Monday, 21 April 2025

The Member, Board Of Revenue vs Arthur Paul Benthall - When two words of different import are used in a statute in two consecutive provisions, it would be difficult to maintain that they are used in the same sense,

 SCI (04.10.1955) in The Member, Board Of Revenue vs Arthur Paul Benthall [Civil Appeal No. 159 of 1954.] held that;

  • When two words of different import are used in a statute in two consecutive provisions, it would be difficult to maintain that they are used in the same sense,


Excerpts of the Order;    

This appeal raises a question under section 5 of the Indian Stamp Act II of 1899. The respondent was, at the material time, the Managing Director of Messrs Bird and Co. Ltd., and of Messrs F. W. Heilgers and Co., Ltd., which were acting as Managing Agents of several Companies registered under the Indian Companies Act. He was also a Director of a number of other Companies, and had on occasions acted as liquidator of some Com panies, as executor or administrator of estates of deceased persons and as trustees of various estates. On 4-7-1949 he applied to the Collector of Calcutta under section 31 of the Stamp Act for adjudication of duty payable on a power of- attorney, marked as Exhibit A in the proceedings, which he proposed to execute. By that power, he empowered Messrs Douglas Chisholm Fairbairn and John James Brims Sutherland jointly and severally to act for him in his individual capacity and also as executor, administrator, trustee, managing agent, liquidator and all other capacities. The Collector referred the matter under section 56(2) of the Act to the decision of the Chief Controlling Revenue Authority, who eventually referred it under section 57 to the High Court of Calcutta stating his own opinion that the stamp duty was payable on the power "for as many respective capacities as the principal executes the power". The reference was heard by a Bench consisting of the Chief Justice, Das, J. and S. R. Das Gupta, J., who differed in their opinion. The learned Chief Justice with whom Das, J. agreed, held that the different capacities of the executant did not constitute distinct matters for purposes of section 5 of the Act, and that the proper duty payable on the instrument was Rs. 10 under article 48(d) of Schedule 1-A of the Stamp Act as amended by section 13 of Bengal Act III of 1922. S. R. Das Gupta, J. was of the opinion that the different capacities of the executant were distinct matters for the purposes of section 5, and that the instrument was chargeable with the aggregate amount of duty payable if separate instruments were executed in respect of each of those capacities. In the result, the question was answered in accordance with the opinion of the majority in favour of the respondent. Against that decision, the Board of Revenue, West Bengal has preferred this appeal by special leave, and contends that the instrument in question comprises distinct matters, and must be stamped in accordance with section 5.


The statutory provisions bearing on the question are sections 3 to 6 of the Act. Section 3 is the charging section, and it enacts that subject to certain exemptions, every instrument mentioned in the Schedule to the Act shall be chargeable with the duty of the amount indicated therein as the proper duty therefor. Section 4 lays down that when in the case of any sale, mortgage or settlement several instruments are employed for completing the transaction, only one of them called the principal instrument is chargeable with the duty mentioned in Schedule 1, and that the other instruments are chargeable each with a duty of one rupee. Section 5 enacts that any instrument comprising or relating to several distinct matters shall be chargeable with the aggregate amount of the duties with which separate instruments, each comprising or relating to one of such matters, would be chargeable under the Act. Section 6, so far as is material, runs as follows: 

  • "Subject to the provisions of the last preceding section, an instrument so framed as to come within two or more of the descriptions in Schedule I, shall, where the duties chargeable thereunder are different, be chargeable only with the highest of such duties".


The point for decision in this appeal is as to the meaning to be given to the words "distinct matters" in section 5. The contention of the respondent which found favour with the majority of the learned Judges in the court below is that the word "matters" in section 5 is synonymous with the word "description" occurring in section 6, and that they both refer to the several categories of instruments which are set out in the Schedule. The argument in support of this con- tention is this: Section 5 lays down that the duty payable when the instrument comprises or relates to distinct matters is the aggregate of what would be payable on separate instruments relating to each of these matters. An instrument would be chargeable under section 3 only if it fell within one of the categories mentioned in the Schedule. Therefore, what is contemplated by section 5 is a combination in one document of different categories of instruments such as sale and mortgage, sale and lease or mortgage and lease and the like, But when the category is one and the same, then section 5 has no application, and as, in the present case, the instrument in question is a power-of- attorney, it would fall under article 48 (a) in whatever capacity it was executed, and there being only one category, there are no distinct matters within section 5. We are unable to accept the contention that the word "matter" in section 5 was intended to convey the same meaning as the word "description" in section 6. In its popular sense, the expression "distinct matters" would connote something different from distinct "categories". Two transactions might be of the same description, but all the same, they might be distinct. If A sells Black-acre to X and mortgages White-acre to Y, the transactions fall under different categories, and they are also distinct matters. But if A mortgages Black-acre to X and mortgages Whiteacre to Y, the two transactions fall under the same category, but they would certainly be distinct matters. If the intention of the legislature was that the expression 'distinct matters' in section 5 should be understood not in its popular sense but narrowly as meaning different categories in the Schedule, nothing would have been easier than to say so. When two words of different import are used in a statute in two consecutive provisions, it would be difficult to maintain that they are used in the same sense, and the conclusion must follow that the expression "distinct mat- ters" in section 5 and "descriptions" in section 6 have different connotations.


It is urged against this conclusion that if the word "matters" in section 5 is construed as meaning anything other than "categories" or in the phraseology of section 6, "descriptions" mentioned in the Schedule, then there could be no conflict between the two sections, and the clause in section 6 that it is "subject to the provision of the last preceding section" would be meaningless and useless. We see no force in this contention. Though the topics covered by sections 5 and 6 are different, it is not difficult to conceive of instruments which might raise questions falling to be determined under both the sections. Thus, if a partnership carried on by members of a family is wound up and the deed of dissolution effects also a partition of the family properties as in Secretary, Board of Revenue v. Alagappa Chettiar(1), the instrument can be viewed both as a deed of dissolution and a deed of partition, and under section 6, the duty payable will be the higher duty as on an instrument of partition. But supposing by that very deed one of the members creates a charge or mortgage over the properties allotted to his share in favour of another member for moneys borrowed by him for his own purposes, that would be a distinct matter which would attract section 5. Now, but for the saving clause, a contention might be advanced that sections 5 and 6 are mutually exclusive, and as the in- strument falls within section 6, the only duty payable thereon is as on an instrument of partition and no more. The purpose of the clause in section 6 is to repel any such contention.


Considerable stress was laid by Mr. Chaudhury on the scheme of the Act as embodied in sections 3 to 6 as strongly supporting the view that 'matters' in section 5 meant the same thing as 'description' in section 6. He argued that under section 3 the duty was laid not on all instruments but on those which were of the descriptions mentioned in the Schedule, that section 4 enacted a special provision with reference to three of the categories mentioned in the Schedule, sale (conveyance), mortgage and settlement, that if they were completed in more than one instrument, not all of them were liable for the duty specified in the Schedule, but only one of them called the principal document, and that section 6 provided that when the instrument fell under two or more of the categories in the Schedule, the duty payable was the highest payable on any one of them, that thus the categories in the schedule were the pivot on which the entire scheme revolved, and that in construing the section in the light of that scheme, the expression "distinct matter" must in the setting be construed as distinct categories. To construe "distinct matters" as (1) I.L.R. [1937] Mad. 553.something different from "distinct categories" would be, it was argued, to introduce a concept foreign to the scheme of the enactment.


The error in this argument lies in thinking that the object and scope of sections 4 to 6 are the same, which in fact they are not. Section 4 deals with a single transaction completed in several instruments, and section 6 with a single transaction which might be viewed as falling under more than one category, whereas section 5 applies only when the instrument comprises more than one transaction, and it is immaterial for this purpose whether those transactions are of the same category or of different categories. The topics dealt with in the three sections being thus different, no useful purpose will be served by referring to section 4 or section 6 for determining the scope of section 5 or for construing its terms. It is not without significance that the legislature has used three different words in relation to the three sections, 'transaction' in section 4, matter' in section 5, and 'description' in section 6.


In support of his contention that 'distinct matters' in section 5 meant only different categories, learned counsel for the respondent relied on certain observations in Ansell v. Inland Revenue Commissioners(1). There, the instrument under consideration was a deed of settlement which comprised certain Government securities as also other investments, and under the Stamp Act, 1891, it was chargeable with a single duty ad valorem on the value of all the properties settled. By section 74, sub-section (1) of the Finance Act, 1910, voluntary dispositions were chargeable with a higher stamp duty as on a conveyance; but Government securities were, exempted from the operation of the section. The question that arose for decision was whether a separate duty was payable in respect of Government stocks under the provisions of the Stamp Act, 1891 over and above what was paid under section 74, sub-section (1) of the Finance Act, 1910 on account of other investments. Answering it in the affirmative, Rowlatt, J. observed:

  • "If two different classes of property are being transferred by the same words of assignment in the same document, and those two different classes of property in the same document are different from the point of view of the Stamp Act and taxation, it seems to me in common sense that they must be distinct matters".


The respondent wants to read these observations as meaning that where the matters are not dealt with separately for purposes of stamp duty, then they are not distinct matters. This, however, does not follow. The case before the court was one in which the instrument dealt with properties which fell under' two categories, and the decision was that they were distinct matters. There is nothing either in the deci- sion or the observations quoted above to support the contention of the respondent that if the instrument comprises matters falling within the same description, it is not to be construed as comprising distinct matters. Reliance was also placed on the observations in Reversionary Interest Society v. Commissioners of Inland Revenue(1), in which it was held that a statutory declaration for the purpose of carrying through a transaction was liable for a single stamp duty. There, the declaration was made by husband and wife, and in view of the purpose for which it had to be used, it was construed as one declaration. This is a decision on the facts, and is not of much assistance. In the view, then, that section 5 would apply even when the instrument comprises matters of the same description, the point for decision is whether the instrument proposed to be executed by the respondent is a single power-of-attorney or a combination of several of them. The contention of Mr. Chaudhury is that when the executant of one instrument confers on the attorney a general authority to act for him in whatever matters he could act, then there is, in fact, only a single delegation, and that therefore the instrument must be construed as a single power-of attorney liable for a single duty under article 48(d) of the Schedule. The contention of the appellant, on the other hand, is that though the instrument is executed by one person, if he fills several capacities and the authority conferred is general, there would be distinct delegations in respect of each of those capacities, and that the instrument should bear the aggregate of stamp duty payable in respect of each of such capacities. The question is which of these two contentions is correct.


We are unable to agree with the respondent 'that when a person executes a power-of-attorney in respect of all the matters in which he could act, it should be held, as a matter of law and without regard to the contents of the instrument, to comprise a single matter. Whether it relates to a single matter or to distinct matters will, in our opinion, depend on a number of factors such as who are parties thereto, which is the subject-matter on which it operates and so forth. Thus, if A executes one power authorising X to manage one estate and Y to manage another estate, there would really be two distinct matters, though there is only one instrument executed by one person. But if both X and Y are constituted attorneys to act jointly and severally in respect of both the estates, then there is only one delegation and one matter, and that is specifically provided for in article 48(d). Conversely, if a number of persons join in executing one instrument, and there is community of interest between them in the subject-matter comprised therein, it will be chargeable with a single duty. This was held in Davis v. Williams(1), Bowen v. Ashley(1), Good-son v. Forbes(1) and other cases. But if the interests of the executants are separate, the instrument must be construed as comprising distinct matters. Vide Freeman v. Commissioners of Inland Revenue(1). Applying the same principle to powers-of-attorney, it was held in Allen v. Morrison(1) that when members of a mutual insurance club executed Single power, it related to one matter , Lord Tenterdon, C. J. observing that

  •  "there was certainly a community of purpose actuating all the members of this club". 


In Reference under Stamp Act, s. 46(1), a power-of attorney executed by thirty-six persons in relation to a fund in which they were jointly interested was held to comprise a single matter. A similar decision was given in Reference under Stamp Act, s. 46(2) where a power-of-attorney was executed by ten mirasdars empowering the collection of communal income appurtenant to their mirasi rights. On the other hand, where several donors having separate interests execute a single power-of-attorney with reference to their respective properties as, for example, when A constitutes X as attorney for management of his estate Black-acre and B constitutes the same person as attorney for the management of his estate White-acre, then the instrument must be held to comprise distinct matters. It was so decided in Reference under Stamp Act, 8. 46(3). Thus, the question whether a power-of attorney relates to distinct matters is one that will have to be decided on a consideration of the terms of the instrument and the nature and the extent of the authority conferred thereby.


It may be mentioned that questions of this character cannot now arise in England in view of the special provision contained in the Finance Act, 1927 (17 & 18, Geo. 5, Ch.10), section 56 which runs as follows:

  • "No instrument chargeable with stamp duty under the heading Letter or Power of Attorney and Commission, Factory, Mandate, or other instrument in the nature thereof' in the First Schedule to the Stamp Act, 1891, shall be charged with duty more than once by reason only that more persons than one are named in the instrument as donors or donees (whether jointly or severally or otherwise), of the powers thereby conferred or that those powers relate to more than one matter".


There is no provision in the statute law of this country similar to the above, and it is significant that it assumes that a power of attorney might consist of distinct matters by reason of the fact that there are several donors or donees mentioned in it, or that it relates to more than one matter.


Now, considering Exhibit A in the light of the above discussion, the point for determination is whether it can be said to comprise distinct matters by reason of the fact that the respondent has executed it in different capacities. In this form, the question is bereft of authority, and falls to be decided on well-recognised principles applicable to the matter. It is, as has been stated above, settled law that when two persons join in executing a power-of-attorney, whe- ther it comprises distinct matters or not will depend on whether the interests of the executants in the subject- matter of the power are separate or joint. Conversely, if one person holding properties in two different capacities, each unconnected with the other, executes a power in respect of both of them, the instrument should logically be held to comprise distinct matters. That will be in consonance with the generally accepted notion of what are distinct matters, and that certainly was the view which the respondent himself took of the matter when he expressly recited in the power that he executed it both in his individual capacity and in his other capacities. But it is contended by Mr. Chaudhury that the fact that the respondent filled several capacities would not affect the character of the instrument as relating to a single matter, as the delegation thereunder extended to whatever the respondent could do, and that it would be immaterial that be held some properties in his individual capacity and some others as trustee or executor, as the legal title to all of them would vest in him equally in the latter as well as in the former capacity. We are concerned, he argued, not with the source from which the title flowed but with the reservoir in which it is now contained. This is to attach more importance to the form of the matter than to its substance. When a person is appointed trustee, the legal title to the estate does, under the English law, undoubtedly vest in him; but then he holds it for the benefit of the cestui que trust in whom the equitable estate vests. Under the Indian law, it is well established that there can be trusts and fiduciary relations in the nature of trust even without there being a vesting of the legal estate in the trustee as in the case of mutts and temples. Vide Vidya Varuthi v. Balusami(1). In such cases, the legal title is vested in the institution, the mahant or shebait being the manager thereof, and any delegation of authority by him can only be on behalf of the institution which he represents. When a person possesses both a personal capacity and a representa- tive capacity, such as trustee, and there is a delegation" of power by him in both those capacities, the position in law is exactly the same as if different persons join in executing a power in respect of matters which are unrelated. There being no community of interest between the personal estate belonging to the executant and the trust estate vested in him, they must be held to be distinct matters for purposes of section 5. The position is the same when a person is executor or administrator, because in that capacity he represents the estate of the deceased, whose persona is deemed to continue in him for purposes of administration.


It was finally contended by Mr. Chaudhury that if every capacity of the donor is to be considered as a distinct matter, we should have to hold that there are distinct matters not only with reference to the capacity of the executant as trustee, executor and so forth, but in respect of every transaction entered into by him in his personal capacity. Thus, it is argued, if he confers on his attorney authority to sell one property, to mortgage another and to lease a third, he would have acted in three different capacities as vendor, mortgagor and lessor, and the instrument will have to be stamped as relating to three distinct matters. This, he contended, would destroy the very basis of a general power-of-attorney. The fallacy in this argument is in mixing up the capacity which a person possesses with acts exercisable by virtue of that capacity. When an executor, for example, sells one property for discharging the debts of the testator and mortgages another for raising funds for carrying on his business, he no doubt acts in two different transactions but in respect of both of them, he functions only in his capacity as executor. In our opinion, there is no substance in this contention.


In the result, we are of the opinion, differing from the majority of the learned Judges of the court below, that the instrument, Exhibit A, comprises distinct matters in respect of the several capacities of the respondent mentioned therein, and that the view taken by the revenue authorities and supported by S. R. Das Gupta, J. is correct. This appeal will accordingly be allowed. The respondent will pay the costs of the appellant here and in the court below. BHAGWATI J.-I regret I am unable to agree with the conclusion reached in the Judgment just delivered. While agreeing in the main with the construction put upon sections 4, 5 and 6 of the Act and the connotation of the words "distinct matters" used in section 5, 1 am of the view that the question still survives whether the instrument in question is a single power of attorney or a combination of several of them. The argument which has impressed my Bro- ther Judges forming the majority of the Bench is that though the instrument is executed by one individual, if he fills several capacities and the authority conferred is general, there would be distinct delegations in respect of each of those capacities and the instrument should bear the aggregate of stamp duty payable in respect of each of such capacities. With the greatest respect I am unable to accede to that argument. I agree that the question whether a power of attorney relates to distinct matters is one that will have to be decided on the consideration of the terms of 'the instrument and the nature and the extent of the authority, conferred thereby. The fact, however, that the donor of the power of attorney executes it in different capacities is not sufficient in my opinion to constitute the instrument one comprising distinct matters and thus requiring to be stamped with the aggregate amount of the duties with which separate instruments each comprising or relating to one of such matters would be chargeable under the Act, within the meaning of section 5. The transaction is a single transaction whereby the donor constitutes the donees jointly and severally his attorneys for him and in his name and on his behalf to act for him in his individual capacity and also in his capacity as managing director, director, managing agent, agent, secretary or liquidator of any company in which he is or may at any time, thereafter be in- terested in any such capacity as aforesaid and also as executor, administrator, trustee or in any capacity whatsoever as occasion shall require. No doubt, different capacities enjoyed by the donor are combined herein but that does not constitute him different individuals thus bringing this instrument within the mischief of section 5. The executants of the instrument are not several individuals but is only one individual, the donor himself, though he enjoys different capacities. These different capacities have a bearing on the nature and extent of the powers which he could exercise as such. In his own individual capacity he could exercise all the powers as the full owner qua whatever right, title and interest be enjoys in the property, whether it be an absolute interest or a limited one. he may be the absolute owner of the property or may have a life interest therein, he may have a mortgagee's interest or a lessees interest therein, he may be a dominant owner of a tenement or may be a mere licensee; but whatever interest be enjoys in that property will be the subject-matter of the power which he executes in favour of the donee. He may, apart from this individual interest which he enjoys therein, be a trustee of certain property and be may also enjoy the several interests described above in his capacity as such trustee. It may be that, in his turn he may be accountable to the beneficiaries for the due administration of the affairs of the trust but that does not mean that he, as trustee, is not entitled to exercise all these powers, the trust property having vested in him, and he being therefore in a position to exercise all these powers in relation thereto. The same would be the position if he were an executor or an administrator of an estate, in possession of the estate of the deceased as such. The property of the deceased would vest in him though his powers of dealing with the same would be circumscribed either by the provisions of the testamentary instrument or the limitations imposed upon the same by law. All these circumstances would certainly impose limitations on his powers of dealing with the properties but that does not detract from the position that he is entitled to deal with those properties and exercise all the powers in relation thereto though with the limitations imposed upon them by reason of the capacities which he enjoys. It follows, therefore, that, though enjoying different capacities, he is the same individual who functions though in different capacities and conducts his affairs in the various capacities which he enjoys but as a single individual. He is not one individual when be is acting in his own individual capacity; he is not another individual when he is acting as a trustee of a particular estate and he is not a third individual when he is acting as an executor or administrator of a deceased person. In whatever capacity he is acting he is the same individual dealing with various affairs with which he is concerned though with the limita- tions imposed upon his powers of dealing with the properties by reason of the properties having vested in him in different capacities.


I am therefore of the opinion that the instrument in question does not comprise distinct matters but comprises one matter only and that matter is the execution of a general power of attorney by the donor in favour of the donees constituting the donees his attorneys to act for him in all the capacities which he enjoys. The instrument in question cannot be split up into separate instruments each comprising or relating to a distinct matter in so far as the different capacities of the donor are concerned. A general power of attorney comprises all acts which can be done by the donor himself, whatever be the capacity or capacities which he enjoys and cannot be split up into individual acts which the donor is capable of per- forming and which he appoints his attorney to do for him and in his name and on his behalf. It is within the very nature of the general power of attorney that all the distinct acts which the donor is capable of performing are comprised in the one instrument which is executed by him, and if that is the position, it is but logical that whatever acts the donor is capable of performing whether in his individual capacity or in his representative capacity as trustee or as executor or administrator are also comprised within the instrument and are not distinct matters to be dealt with as such so as to attract the operation of section 5.


I am therefore of the opinion that the conclusion reached by the majority Judges in the High Court of Judicature at Calcutta was correct and would accordingly dismiss this Appeal with costs.


BY THE COURT.-In accordance with the opinion of the majority the Appeal is allowed with costs here and in the Court below.


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Imp. Rulings - SARFAESI & Writ Jurisdiction under Article 226.

Imp. Rulings - SARFAESI & Writ Jurisdiction under Article 226.

Index;

  1. Supreme Court (2021.12.16) in State Bar Council of Madhya Pradesh vs. Union of India [Special Leave Petition (C) No. 10911/2021] 

  2. Supreme Court (2022.11.16) Varimadugu Obi Reddy v. B. Sreenivasulu, [Civil Appeal No.. 8470 of 2022, (2023) 2 SCC 168]

  3. Supreme Court (2022.01.12) Phoenix ARC (P) Ltd. v. Vishwa Bharati Vidya Mandir, [(2022) 5 SCC 345]

  4. Supreme Court (2021.04.20) Radha Krishan Industries v. State of H.P., [(2021) 6 SCC 771]

  5. Supreme Court (2018.01.30) Authorized Officer State Bank of Travancore v. Mathew K.C. [(2018) 3 SCC 85] 

  6. Supreme Court (2010.07.26) United Bank of India v. Satyawati Tondon, [(2010) 8 SCC 110]

  7. Supreme Court (2003.09.26) Federal Bank Ltd. v. Sagar Thomas, [(2003) 10 SCC 733] 

  8. Supreme Court (1954.12.09) Hari Vishnu Kamath v. Syed Ahmad Ishaque, [(1955) 1 SCR 1104]

  9. Supreme Court (1952.03.17) Veerappa Pillai v. Raman & Raman Ltd. [(1952) SCR 583],

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A writ of certiorari is to be issued over a decision when the Court finds that the process does not conform to the law or statute. In other words, courts are not expected to substitute themselves with the decision-making authority while finding fault with the process along with the reasons assigned.


A writ of mandamus is a prerogative writ. In the absence of any legal right, the Court cannot exercise the said power. More circumspection is required in a financial transaction, particularly when one of the parties would not come within the purview of Article 12 of the Constitution of India. When a statute prescribes a particular mode, an attempt to circumvent shall not be encouraged by a writ court.

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1. Supreme Court (2021.12.16) in State Bar Council of Madhya Pradesh vs. Union of India [Special Leave Petition (C) No. 10911/2021] held that;

  • “Learned Senior Counsel appearing for the petitioner has brought to our notice the difficulty being faced by parties on account of non-appointment of members in DRTs and DRATs. He requested that the matters before DRT and DRAT can be directed to be considered by other Tribunals like Central Administrative Tribunal, Armed Forces Tribunal and Industrial Tribunal within the State.

  • With a view to resolve the problem being faced by the parties, for the time being and purely as a stop-gap arrangement, we request the concerned High Court(s) to entertain the matters falling within the jurisdiction of DRTs and DRATs under Article 226 of the Constitution of India, till further orders.

  • We make it clear that once the Tribunal(s) is/are constituted, the matters can be relegated to the Tribunals by the High Court(s).

  • List the matter on 21-1-2022.”

[ Link Citation  ]

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2. Supreme Court (2022.11.16) Varimadugu Obi Reddy v. B. Sreenivasulu, [Civil Appeal No.. 8470 of 2022, (2023) 2 SCC 168] held that;

  • “36. In the instant case, although the respondent borrowers initially approached the Debts Recovery Tribunal by filing an application under Section 17 of the SARFAESI Act, 2002, but the order of the Tribunal indeed was appealable under Section 18 of the Act subject to the compliance of condition of pre-deposit and without exhausting the statutory remedy of appeal, the respondent borrowers approached the High Court by filing the writ application under Article 226 of the Constitution. We deprecate such practice of entertaining the writ application by the High Court in exercise of jurisdiction under Article 226 of the Constitution without exhausting the alternative statutory remedy available under the law. This circuitous route appears to have been adopted to avoid the condition of pre-deposit contemplated under 2nd proviso to Section 18 of the 2002 Act.”

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3. Supreme Court (2022.01.12) Phoenix ARC (P) Ltd. v. Vishwa Bharati Vidya Mandir, [(2022) 5 SCC 345] held thatl

  • “18. Even otherwise, it is required to be noted that a writ petition against the private financial institution — ARC — the appellant herein under Article 226 of the Constitution of India against the proposed action/actions under Section 13(4) of the SARFAESI Act can be said to be not maintainable. In the present case, the ARC proposed to take action/actions under the SARFAESI Act to recover the borrowed amount as a secured creditor. The ARC as such cannot be said to be performing public functions which are normally expected to be performed by the State authorities. During the course of a commercial transaction and under the contract, the bank/ARC lent the money to the borrowers herein and therefore the said activity of the bank/ARC cannot be said to be as performing a public function which is normally expected to be performed by the State authorities. If proceedings are initiated under the SARFAESI Act and/or any proposed action is to be taken and the borrower is aggrieved by any of the actions of the private bank/bank/ARC, borrower has to avail the remedy under the SARFAESI Act and no writ petition would lie and/or is maintainable and/or entertainable. Therefore, decisions of this Court in Praga Tools Corpn. v. C.A. Imanual, [(1969) 1 SCC 585] and Ramesh Ahluwalia v. State of Punjab, [(2012) 12 SCC 331: (2013) 3 SCC (L&S) 45: 4 SCEC 715] relied upon by the learned counsel appearing on behalf of the borrowers are not of any assistance to the borrowers.

  • xxx xxx xxx

  • 21. Applying the law laid down by this Court in State Bank of Travancore v. Mathew K.C., [(2018) 3 SCC 85: (2018) 2 SCC (Civ) 41] to the facts on hand, we are of the opinion that filing of the writ petitions by the borrowers before the High Court under Article 226 of the Constitution of India is an abuse of process of the court. The writ petitions have been filed against the proposed action to be taken under Section 13(4). As observed hereinabove, even assuming that the communication dated 13-8-2015 was a notice under Section 13(4), in that case also, in view of the statutory, efficacious remedy available by way of appeal under Section 17 of the SARFAESI Act, the High Court ought not to have entertained the writ petitions. Even the impugned orders passed by the High Court directing to maintain the status quo with respect to the possession of the secured properties on payment of Rs 1 crore only (in all Rs 3 crores) is absolutely unjustifiable. The dues are to the extent of approximately Rs 117 crores. The ad interim relief has been continued since 2015 and the secured creditor is deprived of proceeding further with the action under the SARFAESI Act. Filing of the writ petition by the borrowers before the High Court is nothing but an abuse of process of court. It appears that the High Court has initially granted an ex parte ad interim order mechanically and without assigning any reasons. The High Court ought to have appreciated that by passing such an interim order, the rights of the secured creditor to recover the amount due and payable have been seriously prejudiced. The secured creditor and/or its assignor have a right to recover the amount due and payable to it from the borrowers. The stay granted by the High Court would have serious adverse impact on the financial health of the secured creditor/assignor. Therefore, the High Court should have been extremely careful and circumspect in exercising its discretion while granting stay in such matters. In these circumstances, the proceedings before the High Court deserve to be dismissed.”

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4. Supreme Court (2021.04.20) Radha Krishan Industries v. State of H.P., [(2021) 6 SCC 771] held that;

  • “25. In this background, it becomes necessary for this Court, to dwell on the “rule of alternate remedy” and its judicial exposition. In Whirlpool Corpn. v. Registrar of Trade Marks (1998) 8 SCC 1, a two-Judge Bench of this Court after reviewing the case law on this point, noted: (SCC pp. 9-10, paras 14-15)

  • “14. The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari for the enforcement of any of the Fundamental Rights contained in Part III of the Constitution but also for “any other purpose”.

  • 15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case-law on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field”.       (emphasis supplied)

  • 26. Following the dictum of this Court in Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8 SCC 1], in Harbanslal Sahnia v. Indian Oil Corpn. Ltd. [(2003) 2 SCC 107], this Court noted that: (Harbanslal Sahnia case, SCC p. 110, para 7)

  • “7. So far as the view taken by the High Court that the remedy by way of recourse to arbitration clause was available to the appellants and therefore the writ petition filed by the appellants was liable to be dismissed is concerned, suffice it to observe that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case, in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies: (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. (See Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8 SCC 1].)

  • The present case attracts applicability of the first two contingencies. Moreover, as noted, the appellants’ dealership, which is their bread and butter, came to be terminated for an irrelevant and non-existent cause. In such circumstances, we feel that the appellants should have been allowed relief by the High Court itself instead of driving them to the need of initiating arbitration proceedings.” (emphasis supplied)

  • 27. The principles of law which emerge are that:

  • 27.1. The power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as well.

  • 27.2. The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is where an effective alternate remedy is available to the aggrieved person.

  • 27.3. Exceptions to the rule of alternate remedy arise where: (a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution; (b) there has been a violation of the principles of natural justice; (c) the order or proceedings are wholly without jurisdiction; or (d) the vires of a legislation is challenged.

  • 27.4. An alternate remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternate remedy is provided by law.

  • 27.5. When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion.

  • 27.6. In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with.”

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5. Supreme Court (2018.01.30) Authorized Officer State Bank of Travancore v. Mathew K.C., [(2018) 3 SCC 85] held that;

  • “5. We have considered the submissions on behalf of the parties. Normally this Court in exercise of jurisdiction under Article 136 of the Constitution is loath to interfere with an interim order passed in a pending proceeding before the High Court, except in special circumstances, to prevent manifest injustice or abuse of the process of the court. In the present case, the facts are not in dispute. The discretionary jurisdiction under Article 226 is not absolute but has to be exercised judiciously in the given facts of a case and in accordance with law. The normal rule is that a writ petition under Article 226 of the Constitution ought not to be entertained if alternate statutory remedies are available, except in cases falling within the well-defined exceptions as observed in CIT v. Chhabil Dass Agarwal [(2014) 1 SCC 603], as follows: (SCC p. 611, para 15)

  • “15. Thus, while it can be said that this Court has recognised some exceptions to the rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal v. Supt. of Taxes [AIR 1964 SC 1419], Titaghur Paper Mills Co. Ltd. v. State of Orissa [(1983) 2 SCC 433: 1983 SCC (Tax) 131] and other similar judgments that 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 still holds the field. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation.”

  • xxx xxx xxx

  • 8. The Statement of Objects and Reasons of the SARFAESI Act states that the banking and financial sector in the country was felt not to have a level playing field in comparison to other participants in the financial markets in the world. The financial institutions in India did not have the power to take possession of securities and sell them. The existing legal framework relating to commercial transactions had not kept pace with changing commercial practices and financial sector reforms resulting in tardy recovery of defaulting loans and mounting non-performing assets of banks and financial institutions. Narasimhan Committee I and II as also the Andhyarujina Committee constituted by the Central Government Act had suggested enactment of new legislation for securitisation and empowering banks and financial institutions to take possession of securities and sell them without court intervention which would enable them to realise long-term assets, manage problems of liquidity, asset liability mismatches and improve recovery. The proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as “the DRT Act”) with passage of time, had become synonymous with those before regular courts affecting expeditious adjudication. All these aspects have not been kept in mind and considered before passing the impugned order.

  • 9. Even prior to the SARFAESI Act, considering the alternate remedy available under the DRT Act it was held in Punjab National Bank v. O.C. Krishnan [(2001) 6 SCC 569] that: (SCC p. 570, para 6)

  • “6. The Act has been enacted with a view to provide a special procedure for recovery of debts due to the banks and the financial institutions. There is a hierarchy of appeal provided in the Act, namely, filing of an appeal under Section 20 and this fast-track procedure cannot be allowed to be derailed either by taking recourse to proceedings under Articles 226 and 227 of the Constitution or by filing a civil suit, which is expressly barred. Even though a provision under an Act cannot expressly oust the jurisdiction of the court under Articles 226 and 227 of the Constitution, nevertheless, when there is an alternative remedy available, judicial prudence demands that the Court refrains from exercising its jurisdiction under the said constitutional provisions. This was a case where the High Court should not have entertained the petition under Article 227 of the Constitution and should have directed the respondent to take recourse to the appeal mechanism provided by the Act.”

  • xxx xxx xxx

  • 15. It is the solemn duty of the court to apply the correct law without waiting for an objection to be raised by a party, especially when the law stands well settled. Any departure, if permissible, has to be for reasons discussed, of the case falling under a defined exception, duly discussed after noticing the relevant law. In financial matters grant of ex parte interim orders can have a deleterious effect and it is not sufficient to say that the aggrieved has the remedy to move for vacating the interim order. Loans by financial institutions are granted from public money generated at the taxpayer’s expense. Such loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as entrustment by the public. Timely repayment also ensures liquidity to facilitate loan to another in need, by circulation of the money and cannot be permitted to be blocked by frivolous litigation by those who can afford the luxury of the same. The caution required, as expressed in United Bank of India v. Satyawati Tondon [(2010) 8 SCC 110: (2010) 3 SCC (Civ) 260], has also not been kept in mind before passing the impugned interim order: (SCC pp. 123-24, para 46)

  • “46. It must be remembered that stay of an action initiated by the State and/or its agencies/instrumentalities for recovery of taxes, cess, fees, etc. seriously impedes execution of projects of public importance and disables them from discharging their constitutional and legal obligations towards the citizens. In cases relating to recovery of the dues of banks, financial institutions and secured creditors, stay granted by the High Court would have serious adverse impact on the financial health of such bodies/institutions, which (sic will) ultimately prove detrimental to the economy of the nation. Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters. Of course, if the petitioner is able to show that its case falls within any of the exceptions carved out in Baburam Prakash Chandra Maheshwari v. Antarim Zila Parishad [AIR 1969 SC 556], Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8 SCC 1] and Harbanslal Sahnia v. Indian Oil Corpn. Ltd. [(2003) 2 SCC 107] and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order.

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6. Supreme Court (2010.07.26) United Bank of India v. Satyawati Tondon, [(2010) 8 SCC 110] held that;,

  • “42. There is another reason why the impugned order should be set aside. If Respondent 1 had any tangible grievance against the notice issued under Section 13(4) or action taken under Section 14, then she could have availed remedy by filing an application under Section 17(1). The expression “any person” used in Section 17(1) is of wide import. It takes within its fold, not only the borrower but also the guarantor or any other person who may be affected by the action taken under Section 13(4) or Section 14. Both, the Tribunal and the Appellate Tribunal are empowered to pass interim orders under Sections 17 and 18 and are required to decide the matters within a fixed time schedule. It is thus evident that the remedies available to an aggrieved person under the SARFAESI Act are both expeditious and effective.

  • 43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.

  • 44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution.

  • 45. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance.

  • xxx xxx xxx

  • 55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection.”


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7. Supreme Court (2003.09.26) Federal Bank Ltd. v. Sagar Thomas, [(2003) 10 SCC 733] held that;

  • “18. 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.

  • xxx xxx xxx

  • 26. 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. All the same, banking activity as a whole carried on by various banks undoubtedly has an impact and effect on the economy of the country in general. Money of the shareholders and the depositors is with such companies, carrying on banking activity. The banks finance the borrowers on any given rate of interest at a particular time. They advance loans as against securities. Therefore, it is obviously necessary to have regulatory check over such activities in the interest of the company itself, the shareholders, the depositors as well as to maintain the proper financial equilibrium of the national economy. The banking companies have not been set up for the purposes of building the economy of the State; on the other hand such private companies have been voluntarily established for their own purposes and interest but their activities are kept under check so that their activities may not go wayward and harm the economy in general. A private banking company with all freedom that it has, has to act in a manner that it may not be in conflict with or against the fiscal policies of the State and for such purposes, guidelines are provided by Reserve Bank so that a proper fiscal discipline, to conduct its affairs in carrying on its business, is maintained. So as to ensure adherence to such fiscal discipline, if need be, at times even the management of the company can be taken over. Nonetheless, as observed earlier, these are all regulatory measures to keep a check and provide guidelines and not a participatory dominance or control over the affairs of the company. For other companies in general carrying on other business activities, maybe manufacturing, other industries or any business, such checks are provided under the provisions of the Companies Act, as indicated earlier. There also, the main consideration is that the company itself may not sink because of its own mismanagement or the interest of the shareholders or people generally may not be jeopardized for that reason. Besides taking care of such interest as indicated above, there is no other interest of the State, to control the affairs and management of the private companies. Care is taken in regard to the industries covered under the Industries (Development and Regulation) Act, 1951 that their production, which is important for the economy, may not go down, yet the business activity is carried on by such companies or corporations which only remains a private activity of the entrepreneurs/companies.

  • 27. 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.”

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8. Supreme Court (1954.12.09) Hari Vishnu Kamath v. Syed Ahmad Ishaque, [(1955) 1 SCR 1104] held that;,

  • “Then the question is whether there are proper grounds for the issue of certiorari in the present case. There was considerable argument before us as to the character and scope of the writ of certiorari and the conditions under which it could be issued. The question has been considered by this Court in Parry & Co. v. Commercial Employees’ Association, Madras [(1952) SCR 519], Veerappa Pillai v. Raman and Raman Ltd. & Others [(1952) SCR 583], Ibrahim Aboobaker v. Custodian General [(1952) SCR 696] and quite recently in T.C. Basappa v. T. Nagappa [(1955) SCR 250]. On these authorities, the following propositions may be taken as established:

  • (1) Certiorari will be issued for correcting errors of jurisdiction, as when an inferior Court or Tribunal acts without jurisdiction or in excess of it, or fails to exercise it. 

  • (2) Certiorari will also be issued when the Court or Tribunal acts illegally in the exercise of its undoubted jurisdiction, as when it decides without giving an opportunity to the parties to be heard, or violates the principles of natural justice. 

  • (3) The Court issuing a writ of certiorari acts in exercise of a supervisory and not appellate jurisdiction. One consequence of this is that the Court will not review findings of fact reached by the inferior Court or Tribunal, even if they be erroneous. This is on the principle that a Court which has jurisdiction over a subject-matter has jurisdiction to decide wrong as well as right, and when the Legislature does not choose to confer a right of appeal against that decision, it would be defeating its purpose and policy, if a superior Court were to re-hear the case on the evidence, and substitute its own findings in certiorari. These propositions are well-settled and are not in dispute.

  • (4) The further question on which there has been some controversy is whether a writ can be issued, when the decision of the inferior Court or Tribunal is erroneous in law. This question came up for consideration in Rex v. Northumberland Compensation Appeal Tribunal; Ex parte Shaw [(1951) 1 K.B. 711], and it was held that when a Tribunal made a “speaking order” and the reasons given in that order in support of the decision were bad in law, certiorari could be granted. It was pointed out by Lord Goddard, C.J. that that had always been understood to be the true scope of the power. Walsall Overseers v. London and North Western Ry. Co. [(1879) 4 A.C. 30] and Rex v. Nat Bell Liquors Ld. [(1922) 2 A.C. 28] were quoted in support of this view. In Walsall Overseers v. London and North Western Ry. Co. [(1879) 4 A.C. 30] Lord Cairns, L.C. observed as follows:

  • “If there was upon the face of the order of the court of quarter sessions anything which showed that order was erroneous, the Court of Queen’s Bench might be asked to have the order brought into it, and to look at the order, and view it upon the face of it, and if the court found error upon the face of it, to put an end to its existence by quashing it.”

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9. Supreme Court (1952.03.17) Veerappa Pillai v. Raman & Raman Ltd. [(1952) SCR 583], it was observed by this Court that under article 226 the writ should be issued “in grave cases where the subordinate tribunals or bodies or officers act wholly without jurisdiction, or in excess of it, or in violation of the principles of natural justice, or refuse to exercise a jurisdiction vested in them, or there is an error apparent on the face of the record”. In T.C. Basappa v. T. Nagappa [(1955) SCR 250] the law was thus stated:

  • “An error in the decision or determination itself may also be amenable to a writ of ‘certiorari’ but it must be a manifest error apparent on the face of the proceedings, e.g., when it is based on clear ignorance or disregard of the provisions of law. In other words, it is a patent error which can be corrected by ‘certiorari’ but not a mere wrong decision.”


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