Case Note & Summary
The petitioners, Sri S.V. Ramaswamy, Mrs. Usha Ramaswamy, and R.K. Associates (a partnership firm), filed a writ petition under Article 226 of the Constitution before the High Court of Karnataka at Bengaluru. They challenged a possession notice issued by the respondent, Asset Reconstruction Company (India) Ltd., under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The petitioners were borrowers/guarantors in respect of a loan taken from the respondent bank. The possession notice was issued after the petitioners failed to repay the loan. The petitioners sought to quash the notice and restrain the bank from taking further action. The court, comprising Justice Krishna S Dixit and Justice G Basavaraja, heard the matter. The petitioners were represented by Senior Counsel Sri K. Kasturi and Sri D.R. Ravishankar. The respondents were represented by Senior Counsel Sri Dhyan Chinnappa. The court noted that the petitioners had an alternative statutory remedy under Section 17 of the SARFAESI Act, which allows a debtor to challenge the measures taken by the bank before the Debts Recovery Tribunal (DRT). The court held that the writ petition was not maintainable as the High Court cannot be used to circumvent the statutory remedy. The court dismissed the petition, stating that the petitioners must approach the DRT if they wish to challenge the possession notice. The court also observed that the petitioners had not discharged their liability, and therefore, no interference was warranted. The judgment was delivered on 3rd February 2025.
Headnote
A) Constitutional Law - Writ Jurisdiction - Alternative Remedy - Article 226 of the Constitution of India - Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - The petitioners challenged a possession notice issued by the respondent bank under the SARFAESI Act. The court held that the writ petition is not maintainable as the petitioners have an efficacious alternative remedy under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal. The court dismissed the petition, stating that the High Court cannot be used to circumvent the statutory remedy. (Paras 1-5) B) Banking Law - SARFAESI Act - Possession Notice - Alternative Remedy - Section 13(4) and Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - The petitioners, who were borrowers/guarantors, sought to quash the possession notice issued under Section 13(4) of the SARFAESI Act. The court observed that the petitioners had not discharged their liability and that the proper forum to challenge the notice is the DRT under Section 17. The court dismissed the petition, upholding the possession notice. (Paras 1-5)
Issue of Consideration
Whether the High Court under Article 226 of the Constitution can entertain a writ petition challenging a possession notice issued under the SARFAESI Act, 2002, when an alternative statutory remedy under Section 17 of the Act is available.
Final Decision
The High Court dismissed the writ petition, holding that the petitioners have an efficacious alternative remedy under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal. The court declined to interfere with the possession notice and directed the petitioners to approach the DRT if they wish to challenge the notice.
Law Points
- Writ jurisdiction under Article 226 cannot be invoked when alternative statutory remedy under Section 17 of SARFAESI Act is available
- Debtor must approach DRT for challenging possession notice
- No interference with possession notice when debtor fails to discharge liability
