2022 (2) TMI 1235 - HC - Indian Laws

Writ petitions under Article 226 not maintainable against SARFAESI Act notices. Alternative statutory remedies available.

The court held that writ petitions under Article 226 of the Constitution of India are generally not maintainable against notices issued under Sections ... Maintainability of petition - availability of alternative efficacious statutory remedy or not - Validity of notices issued either under Section 13(2) of the Securitisation And Reconstructions of Financial Assets and Enforcement of Security Interest Act, 2002 or under Section 13(4) of the SARFAESI Act, 2002 - HELD THAT:- These writ petitions filed by the petitioners deserves to be dismissed for the reasons; firstly, the petitioners are having alternative efficacious statutory remedy under the SARFAESI Act, 2002; secondly, the guidelines issued by the R.B.I. can be very much looked into by the Debts Recovery Tribunal as well as by the banks while examining the reply if submitted by the petitioners against the notices served upon them and lastly in the facts and circumstances in view of the judgment passed by the Hon'ble Supreme Court in the matter of I.C.I.C.I. Bank Limited as well as the Pheonix India (both supra), the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India is not exercised. The writ petition is dismissed. Issues Involved:1. Maintainability of writ petitions under Article 226 of the Constitution of India against notices issued under Sections 13(2) and 13(4) of the SARFAESI Act, 2002.2. Alleged non-compliance with RBI guidelines by financial institutions.3. Availability of alternative statutory remedies under the SARFAESI Act, 2002.Issue-wise Detailed Analysis:1. Maintainability of Writ Petitions:The primary issue addressed in the judgment is whether writ petitions under Article 226 of the Constitution of India are maintainable against notices issued under Sections 13(2) and 13(4) of the SARFAESI Act, 2002. The court noted that the petitioners challenged the notices issued by nationalized banks/private financial institutions under these sections. The respondents raised a preliminary objection, arguing that an alternative efficacious statutory remedy is available under the SARFAESI Act, 2002. The court referred to multiple judgments, including those by the Supreme Court, which consistently held that writ petitions are generally not maintainable in such cases. Notable references include:- Punjab National Bank and Ors. Vs. Imperial Gift House and Another (2013) 14 SCC 622: The Supreme Court held that the High Court was not justified in entertaining a writ petition against a notice issued under Section 13(2) of the SARFAESI Act.- ICICI Bank Ltd. and Ors. Vs. Umakanta Mohapatra and Ors. (2019) 13 SCC 497: The Supreme Court reiterated that High Courts should not entertain matters under the SARFAESI Act and should avoid granting interim orders to NPAs.- Phoenix ARC Private Limited Vs. Vishwa Bharati Vidya Mandir and Ors., Civil Appeal Nos.257-259 of 2022: The Supreme Court held that a writ petition against a private financial institution under Article 226 is not maintainable when the borrower has remedies under the SARFAESI Act.2. Alleged Non-compliance with RBI Guidelines:The petitioners argued that the financial institutions were not following RBI guidelines, particularly regarding the moratorium. They cited several judgments to support their contention:- Transcon Skycity Pvt. Ltd. and Ors. Vs. ICICI Bank and Ors.: The Bombay High Court held that RBI circulars regarding moratorium apply to amounts due after 1st March 2020.- Subramanya Construction and Development Company Limited Vs. Union Bank of India: The Karnataka High Court discussed the impact of COVID-19 and the discretionary power of banks to grant moratorium while ensuring the continuity of viable businesses.3. Availability of Alternative Statutory Remedies:The court emphasized that the SARFAESI Act, 2002 provides a complete mechanism for addressing grievances related to actions taken by financial institutions. The respondents argued that the petitioners have the statutory remedy of appeal under the SARFAESI Act against notices issued under Sections 13(2) and 13(4). The court referred to several judgments underscoring the availability and adequacy of these remedies:- M.Sivanandam vs The Authorised Officer, State Bank of India: The Madras High Court held that a notice under Section 13(2) is merely a demand and does not provide grounds for a writ petition.- C. Bright Vs. The District Collector and Ors. (2021) 2 SCC 392: The Supreme Court highlighted that High Courts should be cautious in granting stays in matters related to the recovery of dues by financial institutions.Conclusion:The court concluded that the writ petitions filed by the petitioners were not maintainable for several reasons:- The petitioners have an alternative efficacious statutory remedy under the SARFAESI Act, 2002.- The RBI guidelines can be considered by the Debts Recovery Tribunal and the banks when examining the replies to the notices.- In light of the Supreme Court judgments, the court was not inclined to exercise its extraordinary jurisdiction under Article 226 of the Constitution of India.Hence, the writ petitions were dismissed.