2019 (3) TMI 1957 - HC - Insolvency and Bankruptcy

Maintainability of petition - validity of sale certificate - petition is alleged to be not maintainable as the petitioner has not challenged the Sale Certificate before the Debts Recovery Tribunal under Section 17 of the SARFAESI Act - HELD THAT - The Hon'ble Supreme Court of India in AUTHORIZED OFFICER, STATE BANK OF TRAVANCORE AND ANOTHER VERSUS MATHEW K.C. 2018 (2) TMI 25 - SUPREME COURT and AGARWAL TRACOM PVT. LTD. VERSUS PUNJAB NATIONAL BANK ORS. 2017 (11) TMI 1523 - SUPREME COURT held that the aggrieved parties cannot challenge the SARFAESI proceedings directly by filing a Writ Petition under Article 226 of the Constitution of India without exhausting the appeal remedy available to them. Since the petitioner has filed the Writ Petition without exhausting the alternate remedy by way of an appeal available to him under Section 17 of the SARFAESI Act, following the ratio laid down by the Apex Court, the Writ Petition cannot be entertained - petition dismissed.

Summary

Issues:
Challenge to Sale Certificate due to pending insolvency petition. Entertaining Writ Petition without exhausting SARFAESI Act appeal remedy.

The High Court of Madras, comprising Hon'ble Mrs. V.K. Tahilramani, Chief Justice, and Hon'ble Mr. Justice M. Duraiswamy, addressed a Writ Petition seeking the quashing of a Sale Certificate issued by the 2nd respondent in favor of the 3rd respondent. The petitioner contended that the Sale Certificate should be set aside due to a pending Insolvency Petition filed by the 1st respondent. The property was auctioned and the Sale Certificate issued for defaulting on a loan repayment to the 2nd respondent bank.

The Court noted that the petitioner failed to challenge the Sale Certificate before the Debts Recovery Tribunal under Section 17 of the SARFAESI Act. Citing precedents, including judgments by the Supreme Court in cases like Authorized Officer, State Bank of Travancore vs. Mathew K.C., and Agarwal Tracom Pvt. Ltd. vs. Punjab National Bank, it was highlighted that aggrieved parties must exhaust appeal remedies before resorting to Writ Petitions under Article 226 of the Constitution of India.

Referring to a recent Supreme Court decision in ICICI Bank Ltd. vs. Umakanta Mohapatra, the Court reiterated that High Courts should not entertain matters falling under the SARFAESI Act without exhausting statutory remedies. The Supreme Court emphasized that filing a Writ Petition without utilizing the available remedies under the SARFAESI Act and Recovery of Debts Due to Banks and Financial Institutions Act is not maintainable.

Consequently, the High Court of Madras, in line with the Supreme Court's directives and legal principles, dismissed the Writ Petition as the petitioner failed to exhaust the alternate remedy by appealing under Section 17 of the SARFAESI Act. The Court emphasized adherence to the established legal principles and declined to entertain the petition, resulting in the dismissal of the Writ Petition without costs. Subsequently, the connected miscellaneous petitions were closed.