Single Judge Cannot Disregard Rulings Of Division Bench Under Guise Of Reference: Kerala High Court

The Kerala High Court on Wednesday held that a Single Judge is bound by decisions of Division Benches and Full Benches and cannot question or disregard a binding Division Bench ruling under the guise of making a reference.

A Division Bench of Chief Justice Soumen Sen and Justice Syam Kumar V.M was dealing with a reference arising from a writ petition filed by Grids Engineers and Contractors, challenging proceedings initiated by Union Bank of India under Section 14 of the SARFAESI Act. The Bench held

“The writ petition was not maintainable in view of the statutory remedy under the SARFAESI Act, and the interim order passed by the Single Judge was unreasoned.”

The Single Judge had granted an interim stay restraining the Bank from taking possession of the secured asset. The Bank preferred a writ appeal, contending that the writ petition was not maintainable in view of the statutory remedy under the SARFAESI Act and that the interim order was unreasoned. The Division Bench set aside the interim order and directed reconsideration of the issue, including maintainability.

Upon rehearing, interim protection was again granted. The Bank once more appealed, and the Division Bench again set aside the order, holding that the issue of maintainability had not been properly addressed in light of binding Supreme Court precedents.

Instead of proceeding with the writ petition, the Single Judge made a reference questioning the maintainability of intra-court appeals against such interim orders under Section 5 of the Kerala High Court Act, 1958. The matter was placed before a Division Bench, which appointed an Amicus Curiae in view of the wider ramifications.

During the pendency of the proceedings, the parties settled the dispute and the loan account was closed. Despite the appeal becoming infructuous, the Court proceeded to examine the legal issue raised in the reference.

The Bench dismissed the appeal filed by the Bank against the order of reference as not maintainable, holding that the Bank did not have any say in that regard.

On the question of a Single Judge's power to make a reference, the Bench held that a Single Judge is bound by decisions of co-ordinate Benches as well as Division and Full Benches. Emphasising judicial discipline, the Court observed:

“the order of the Division Bench needs to be respected, as judicial discipline and propriety demand that the learned Single Judge is bound by the decision of the Division Bench; and similarly, a Bench of two learned Judges should follow the decision of a Bench of three learned Judges, and in case of a difference of opinion between two Benches of equal strength, the proper course would be to refer the matter to a Bench of higher strength by setting out the reasons as to why it could not agree with the earlier judgment.”

The Bench noted that the writ petitioners were not aggrieved by either of the orders passed by the Division Bench and observed:

“Even if it is assumed for the sake of argument that the Hon'ble Division Bench may have passed an order which, in the estimation of the learned Single Judge, would be contrary to any decision of a Co-ordinate Bench or a Full Bench, it was not proper for the learned Single Judge to ignore the direction of the Hon'ble Division Bench and to take up the issue of the writ petitioners to question the propriety of the said order.”

On the scope of Article 226 in SARFAESI matters, the Bench reiterated that writ jurisdiction is extraordinary and referred to Supreme Court precedents, observing:

“Writ remedy is an extraordinary remedy. Where it prima facie appears to the Court that the order is patently without jurisdiction or passed in violation of the principles of natural justice and the forum before which a litigant can approach for redressal of its grievances is not functional, it would be a travesty of justice if the Constitutional Court does not come to the aid of a litigant.”

The Bench clarified that existence of an alternative remedy does not oust jurisdiction, but it is a matter of discretion. It further held that the writ court may decide the petition on merits and dismiss it if there is suppression of material facts or if the case is not fit for exercise of its extraordinary jurisdiction.

Significantly, the Court held:

“we find that an intra-court appeal is maintainable under Section 5 of the Kerala High Court Act, 1958, inter alia, against an ex parte ad interim order or any order which has clearly affected the right of a party to pursue its statutory remedy.”

It concluded that “the reference is not entertained, as it is found to be incompetent for the reasons recorded above.”

Accordingly, the writ appeal was dismissed.

For Petitioners: Advocates E.B Thajuddeen, Arthur B George, P.A Mohammed Aslam, Ramshad K.R, Muhammed Riswan K.A, Midhun Mohan, Fidil V John, Kiran Narayanan and P Sanjay

For Respondents: Advocates ASP Kurup, Sadchith P Kurup, CP Anil Raj, Siva Suresh, B Sreedevi, Athira Vijayan and Raja Kannan, Amicus Curiae