2016 (2) TMI 816 - HC - Indian Laws

Court emphasizes exhaustion of statutory remedies before approaching for SARFAESI Act challenge.

The High Court dismissed the petition challenging demand notices under the SARFAESI Act for recovery of dues, emphasizing the need to exhaust statutory ... Alternative statutory remedy of preferring appeal before the Tribunal - Held that:- The petitioners have got an alternative statutory remedy of preferring appeal before the Tribunal. The Tribunal has powers to pass interim as well as final order. It is therefore open to the petitioners to challenge notice dated 02.02.2016 by preferring appeal before the Tribunal. This Court is therefore not inclined to entertain this petition in exercise of writ jurisdiction. For the above reasons, this petition is not entertained. Without expressing any opinion on the merits of the case of the petitioners, the petitioners are relegated to pursue the alternative remedy before the Debts Recovery Tribunal. Issues:Challenge to demand notices under SARFAESI Act for recovery of dues; Availability of alternative remedy under Section 17 for appeal before Debts Recovery Tribunal.Analysis:The petitioners challenged demand notices issued by the respondent Bank under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 for the recovery of dues amounting to &8377; 2,04,65,500/- with interest. The notices were issued under Section 13(2) and 13(4) of the Act. The petitioners claimed to have faced financial difficulties, made partial payments, and requested the Bank for leniency. However, the Bank proceeded with the recovery action by issuing a subsequent notice. The petitioners contended that they had a right to appeal under Section 17 of the Act before the Debts Recovery Tribunal, citing relevant Supreme Court precedents like Authorised Officer, Indian Overseas Bank vs. Ashok Saw Mill and Kanaiyalal Lalchand Sachdev vs. State of Maharashtra.The High Court referred to the Supreme Court's observations in United Bank of India vs. Satyawati Tondon and Others, emphasizing that statutory remedies under the SARFAESI Act must be exhausted before approaching the court under Article 226 of the Constitution. The Court highlighted the comprehensive recovery procedures and quasi-judicial bodies established under the Act for redressal of grievances. It reiterated that the High Court should insist on exhausting statutory remedies before entertaining petitions challenging recovery actions by banks and financial institutions.Given the availability of an alternative statutory remedy of appeal before the Tribunal, the High Court declined to entertain the petition under its writ jurisdiction. The Court noted that the petitioners had the option to challenge the impugned notice before the Debts Recovery Tribunal, which has the authority to issue interim and final orders. The petitioners were directed to pursue their case before the Tribunal, emphasizing that the High Court was not expressing any opinion on the merits of the petitioners' case. Consequently, the petition was dismissed, and the petitioners were advised to avail themselves of the statutory remedy provided under the Act.