2016 (4) TMI 222 - HC - Indian Laws

Notice under SARFAESI Act - Held that - At the stage of measures under Section 13(4) and/or the stage post-Section 13(4) of the SARFAESI Act, the remedy of appeal before the Debts Recovery Tribunal under Section 17 of the Act is available to the borrower. Since the statutory alternative remedy is available with the petitioners, this Court is not inclined to entertain this petition. It is trite that in the commercial matters, alternative remedy has to exhausted steadfast rather than invoking writ jurisdiction of High Court straightway. Accordingly, this petition is dismissed. The petitioners are relegated to pursue their remedy in appeal under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal.

Summary

Issues:
Challenge against notice under Section 13(4) of SARFAESI Act.

Analysis:
The petition challenged a notice dated 06.06.2015 issued under Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The respondent Bank, as the assignee of the debt, initiated proceedings against the petitioners for recovery of dues amounting to ?23,05,770. The Court noted that the steps taken by the respondent Bank under the SARFAESI Act had reached the stage of Section 13(4), where symbolic possession of the mortgaged property was taken. The respondent Bank confirmed that cheques issued by the petitioners for repayment had bounced, leading to the initiation of recovery proceedings.

The Court emphasized that at the stage post-Section 13(4) of the SARFAESI Act, the borrower has the remedy of appeal before the Debts Recovery Tribunal under Section 17 of the Act. Referring to legal precedents, the Court highlighted the principle that in commercial matters, the statutory alternative remedy must be exhausted before approaching the High Court through a writ petition. The Supreme Court's decisions in Kanaiyalal Lalchand Sachdev vs. State of Maharashtra and United Bank of India vs. Satyawati Tondon were cited to support this principle.

The petitioners argued that issues regarding the respondent's entitlement to take action under the SARFAESI Act and the validity of the notice under Section 13(2) should be addressed. However, the Court maintained that all such contentions should be raised before the Debts Recovery Tribunal during the appeal process. The Court dismissed the petition, directing the petitioners to pursue their remedy through an appeal under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal. It was clarified that the Court did not delve into the merits of the case, leaving it for the Tribunal to decide in accordance with the law.

In conclusion, the petition challenging the notice under Section 13(4) of the SARFAESI Act was dismissed by the Court, emphasizing the availability of the statutory remedy of appeal before the Debts Recovery Tribunal for the petitioners. The judgment reiterated the principle that in matters involving recovery of dues, the High Court should insist on exhausting statutory remedies before entertaining writ petitions.