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2017 (2) TMI 957 - HC - Indian LawsRight to appeal - Alternative efficacious remedy to approach Debts Recovery Tribunal - Held that - the remedy provided under the Act is an efficacious remedy. The petitioners can lead evidence before the Tribunal to establish his case and the contentions. Even the Tribunal has power to restore back the possession if the aggrieved person succeeds before the Tribunal. The powers of the Tribunal are wider and the Tribunal can undertake the examination of various issues by virtue of the amendment brought in the aforesaid provision of the Act in the year 2016. Single Judge has not committed any error while relegating the petitioners to an alternative efficacious remedy i.e. appeal under Section 17 of the Act before the Debts Recovery Tribunal. At this stage, it is also relevant to note that the learned Single Judge has specifically observed that he has not gone into the merits of the case of the petitioners and therefore any observations made in the said order does not mean to and shall not be treated as expression on merits. It is also clarified that if the appropriate proceedings are initiated before the Debts Recovery Tribunal, the Tribunal shall examine the same in accordance with law and on merits.
Issues Involved:
1. Classification of the petitioners' outstanding accounts as Non-Performing Assets (NPA). 2. Legality of the notices issued under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). 3. Availability of an alternative remedy before the Debts Recovery Tribunal (DRT). Issue-wise Detailed Analysis: 1. Classification of the petitioners' outstanding accounts as Non-Performing Assets (NPA): The petitioners argued that the classification of their accounts as NPA by the respondent was premature and thus illegal. They stated that, according to RBI guidelines, an account should be classified as NPA if dues are not paid for more than 90 days. The first due date was 16th June 2016, meaning the 90-day period would end on 14th September 2016. However, the respondent classified the account as NPA on 14th September 2016, a day earlier. The petitioners contended that the classification should have commenced from 17th June 2016, making the correct NPA classification date 15th September 2016. 2. Legality of the notices issued under the SARFAESI Act: The petitioners challenged the legality of the notice issued on 14th October 2016 under Section 13(2) read with Section 13(3) of the SARFAESI Act, which declared their accounts as NPA. They also contested the subsequent actions taken by the respondent, including the possession notice dated 5th January 2017 issued under Section 13(4) of the Act. The petitioners sought declarations from the court that these notices were illegal, null, and void. 3. Availability of an alternative remedy before the Debts Recovery Tribunal (DRT): The learned Single Judge dismissed the petition on the ground that the petitioners had an alternative efficacious remedy available under Section 17 of the SARFAESI Act to approach the DRT. The petitioners argued that the learned Single Judge erred by not considering the merits of their case, specifically the premature classification of their accounts as NPA. They contended that the DRT had the jurisdiction to examine the legality of the actions taken by the respondent under the SARFAESI Act and could provide appropriate relief, including restoring possession of the secured assets if the petitioners' grievances were found valid. Court's Analysis and Conclusion: The court considered the rival submissions and examined the provisions of Section 17 of the SARFAESI Act, which provides an efficacious remedy for aggrieved persons to approach the DRT. The DRT has the power to examine the legality of the measures taken by the secured creditor and can restore possession if the actions are found to be non-compliant with the Act. The court referred to the Supreme Court's decision in United Bank of India v. Satyawati Tondon & Ors., which emphasized that the High Court should not entertain writ petitions if an effective alternative remedy is available, particularly in matters involving recovery of public dues. The court concluded that the learned Single Judge did not commit any error in directing the petitioners to avail the alternative remedy before the DRT. The court also noted that the learned Single Judge had not examined the merits of the case, leaving it open for the DRT to consider the petitioners' grievances in accordance with the law. Final Judgment: The appeal was dismissed, upholding the learned Single Judge's decision to direct the petitioners to approach the DRT under Section 17 of the SARFAESI Act. The court reiterated that the petitioners could lead evidence before the DRT to establish their case and seek appropriate relief.
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