SARFAESI remedy and BIFR abatement limit writ relief against secured creditor recovery measures.

Writ petitions challenging SARFAESI notices were held to be not maintainable where the Act provides an effective statutory remedy under section 17 before the Debts Recovery Tribunal, and writ jurisdiction under Article 226 should be used sparingly in recovery matters. The article also states that section 22 of the Sick Industrial Companies (Special Provisions) Act did not bar action under sections 13(2) and 13(4) of SARFAESI, because the later special enactment prevails and a pending BIFR reference abates automatically once secured creditors representing not less than three-fourth in value take measures under section 13(4). It further notes that waiver requires clear intentional relinquishment, which was not shown on the facts.

---

---

Issues: (i) whether writ petitions challenging the notice under section 13(2) of the SARFAESI Act were maintainable in view of the statutory remedy under section 17; (ii) whether section 22 of the Sick Industrial Companies (Special Provisions) Act barred action under sections 13(2) and 13(4) of the SARFAESI Act and whether the pending references insulated the petitioners from SARFAESI measures; (iii) whether the respondent had waived or abandoned its right to proceed under the SARFAESI Act.

Issue (i): whether writ petitions challenging the notice under section 13(2) of the SARFAESI Act were maintainable in view of the statutory remedy under section 17.

Analysis: The remedy under the SARFAESI Act is a complete statutory mechanism for challenge to measures taken by secured creditors. Where action under section 13 is taken or threatened, an aggrieved person may approach the Debts Recovery Tribunal under section 17. In matters involving recovery by banks and financial institutions, writ jurisdiction is to be exercised with great circumspection, and the existence of an effective alternative remedy ordinarily weighs against interference under Article 226.

Conclusion: The writ petitions were not maintainable on this ground, and the petitioners were not entitled to invoke writ jurisdiction to stall SARFAESI proceedings.

Issue (ii): whether section 22 of the Sick Industrial Companies (Special Provisions) Act barred action under sections 13(2) and 13(4) of the SARFAESI Act and whether the pending references insulated the petitioners from SARFAESI measures.

Analysis: The SARFAESI Act contains an overriding provision and, by the amending provisions in section 41, inserted provisos into section 15 of the 1985 Act. The statutory scheme shows that no fresh reference can be made after acquisition of financial assets by a securitisation or reconstruction company, and where a pending reference exists, it abates once secured creditors representing not less than three-fourth in value take measures under section 13(4). Abatement follows by operation of law and does not require a separate adjudication. The respondent had asserted consent of the requisite majority of secured creditors, and the petitioners did not effectively dispute that assertion. The bar under section 22 of the 1985 Act did not prevent recourse to SARFAESI measures, and the later special enactment prevailed in this field.

Conclusion: Section 22 of the 1985 Act did not bar the impugned SARFAESI action, and the pending references did not protect the petitioners from measures under section 13(4).

Issue (iii): whether the respondent had waived or abandoned its right to proceed under the SARFAESI Act.

Analysis: Waiver requires an intentional relinquishment of a known right. The record did not show any clear communication or conduct amounting to relinquishment of the respondent's right to proceed under the SARFAESI Act. Participation in compromise discussions or initial consent in company-court proceedings did not amount to abandonment of the secured creditor's statutory remedies, especially where the respondent continued to assert its right to recover under the Act.

Conclusion: No waiver or abandonment of statutory rights was established against the respondent.

Final Conclusion: The impugned notices and threatened recovery measures were not shown to be without jurisdiction, and the petitioners were not entitled to the relief sought in any of the writ petitions.

Ratio Decidendi: In proceedings involving a sick industrial company, the SARFAESI Act prevails over inconsistent constraints under the Sick Industrial Companies (Special Provisions) Act, and a pending BIFR reference abates automatically when secured creditors representing not less than three-fourth in value take measures under section 13(4); writ jurisdiction should ordinarily not be invoked where an effective statutory remedy under the SARFAESI Act is available.

---