SRI JAYARAM HEGDE vs AUTHORIZED OFFICER CUM CHIEF MANAGER

IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 17TH DAY OF JUNE, 2015 PRESENT THE HON'BLE MR. JUSTICE VINEET SARAN AND THE HON’BLE MR. JUSTICE ARAVIND KUMAR W.A.NO.1999/2014(GM-DRT) BETWEEN:

SRI.JAYARAM HEGDE AGED ABOUT 72 YEARS, S/O LATE SUBBAYYA SHETTY, PROP:ANSHOOL METALS PVT. LTD., R./AT FLAT NO.5/5A, SEA BIRD APARTMENT 114, BEACH ROAD, BANDRA (W) MUMBAI, REPRESENTED BY HIS GPA SRI.V.PRASAD SHETTY, AGED ABOUT 53 YEARS, S/O LATE V. RAMANNA SHETTY, SRIKRIPA KADEKAR – KANNARPADI ROAD, POST - KADEKAR, UDUPI TALUK AND DISTRICT - 574 009 ..APPELLANT

(BY SRI.NATARAJA BALLAL A., ADVOCATE)

AND: 1.AUTHORIZED OFFICER CUM CHIEF MANAGER R

CANARA BANK, PAREL BRANCH, PAREL, MUMBAI-400 022.

2.CHIEF MANAGER CANARA BANK, BALMATTA, MANGALURU-574 001.

3.THE CHAIRMAN & MANAGING DIRECTOR HEAD OFFICE, CANARA BANK, J.C.ROAD, BENGALURU-560 021.

4.THE MANAGER CANARA BANK, COURT ROAD, UDUPI-574 009.

5.SRI.P.DHANANJAYA SHETTY MAJOR, S/O LATE THAUDA SHETTY, R/AT 115/35, DEV ASHISH CO-OPERATIVE HOUSING SOCIETY LTD., ABOVE CANARA BANK, SION (E), MUMBAI-400 022. ..RESPONDENTS

(BY SRI.A.ANAND SHETTY, ADVOCATE FOR C/R-5, SRI.V.HARIDAS BHAT, ADVOCATE FOR R-1 TO R-4)

THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT READ WITH RULE 27 OF THE WRIT PROCEEDINGS RULES PRAYING TO SET ASIDE THE ORDER DATED 17.07.2014 PASSED IN WRIT PETITION NO.51774/2012 (GM-DRT).

THIS WRIT APPEAL COMING ON FOR PRELIMINARY HEARING, THIS DAY, VINEET SARAN J, DELIVERED THE FOLLOWING :

JUDGMENT

This is an intra court appeal filed by the writ petitioner-appellant against the Judgment and order dated 17.07.2014 passed by learned Single Judge in W.P.51774/2012 whereby the petition has been dismissed on the ground of availability of alternate remedy of approaching the Debt Recovery Appellate Tribunal under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short `Act of 2002’).

The brief facts relevant for the purpose of the case are that: M/s.Anshool Metals Pvt., Ltd., of which the petitioner-appellant is the Chairman cum Managing Director, had taken a loan from the respondent-Canara Bank against which the appellant-petitioner had mortgaged its properties situated in Mumbai in Maharashtra as well as Udupi and Mangaluru, D.K. Districts in the State of Karnataka. For recovery of its

dues, the bank had issued notice dated 14.07.2010 for auction of property of the appellant situated in the State of Karnataka. The auction sale was held on 14.08.2010 and thereafter confirmed and a registered sale deed was executed in favour of respondent No.5 on 22.09.2010. Challenging the same appellant-petitioner filed S.A.No.149/2012 under section 17 of the Act of 2002 before the Debt Recovery Tribunal, Karnataka at Bengaluru.

A preliminary objection was raised by respondent-bank before the Tribunal with regard to jurisdiction of Tribunal at Bengaluru to hear the matter, Tribunal then framed following three points for consideration:

“1. Whether the present Tribunal i.e., the DRT Bangalore is having territorial jurisdiction to try the present SA under the SARFAESI Act or not?

Whether the Appellant proves that, the present Impugned Auction Notice dated 14.07.2010, the Auction Sale dated 14.08.2010 and the Registered Sale Deed dated 22.09.2010 in respect to Secured Properties are illegal?

What order?”

By a detailed order dated 15.10.2012, the Tribunal decided Point No.1 (with regard to jurisdiction) against the petitioner-appellant and held that Debt Recovery Tribunal at Bengaluru had no territorial jurisdiction to try the case. However, even after having held that the Tribunal did not have jurisdiction, it proceeded to decide Points No.2 and 3 also and dismissed the case of the appellant-petitioner on merits. Challenging the said order, the appellant filed W.P.51774/2012 which has been dismissed by learned Single Judge on the ground of alternate remedy available to the petitioner-appellant under section 18 of the Act of

2002. Aggrieved by the said order this appeal has been filed.

We heard Sri.Nataraja Ballal, learned counsel for the appellant as well as Sri.V.Haridass Bhat, learned counsel for respondents 1 to 4 – Canara Bank and Sri.Anand Shetty, learned counsel for respondent No.5 – Auction Purchaser and perused the records.

With consent of learned counsel appearing for the parties this appeal has been heard and is being finally disposed at this stage.

The submission of the learned counsel for appellant is that since the properties which were auctioned were situated within the State of Karnataka, the Tribunal at Bangalore had jurisdiction to hear the application that had been filed by appellant for setting aside the sale. It is also contended that once Tribunal had held that it had no jurisdiction to decide the case for

want of jurisdiction, it could not have proceeded to hear the matter and adjudicate it on merits. It has also been submitted that in a case like this, the question of alternate remedy would not arise as after having decided that it had no jurisdiction to decide the case, the Tribunal could not have proceeded to decide the case on merits as it would adversely affect the interest of the appellant and such order on merits of the case is wholly without jurisdiction. It has been submitted that the dismissal of the petition on the ground of alternate remedy was not warranted in the case and writ petition should have been heard and decided on merits. On the other hand, learned counsel for respondents have urged that in view of the decision of the Apex Court in the case of United Bank of India Vs Satyawati Tondon and others reported in (2010)8 SCC 110 appellant ought to have first approached the appellate Tribunal if aggrieved by order of Debt Recovery Tribunal and writ petition filed against the order of Debt Recovery Tribunal was not

maintainable and as such it has been rightly dismissed by learned Single Judge.

It is well settled law that the availability of alternate remedy would not be a bar in filing writ petition if the order under challenge is without jurisdiction (vide Whirlpool Corporation Vs Registrar of Trade Marks, Mumbai reported in AIR 1999 SC 22 and Commissioner of Income Tax and others Vs Chhabil Dass Agarwal reported in (2014)1 SCC 603). It cannot be denied that after the Tribunal had held that it had no jurisdiction to hear the case, passing of the order on merits and deciding Points 2 and 3 was wholly without jurisdiction. In such a case, the Tribunal could not have proceeded to decide the case on merits. As such we are of the firm view that insofar as the order of Tribunal which relates to the decision of the case on merits was without jurisdiction and on that ground the writ petition ought to have been entertained and such portion of the order had to be quashed.

As regards the decision on Point No.1 i.e., whether the Debt Recovery Tribunal, Bengaluru had territorial jurisdiction to entertain the case is concerned, the said order could have either been challenged before the Debt Recovery Tribunal under section 18 of the Act of 2002 or in the alternate, if the appellant was satisfied with the finding, he could have instituted a fresh case before such Tribunal having territorial jurisdiction. Thus, as regard to the decision on Point No.1, we would not like to interfere.

In the result, we dispose of this writ appeal with a direction that the finding of the Tribunal vide order dated 15.10.2012 with regard to the merits of the case is liable to be quashed on the ground that the Tribunal had no jurisdiction to proceed with the case on merits. Accordingly, the decision of the Tribunal with regard to Points No.2 and 3 are quashed.

With regard to the decision of the Tribunal on the point of jurisdiction, we leave it open to the appellant to either challenge the same before the appellate Tribunal or approach the Debt Recovery Tribunal having territorial jurisdiction.

If any such appeal is filed the appellant would be entitled to the benefit of section 14 of the Limitation Act.

Appeal stands allowed to the extent as indicated above.

In view of the above order, interlocutory applications pending in this appeal stand consigned to records.

Sd/-

JUDGE

Sd/-

JUDGE SBN

SRI JAYARAM HEGDE vs. AUTHORIZED OFFICER CUM CHIEF MANAGER