2017 (11) TMI 1523 - SC - Indian Laws

Auction purchaser aggrieved by the action of the secured creditor in forfeiting their money - remedy under SARFAESI Act - Held that - Writ Court as also the Appellate Court were justified in dismissing the appellant s writ petition on the ground of availability of alternative statutory remedy of filing an application under Section 17(1) of SARFAESI Act before the concerned Tribunal to challenge the action of the PNB in forfeiting the appellant s deposit under Rule 9(5). We find no ground to interfere with the impugned judgment of the High Court. The appellant is, accordingly, granted liberty to file an application before the concerned Tribunal (DRT) under Section 17(1) of the SARFAESI Act, which has jurisdiction to entertain such application within 45 days from the date of this order. In case, if the appellant files any such application, the Tribunal shall decide the same on its merits in accordance with law uninfluenced by any of the observations made by this Court and the High Court in the impugned judgment.

Summary

Issues Involved:
1. Legality of the forfeiture of the deposit by PNB.
2. Applicability of Section 17 of the SARFAESI Act to the forfeiture action.
3. Appropriateness of filing a writ petition under Article 226/227 of the Constitution versus approaching the DRT under Section 17 of the SARFAESI Act.

Detailed Analysis:

1. Legality of the forfeiture of the deposit by PNB:
The appellant (auction purchaser) failed to pay the regular installments towards the sale money as per the memorandum of understanding with PNB. This resulted in disputes, leading to PNB forfeiting the appellant's deposit by a letter dated 26.06.2015. The appellant challenged this action by filing a writ petition, which was dismissed by the Single Judge on the grounds of an alternative statutory remedy available under Section 17 of the SARFAESI Act.

2. Applicability of Section 17 of the SARFAESI Act to the forfeiture action:
The appellant contended that the forfeiture of the deposit is not one of the measures specified under Section 13(4) of the SARFAESI Act, and thus, Section 17 is not applicable. The Supreme Court, however, held that the action of forfeiture is indeed a part of the measures taken under Section 13(4), as it is covered under Rules 8 and 9 of the Security Interest (Enforcement) Rules, 2002. The court emphasized that the measures under Section 13(4) include all actions taken by the secured creditor under the Rules, which relate to the measures specified in Section 13(4). Therefore, the appellant, being aggrieved by the forfeiture, falls within the expression "any person" under Section 17(1) and is entitled to challenge the action before the DRT.

3. Appropriateness of filing a writ petition under Article 226/227 of the Constitution versus approaching the DRT under Section 17 of the SARFAESI Act:
The Supreme Court upheld the view of the High Court that the proper remedy for the appellant was to file an application under Section 17 of the SARFAESI Act before the DRT, rather than filing a writ petition under Article 226/227 of the Constitution. The court cited the case of United Bank of India vs. Satyawati Tondon & Ors., emphasizing that the High Court should not entertain a writ petition when an effective alternative remedy is available under the SARFAESI Act. The court reiterated that the rule of exhaustion of alternative remedy is a rule of discretion and not compulsion, but it is generally followed to ensure that statutory remedies are exhausted before approaching the High Court.

Conclusion:
The Supreme Court found no merit in the appeal and upheld the High Court's decision, dismissing the appellant's writ petition on the ground of availability of an alternative statutory remedy under Section 17(1) of the SARFAESI Act. The appellant was granted liberty to file an application before the DRT within 45 days, which the Tribunal shall decide on its merits in accordance with the law. The appeal was accordingly dismissed.