Case Note & Summary
The petitioner, Asset Reconstruction Company (India) Limited, acting as trustee of Arcil-SBPS-024-I Trust, filed a writ petition under Article 226 of the Constitution of India challenging an order dated 19 August 2016 passed by the Debt Recovery Tribunal (DRT) in an application under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The DRT had dismissed the petitioner's application seeking to set aside an auction sale of secured assets. The respondents were M/s. Alpha & Omega Diagnostics (India) Ltd. and its guarantors. The petitioner had taken possession of the secured assets under Section 13(4) of the SARFAESI Act and subsequently issued a sale notice. The auction was conducted and the sale was confirmed in favor of a third party. The petitioner then filed an application before the DRT under Section 17 of the SARFAESI Act to set aside the sale, which was dismissed by the DRT. The petitioner challenged this order in the writ petition. The respondents argued that the writ petition was not maintainable as the petitioner had an alternative remedy of appeal under Section 18 of the SARFAESI Act. The court considered the submissions and held that the DRT had jurisdiction to entertain the application under Section 17 even after the recovery certificate was issued. However, the court found that the DRT's order was a reasoned order and the petitioner failed to show any error of law or jurisdiction. The court also noted that the petitioner had an alternative remedy of appeal under Section 18 of the SARFAESI Act, which was an efficacious remedy. Therefore, the court dismissed the writ petition, holding that it was not inclined to interfere with the DRT's order in exercise of its writ jurisdiction. The court directed the petitioner to avail the alternative remedy of appeal if so advised.
Headnote
A) SARFAESI Act - Section 17 Application - Jurisdiction of DRT - The DRT has jurisdiction to entertain an application under Section 17 of the SARFAESI Act even after a recovery certificate is issued, as the remedy under Section 17 is independent of the recovery proceedings. The court held that the DRT's order refusing to set aside the auction sale was not without jurisdiction. (Paras 1-10) B) SARFAESI Act - Alternative Remedy - Writ Jurisdiction - The petitioner had an alternative remedy of appeal under Section 18 of the SARFAESI Act against the DRT order. The court held that the writ petition was not maintainable as the petitioner failed to exhaust the statutory remedy. (Paras 11-15) C) SARFAESI Act - Auction Sale - Setting Aside - The DRT refused to set aside the auction sale on merits, finding no irregularity or fraud. The court held that the DRT's order was a reasoned order and did not warrant interference in writ jurisdiction. (Paras 16-20)
Issue of Consideration
Whether the Debt Recovery Tribunal (DRT) had jurisdiction to entertain an application under Section 17 of the SARFAESI Act after the recovery certificate was issued and whether the DRT's order refusing to set aside the auction sale was valid.
Final Decision
The writ petition was dismissed. The court held that the DRT had jurisdiction to entertain the application under Section 17 of the SARFAESI Act and that the petitioner had an alternative remedy of appeal under Section 18. The court declined to interfere with the DRT's order.
Law Points
- SARFAESI Act
- Section 13(4) possession
- Section 17 DRT jurisdiction
- Section 18 appeal
- alternative remedy
- writ jurisdiction
- auction sale
- set aside sale
- limitation
- recovery certificate
