Writ against SARFAESI Act:

Writ against SARFAESI Act:

It is no doubt true that the Supreme Court has time and again cautioned High Courts not to entertain writ petitions arising under the SARFAESI Act, given the hierarchy of statutory remedies provided under the enactment itself. 

However, it must be remembered that refusal by High Courts to entertain writ petitions due to availability of alternative remedies is a self-imposed restraint and discretion in this regard has to be exercised judiciously on a case-to-case basis depending upon the individual facts obtaining therein.

Recently, the Supreme Court had occasion to consider this issue in AUTHORIZED OFFICER, STATE BANK OF TRAVANCORE V/s. MATHEW K.C. 

The case arose out of the interim order passed by the Kerala High Court in a writ petition staying further proceedings at the stage of measures being taken under Section 13(4) of the SARFAESI Act. 

The Supreme Court observed that the SARFAESI Act is a complete code in itself and the High Court ought not to have entertained the writ petition in view of the alternative remedies available thereunder. 

On facts, the Supreme Court found that the writ petition was not instituted bonafide but only to stall further action for recovery. There was no pleading as to why the remedy under Section 17 of the SARFAESI Act was not efficacious and no compelling reasons were cited for bypassing the same. Referring to case law on the subject, the Supreme Court concluded that the writ petition ought not to have been entertained and that the interim order was granted for the mere asking without assigning special reasons and without even allowing a hearing to the bank.

Similar was the view taken by the Supreme Court a little earlier in November, 2017, in AGARWAL TRACOM PVT. LTD. V/s. PUNJAB NATIONAL BANK. 

This case also arose out of proceedings initiated under the SARFAESI Act which culminated in the sale of the secured asset. The appellant before the Supreme Court was the auction purchaser who failed to pay the bid amount in terms of the sale conditions. 

The Delhi High Court had refused to entertain the writ petition filed by the appellant assailing forfeiture of its deposit holding that the proper remedy was to file a securitization application under Section 17 of the SARFAESI Act before the jurisdictional Tribunal. 

In appeal, the Supreme Court observed that the expression any of the measures referred to in Section 13(4) taken by the secured creditor in Section 17(1) of the SARFAESI Act would include forfeiture of the deposit made by the auction purchaser. 

The Supreme Court accordingly concurred with the view taken by the Delhi High Court that the auction purchaser ought to have availed the statutory remedy. 

While holding so, the Supreme Court recalled that in UNITED BANK OF INDIA V/s. SATYAWATI TONDON it had occasion to examine in detail the provisions of the SARFAESI Act and invocation of the extraordinary power of the High Court under Article 226 of the Constitution to challenge the actions taken thereunder. 

The observations made therein were to the effect that the High Court would ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that, in all such cases, the High Court must insist that a person aggrieved must exhaust the remedies available under the relevant statute before availing the remedy under Article 226 of the Constitution.

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