SARFAESI representation safeguards: writ jurisdiction remains open, and failure to communicate reasons can vitiate enforcement action.

Availability of the statutory remedy under Section 17 of the SARFAESI Act does not create an absolute bar to writ jurisdiction where the challenge alleges breach of statutory safeguards and natural justice. A secured creditor must consider a borrower's representation made in response to a demand notice under Section 13(2) and, if it is not accepted, communicate written reasons within the prescribed time before taking measures under Section 13(4). Failure to give such written response vitiates the enforcement action, as the safeguard under Section 13(3A) is mandatory. The impugned notice was therefore invalid, and the matter was remitted for a fresh decision and communication to the borrower.

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Issues: (i) whether the writ petition was not maintainable on the ground of availability of the statutory remedy under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (ii) whether the notice under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 was vitiated for non-compliance with Section 13(3A) and for failure to communicate reasons on the petitioners' representation.

Issue (i): whether the writ petition was not maintainable on the ground of availability of the statutory remedy under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

Analysis: The availability of the remedy under Section 17 does not create an absolute bar to the exercise of writ jurisdiction. The challenge raised included non-compliance with the statutory safeguards and violation of natural justice, and the petition had been admitted for hearing. In such circumstances, the existence of an alternative remedy did not justify throwing out the writ petition at the threshold.

Conclusion: The objection to maintainability was rejected and the petition was held to be entertainable.

Issue (ii): whether the notice under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 was vitiated for non-compliance with Section 13(3A) and for failure to communicate reasons on the petitioners' representation

Analysis: The petitioners had submitted a representation in response to the demand notice and had made part-payments while seeking time to liquidate the dues. Section 13(3A) required the secured creditor to consider the representation or objection and, if it was not accepted, to communicate reasons within the prescribed time. No written rejection or written communication of reasons was issued. The statutory mandate was treated as mandatory and an integral safeguard before coercive action under Section 13(4).

Conclusion: The impugned notice dated 26.4.2007 was invalid and was set aside for breach of Section 13(3A).

Final Conclusion: The petition succeeded in part, the threshold objection to writ maintainability failed, but the subsequent enforcement notice was quashed for want of the required statutory response to the petitioners' representation, with a direction to the Bank to take a fresh decision thereon and communicate it.

Ratio Decidendi: Where a borrower or surety makes a representation in response to a demand under Section 13(2), the secured creditor must apply its mind and communicate written reasons if the representation is not accepted before resorting to measures under Section 13(4); failure to do so vitiates the enforcement action, and the existence of an alternative remedy under Section 17 does not by itself oust writ jurisdiction in such a case.

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