2016 (12) TMI 364 - HC - Indian Laws

Notice under SARFAESI Act challenged - Held that - It is trite that the High Court exercising jurisdiction under Article 226 of the Constitution would be loath to entertain the petition straightway when aggrieved person has got an alternative statutory remedy. The remedy before the Tribunal is not only statutory remedy available, it is efficacious remedy where the parties can lead evidence in support of their case. All the contentions which are sought to be raised in this petition by the petitioners could well be raised and agitated in the Appeal before the Tribunal. The matter in commercial realm. In such cases, rule of availment of alternative statutory remedy has to be adhered to steadfast. This petition is not entertained and is hereby dismissed. It is clarified that this Court has not gone into the merits of the case of the petitioners. It will be open for the petitioners to raise all the contentions and prayers before the Tribunal in the Appeal which they may opt to prefer. Dismissed as above.

Summary

Issues:
Challenge to SARFAESI Act notices under Article 226 of the Constitution.

Analysis:
The petitioners obtained a loan in 2007 and defaulted on payments, leading to the loan facility being recalled by the lender. An arbitrator was appointed, and an award was passed in favor of the lender. The lender assigned the debt to a bank, which initiated action under the SARFAESI Act to recover the outstanding amount. The petitioner argued that this action was impermissible due to the pending execution proceedings related to the arbitration award.

The court held that the bank, as the assignee of the debt, had the right to proceed under the SARFAESI Act to recover the amount. It was determined that there was no duality of action or double jeopardy, as it was a single debt being sought for recovery. The court emphasized that the SARFAESI Act operates independently and is a valid recourse for recovery.

Additionally, the court noted that the petitioner had an alternative statutory remedy available under Section 17 of the Act. Referring to relevant case law, including the Supreme Court's observations in various cases, the court highlighted the importance of exhausting statutory remedies before seeking relief under Article 226 of the Constitution. The court emphasized the need to adhere to the rule of availing alternative statutory remedies, especially in commercial matters.

Consequently, the court dismissed the petition on the grounds that the petitioner had an efficacious alternative remedy before the Tribunal, where all contentions could be raised and evidence could be presented. The court clarified that it had not delved into the merits of the case and directed the petitioners to raise their contentions and prayers before the Tribunal in the Appeal process. The dismissal was based on the principle that when an alternative statutory remedy is available, the High Court would be reluctant to entertain a petition directly.