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2019 (4) TMI 884 - HC - Indian LawsDishonor of Cheque - default in repayment of loan - Auction - Section 17(1) of the SARFAESI Act - Held that - Section 17(1) of the SARFAESI Act makes it clear that the measures contemplated under Section 13(4) of the Act provide continuity to the cause of action. In the present case, against the action of the respondent Bank in accepting the only bid and confirming the sale, the petitioners have an alternative effective remedy of filing an application under Section 17 of the SARFAESI Act. In the present case, since the action taken by the respondent- Bank in auctioning the residential house in question on account of default in repayment of the loan, was in continuation of the measures provided under Section 13(4) of the Act, the petitioners have an alternative effective remedy of filing an application under Section 17 of the Act. The petitioners instead of availing that remedy, have approached this Court under Article 226 of the Constitution of India. Petition dismissed - decided against petitioner.
Issues Involved:
1. Legality of the auction proceedings conducted by the respondent bank. 2. Adequacy and fairness of the auction price. 3. Availability of alternative remedy under Section 17 of the SARFAESI Act. 4. Jurisdiction of the High Court under Article 226 of the Constitution of India. Detailed Analysis: 1. Legality of the Auction Proceedings: The petitioners challenged the auction proceedings conducted by the respondent bank, asserting that the sale notice dated 06.03.2018 and subsequent actions, including the auction on 20.04.2018 and the sale confirmation letter dated 23.04.2018, were arbitrary, illegal, and unfair. They contended that the auction was conducted in collusion with the sole bidder, resulting in a sale price significantly lower than the market value of the property. The petitioners argued that the bank should have considered their higher offer of ?2.05 crore instead of confirming the sale at ?1,81,50,000/-. 2. Adequacy and Fairness of the Auction Price: The petitioners claimed that the auction price of ?1,81,50,000/- was significantly lower than the market value of the property, which they asserted was capable of fetching a much higher price. They alleged that the bank acted unfairly by accepting the solitary bid and not exploring better offers, including their own offer of ?2 crore, which was paid in court. The petitioners emphasized that the auction was conducted without considering the true market value of the property. 3. Availability of Alternative Remedy under Section 17 of the SARFAESI Act: The court highlighted that the SARFAESI Act provides a comprehensive mechanism for addressing grievances related to the enforcement of security interests. Section 17(1) of the SARFAESI Act allows an aggrieved person to file an application within 45 days to the Tribunal against any measures taken under Section 13(4) of the Act. The court emphasized that the petitioners had an effective alternative remedy available under Section 17 of the SARFAESI Act to challenge the bank's actions, including the auction proceedings and sale confirmation. 4. Jurisdiction of the High Court under Article 226 of the Constitution of India: The court referred to several precedents, including decisions by the Apex Court, which established that the High Court should not entertain a writ petition under Article 226 if an effective alternative remedy is available. The court cited cases such as Agarwal Tracom Private Limited vs. Punjab National Bank and others, and Union Bank of India vs. Satyawati Tondon, which reinforced the principle that the High Court should exercise restraint and insist on exhausting statutory remedies before invoking its writ jurisdiction. The court concluded that the petitioners should have availed the alternative remedy under Section 17 of the SARFAESI Act instead of approaching the High Court. Conclusion: The court dismissed the writ petition, emphasizing that the petitioners had an adequate and effective alternative remedy under Section 17 of the SARFAESI Act to challenge the auction proceedings and sale confirmation. The court reiterated that it would not interfere in writ jurisdiction when a statutory remedy is available, in line with the principles established by the Apex Court. The petitioners were advised to pursue the alternative remedies in accordance with the law, and the court clarified that its observations should not be construed as an opinion on the merits of the case.
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