Case Note & Summary
The petitioner, M/s Nitesh Residency Hotels Pvt. Ltd., a heavy borrower, filed a writ petition under Articles 226 and 227 of the Constitution of India before the High Court of Karnataka at Bengaluru. The petition challenged the letters dated 05.02.2021 (Annexure-F) and 07.04.2021 (Annexure-J) issued by the 3rd respondent, Yes Bank Limited, whereby all credit facilities extended to the petitioner were recalled. Additionally, the petitioner challenged the consequent SARFAESI notice at Annexure-L. The impugned actions were based on defaults committed by the petitioner, resulting in the classification of its debt as a non-performing asset (NPA). The total outstanding liability as on 16.07.2021 was Rs. 358,39,49,064/- with accrued interest. The court considered the preliminary issue of maintainability, noting that the petitioner had an efficacious alternative remedy under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) before the Debt Recovery Tribunal (DRT). The court held that the writ petition was not maintainable and dismissed it, granting liberty to the petitioner to approach the appropriate forum in accordance with law. The court also clarified that all contentions on merits were kept open for the petitioner to raise before the DRT.
Headnote
A) Constitutional Law - Maintainability of Writ Petition - Alternative Remedy - Availability of statutory remedy under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) - The petitioner, a heavy borrower, challenged the recall of credit facilities and SARFAESI notice issued by the respondent bank. The court held that the writ petition is not maintainable as the petitioner has an efficacious alternative remedy under Section 17 of the SARFAESI Act before the Debt Recovery Tribunal. The court dismissed the petition with liberty to approach the appropriate forum. (Paras 1-3) B) Banking Law - Non-Performing Asset (NPA) - Classification - Recall of Credit Facilities - The petitioner's debt was classified as NPA due to defaults, leading to recall of credit facilities and issuance of SARFAESI notice. The court did not adjudicate on the merits of the classification due to the availability of alternative remedy. (Paras 1-2)
Issue of Consideration
Whether a writ petition under Articles 226 and 227 of the Constitution is maintainable against a recall of credit facilities and SARFAESI notice when an alternative statutory remedy is available under the SARFAESI Act.
Final Decision
The writ petition is dismissed as not maintainable. The petitioner is at liberty to approach the appropriate forum in accordance with law. All contentions on merits are kept open.
Law Points
- Alternative remedy
- Maintainability of writ petition
- SARFAESI Act
- Debt recovery
- NPA classification
