2017 (2) TMI 1556 - HC - Indian Laws

Maintainability of petition - availability of alternative remedy - Declaration of account as non-performing asset - HELD THAT - The remedy of appeal provided by the Legislature under Section 17 of the Act is efficacious remedy. It would possible for the petitioners to lead evidence before the Tribunal to establish his case and the contentions. The Tribunal has power to restore back the possession if the aggrieved person succeeds before the Tribunal. The powers of the Tribunal has been widened in terms of the undertaking of examination of various issues by virtue of the amendment brought in, in Section 17 of the Act under the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016. It is a cardinal principle that the High Court would be loath to exercise discretion in favour of entertaining a writ petition where the Legislature has provided alternative statutory remedy. In the present case, a special forum is available in form of Debts Recovery Tribunal where appeal would lie. In the matters involving commercial disputes, it is trite that rule of availing alternative remedy should be adhered to steadfast. The principle on this aspect is unequivocal. In Authorised Officer, Indian Overseas Bank v. Ashok Saw Mill 2009 (7) TMI 765 - SUPREME COURT , the Apex Court held that remedy by way of appeal under Section 17 is available not only upto the stage referable to Section 13(4), but even in respect of measures taken post- 13(4) stage. In the present case, the stage at which the petitioner is beset with, is such stage. The petitioner is aggrieved person for the purpose of Section 17 of the Act. In Kanaiyalal Lalchand Sachdev v. State of Maharashtra 2011 (2) TMI 1277 - SUPREME COURT , the Supreme Court has stated that the measures under Section 14 constitutes the action taken after the stage of Section 13(4) and a remedy of appeal under Section 17 would be available. In that case, refusal by the High Court to entertain the writ petition was held to be fully justified. Thus, only on the ground that the petitioners have got alternative efficacious remedy, this petition is not entertained and stands dismissed, leaving the petitioners at liberty to approach Debts Recovery Tribunal - petition dismissed.

Summary

Issues:
1. Classification of outstanding account as non-performing asset.
2. Legality of notices issued by the respondent Bank.
3. Validity of possession notices and auction of secured properties.
4. Prayers for interim relief and illegal actions by the Bank.
5. Alternative statutory remedy available to the petitioners.

Analysis:

Issue 1: Classification of outstanding account as non-performing asset
The petitioners contested the classification of their account as a non-performing asset by the Bank on 14th September, 2016, arguing it was premature. The petitioners claimed that the Bank acted with undue haste and failed to consider their requests for debt reconstruction. The petitioners also questioned the valuation of their properties before the auction and alleged breaches of rules by the Bank. They sought relief based on the interest of the borrower and the impact of demonetization on their situation.

Issue 2: Legality of notices issued by the respondent Bank
The petitioners challenged the legality of notices issued by the Bank under Section 13(2) and Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. They argued that the Bank did not follow proper procedures and acted without proper valuation of the properties. The petitioners sought to set aside these notices and the subsequent possession actions taken by the Bank.

Issue 3: Validity of possession notices and auction of secured properties
The petitioners raised concerns about the possession notices issued by the Bank and the subsequent auction of their secured properties. They alleged that the Bank undervalued the reserved price and did not follow the required procedures. The petitioners contended that the Bank should not have proceeded with the auction without physical possession of the properties and sought relief in this regard.

Issue 4: Prayers for interim relief and illegal actions by the Bank
The petitioners requested interim relief and urged the court to exercise writ jurisdiction to address their grievances. They cited relevant legal precedents to support their arguments, emphasizing the need for equitable relief and fair treatment by the Bank. The petitioners highlighted the residential nature of the secured properties and questioned the Bank's actions in light of their circumstances.

Issue 5: Alternative statutory remedy available to the petitioners
The court dismissed the petition, citing the availability of an alternative statutory remedy under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal. The court emphasized the importance of exhausting statutory remedies before seeking relief through writ jurisdiction. It noted that the Tribunal had the power to address the petitioners' claims and that the legislative framework provided a comprehensive procedure for debt recovery disputes.

In conclusion, the court dismissed the petition based on the availability of an alternative statutory remedy and advised the petitioners to approach the Debts Recovery Tribunal for further proceedings. The court clarified that its decision did not delve into the merits of the case and that any future proceedings would be examined by the Tribunal in accordance with the law.