Case Note & Summary
The judgment pertains to two writ petitions filed before the Bombay High Court challenging an order dated 11th September 2015 passed by the Chief Metropolitan Magistrate under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The petitioners in Writ Petition No. 3071 of 2015 are Fine Platinum (India) Limited and Rajesh L. Kothari, and the petitioners in Writ Petition (L) No. 3096 of 2015 are Premkumar L. Kothari and Fine Jewellery (India) Limited. The respondents include Indusland Bank Limited, Bank of India, and other entities. The dispute arises from loan transactions where the petitioners had availed credit facilities from the banks, and upon default, the banks initiated recovery proceedings under the SARFAESI Act. The banks issued possession notices under Section 13(4) of the SARFAESI Act, which were challenged by the petitioners before the High Court under Article 226 of the Constitution. The primary legal issue was whether the writ petitions were maintainable given the availability of an alternative statutory remedy under Section 17 of the SARFAESI Act, which allows any person aggrieved by measures taken under Section 13(4) to file an application before the Debts Recovery Tribunal (DRT). The petitioners argued that the possession notice was illegal and that the writ jurisdiction should be invoked due to the urgency and the alleged violation of principles of natural justice. The respondents contended that the petitioners should first exhaust the remedy under Section 17 before approaching the High Court. The court, after hearing the submissions, held that the SARFAESI Act provides a complete mechanism for challenging the measures taken by the secured creditor, and the remedy under Section 17 is an effective alternative remedy. The court observed that the High Court should not entertain writ petitions when an alternative statutory remedy is available, unless exceptional circumstances are shown. The court found no such exceptional circumstances in the present case. Consequently, the court dismissed both writ petitions as not maintainable, granting the petitioners liberty to approach the Debts Recovery Tribunal under Section 17 of the SARFAESI Act within a specified period. The court also directed that if the petitioners approach the DRT, the tribunal shall consider the applications without being influenced by the dismissal of the writ petitions and shall decide them on their own merits.
Headnote
A) Constitutional Law - Writ Jurisdiction - Alternative Remedy - Availability of Statutory Remedy under Section 17 of SARFAESI Act - The court held that when an effective alternative remedy is available under Section 17 of the SARFAESI Act, the High Court should not entertain a writ petition under Article 226 of the Constitution of India. The petitioners were directed to avail the remedy before the Debts Recovery Tribunal. (Paras 10-15) B) Banking Law - SARFAESI Act - Possession Notice - Challenge by Guarantor and Borrower - The court held that both the borrower and the guarantor are entitled to file an application under Section 17(1) of the SARFAESI Act before the Debts Recovery Tribunal to challenge the possession notice. The writ petitions were dismissed as not maintainable. (Paras 16-20)
Issue of Consideration
Whether the writ petitions challenging the possession notice issued under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) are maintainable when an alternative statutory remedy under Section 17 of the SARFAESI Act is available.
Final Decision
The court dismissed both writ petitions as not maintainable, holding that the petitioners have an effective alternative remedy under Section 17 of the SARFAESI Act. The court granted liberty to the petitioners to approach the Debts Recovery Tribunal under Section 17 within a specified period, and directed the tribunal to decide the applications on their own merits without being influenced by the dismissal of the writ petitions.
Law Points
- Alternative remedy
- SARFAESI Act
- Section 17
- Writ jurisdiction
- Article 226
- Possession notice
- Guarantor
- Borrower
- Maintainability
