2025 (3) TMI 1338 - HC - Indian Laws

Dismissal of petition on the ground that the appellants/petitioners has got the statutory remedy available to them by way of invoking Section 18 of the SARFAESI Act and filing an appeal before the Debt Recovery Appellate Tribunal - HELD THAT - It is true that there is no bar for this Court to entertain a writ petition however in case of availability of efficacious and alternative statutory remedy this Court can interfere in a petition filed under Article 226 of the Constitution of India in very rare cases. The SARFAESI Act is a code scheme of which provides for various statutory remedies available to the parties at various stages of the proceedings drawn and conducted under the said Act. Merely because the appellants/petitioners will be required to deposit certain amount to avail the remedy of the appeal under Section 18 of the SARFAESI Act it cannot be said that this Court would necessarily invoke the jurisdiction under Article 226 of the Constitution of India. Reference made to a judgment of Hon ble Supreme Court in the case of PHR Invent Educational Society v. UCO Bank and others 2024 (4) TMI 466 - SUPREME COURT (LB) wherein it has clearly been held that the High Court would ordinarily not entertain a petition under Article 226 of the Constitution of India if an effective remedy is available to the aggrieved person. Conclusion - The requirement to make a deposit under Section 18 of the SARFAESI Act does not justify bypassing the statutory remedy in favor of a writ petition. The principle of exhausting alternative remedies is upheld.

ISSUES PRESENTED and CONSIDERED

The core legal issue considered in this case is whether the High Court should entertain a writ petition under Article 226 of the Constitution of India when an alternative statutory remedy is available under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). Specifically, the issue revolves around whether the requirement to make a deposit under Section 18 constitutes a valid reason for bypassing the statutory remedy and invoking the writ jurisdiction of the High Court.

ISSUE-WISE DETAILED ANALYSIS

Relevant legal framework and precedents: The legal framework centers on the SARFAESI Act, which provides a mechanism for the recovery of debts by financial institutions. Section 18 of the SARFAESI Act allows for an appeal to the Debt Recovery Appellate Tribunal (DRAT) against orders passed by the Debt Recovery Tribunal (DRT), subject to the condition of making a deposit. The Court also references Article 226 of the Constitution, which grants High Courts the power to issue certain writs.

The Court cites several precedents from the Supreme Court, notably PHR Invent Educational Society v. UCO Bank and others, which emphasize that High Courts should ordinarily not entertain writ petitions when an effective alternative remedy is available. This principle is reiterated in cases such as Agarwal Tracom (P) Ltd. v. Punjab National Bank and State Bank of Travancore v. Mathew K.C., which underscore the importance of exhausting statutory remedies before approaching the High Court under Article 226.

Court's interpretation and reasoning: The Court reasons that the SARFAESI Act is a comprehensive code that provides for various statutory remedies at different stages of debt recovery proceedings. The requirement to make a deposit under Section 18 is a statutory condition for filing an appeal and does not, by itself, justify bypassing the statutory remedy in favor of a writ petition.

The Court acknowledges that while there is no absolute bar on entertaining writ petitions, the presence of an efficacious and alternative statutory remedy typically precludes the invocation of writ jurisdiction. The Court emphasizes the principle of self-imposed restraint and the rule of exhaustion of alternative remedies, which are discretionary but generally adhered to in matters involving public dues and financial institution recoveries.

Key evidence and findings: The Court notes that the appellants sought to quash an order by the DRT, which rejected their application to restrain the respondent bank from auctioning the property. The availability of an appellate remedy under Section 18 of the SARFAESI Act is not in dispute.

Application of law to facts: Applying the legal framework and precedents, the Court concludes that the appellants' commercial incapacity to make the required deposit does not constitute a sufficient ground to invoke the High Court's writ jurisdiction. The statutory remedy under Section 18 remains the appropriate course of action.

Treatment of competing arguments: The appellants argued that their inability to make the deposit should allow them to seek redress through a writ petition. However, the Court dismisses this argument, citing the established principle that the existence of an alternative remedy generally precludes the invocation of writ jurisdiction, except in rare cases.

Conclusions: The Court concludes that the appellants should pursue the statutory remedy provided under the SARFAESI Act by filing an appeal with the DRAT, as the inability to make a deposit does not warrant the High Court's intervention under Article 226.

SIGNIFICANT HOLDINGS

The Court holds that the High Court should not entertain writ petitions under Article 226 when an effective statutory remedy is available, particularly in matters involving the recovery of public dues and financial institution debts. This principle is reinforced by the Supreme Court's rulings, which emphasize the rule of exhaustion of alternative remedies and the need for self-imposed restraint by the judiciary.

Verbatim quotes of crucial legal reasoning:

"The High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person. It has been held that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions."

Core principles established: The Court establishes that the requirement to make a deposit under Section 18 of the SARFAESI Act does not justify bypassing the statutory remedy in favor of a writ petition. The principle of exhausting alternative remedies is upheld, reinforcing the comprehensive nature of the SARFAESI Act as a code for debt recovery.

Final determinations on each issue: The Court dismisses the Letters Patent Appeal, affirming the decision of the learned Single Judge and reiterating that the appellants must pursue the statutory remedy under the SARFAESI Act by appealing to the DRAT.

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