High Court upholds District Magistrate's order under SARFAESI Act, stresses appeal remedy & statutory exhaustion.

The High Court dismissed the petition challenging the District Magistrate's order under Section 14 of the SARFAESI Act. The Court emphasized the availability of an appeal remedy under Section 17 of the Act post-Section 13(4), citing relevant Supreme Court decisions. It highlighted the importance of exhausting statutory remedies before resorting to writ jurisdiction under Article 226. The Court directed the petitioners to pursue the appeal remedy before the Debt Recovery Tribunal, refraining from delving into the case's merits.

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Issues:
Challenge to order under Section 14 of SARFAESI Act by District Magistrate.

Analysis:
The petitioners challenged the order passed by the District Magistrate under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The bank had granted a credit facility to the petitioners, who defaulted in payment, leading to the bank invoking provisions of the Act. The District Magistrate ordered police assistance for the bank to take possession of the secured assets. The petitioners argued that the order was contrary to Supreme Court judgments in Harshad Govardhan Sondagar v/s International Assets Reconstruction Company Limited and Others, J. Rajiv Subramaniyan and Another vs. Pandiyas and Others, and Mathew Varghese vs. M. Amritha Kumar and Others.

The High Court noted that the action taken by the bank had reached the stage of Section 14, where police assistance was requested for taking possession of the assets. Referring to the Supreme Court decision in Authorised Officer, Indian Overseas Bank Vs Ashok Saw Mill, the Court held that the petitioner had the right to appeal under Section 17 of the Act. The Court emphasized that the Act provides an efficacious remedy for aggrieved parties at the stage post-Section 13(4), as seen in the observations made in Kanaiyalal Lalchand Sachdev Vs State of Maharashtra.

Furthermore, the Supreme Court's caution in United Bank of India V/s Satyawati Tondon and Others highlighted the importance of exhausting remedies under Section 17 of the Act before approaching the High Court under Article 226. The Court referred to a division bench decision in Issan Overseas Limited V/s Union of India Ministry of Finance, emphasizing the availability of an alternative remedy through appeal under Section 17. The Court also cited Analkumar Rajkishore Mishra & ors. Vs. Dena Bank, stressing the maintainability of appeals under Section 17 against measures taken under Section 13(4) of the Act.

In conclusion, the Court dismissed the petition, directing the petitioners to avail the remedy of appeal before the Debt Recovery Tribunal under Section 17 of the Act. The Court clarified that it had not delved into the merits of the case but focused on the availability of the alternative remedy. The decision underscored the principle of exhausting alternative remedies before seeking relief through writ jurisdiction under Article 226 of the Constitution.

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