2016 (12) TMI 61 - HC - Indian Laws

Proceedings under SERFAESI Act - prayer to set aside the notices - Held that - It is quite clear that the District Magistrate, upon an application being filed by the respondent Bank under Section 14 of the SERFAESI Act, has only issued a notice/summons to the petitioners to remain present on 07th November, 2016 and answer the case. It is this notice which is challenged by the petitioners and it is at this stage that the petitioners have filed this petition. It appears that the petitioners sent letter to the Bank on 14th November, 2016 and requested not to proceed with the hearing. The District Magistrate kept the next date to 21st November, 2016. In the meantime, on 17th November, 2016, the present petition came to be filed. It is entirely incomprehensible as to what was the justification on part of the petitioners not to respond to the notices, but straightway to rush to file the present petition. Thus there was no occasion to invoke the jurisdiction of the writ court at the stage and in the circumstances obtained. The self-convenient act of on part of the petitioners to file present petition seeking to invoke the writ powers of the Court are indeed not well conceived in law and partakes an abuse of process of law, warranting a strict view.

Summary

Issues:
Challenge to notice issued under Section 14 of the SERFAESI Act by a bank, Premature filing of petition invoking writ jurisdiction under Article 226 of the Constitution, Availability of statutory remedies under the DRT Act and SARFAESI Act, Abuse of process of law.

Analysis:
1. Challenge to Notice under Section 14 of SERFAESI Act:
The petitioners, a group of six individuals, sought to set aside a notice issued by a bank under Section 14 of the SERFAESI Act, 2002. The bank had initiated proceedings against the petitioners regarding outstanding dues. The petitioners also aimed to quash the proceedings before the District Magistrate, which were in progress under Case No.17 of 2016. The petition detailed the financial transactions and mortgage arrangements between the petitioners and the bank over the years, highlighting the escalation of credit facilities and subsequent financial difficulties faced by the petitioners.

2. Premature Filing of Petition:
The High Court deemed the petition premature and misconceived. The court emphasized that the petitioners had alternative remedies available, such as filing an appeal before the Debt Recovery Tribunal under Section 17 of the Act. The court noted that the petitioners had already filed a Securitisation Application challenging earlier notices. The court highlighted that the present petition was solely against the issuance of notice/summons by the District Magistrate, and no final order had been passed. The court cited a Supreme Court judgment emphasizing the need to exhaust statutory remedies before invoking writ jurisdiction.

3. Availability of Statutory Remedies:
Referring to legal precedent, the High Court reiterated the importance of exhausting statutory remedies available under the DRT Act and SARFAESI Act before approaching the High Court under Article 226 of the Constitution. The court cautioned against bypassing the established statutory mechanisms for recovery of dues, especially in cases involving banks and financial institutions. The court emphasized the comprehensive procedures outlined in relevant statutes for redressal of grievances.

4. Abuse of Process of Law:
The High Court concluded that the petitioners' act of rushing to file the present petition without responding to the notices or engaging with the ongoing proceedings amounted to an abuse of the legal process. The court dismissed the petition as meritless and imposed a cost of &8377; 5,000 on the petitioners, directing them to deposit the amount with the Gujarat High Court Legal Aid Committee within 10 days. The court emphasized the need for petitioners to adhere to legal procedures and not misuse the writ powers of the Court.

In summary, the High Court dismissed the petition challenging the notice issued under Section 14 of the SERFAESI Act, highlighting the premature nature of the filing, the availability of statutory remedies, and the importance of following established legal procedures to avoid abuse of the legal process.