived at between the parties. In its order in CRM M-
13783 of 2014 dated 01.05.2014, the Punjab & Haryana High
Court recorded that the Counsel for the parties were ad-idem that
the matter stood amicably resolved; and the petitioner therein i.e.,
Dr. S.M. Manepalli was required to furnish an undertaking before
the Debt Recovery Tribunal, Andhra Pradesh at Hyderabad in
terms of the settlement. Thereafter, in its order in CRM M-22791
of 2014 dated 25.07.2011, the submission, made on behalf of the
petitioners therein, that they would stick to the compromise was
recorded by the Punjab and Haryana High Court. Both SAAIL and
SGEPL filed applications in S.A. Nos.759 of 2014 and 760 of 2014
before the DRT. On the ground that the undertaking given by
them was not adhered to, the bail granted to the directors is said
to have been cancelled questioning which SLP (Crime) Nos.9042 of
2014 and 9420 of 2014 were filed before the Supreme Court.
Granting liberty to withdraw the SLP, the Supreme Court, by its
order dated 03.02.2015, dismissed the SLP as withdrawn.
While matters stood thus, SPCL filed SAIR No.442 of 2014
before the DRT, Hyderabad requesting that all proceedings,
initiated by IHFL under the SARFAESI Act, against SAAIL and
SGEPL be stayed. It is the petitioners case that, when SAIR
No.442 of 2014 was filed, the DRT Registry took an objection to the
maintainability of the said SA in as much as the property, which
was the subject matter of the SA, was situated in the State of
Chhattisgarh. The petitioners grievance is that, though the SA
was not even numbered, the DRT, by its order dated 18.07.2014,
had directed the petitioner to postpone auction of the properties
belonging to SGEPL and SAAIL; thereafter the matter was once
again heard on 23.07.2014, and was reserved for orders on the
question of jurisdiction; and the Tribunal had simply adjourned
the matter thereafter, from time to time, extending the status quo
orders. The petitioner contends that, unless orders on its
jurisdiction are pronounced, no orders can be passed by the DRT;
the order of status quo was illegal and arbitrary; it is more than
eight months since orders, on jurisdiction, were reserved; the
impugned order was causing grave and irreparable loss to the
petitioner; and it was preventing them from lawfully exercising
their rights, under the SARFAESI Act, for recovery of their dues.
In the counter-affidavit, filed on behalf of the respondents, it
is stated that SPCL holds 78% shares in its subsidiary SGEPL;
SGEPL holds 100% shares in its subsidiary SAAIL; both SGEPL
and SAAIL are engaged in the business of power generation; SPCL,
being the holding company, has sufficient interest in the affairs of
SGEPL and SAAIL; as on 07.04.2015, SPCL holds 100% shares in
its subsidiary SGEPL; SGEPL and SAAIL obtained a loan of Rs.25
crores and Rs.28 crores respectively, from the Hyderabad branches
of a consortium of Nationalised banks, to set up their plants; IICL
approached SGEPL and SAAIL, and offered to take over the
existing loans from the nationalised banks by replacing the
existing loan and augmenting working capital to the tune of Rs.35
crores per power plant; loans were sanctioned vide letter dated
28.06.2010, and loan agreements were entered into on
29.06.2010; thereafter, officers of IICL insisted on their taking over
the operation and maintenance of the power plants; a
memorandum of understanding to that effect was entered into on
09.11.2011; IICL, which is a Non-banking financial institution
(NBFC) and is not covered under the SARFAESI Act, approached
SGEPL and SAAIL and offered to take over the loan from IICL and
issued sanction letter dated 28.03.2012 sanctioning a loan of
Rs.50 crores per power plant; all the loan documents were signed
at Hyderabad by the management of SGEPL and SAAIL on
30.03.2012; instead of IFSL disbursing the loan, IICL disbursed a
sum of Rs.41.48 crores from its bank account on 31.03.2012, and
SGEPL repaid Rs.40.42 crores from its bank account to IICL; IICL
issued a no due certificate certifying that there was no amount
due, and there was no charge on the assets of SGEPL or SAAIL;
IFSL had disbursed Rs.1.82 crores to SGEPL and Rs.6.76 crores to
SAAIL, and no further sum, amounting to Rs.50 crores per plant,
were disbursed; IHFL, claiming to be the transferee company of
IFSL, issued the notice, under Section 13(2) of the SARFAESI Act,
dated 10.07.2013 demanding payment of Rs.51.96 crores from
SGEPL, and another notice dated 23.07.2013 demanding payment
of Rs.55.58 crores from SAAIL; SGEPL and SAAIL submitted their
objections under Section 13(3-A) of the SARFAESI Act on
06.09.2013 and 10.09.2013 respectively; IHFL rejected the
objections by their letter dated 30.09.2013; they issued possession
notice to SAAIL and SGEPL dated 22.10.2013 under Rule 8(1) of
the SARFAESI Rules; they issued a sale notice, under Rule 8(6) of
the SARFAESI Rules to SGEPL and SAAIL, informing that a public
auction would be held on 17.12.2013; the possession notice as well
as sale notices were challenged by SGEPL and SAAIL by filing
S.A.Nos.759 and 760 of 2013 before the DRT, Hyderabad which, by
order dated 16.12.2013, directed that the sale may go on but the
same shall not be confirmed; the applications in S.A. Nos.759 and
760 of 2013 are still pending as on date; and the interim order is
in force.
Reference is also made, in the counter-affidavit, to the fact
that the directors of SGEPL and SAAIL were arrested on
26.03.2014, and were sent on police remand on 28.03.2014.
According to the respondent, the officers of IHFL pressurised their
director, Dr. S.M. Manepalli, to withdraw S.A. Nos.759 and 760 of
2013 stating that they would co-operate in his securing bail only
then, and if he did not co-operate then his other family members
would also be arrested on false charges; Dr. S.M. Manepalli was
forced to sign on the compromise petition under duress; the said
officers also forced the Director to ensure that the other
respondents in S.A. Nos.759 and 760 of 2013 withdrew the same
on the ground that the matter had been settled between the
parties, when in fact there was no such settlement; IHFL did not
keep its part of the promise to co-operate in getting the criminal
cases filed against the Director and others closed; the sale did not
take place on 17.12.2013; another sale notice was issued on
22.03.2014 fixing the date of auction as 26.04.2014; even on that
day no sale took place; another sale notice was issued on
29.04.2014 fixing the date of auction as 31.05.2014; questioning
the validity of the said notice dated 29.04.2014 issued to SAAIL,
and another sale notice of the same date issued to SGEPL, SPCL
filed SAIR No.442 of 2014, under Section 17 of the SARFAESI Act,
on 17.05.2014; the application filed by them on 17.06.2014 was
returned with objections on 18.06.2014; after complying with the
objections, they re-submitted the S.A. on 20.06.2014; their
application was once again rejected on 20.06.2014 with certain
objections; after the application was returned on 20.06.2014, the
petitioner once again issued sale notice dated 18.06.2014
proposing to conduct the sale on 21.07.2014; the respondent
amended their application to include a challenge to the sale notice
dated 18.06.2014, and re-submitted the application complying
with the objections stating that the SA was maintainable, no such
objection with regards territorial jurisdiction was taken by the
Tribunal, and the Registry had orally stated that they had
instructions not to entertain the application; inspite of demanding
that the law be stated, for not entertaining the application, the
Registry did not state the law and, by endorsement dated
15.07.2014, posted the matter before the bench; on 17.07.2014
their Counsel argued on the office objections; after hearing them,
the Tribunal posted the matter for orders to 18.07.2014; IHFL
engaged the services of a Counsel, and filed an application on
18.07.2014 to re-open the matter and to conduct hearing afresh;
the DRT re-opened the matter on 18.07.2014, and heard the
parties, although IHFL had no right to be heard at that stage; on
09.10.2014, IHFL changed Counsel and represented before the
DRT that the matter was settled, and the matter may be listed
before the Lok Adalat though there was no such settlement; the
matter was posted before the Lok Adalat on 18.10.2014; as there
was no consensus for settlement, the matter was posted before the
DRT again; on 21.01.2015 IHFL sought adjournment; and the
matter is being adjourned from time to time.
According to the respondents, the Writ Petition as filed is an
abuse of process of Court; IHFL has no locus to file the same as
the DRT has not even issued notice to them; the Writ Petition, for
grant of relief of mandamus, is not maintainable; the Writ Petition
is liable to be dismissed as the DRT has not been made a party; at
the stage of accepting the application, IHFL has no right to be
heard; IHFL, by its action of preventing the DRT from passing the
order, is estopped from complaining that the DRT is not passing
any order; the question of territorial jurisdiction has to be decided
by the DRT, and the same is pending; the DRT at Hyderabad has
jurisdiction under the SARFAESI Act read with the provisions of
the Recovery of Debts Due to Banks and Financial Institutions Act,
1993 (for short the RDDB Act); IHFL has suppressed the fact that
they had engaged Counsel, and had sought reopening of the matter
on 18.07.2014 before the DRT; but for the intervention of IHFL on
18.06.2014, the DRT would have passed orders on the question of
jurisdiction; and the Writ Petition is liable to be dismissed.
Elaborate submissions were made by Sri S.Niranjan Reddy
and Sri Mehfooz Nazki, Learned Counsel for the petitioner in all
the three Writ Petitions, and Sri P.S.Rajasekhar, Learned Counsel
for the respondent-companies. It is convenient to examine the
rival submissions under different heads.
I. DOES THE DEBT RECOVERY TRIBUNAL, HYDERABAD LACK
TERRITORIAL JURISDICTION TO ENTERTAIN AN
APPLICATION, UNDER SECTION 17(1) OF THE SARFAESI
ACT, AS ALL THE SECURED ASSETS ARE LOCATED IN THE
STATE OF CHATTISGARH BEYOND THE TERRITORIAL
LIMITS OF THE DRT?
It is no doubt true that the DRT can examine the question of
its territorial jurisdiction to entertain an application under Section
17(1) of the SARFAESI Act. That does not mean that this Court, in
Writ proceedings under Article 226 of the Constitution of India, is
precluded from examining this question. It is only if the condition
prescribed by the statute (i.e., the SARFAESI Act) is satisfied that
the DRT derives jurisdiction to deal with the matter. Proof of such
a condition is regarded as the proof of a collatera1 fact, and an
erroneous decision of the Tribunal as to the existence of this
collateral fact is not regarded as binding on the parties and can be
challenged by a writ proceeding under Article 226. But in cases
where the Tribunal is given jurisdiction to deal with certain
matters, then its decision, on those matters, cannot be regarded as
a decision on collateral facts. Where a quasi-judicial authority
makes an order in the undoubted exercise of its jurisdiction, in
pursuance of a provision of law which is intra vires, an error of law
or fact committed by that authority cannot be impeached otherwise
than on appeal, unless the erroneous determination relates to a
matter on which the jurisdiction of the body depends, and the
relevant law does not confer on that body jurisdiction to determine
that matter. (Naresh Shridhar Mirajkar v. State of Maharashtra ;
Ujjam Bai v. State of U.P. ; M/s. Kamala Mills Ltd. v. State of
Bombay ). Even if the DRT had decided the question of its
territorial jurisdiction, the order passed by it in this regard could
have been questioned in writ proceedings before this Court. In the
present case, the petitioners complaint is that, despite hearing
them on the maintainability of SAIR No.442 of 2014 on the ground
that the DRT lacked territorial jurisdiction, no orders were passed
by the DRT, and the Presiding Officer of the DRT had reopened the
matter on the eve of his retirement on 30.04.2015 without passing
any order on the maintainability of the three S.As pending before
the DRT. The petitioner, which has suffered an order of status quo
from the DRT, requests this Court therefore to decide the question
of the territorial jurisdiction of the DRT to entertain the three S.As.
Sri S. Niranjan Reddy, Learned Counsel for the petitioner,
would refer to certain provisions of the SARFAESI Act, the RDDB
Act and the Rules made thereunder, to submit that, as all the
secured assets, which are the subject matter of all the three S.As,
are located within the State of Chattisgarh and not in either of the
States of Telangana and Andhra Pradesh, the DRT lacks territorial
jurisdiction to entertain applications under Section 17(1) of the
SARFAESI Act. Learned Counsel would rely on Amish Jain v.
ICICI Bank Ltd. and MD, Excel Stationers Ltd. v. International
Asset Reconstruction Co. Ltd, New Delhi in this regard. On the
other hand Sri P.S. Rajasekhar, Learned Counsel for the
respondent-companies, would place reliance on Section 17(1) and
17(7) of the SARFAESI Act, Section 19(1) and 19(23) of the
R.D.D.B. Act and Rule 6 of the Debts Recovery Tribunal
(Procedure) Rules, 1993 in support of his submissions that the
D.R.T. has territorial jurisdiction to entertain the S.A. as a part of
the cause of action arose within its territorial limits. He would also
place reliance on a Division bench judgment of the Madras High
Court, in M/s. Asian Health And Nutri Foods v. The Debts
Recovery Tribunal , in this regard.
Section 17 of the SARFAESI Act, on which reliance is placed
on behalf of the respondents, relates to the right to appeal and,
under sub-section (1) thereof, 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 or his authorised officer,
may prefer an appeal to the Debts Recovery Tribunal having
jurisdiction in the matter within forty-five days from the date on
which such measure had been taken. In Amish Jain4, a Full
bench of the Delhi High Court held that the question of territorial
jurisdiction, for the remedy of appeal provided in Section 17(1) of
the SARFAESI Act, has to be construed in the light of the
SARFAESI Act, and not in the light of the RDDB Act; Section 17(1)
of the SARFAESI Act provides for filing of the appeal / application
thereunder not to any DRT but only to the "DRT having
jurisdiction in the matter"; the scope of a proceeding, under
Section 17(1) of the SARFAESI Act, is described in Section 17(2) of
the SARFAESI Act as "whether any of the measures referred to in
Sub-Section (4) of Section 13 of the SARFAESI Act taken by the
secured creditor for enforcement of security are in accordance with
the provisions of the SARFAESI Act and the Rules made
thereunder"; the measures, which the Bank / Financial Institution
is empowered to take under Section 13(4) of the SARFAESI Act, are
of taking over possession or management of the secured asset; the
cause of action for the appeal under Section 17(1) of the SARFAESI
Act is the taking over of the possession / management of the
secured asset; the cause of action can be said to have accrued only
within the jurisdiction of the DRT where the secured asset is
situated, and possession thereof is taken; it is the said DRT only
which can be said to be having "jurisdiction in the matter" within
the meaning of Section 17(1) of the Act; the relief to be granted by
the DRT in an appeal under Section 17(1) of the SARFAESI Act, if
successful, is (under Section 17(3)) of restoration of possession /
management of the secured asset to the borrower and to pass such
order as it may consider appropriate and necessary in relation to
the recourse taken by the Banks / Financial Institution under
Section 13(4) of the SARFAESI Act; the DRT, within whose
jurisdiction the secured asset, to be so restored to the borrower, is
situated, is the most competent to grant the relief and implement
its order; the orders, which the DRT may be required to pass under
Section 17(3) of the SARFAESI Act, may also entail exercising
jurisdiction over the Chief Metropolitan Magistrate/District
Magistrate which is approached by the Bank / Financial
Institution for assistance for taking over possession /
management; exercise of jurisdiction under Section 17(1) of the
SARFAESI Act by DRTs, of a place other than where the secured
asset is situated, is likely to lead to complexities and difficulties
and which are best avoided; the remedy under Section 17(1) is
available not only to the borrower or mortgagor, but also to any
other person aggrieved by the measures taken under Section 13(4);
if it were to be held that more than one DRT will have jurisdiction,
it may also lead to the remedy under Section 17(1), against the
same action under Section 13(4), being invoked by different
persons before different DRTs; all these disputes bear closest
proximity to the place where the secured asset is situated; and the
DRT having jurisdiction over that place would be the most suitable
DRT to entertain such disputes.
Section 17(7) of the SARFAESI Act stipulates that, save as
otherwise provided in the Act, the Debts Recovery Tribunal shall,
as far as may be, dispose of the appeal in accordance with the
provisions of the RDDB Act, and the rules made there under.
Section 19 of the RDDB Act relates to the Application to the
Tribunal. Under sub-section (1) thereof, where a bank or a
financial institution has to recover any debt from any person, it
may make an application to the Tribunal within the local limits of
whose jurisdiction (a) the defendant, or each of the defendants
where there are more than one, at the time of making the
application, actually and voluntarily resides, or carries on
business, or personally works for gain; or (b) any of the
defendants, where there are more than one, at the time of making
the application, actually and voluntarily resides, or carries on
business, or personally works for gain; or (c) the cause of action,
wholly or in part, arises. In Amish Jain4, the Full bench of the
Delhi High Court held that Section 17(7) of the SARFAESI Act
requires disposal of appeals under Section 17(1) of the SARFAESI
Act, "as far as may be" in accordance with the provisions of the
RDDB Act and the Rules framed thereunder; Section 17(7) of the
SARFAESI Act is to be read as providing for disposal of the appeal,
under Section 17(1) of the SARFAESI Act, in accordance with the
provisions of the RDDB Act and the Rules made thereunder save
as otherwise provided in the SARFAESI Act; the jurisdictional
provision under Section 19(1) of the RDDB Act is only for
applications by the Bank / Financial Institution for recovery of the
debt from any person; an application by a Bank / Financial
Institution for recovery of the debt cannot be equated with an
appeal/application under Section 17(1) of the SARFAESI Act; there
is no provision in the RDDB Act providing for territorial jurisdiction
of an appeal under Section 17(1) of the SARFAESI Act, and the
question of application thereof under Section 17(7) does not arise;
under Section 17(7) of the SARFAESI Act only that much of the
RDDB Act can be said to be incorporated therein as is contained in
the RDDB Act and not more; whether a particular provision of the
RDDB Act would apply or not, would depend upon the nature and
scope of the proceeding under the SARFAESI Act; once it is held
that an appeal under Section 17(1) of the SARFAESI Act cannot be
equated with an application by the Bank / Financial Institution for
recovery of the debt under Section 19 of the RDDB Act, the limits
of territorial jurisdiction described under Section 19(1) of the
RDDB Act cannot be made applicable to Section 17(1) of the
SARFAESI Act; the provision for territorial jurisdiction under
Section 19 (1) of the RDDB Act is only qua the applications to be
made by the Bank or Financial Institution for recovery of its debt;
a proceeding, under Section 17(1) of the SARFAESI Act is initiated
not by the Bank or the Financial Institution but by a person,
including the borrower, aggrieved by the measures taken by the
Bank or the Financial Institution under Section 13 (4) of the
SARFAESI Act; notwithstanding Section 17(7) of the SARFAESI Act
providing for the disposal of the proceedings under Section 17(1) of
the SARFAESI Act in accordance with the provisions of the RDDB
Act and the Rules made thereunder, the same cannot make the
provisions of Section 19(1) of the RDDB Act applicable to
proceedings under Section 17(1) of the SARFAESI Act; use, in
Section 17(7) of the SARFAESI Act, of the words "as far as may be"
and "save as otherwise provided in this Act" also exclude the
applicability of the principles contained in Section 19(1) of the
RDDB Act to determine the territorial jurisdiction of an appeal
under Section 17(1) of the SARFAESI Act; the provisions of
Sections 14 and 17A of the SARFAESI Act clearly establish the
nexus of the appeal under Section 17(1) to the place where the
secured asset is situated; the multiple choice, available under
Section 19(1) of the RDDB Act, is not applicable to an appeal under
Section 17(1) of the SARFAESI Act; the principles of Section 16
CPC are reflected in Sections 14 and 17A of the SARFAESI Act;
assistance to the Secured Creditor has not been provided of any
Court but only of the Court within whose jurisdiction the secured
asset is situated; this is not without reason; it is only the CMM /
DM within whose jurisdiction such secured asset is situated who
can render such assistance; Section 16 CPC recognizes the well
established principle that actions against res or property should be
brought in the forum where such res is situated; a Court, within
whose territorial jurisdiction the property is not situated, has no
power to deal with and decide the rights or interests in such
property, or to give an effective judgment with respect thereto;
when a Court has no jurisdiction, owing to the property not being
situated within its jurisdiction, the objection goes to the extent of
making the order of that Court a nullity on the ground of want of
jurisdiction; jurisdiction could not have been conferred by non
traverse or consent; merely because the defendant, if it were to
sue, can sue at the place of the residence of the plaintiff, does not
entitle the plaintiff to sue at the place of his residence if that place
would, otherwise, not have territorial jurisdiction; and an appeal /
application under Section 17(1) of the SARFAESI Act can be filed
only before the DRT within whose jurisdiction the property /
secured asset, against which action is taken, is situated and in no
other DRT.
In Excel Stationers Ltd5, the common question of law
which arose for consideration was whether or not the DRT,
constituted under Section 3 (1) of the RDDB Act, had the
jurisdiction to enforce the security interest in respect of property
situated outside its jurisdiction. The Division bench of this Court
held that the DRT, constituted under Section 3 of the RDDB Act,
does not have any power of adjudication, except in those areas
notified in Section 3(2) of the RDDB Act; making an application to
the DRT, or taking cognizance by it, is one aspect; exercising
powers, with regard to enforcement of the security, is a different
aspect; both these aspects cannot be read together as it may lead
to anomaly or passing of orders by the Tribunal without
jurisdiction; even assuming that the DRT at Hyderabad has
jurisdiction, as a part of cause of action arose within its limits,
does not mean that it has the power to pass any order under the
SARFAESI Act; the Tribunal has the power to take such measures,
within the specified areas, as is conferred on them by Parliament
or in pursuance of the Statute; under Section 17 of the SARFAESI
Act, the DRT has original jurisdiction to adjudicate on the
objections raised by the aggrieved borrower, or any other person,
when measures are taken under Section 13 (4) of the SARFAESI
Act against the secured assets; such an application has to be made
to the DRT having jurisdiction in the matter; if it is mere recovery
of amounts by the bank, the DRT, Hyderabad would have
jurisdiction to decide whether the bank is entitled to recover the
amount or not; but, in case, the bank takes measures for
enforcement of the security interest created by the borrower for the
purpose of taking the loan, the DRT would not have jurisdiction
outside its territorial limits.
Rule 6 of the Debts Recovery Tribunal (Procedure) Rules,
1993 (hereinafter referred to as the 1993 Rules), on which also
reliance is placed on behalf of the respondents, relates to the place
of filing application and, thereunder, the application shall be filed
by the applicant with the Registrar within whose jurisdiction (a)
the applicant is functioning as a bank or financial institution, as
the case may be, for the time being, or (b) the defendant, or each of
the defendants where there are more than one, at the time of
making application, actually or voluntarily resides, or carries on
business, or personally works for gain, or (c) any of the defendants
where there are more than one, at the time of making the
application, actually and voluntarily resides, or carries on
business, or personally works for gain, or (d) the cause of action,
wholly or in part, arises.
In Excel Stationers Ltd5, the Division Bench of this Court
held that Section 19(1) of the RDDB Act, read with Rule 6 of the
1993 Rules, can be applied with regards jurisdiction when the
Bank or the financial institution makes an application for recovery
of the debt due to them; if the application is made only for recovery
of the debt due, the jurisdictional aspect, as contained in Section
19 of the RDDB Act and Rule 6 of the 1993 Rules, would apply;
but when the Bank is enforcing the security interest, it has to be
read along with the provisions of the SARFAESI Act coupled with
the Appendix mentioned in the SARFAESI Rules; though the
SARFAESI Act is silent with regards exercise of jurisdiction by the
DRT, it should be read along with Appendix-VII of the SARFAESI
Rules; the object and purpose of both the enactments are different;
the object of the RDDB Act is to recover money from the borrowers,
whereas the object of SARFAESI Act is to recover the amount by
proceeding against the security interest created by the borrower, ie
enforceability of the security interest; when the Bank or financial
institution makes an application before the DRT for recovery of the
debt due, it has been given the choice of making an application,
before the Tribunal, on any one of the three contingencies therein;
those aspects cannot be made applicable when the Bank is taking
measures for enforcement of the security interest; for enforcement
of the security interest the concerned DRT, where the subject
matter of the issue falls for consideration, can alone exercise
jurisdiction; if the subject matter, i.e., the security interest created,
does not fall within the jurisdiction of the Tribunal, it cannot
exercise its jurisdiction on the enforceability of the security
interest; where the secured asset is situated outside the
jurisdiction of the Tribunal, it has no jurisdiction to grant relief in
respect of such property; when the borrower, or any person
interested in the secured asset, makes an application before the
DRT, the secured asset must be located within the territorial
jurisdiction of that Tribunal; and, if the secured asset is not
located within the jurisdiction of the Tribunal which is constituted
under Section 3(2) of the RDDB Act, it does not have jurisdiction to
decide the issue.
The application referred to in Rule 6 is the application which
a bank or a financial institution can file under Section 19(1) of the
RDDB Act. It is not in dispute that all the secured assets, which
are the subject matter of all the three S.As filed before the DRT,
Hyderabad and in all the three Writ Petitions filed before this
Court, are located within the State of Chattisgarh and none of the
secured assets are located either in the State of Telangana or in
the State of Andhra Pradesh. Since Section 19(1) of the RDDB Act
itself does not enable an application to be filed under Section 17(1)
of the SARFAESI Act before the D.R.T, beyond whose territorial
jurisdiction all the secured assets are located, reliance placed on
Rule 6 of the 1993 Rules is also of no avail.
Section 19(23) of the RDDB Act provides that where the
Tribunal, which has issued a certificate of recovery, is satisfied
that the property is situated within the local limits of the
jurisdiction of two or more Tribunals, it may send copies of the
certificate of recovery for execution to such other Tribunals where
the property is situated. It is only if Section 19(1) of the RDDB Act
were held applicable, to applications filed under Section 17(1) of
the SARFAESI Act, would Section 19(23) apply. As Section 19(1) of
the RDDB Act does not automatically apply to proceedings
instituted under Section 17(1) of the SARFAESI Act, Section 19(23)
of the RDDB Act cannot be relied upon to contend that, if any one
of the ingredients of Section 19(1) of the RDDB Act are attracted,
any of such DRTs can entertain an application under Section 17(1)
of the SARFAESI Act. As none of the secured assets are located
within its territorial limits, it is evident that the D.R.T, Hyderabad
lacks territorial jurisdiction to entertain the S.As filed under
Section 17 of the SARFAESI Act.
Reliance placed by Sri P.S. Rajasekhar, Learned Counsel for
the respondent, on the Division bench judgment of the Madras
High Court, in M/s. Asian Health and Nutri Foods6, is misplaced.
In M/s. Asian Health and Nutri Foods6, some of the properties
were situated in Madurai, within the territorial jurisdiction of the
Debts Recovery Tribunal, Madurai. The petitioner before the
Madras High Court had filed an Appeal in S.A.SR.No.2051 of 2014
on the file of the Debts Recovery Tribunal, Madurai, under Section
17 of the SARFAESI Act, challenging all the possession notices.
The Registrar of the Debt Recovery Tribunal had returned the
papers on the ground that the petitioners should approach the
respective Tribunals within whose jurisdiction each one of the
properties were situated. Aggrieved by the return of the papers,
the petitioners had approached the Madras High Court. It is in
this context that the Division bench of the Madras High Court
observed:-
.In Amish Jain vs. ICICI Bank Limited (IV (2012) BC 552
(FB), a Full Bench of the Delhi High Court was concerned with a reference
made by a Division Bench, on the question as to whether an appeal under
Section 17 of the SARFAESI Act would lie only in the Court within whose
jurisdiction the mortgaged property is situate or as to whether it can be
filed in the Tribunal having jurisdiction where the Branch of the Bank
which disbursed the loan is situate. The Full Bench of the Delhi High Court
held that an appeal under Section 17 of the SARFAESI Act can be filed only
before the Debts Recovery Tribunal within whose jurisdiction the secured
asset is situate. It is based upon this judgment that the Tribunal has held
that the petitioners herein should go before every one of the Tribunals
within whose jurisdiction every one of the properties is situate.
But we do not think that the said decision can be relied upon for the
purpose of resolving the issue that has arisen in this case. The Full Bench
of the Delhi High Court was not concerned with the question as to which of
the Tribunals would have jurisdiction, when several secured assets are
involved and when all of them are located within the jurisdiction of
different Tribunals. In the case on hand we are confronted with the
situation where there as several secured assets located within the
jurisdiction of various Tribunals. Hence the decision of the Full Bench of
the Delhi High Court cannot be invoked to resolve the problem on
hand.. (emphasis supplied)
Unlike in M/s. Asian Health and Nutri Foods6, where some
of the secured assets were located within the territorial limits of
the DRT whose jurisdiction under Section 17(1) of the SARFAESI
Act was invoked, in the case on hand none of the secured assets
are located within the territorial limits of the DRT, Hyderabad or,
even for that matter, within the States of Telangana and Andhra
Pradesh.
The law declared by the Full Bench of the Delhi High Court
in Amish Jain4 was followed and reiterated by a Division Bench of
this Court in Excel Stationers Ltd.5. The judgment of a co-
ordinate Division Bench is binding on us. We see no reason to
take a view different from the law declared in Excel Stationers
Ltd.5 that it is only the D.R.T, within whose territorial jurisdiction
the subject secured assets are located, which can entertain the
S.A. filed under Section 17(1) of the SARFAESI Act; and the D.R.T,
within whose territorial limits none of the subject secured assets
are located, would lack territorial jurisdiction to entertain the S.A.
II. OBJECTIONS REGARDING MAINTAINABILITY OF THESE
WRIT PETITIONS:
A. MISREPRESENTATION MUST BE OF MATERIAL AND
RELEVANT FACTS:
Sri P.S. Rajasekhar, Learned Counsel for the respondent-
companies, would contend that, as the petitioner has suppressed
the fact that they had filed an application in SAIR No.442 of 2014
to reopen the matter for hearing them on the maintainability of the
S.A. on the ground of lack of territorial jurisdiction, the Writ
Petitions must be dismissed in limini. The jurisdiction of the High
Court under Article 226 of the Constitution is extraordinary,
equitable and discretionary. Prerogative writs mentioned therein
are issued for doing substantial justice. A prerogative remedy is
not a matter of course. While exercising extraordinary power a Writ
Court would bear in mind the conduct of the party who invokes its
jurisdiction. If the applicant makes a false statement or suppresses
material facts or attempts to mislead it, the Court may dismiss the
action on that ground alone and may refuse to enter into the
merits of the claim. This rule has been evolved in larger public
interest to deter unscrupulous litigants from abusing the process
of Court by deceiving it. It is, therefore, of utmost necessity that
the person approaching the Writ Court must come with clean
hands, put forward all the facts before the Court without
concealing or suppressing anything and seek an appropriate relief.
(K.D. Sharma v. SAIL ). As a general rule, suppression of a
material fact by a litigant disqualifies such litigant from obtaining
any relief. (S.J.S. Business Enterprises (P) Ltd. v. State of
Bihar ). The very basis of the writ jurisdiction rests in the
disclosure of true, complete and correct facts. If the material facts
are not candidly stated or are suppressed or are distorted, the very
functioning of the writ courts would become impossible. (Prestige
Lights Ltd. v. SBI ).
When an applicant comes to the Court to obtain relief on an
ex-parte statement he should make a full and fair disclosure of all
the material facts ie facts, not law. He must not mis-state the law if
he can help it; the Court is supposed to know the law. But it
knows nothing about the facts, and the applicant must state fully
and fairly the facts; and the penalty by which the Court enforces
that obligation is that, if it finds out that the facts have not been
fully and fairly stated to it, it would then set aside any action
which it has taken on the faith of the imperfect statement. (R. v.
Kensington Income Tax Commissioners ; K.D. Sharma7).
A person invoking the discretionary jurisdiction of the Court
cannot be allowed to approach it with a pair of dirty hands.
(Arunima Baruah v. Union of India ). In the event of a party
making a misrepresentation on a point having a bearing on the
question of the exercise of judicial discretion, and thereby trying to
overreach the Court, the party forfeits the claim to the
discretionary relief. The same is the case when the
misrepresentation is discovered by the Court. But the
misrepresentation must be deliberate and on a point having
relevance to the question before the Court. (Rosy Jacob v. Jacob
A. Chakramakkal ). A court of equity refuses relief to the
petitioner whose conduct, in regard to the subject-matter of the
litigation, has been improper. This was formerly expressed by the
maxim he who has committed iniquity shall not have equity, and
relief was refused where a transaction was based on the
petitioners fraud or misrepresentation. Later it was said that the
plaintiff in equity must come with perfect propriety of conduct, or
with clean hands. The maxim does not, however, mean that equity
strikes at depravity in a general way; the cleanliness required is to
be judged in relation to the relief sought, and the conduct
complained of must have an immediate and necessary relation to
the equity sued for; it must be depravity in a legal as well as in a
moral sense. (Halsburys Laws of England, 4th Edn., Vol. 16, pp.
874-76; Arunima Baruah11). Equity will not apply the principle
about clean hands unless the depravity, the dirt in question on the
hand, has an immediate and necessary relation to the equity sued
for. (Moody v. Cox ; Arunima Baruah11).
As noted hereinabove, the DRT heard the objection regarding
maintainability of SAIR No.442 of 2014, in view of territorial
jurisdiction, on 17.07.2014 and posted the matter for orders on
18.07.2014 on which date the Learned Counsel for the respondent
in SAIR No.442 of 2014 (the petitioner in the present Writ Petition)
filed a petition to reopen SAIR for hearing them with regards
maintainability. While the order passed by the DRT in SAIR
No.442 of 2014 dated 18.07.2014, which records that a reopen
petition was filed, is under challenge in W.P. No.6350 of 2015, the
petitioner has not specifically referred in the Writ affidavit to the
fact that they had filed a petition on 18.07.2014 to reopen the SAIR
for hearing them with regards maintainability. As the fact, that a
petition was filed to reopen SAIR, is referred to in the order of DRT
dated 18.07.2014 itself, it cannot be said that the petitioner has
deliberately suppressed the fact of their filing a petition to reopen
SAIR No.442 of 2014.
In order to enable the Court to refuse to exercise its
discretionary jurisdiction, suppression must be of material facts.
What would be a material fact, suppression whereof would
disentitle the appellant to obtain a discretionary relief, would
depend upon the facts and circumstances of each case. Material
fact would mean material for the purpose of determination of the
lis, the logical corollary whereof would be that whether the same
was material for grant or denial of the relief. If the fact suppressed
is not material for determination of the lis between the parties, the
court may not refuse to exercise its discretionary jurisdiction.
(Arunima Baruah11). The suppressed fact must be a material one
in the sense that had it not been suppressed it would have had an
effect on the merits of the case. It must be a matter which was
material for the consideration of the court, whatever view the court
may have taken. (S.J.S. Business Enterprises (P) Ltd.8).
It is only non-disclosure of material and relevant facts which
may justify this Court exercising restraint, and in refraining from
exercising its discretionary jurisdiction, under Article 226 of the
Constitution of India, to examine the matter on its merits. Except
to state that the petitioner had suppressed the fact of their having
filed a petition to reopen the matter, Sri P.S.Rajasekhar, Learned
Counsel for the respondent, has not shown how the non-disclosure
is material and how it would have an effect on the merits of the
petitioners case before this Court. It is not in dispute that, even
though the petitioner filed the petition to reopen the matter and to
hear them on maintainability, the DRT, Hyderabad nonetheless
passed the order dated 18.07.2014 directing the petitioner to
postpone the auction without deciding the question whether or not
it has territorial jurisdiction to entertain SAIR No.442 of 2014 as
all the secured assets, which were the subject matter of SAIR
No.442 of 2014, were all located in the State of Chattisgarh beyond
the territorial limits of the DRT, Hyderabad. Even thereafter, the
DRT kept adjourning the matter repeatedly on the ground that
orders were not ready. We find no merit in the submission, urged
on behalf of the respondents, that the Writ Petition should not be
entertained on the ground of suppression of material facts. The
respondents-applicants, who are all beneficiaries of the order of
status quo passed by the DRT, Hyderabad, even without deciding
its territorial jurisdiction to entertain the S.As, cannot now be
heard to contend that, failure on the part of the petitioner herein to
specifically refer to the fact that they had filed an application
before the DRT to reopen the matter and hear them on the
maintainability of the SA, would necessitate the Writ Petition being
dismissed as an abuse of process of Court.
B. IS FAILURE TO IMPLEAD THE DRT, AS A RESPONDENT
IN THESE WRIT PETITIONS, FATAL?
Sri P.S. Rajasekhar, Learned Counsel for the respondent,
would submit that failure to array the DRT as a respondent in all
the Writ Petitions, would necessitate its dismissal on the ground of
non-joinder of necessary parties. He would rely on Udit Narain
Singh Malpaharia v. Additional Member, Board of Revenue in
this regard. On the other hand Sri S.Niranjan Reddy, Learned
Counsel for the petitioner, would submit that Courts/Tribunals
should not be arrayed as parties to Writ proceedings; and, in any
event, this Court could suo-motu implead the DRT as a
respondent.
A necessary party is one without whom no order can be
made effectively and a proper party is one in whose absence an
effective order can be made but whose presence is necessary for a
complete and final decision of the question involved in the
proceeding. (Udit Narain Singh Malpaharia14; U.P. Awas Evam
Vikas Parishad v. Gyan Devi ). In Savitri Devi v. District
Judge, Gorakhpur , the Supreme Court deprecated the practice
of impleading Judicial Officers as respondents in Writ proceedings.
To quote:-
Before parting with this case it is necessary for us to point out
one aspect of the matter which is rather disturbing. In the writ petition
filed in the High Court as well as the Special Leave Petition filed in this
Court, the District Judge, Gorakhpur and the 4th Additional Civil Judge
(Junior Division), Gorakhpur are shown as respondents and in the Special
Leave Petition they are shown as contesting respondents. There was no
necessity for impleading the judicial officers who disposed of the matter in
a civil proceeding when the writ petition was filed in the High Court; nor is
there any justification for impleading them as parties in the Special Leave
Petition and describing them as contesting respondents. We do not approve
of the course adopted by the petitioner which would cause unnecessary
disturbance to the functions of the concerned judicial officers. They cannot be
in
any way equated to the officials of the Government. It is high time that the
practice of impleading judicial officers disposing of civil proceedings as
parties to writ petitions under Article 226 of the Constitution of India or
Special Leave Petitions under Article 136 of the Constitution of India was
stopped. We are strongly deprecating such a practice. .. (emphasis
supplied)
The question, which arose for consideration in Udit Narain
Singh Malpaharia14, was whether, in a writ in the nature of
certiorari filed under Article 226 of the Constitution, the party or
parties in whose favour a tribunal or authority had made an order,
which was sought to be quashed, was or were necessary party or
parties. While the Additional Solicitor-General contended before
the Supreme Court that, in such a writ, the tribunal or the
authority was the only necessary party and the parties, in whose
favour the said tribunal or authority made an order or created
rights, were not necessary parties but may, at best, be only proper
parties and it is open to the Supreme Court, even at this very late
stage, to direct the impleading of the said parties for a final
adjudication of the controversy, the learned Counsel for the
respondent contended that, whether or not the authority
concerned was a necessary party, the parties in whose favour the
Tribunal had passed the order would certainly be necessary parties
for, otherwise, the High Court would be deciding a case behind the
back of the parties that would be affected by its decision. It is in
this context that the Supreme Court observed:-
..To answer the question raised it would be convenient at the outset
to ascertain who are necessary or proper parties in a proceeding. The law on the
subject is well settled: it is enough if we state the principle. A necessary
party
is one without whom no order can be made effectively; a proper party is
one in whose absence an effective order can be made but whose presence is
necessary for a complete and final decision on the question involved in the
proceeding.
.A tribunal, therefore, exercising a judicial or quasi-judicial
act cannot decide against the rights of a party without giving him a
hearing or an opportunity to represent his case in the manner known to
law. If the provisions of a particular statute or rules made thereunder do
not provide for it, principles of natural justice demand it. Any such order
made without hearing the affected parties would be void. As a writ of
certiorari will be granted to remove the record of proceedings of an inferior
tribunal or authority exercising judicial or quasi-judicial acts, ex
hypothhesi it follows that the High Court in exercising its jurisdiction shall
also act judicially in disposing of the proceedings before it. It is implicit in
such a proceeding that a tribunal or authority which is directed to transmit
the records must be a party in the writ proceedings, for, without giving
notice to it, the record of proceedings cannot be brought to the High
Court. It is said that in an appeal against the decree of a subordinate court,
the court that passed the decree need not be made a party and on the same
parity of reasoning it is contended that a tribunal need not also be made a
party in a writ proceeding. But there is an essential distinction between an
appeal against a decree of a subordinate court and a writ of certiorari to
quash the order of a tribunal or authority: in the former, the proceedings
are regulated by the Code of Civil Procedure and the court making the
order is directly subordinate to the appellate court and ordinarily acts
within its bounds, though sometimes wrongly or even illegally, but in the
case of the latter, a writ of certiorari is issued to quash the order of a
tribunal which is ordinarily outside the appellate or revisional jurisdiction
of the court and the order is set aside on the ground that the tribunal or
authority acted without or in excess of jurisdiction. If such a tribunal or
authority is not made party to the writ, it can easily ignore the order of the
High Court quashing its order, for, not being a party, it will not be liable to
contempt. In these circumstances whoever else is a necessary party or not
the authority or tribunal is certainly a necessary party to such a
proceeding. In this case, the Board of Revenue and the Commissioner of Excise
were rightly made parties in the writ petition.
The next question is whether the parties whose rights are directly
affected are the necessary parties to a writ petition to quash the order of a
tribunal. As we have seen, a tribunal or authority performs a judicial or quasi-
judicial act after hearing parties. Its order affects the right or rights of one
or the
other of the parties before it. In a writ of certiorari the defeated party
seeks
for the quashing of the order issued by the tribunal in favour of the
successful party. How can the High Court vacate the said order without the
successful party being before it. Without the presence of the successful
party the High Court cannot issue a substantial order affecting his right.
Any order that may be issued behind the back of such a party can be
ignored by the said party, with the result that the tribunal's order would be
quashed but the right vested in that party by the wrong order of the
tribunal would continue to be effective. Such a party, therefore, is a
necessary party and a petition filed for the issue of a writ of certiorari
without making him a party or without impleading him subsequently, if
allowed by the court, would certainly be incompetent. A party whose
interests are directly affected is, therefore, a necessary party..
..To summarise: in a writ of certiorari not only the tribunal or
authority whose order is sought to be quashed but also parties in whose
favour the said order is issued are necessary parties. But it is in the
discretion of the court to add or implead proper parties for completely settling
all
the questions that may be involved in the controversy either suo motu or on the
application of a party to the writ or an application filed at the instance of
such
proper party (emphasis supplied).
The aforesaid judgment of the Supreme Court, in Udit
Narain Singh Malpaharia14, was on the question whether a party,
in whose favour an order was passed by the Tribunal, is a
necessary party to a Writ Petition wherein a writ of certiorari was
sought to quash the order of the Tribunal. In the present case the
respondents-companies, in whose favour an interim order was
passed by the DRT, have been arrayed as respondents in all the
three Writ Petitions; they were all put on notice; they filed a
counter-affidavit in reply to the affidavit filed in support of the Writ
Petition; and the Learned Counsel, appearing on behalf of the
respondent-companies, put forth elaborate submissions including
with regards the jurisdiction of the DRT to entertain the S.As.
In Udit Narain Singh Malpaharia14, the Supreme Court held
that, as a writ of certiorari is granted to remove the record of
proceedings of an inferior tribunal exercising judicial or quasi-
judicial acts, ex hypothhesi it followed that the High Court,
exercising its jurisdiction, shall also act judicially in disposing of
the proceedings before it; it is implicit, in such a proceeding, that a
tribunal which is directed to transmit the records must be a party
in the writ proceedings for, without giving notice to it, the record of
proceedings cannot be brought to the High Court; if the tribunal is
not made party to the writ, it can easily ignore the order of the
High Court quashing its order for, not being a party, it will not be
liable to contempt; and, in these circumstances, the tribunal is a
necessary party to such a proceeding.
If a writ of certiorari had been sought, it may have been
necessary to array the DRT as a respondent in the Writ Petition to
call for the records. On the amendment petitions being allowed,
the very jurisdiction of the DRT to entertain the S.As is put in
issue in these Writ Petitions. The DRT is merely a formal party. It
is not as if the DRT would enter appearance through Counsel, and
defend their action before this Court. Historically, certiorari was a
Writ issued to bring the record of an inferior court into the Kings
Bench for review or to remove indictments for trial in that Court.
Mandamus, on the other hand, was directed to inferior courts and
tribunals, and to public officers and bodies, to order the
performance of a public duty. Both certiorari and mandamus were
called prerogative writs. (Halsburys Laws of England, Fourth
Edn., Vol. I, in para 80; Prabodh Verma v. State of U.P., ).
Unlike in Udit Narain Singh Malpaharia14 where a Writ of
certiorari was sought, in all these three Writ Petitions, the
petitioner has sought a writ of mandamus.
Even if the DRT is required to be arrayed as a respondent, to
make any order passed by this Court binding on them, we see no
reason to non-suit the petitioner on this ground. Article 226 is
couched in comprehensive phraseology and it ex-facie confers a
wide power on the High Courts to reach injustice wherever it is
found. The Constitution designedly used a wide language in
describing the nature of the power, the purpose for which and the
person or authority against whom it can be exercised. It can issue
writs in the nature of prerogative writs as understood in England;
but the scope of those writs also is widened by the use of the
expression nature, for the said expression does not equate the
writs that can be issued in India with those in England, but only
draws an analogy from them. That apart, High Courts can also
issue directions, orders or writs other than the prerogative writs. It
enables the High Courts to mould the reliefs to meet the peculiar
and complicated requirements of this country. Any attempt to
equate the scope of the power of the High Court under Article 226
of the Constitution with that of the English Courts to issue
prerogative writs is to introduce unnecessary procedural
restrictions. Such a construction defeats the purpose of the Article
itself. To say this is not to say that the High Courts can function
arbitrarily under this Article. Some limitations are implicit therein.
(Dwarkanath, Hindu Undivided Family v. ITO ; Prabodh
Verma17). The High Court has the power to mould the relief to
meet the requirements of each case. (Prabodh Verma17). Ends of
justice would be met if the DRT, Hyderabad is, suo motu, implead
as a respondent in all the three Writ Petitions. The Debt Recovery
Tribunal, Hyderabad is arrayed as respondent No.2 in all the three
Writ Petitions, and the High Court Registry shall forthwith take
steps to amend the cause-title in all the three Writ Petitions
accordingly.
C. WAS THE REGISTRY OF THE DRT JUSTIFIED IN NOT
NUMBERING SAIR NO.442 OF 2014 AND IN PLACING THE
MATTER BEFORE THE BENCH?
It does appear that S.A.I.R. No.442 of 2014, filed by the
respondent-company, was returned with certain objections which
did not include the objection regarding maintainability of the S.A.
on the ground of lack of territorial jurisdiction. The fact, however,
remains that the D.R.T, in its order dated 18.07.2014, has
specifically recorded that the matter was placed before it for its
decision on the maintainability of the S.A. on the ground of lack of
territorial jurisdiction. We see no reason, therefore, to undertake a
roving enquiry to ascertain whether the Registry of the D.R.T. had
acted amiss in not numbering the S.A. more so as, consequent on
the prayer in all the three Writ Petitions being amended, the
territorial jurisdiction of the D.R.T. to entertain the S.As, when all
the subject secured assets are located outside its territorial limits
and within the State of Chattisgarh, has been put in issue. None
of the objections, urged on behalf of the respondent-companies
justify dismissal of the Writ Petitions in limini.
III. CONCLUSION:
The DRT, Hyderabad lacks territorial jurisdiction to entertain
all the three S.As i.e., S.A.Nos.759 and 760 of 2013 and SAIR
No.442 of 2014. As the D.R.T, Hyderabad lacks jurisdiction to
entertain the S.As, it also lack jurisdiction to pass any interim
orders therein. Consequently, the interim orders passed by the
D.R.T, Hyderabad, in all the three S.As, are vacated and cease to
remain in force. The D.R.T., Hyderabad shall forthwith return the
papers, in all the three S.As, to enable the respondent-companies
to invoke the jurisdiction of the appropriate D.R.T within whose
territorial limits the subject secured assets are located. The Writ
Petitions are, accordingly, allowed. However, in the circumstances,
without costs. Miscellaneous Petitions, if any pending, shall also
stand disposed of.
______________________________
RAMESH RANGANATHAN, J.
__________________________________
M.SATYANARAYANA MURTHY, J.
Date: 01.06.2015.
