2016 (12) TMI 365 - HC - Indian Laws

Entitlment to sell the properties - auctioning the secured assets in exercise of powers under Section 13(4) of the SARFAESI Act - Held that - In the present case, as noted a clear remedy of Appeal is available under Section 17 of the Act. The dispute between the parties fall in the commercial realm where the dispute of such nature, namely commercial, are to be agitated, rule of alternative remedy has to be adhered to steadfast. As the alternative forum would be expert body equipped and competent to dealt with the factual aspects and investigate into the matters into the special realm. Therefore, it is trite that the petitioners are relegated to the alternative remedy. Accordingly the petitioners cannot be allowed to invoke writ jurisdiction of this Court straightway. The petitioners are hereby relegated to approach the Tribunal to avail alternative remedy of Appeal. All the contentions which are raised in this petition may be raised in accordance with law while pursuing the alternative remedy. This Court has not gone into the merits of the case of the petitioners and this petition is not entertained on the aforesaid ground alone.

Summary

Issues:
Prayer for relief against auction of properties under SARFAESI Act invoking writ jurisdiction under Article 226 - Availability of alternative remedy of Appeal under Section 17 of SARFAESI Act - Discretion to entertain writ petition despite alternative remedy - Adherence to rule of alternative remedy in commercial disputes - Applicability of settled law on High Court's jurisdiction in matters involving recovery of public dues and financial institution's dues.

Analysis:

Issue 1: Prayer for relief against auction under SARFAESI Act
The petitioners sought a declaration that the Respondents are not entitled to sell their properties and should not proceed with the e-auction scheduled. The Respondents initiated proceedings under the SARFAESI Act for recovery of due amounts, leading to the issuance of auction notice for the secured assets under Section 13(4) of the Act.

Issue 2: Availability of alternative remedy of Appeal
The Court noted that the petitioners have an alternative efficacious remedy of filing an Appeal under Section 17 of the SARFAESI Act. The Act provides for an appeal mechanism before the Debts Recovery Tribunal (DRT) within 45 days from the measures taken under Section 13(4). The petitioners could avail this remedy as it falls within the commercial realm.

Issue 3: Discretion to entertain writ petition
The learned advocate for the petitioners argued for the discretionary rule of alternative remedy, citing relevant case laws. However, the Court emphasized that the availability of a clear remedy of Appeal under Section 17 mandates adherence to the rule of alternative remedy, especially in commercial disputes. The Court referred to specific cases to support the dismissal of the writ petition in favor of the alternative remedy.

Issue 4: Applicability of settled law on High Court's jurisdiction
Drawing from the Supreme Court's observations in previous cases, the Court highlighted the importance of exhausting statutory remedies under relevant statutes like the SARFAESI Act before invoking Article 226 of the Constitution. The Court stressed that High Courts must exercise caution and discretion in matters involving recovery of public dues and financial institution's dues, emphasizing the need to respect the statutory procedures for recovery.

In conclusion, the Court dismissed the writ petition and directed the petitioners to approach the Tribunal for the alternative remedy of Appeal under Section 17 of the SARFAESI Act. The Court refrained from delving into the merits of the case, emphasizing the need to follow established legal procedures and exhaust statutory remedies before seeking judicial intervention.