Case Note & Summary
The appeal arises from an order of the Division Bench of the High Court for the State of Telangana at Hyderabad, which set aside the DRT's order dismissing the borrower's application for restoration of his securitization application under Section 17 of the SARFAESI Act. The borrower had availed a loan from UCO Bank, mortgaging four properties. Upon default, the bank issued an auction sale notice on 2nd September 2017. The borrower filed S.A. No. 1476 of 2017 before DRT challenging the notice. The auction was held on 14th December 2017, and the appellant, PHR Invent Educational Society, emerged as the highest bidder for Rs.5,72,22,200/-, depositing 25% immediately. On the same day, DRT passed an interim order refusing to stay the sale but directing the bank not to confirm the sale subject to the borrower depositing 30% of the outstanding dues in two installments within one and two weeks, failing which the stay would vacate automatically. The borrower did not comply. The appellant deposited the balance amount on 28th December 2017. The borrower proposed a One Time Settlement, which the bank rejected. On 21st September 2020, the borrower got S.A. No. 1476 of 2017 dismissed as withdrawn claiming out-of-court settlement, but the bank filed a memo denying any settlement. Thereafter, the bank confirmed the sale in favor of the appellant, issued a sale certificate on 2nd November 2020, and delivered possession. The sale certificate was registered on 11th November 2020. The borrower then filed M.A. No. 97 of 2020 for restoration of the S.A., which DRT dismissed on 2nd February 2021. The borrower filed a writ petition before the High Court, which set aside the DRT order and directed restoration of the S.A. The Supreme Court held that the High Court erred in entertaining the writ petition when an efficacious alternative remedy of statutory appeal was available under the SARFAESI Act. The Court noted that the borrower's conduct disentitled him to equitable relief, as he failed to comply with DRT's interim order, proposed an OTS that was not accepted, and got the S.A. dismissed as withdrawn on false grounds. By the time the writ petition was filed, the appellant had paid the full amount and obtained a registered sale certificate. The Supreme Court allowed the appeal, set aside the High Court's order, and restored the DRT's order dismissing the restoration application.
Headnote
A) Constitutional Law - Writ Jurisdiction - Alternative Remedy - Availability of efficacious alternative remedy under SARFAESI Act - High Court erred in entertaining writ petition under Article 226/227 when statutory appeal was available - Rule of self-restraint not absolute but must be exercised in exceptional circumstances - Held that the High Court should not have interfered when the borrower had not complied with DRT orders and the auction purchaser had already paid full amount and obtained sale certificate (Paras 6-7, 10-13). B) SARFAESI Act - Restoration of Securitization Application - Conduct of Borrower - Borrower failed to deposit 30% of outstanding dues as directed by DRT, proposed OTS which was not accepted, and later got S.A. dismissed as withdrawn claiming settlement - After full payment by auction purchaser and issuance of sale certificate, restoration of S.A. was improper - Held that the conduct of the borrower disentitled him to equitable relief (Paras 10-13).
Issue of Consideration
Whether the High Court was justified in entertaining a writ petition under Article 226/227 of the Constitution of India when an efficacious alternative remedy of statutory appeal was available under the SARFAESI Act, and whether the conduct of the borrower disentitled him to equitable relief.
Final Decision
The Supreme Court allowed the appeal, set aside the impugned order of the High Court, and restored the order of DRT dated 2nd February 2021 dismissing M.A. No. 97 of 2020. The restoration of S.A. No. 1476 of 2017 was set aside.
