Prospective SARFAESI notification and lack of jurisdiction bar enforcement on earlier loan transactions.

Writ jurisdiction remains available where action under the SARFAESI framework is wholly without jurisdiction, notwithstanding the existence of a statutory remedy. The notice under Section 13(4) is a necessary precursor to measures under that provision, and omission of such notice would make the appeal under Section 17 illusory. A lender can invoke Section 13 only if it was a financial institution and secured creditor on the date of the transaction; a later notification conferring that status operates prospectively. On that basis, loan agreements entered into before the notification could not support enforcement action under the Act.

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Issues: Whether the writ petition was maintainable despite the statutory remedy, and whether the secured creditor could invoke the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 in respect of loan transactions entered into before it became a financial institution under the Act.

Analysis: The challenge related to dispossession of the petitioner on the basis of notices issued under the Act. The Court held that a notice under Section 13(4) is necessary before measures under that provision are taken, and that the right of appeal under Section 17 would be rendered illusory if such notice is omitted. The Court further held that the lender became a financial institution only from the date of the Central Government notification and that the notification operated prospectively. Since the loan agreements preceded the notification, the lender was neither a financial institution nor a secured creditor on the relevant dates, and no security interest could have been created in its favour for invoking Section 13. The Court also held that the proceeding was without jurisdiction, bringing the case within the exception to the rule of alternative remedy.

Conclusion: The writ petition was maintainable, and the action taken under the Act against the petitioner was without jurisdiction.

Ratio Decidendi: A person can invoke Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 only if, on the date of the transaction, it is a financial institution and secured creditor under the Act; a later notification conferring that status operates prospectively and cannot validate action in respect of earlier loan transactions. A writ petition is maintainable where the impugned action is wholly without jurisdiction.

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