Case Note & Summary
The appellants, a partnership firm and its partners, were engaged in the manufacture and trade of Sponge Iron. They had obtained financial assistance from Corporation Bank (respondent No.4). The bank initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and obtained an order from the District Magistrate under Section 14 of the Act for taking possession of the secured asset. Aggrieved by this order, the appellants filed a writ petition before the High Court, which was dismissed by the learned Single Judge on 29th May 2020 on the ground that the appellants had an alternative remedy under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal. The appellants then filed the present writ appeal. The Division Bench, after hearing the parties, upheld the decision of the Single Judge. The court noted that the SARFAESI Act provides a complete mechanism for challenging any action taken by the bank, including an order under Section 14, by filing an application under Section 17 before the Debts Recovery Tribunal. The writ petition was therefore not maintainable. The appeal was dismissed, but the court granted the appellants liberty to approach the Debts Recovery Tribunal within a specified period, and directed that if such an application is filed, the Tribunal shall consider it without being influenced by the dismissal of the writ petition and the appeal.
Headnote
A) SARFAESI Act - Section 14 - District Magistrate's Order - Maintainability of Writ - The appellants challenged the order of the District Magistrate under Section 14 of the SARFAESI Act, 2002, which directed the bank to take possession of the secured asset. The learned Single Judge dismissed the writ petition on the ground of alternative remedy under Section 17 of the Act. The Division Bench upheld the dismissal, holding that the writ petition was not maintainable as the appellants had an efficacious alternative remedy before the Debts Recovery Tribunal under Section 17 of the SARFAESI Act, 2002. (Paras 1-4)
Issue of Consideration
Whether the writ petition challenging the order of the District Magistrate under Section 14 of the SARFAESI Act, 2002 was maintainable despite the availability of an alternative remedy under Section 17 of the Act.
Final Decision
The writ appeal is dismissed. The order of the learned Single Judge dated 29.05.2020 dismissing W.P.No.51184/2017 is upheld. The appellants are at liberty to approach the Debts Recovery Tribunal under Section 17 of the SARFAESI Act, 2002 within a period of four weeks from the date of receipt of a copy of this order. If such an application is filed, the Tribunal shall consider it without being influenced by the dismissal of the writ petition and this appeal.
Law Points
- SARFAESI Act
- 2002
- Section 14
- Writ jurisdiction
- Alternative remedy
- Possession
- Bank's right
