2024 (8) TMI 194 - HC - Indian Laws

Maintainability of petition - availability of alternative efficacious remedy - Jurisdiction of Learned Additional District Magistrate - recovery actions under the provisions of the SARFAESI Act, 2002 - HELD THAT - It is an admitted position that the order under Section 14 has been passed by the Additional Collector and now petitioners being the borrowers has an alternative remedy to approach the DRT by filing an appropriate application which has not been filed. The Apex Court in the case of ICICI Bank Limited and others Vs. Umakanta Mohapatra and others 2018 (10) TMI 1953 - SUPREME COURT has held ' The writ petition, in this case, being not maintainable, obviously, all orders passed must perish, including the impugned order, which is set aside'. Recently, the Apex Court in the case of M/S South Indian Bank Ltd. Ors. Vs. Naveen Mathew Philip Anr. Etc Etc 2023 (5) TMI 798 - SUPREME COURT has deprecated the practice adopted by the High Courts whereby the writ petitions are being entertained in SARFAESI Act matters, especially against the private banks when the statute prescribes a particular mode, an attempt to circumvent shall not be encouraged by the writ Court. The litigant cannot avoid the noncompliance of approaching the Tribunal which requires the prescription of fee and use of constitutional remedy as an alternative. The Apex Court has also deprecated the practice of approaching the High Court for consideration of an offer by the borrower. The Apex Court in the case of M/S South Indian Bank Ltd. 2023 (5) TMI 798 - SUPREME COURT further went on to hold that 'we deprecate such practice of entertaining the writ petitions by the High Court in exercise of power u/S 226 of the Constitution of India without exhausting the alternative remedy available under the law.' The petition is hereby dismissed at the admission stage.

Summary

Issues:
1. Jurisdiction of Additional District Magistrate under SARFAESI Act, 2002.
2. Opportunity of hearing to borrowers under Section 14 of SARFAESI Act, 2002.
3. Alternative remedy available to borrowers under SARFAESI Act, 2002.
4. Maintainability of writ petition under Article 226 of the Constitution.

Jurisdiction of Additional District Magistrate under SARFAESI Act, 2002:
The petitioners filed a Writ Petition under Article 226 challenging an order by the Additional District Magistrate granting liberty to a non-banking finance company (NBFC) to proceed with recovery procedures under sections 14 and 14(1)(A) of the SARFAESI Act, 2002. The petitioners argued that the NBFC invoked the Act without jurisdiction as the outstanding amount was below the threshold for SARFAESI actions. They sought quashing of the actions, claiming grave injustice. The High Court noted the lender's actions and the fear of losing possession of the property.

Opportunity of hearing to borrowers under Section 14 of SARFAESI Act, 2002:
The petitioners contended that the Additional Collector did not grant them a hearing before passing the order, and the borrowed amount was below the limit for SARFAESI actions. They argued that the actions of the NBFC were against the law and void. However, the Government Advocate cited a judgment stating that borrowers need not be heard by the Additional Collector under Section 14. The High Court acknowledged the absence of a DRT application by the borrowers.

Alternative remedy available to borrowers under SARFAESI Act, 2002:
The Government Advocate highlighted that the borrowers had the option to approach the Debt Recovery Tribunal (DRT) by filing an application, which they had not done. Citing previous judgments, it was emphasized that High Courts should refrain from entertaining matters where an alternative remedy exists. The High Court noted the availability of an efficacious remedy under Section 17 before the DRT.

Maintainability of writ petition under Article 226 of the Constitution:
Referring to Supreme Court judgments, the High Court observed that the writ petition was not maintainable as settled legal principles dictated that High Courts should not entertain SARFAESI matters when an alternative remedy is available. Quoting previous cases, the court emphasized that the forum of the writ court should not be used for interim relief when other appropriate forums exist. The court dismissed the petition at the admission stage, following the principles laid down by the Apex Court.

In conclusion, the High Court dismissed the Writ Petition under Article 226, emphasizing the availability of an alternative remedy before the DRT and following the principles established by the Supreme Court regarding the jurisdiction of the High Courts in SARFAESI matters.