2016 (4) TMI 614 - HC - Indian Laws

E-auction notice challenged - Held that - Stage obtained in the process of auction by the respondent under the SARFAESI Act is a post-13(4) stage. The petitioner therefore has an alternative statutory remedy of filing an appeal under Section 17 of the Act before the Debts Recovery Tribunal. It is trite that in the matters involving commercial dispute, rule of alternative remedy is adhered to and applied steadfast. Present petition is not entertained. The petitioner is at liberty to approach the Debts Recovery Tribunal in accordance with law.

Summary

Issues: Challenge to E-auction notice under SARFAESI Act, Entertaining petition under Article 226 when alternative statutory remedy available

In this judgment, the petitioner challenged an E-auction notice issued by the respondent-Housing and Urban Development Corporation Limited under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 to recover dues amounting to &8377;94,82,350. The petitioner's account was declared as a Non Performing Account (NPA), leading to the issuance of the impugned notice under Section 13(4) of the Act. The respondent had already taken symbolic possession of the mortgaged property. The High Court noted that the auction notice was issued well in advance, and the petitioner was informed promptly about the proposed auction, giving them an opportunity to clear dues or find a buyer. However, the petitioner failed to respond and approached the Court at the eleventh hour, close to the auction date.

The Court emphasized that the stage reached by the respondent in the auction process was post-Section 13(4), and the petitioner had an alternative statutory remedy available under Section 17 of the Act by filing an appeal before the Debts Recovery Tribunal. Referring to the Supreme Court's decision in United Bank of India vs. Satyawati Tondon and Others, the High Court highlighted the principle that in matters involving recovery of dues, especially in commercial disputes, the rule of alternative remedy should be strictly followed. The Court quoted the Supreme Court's observation that High Courts must insist on exhausting remedies available under relevant statutes before seeking relief under Article 226 of the Constitution.

The petitioner argued that being an academic institution, they should be treated differently. However, the Court held that this alone did not warrant special treatment outside the purview of the law. Consequently, the High Court dismissed the petition, directing the petitioner to pursue remedies before the Debts Recovery Tribunal as per the law. The judgment concluded by dismissing the petition and granting liberty to the petitioner to approach the Debts Recovery Tribunal for further recourse.