2016 (12) TMI 307 - HC - Indian Laws

Notices under the provisions of SERFAESI Act challenged - prayer to direct the respondent Bank to release working capital in favour of the petitioner No.2. - Held that - In view of the remedy available, this Court is not inclined to entertain the petition for the sole reason that petitioners have alternative statutory remedy available of preferring Appeal under Section 15 of the SERFAESI Act, 2002 before the Debt Recovery Tribunal. Section 17 of the Act, as amended by the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016, entitles an aggrieved person to prefer Appeal. It is trite that the High Court exercising jurisdiction under Article 226 of the Constitution would be loath to entertain the petition straightway when aggrieved person has got an alternative statutory remedy. The remedy before the Tribunal is not only statutory remedy available, it is efficacious remedy where the parties can lead evidence in support of their case. All the contentions which are sought to be raised in this petition by the petitioners could well be raised and agitated in the Appeal before the Tribunal. The matter is under commercial realm. In such cases, rule of availment of alternative statutory remedy has to be adhered to steadfast.

Summary

Issues:
1. Challenge to notices issued by respondent Bank under SERFAESI Act, 2002
2. Claim for release of working capital by petitioners
3. Availability of alternative statutory remedy under Section 17 of the Act

Analysis:
1. The petitioners sought to set aside multiple notices issued by the respondent Bank under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SERFAESI Act). The notices demanded payment of specific sums along with interest, threatening property sale upon failure. The petitioners, including borrowers, guarantors, and sureties, contested the actions taken by the bank under the Act, raising concerns about promises made by the bank regarding working capital release.

2. The petitioners contended that the bank had assured them of sanctioning term loans and providing working capital, based on which they invested significant amounts. However, the bank initiated proceedings under the SERFAESI Act due to repayment defaults. The court noted the loan facilities extended to the petitioners for property purchases and the subsequent defaults leading to the initiation of measures under the Act, including the potential sale of mortgaged properties.

3. The court emphasized the availability of a statutory remedy under Section 17 of the Act, allowing aggrieved persons to appeal measures taken by secured creditors before the Debt Recovery Tribunal. Citing relevant legal precedents, the court highlighted the importance of exhausting statutory remedies before seeking relief through writ petitions. The judgment underscored the need to adhere to the statutory appeal process for matters involving recovery of dues, urging caution and restraint in entertaining petitions under Article 226 of the Constitution.

4. Ultimately, the court dismissed the petition on the grounds of the availability of an alternative statutory remedy, clarifying that it had not delved into the merits of the case. The petitioners were directed to raise their contentions and prayers before the Tribunal through the appeal process. The judgment reinforced the principle that in commercial matters like these, the statutory remedy provided by the Act should be pursued diligently, and the High Court would refrain from entertaining petitions when such an alternative recourse exists.