Case Note & Summary
The petitioners, Kishan Chhelaram Manik and Manik Engineering Private Limited, filed a writ petition under Article 226 of the Constitution before the Bombay High Court challenging the SARFAESI proceedings initiated by the State Bank of India (respondent no.1). The petitioners were guarantors and a corporate debtor in respect of loans taken by respondent no.2, Manik Metals and Trading Company Private Limited. The bank had issued a notice under Section 13(2) of the SARFAESI Act and subsequently took possession of the secured assets under Section 13(4). The petitioners contended that the bank had not complied with the requirements of the Act and that the notice was defective. The bank argued that the petitioners had an alternative statutory remedy under Section 17 of the SARFAESI Act by filing an application before the Debt Recovery Tribunal (DRT). The court examined the scope of Section 17 and held that it provides a comprehensive remedy to any person aggrieved by the measures taken under Section 13(4), including guarantors. The court relied on the Supreme Court's decision in Mardia Chemicals Ltd. v. Union of India, which held that the remedy under Section 17 is an effective alternative remedy. The court also noted that the DRT has the jurisdiction to decide all issues raised by the petitioners. Consequently, the court dismissed the writ petition as not maintainable, leaving the petitioners free to pursue their remedy under Section 17 before the DRT. The court did not express any opinion on the merits of the case.
Headnote
A) SARFAESI Act - Alternative Remedy - Maintainability of Writ Petition - Section 17 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Petitioners challenged the SARFAESI proceedings initiated by the bank. The court held that the remedy under Section 17 is available to any person aggrieved, including guarantors, and that the Debt Recovery Tribunal has jurisdiction to entertain such applications. The writ petition was dismissed as not maintainable in view of the alternative remedy. (Paras 1-24) B) SARFAESI Act - Guarantor - Locus Standi - Section 17 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - The court held that a guarantor is a 'person aggrieved' under Section 17 and can file an application before the DRT challenging the measures taken under Section 13(4). The court relied on the judgment of the Supreme Court in Mardia Chemicals Ltd. v. Union of India. (Paras 10-15) C) SARFAESI Act - Jurisdiction of DRT - Section 17 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - The court held that the DRT has the jurisdiction to decide all issues raised by the petitioners, including the validity of the notice under Section 13(2) and the measures taken under Section 13(4). The writ petition was dismissed. (Paras 16-20)
Issue of Consideration
Whether the petitioners, who are guarantors and a corporate debtor, can maintain a writ petition under Article 226 of the Constitution challenging the SARFAESI proceedings when an alternative statutory remedy under Section 17 of the SARFAESI Act is available.
Final Decision
The writ petition is dismissed as not maintainable in view of the alternative remedy available under Section 17 of the SARFAESI Act. The petitioners are at liberty to file an application under Section 17 before the Debt Recovery Tribunal.
Law Points
- SARFAESI Act
- Section 17
- remedy available to any person aggrieved
- guarantor can file application
- DRT jurisdiction
- alternative remedy
- writ petition not maintainable
