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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether the writ court could interfere with and restrain recovery proceedings initiated under the SARFAESI Act. (ii) Whether the writ court could enforce the Apex Committee's rehabilitation decision and direct implementation of the loan and corpus-fund package as binding on all concerned.
Issue (i): Whether the writ court could interfere with and restrain recovery proceedings initiated under the SARFAESI Act.
Analysis: The proceedings under the SARFAESI Act had already been initiated and were pending before the competent statutory forum. The writ court proceeded on the assumption that the rehabilitation arrangement had been accepted by all concerned, but the materials showed that the secured creditor had not consented to the package. In these circumstances, the writ court ought not to have interdicted the statutory recovery process or deprived the secured creditor of its remedy under the special statute.
Conclusion: The interference with the SARFAESI proceedings was unwarranted and was set aside.
Issue (ii): Whether the writ court could enforce the Apex Committee's rehabilitation decision and direct implementation of the loan and corpus-fund package as binding on all concerned.
Analysis: The decision of the Apex Committee dated 28.10.2014 was not shown to have been accepted by all affected parties. The secured creditor's objections were not properly considered, and one bank was not represented in the meeting. The writ court treated the committee decision as binding without examining these objections or the legal effect of the rehabilitation scheme vis-a -vis the pending SARFAESI proceedings. The proper course was reconsideration of the matter by the Apex Committee after hearing all concerned.
Conclusion: The directions enforcing the rehabilitation decision against the bank were quashed and the matter was remanded for fresh consideration.
Final Conclusion: The appeals succeeded, the writ court's mandamus was set aside, the secured creditor was left free to pursue statutory recovery, and the rehabilitation issue was returned for reconsideration by the Apex Committee after hearing all stakeholders.
Ratio Decidendi: A writ court should not compel implementation of a rehabilitation package or restrain SARFAESI recovery proceedings unless the affected secured creditors have consented or their objections have been lawfully determined, especially where a special statutory remedy is already in motion.
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