Case Note & Summary
The petitioners, M/s Utkarsh Cement Sales Pvt. Ltd. and its directors/guarantors, filed two writ petitions before the Bombay High Court (Aurangabad Bench) challenging the auction sale of their secured assets by the respondent, Omprakash Deodha People's Cooperative Bank Ltd. The bank had initiated recovery proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) for default in repayment of a loan taken by a company for which the petitioners stood as personal guarantors. The bank issued a notice under Section 13(2) of the SARFAESI Act, and subsequently took possession of the secured assets under Section 13(4). The auction sale was conducted, and the sale was confirmed in favor of the auction purchaser, with a sale certificate issued. The petitioners challenged the auction sale on various grounds, including that the bank had not followed the proper procedure and that the sale was vitiated by fraud. The court, after hearing the parties, observed that the petitioners had an efficacious alternative remedy under Section 17 of the SARFAESI Act, which they had not availed. The court noted that the auction sale had already been confirmed and the sale certificate issued, and the petitioners had not paid any amount towards the loan dues. The court held that in such circumstances, the writ petitions were not maintainable and dismissed them, leaving it open to the petitioners to avail the alternative remedy under Section 17 of the SARFAESI Act or any other remedy available in law. The court also directed that the petitioners may approach the appropriate forum for any relief, and if they do so, the same shall be considered in accordance with law.
Headnote
A) Constitutional Law - Writ Jurisdiction - Alternative Remedy - Maintainability - The High Court declined to entertain writ petitions under Article 226 of the Constitution of India when an efficacious alternative remedy under Section 17 of the SARFAESI Act, 2002, was available to the petitioners. The court held that the petitioners, being personal guarantors, could not bypass the statutory remedy and approach the writ court directly, especially after the auction sale had been confirmed and the sale certificate issued. (Paras 1-10) B) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 13(4) - Auction Sale - Confirmation - The court observed that the auction sale of the secured assets had already been confirmed and the sale certificate issued in favor of the auction purchaser. The petitioners, who were personal guarantors, had not paid any amount towards the loan dues. The court held that in such circumstances, the writ petitions were not maintainable and the petitioners should have availed the remedy under Section 17 of the SARFAESI Act. (Paras 1-10) C) Cooperative Societies Act, 1960 - Section 101 - Recovery of Dues - The respondent bank, a cooperative bank, had initiated recovery proceedings under the SARFAESI Act, 2002, against the petitioners who were personal guarantors for a loan taken by a company. The court noted that the bank had followed the procedure under the SARFAESI Act and the auction sale had been confirmed. The court dismissed the writ petitions, leaving it open to the petitioners to avail alternative remedies. (Paras 1-10)
Issue of Consideration
Whether the writ petitions challenging the auction sale of secured assets under the SARFAESI Act, 2002, are maintainable when the petitioners have an alternative remedy under Section 17 of the Act and have not paid the dues.
Final Decision
The Bombay High Court dismissed both writ petitions, holding that the petitioners had an alternative remedy under Section 17 of the SARFAESI Act, 2002, which they had not exhausted. The court observed that the auction sale had been confirmed and the sale certificate issued, and the petitioners had not paid any amount. The court left it open to the petitioners to avail the alternative remedy or any other remedy available in law.
Law Points
- SARFAESI Act
- 2002
- Section 13(4)
- Section 17
- Section 34
- Cooperative Societies Act
- 1960
- Section 101
- alternative remedy
- writ jurisdiction
- personal guarantor
- auction sale
- confirmation of sale
- payment of dues
