Disclosure of pending litigation in SARFAESI e-auction notices is mandatory, and nondisclosure can invalidate deposit forfeiture.

A writ petition may be entertained despite an alternative statutory remedy under section 17 of the SARFAESI Act where the secured creditor is alleged to have acted contrary to the Act and Rules. Under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002, the secured creditor must disclose known encumbrances and material facts affecting the asset's title or value, including pending litigation. Suppression of such information in an e-auction notice, even on an "as is where is" basis, is inconsistent with the duty of fairness and transparency. On that reasoning, forfeiture of the purchaser's deposit was unsustainable and refund with interest was warranted.

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Issues: (i) Whether the writ petition was maintainable despite the availability of a statutory remedy under section 17 of the SARFAESI Act, 2002. (ii) Whether the secured creditor was bound to disclose the pendency of litigation in the e-auction notice and whether forfeiture of the petitioner's deposited amount was valid.

Issue (i): Whether the writ petition was maintainable despite the availability of a statutory remedy under section 17 of the SARFAESI Act, 2002.

Analysis: The availability of an alternative remedy does not bar writ jurisdiction where the action complained of is alleged to be contrary to the statutory scheme. A writ court can intervene when the secured creditor is said to have acted in violation of the Act and the Rules governing enforcement.

Conclusion: The writ petition was maintainable and the objection based on alternative remedy was rejected.

Issue (ii): Whether the secured creditor was bound to disclose the pendency of litigation in the e-auction notice and whether forfeiture of the petitioner's deposited amount was valid.

Analysis: Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 requires disclosure of encumbrances known to the secured creditor and any material fact necessary for a purchaser to judge the nature and value of the property. Pendency of litigation concerning the secured asset is an encumbrance and a material circumstance because it affects the title and value of the asset. A secured creditor enforcing security under the SARFAESI Act must act fairly, bona fide, and transparently, and cannot suppress material information while selling the property on auction terms such as "as is where is". The Bank had knowledge of the pending litigation yet omitted it from the sale notice and thereafter forfeited the petitioner's deposit on the basis of default in payment. Such conduct was held to be arbitrary and contrary to the statutory duty of disclosure.

Conclusion: The Bank was bound to disclose the pending litigation, the forfeiture was invalid, and refund of the amount with interest was warranted in favour of the petitioner.

Final Conclusion: The Bank's failure to disclose the pending litigation vitiated the auction process, and the petitioner was entitled to refund of the deposited amount with interest and costs.

Ratio Decidendi: A secured creditor conducting sale of secured assets under the SARFAESI framework must disclose known litigation affecting the asset as a material encumbrance in the sale notice, and suppression of such information renders forfeiture of the purchaser's deposit unsustainable.

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