High Court upholds dismissal of petition challenging bank actions under SARFAESI Act, emphasizes exhaustion of statutory remedies before seeking relief.

The High Court dismissed the petition challenging the State Bank of India's actions under the SARFAESI Act, directing the petitioners to pursue the alternative statutory remedy under Section 17. The Court emphasized the importance of exhausting statutory remedies before seeking relief under Article 226, citing non-compliance with restructuring conditions as grounds for the Bank's actions. The petitioners' arguments regarding compliance and justification for relief were not upheld, with the Court maintaining the dismissal and urging parties to address their contentions before the Debts Recovery Tribunal.

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Issues:
1. Challenge to the action of the respondent State Bank of India under SARFAESI Act.
2. Declaration of the account as Non-Performing Asset (NPA).
3. Petitioners seeking relief under Article 226 of the Constitution.
4. Respondent Bank's contention regarding non-compliance with restructuring conditions.
5. Availability of alternative statutory remedy under Section 17 of the SARFAESI Act.
6. High Court's dismissal of the petition and direction for availing remedy under Section 17.

Analysis:

Issue 1: Challenge to Bank's Action under SARFAESI Act
The petitioners challenged the action of the respondent Bank under the SARFAESI Act, primarily contesting the issuance of notices under Section 13(2) and the declaration of the account as NPA. The petitioners argued that the Bank's actions were not justified as they had complied with the restructuring terms and had not defaulted post-restructuring.

Issue 2: Declaration of Account as NPA
The respondent Bank contended that the petitioner company failed to comply with various financial requirements post-restructuring, leading to irregularities in the account. The Bank highlighted instances of non-cooperation, lack of financial submissions, and breach of trust regarding collateral security, justifying the declaration of the account as NPA.

Issue 3: Relief under Article 226
The petitioners sought relief under Article 226 of the Constitution to set aside the Bank's actions. However, the High Court emphasized the availability of an alternative statutory remedy under Section 17 of the SARFAESI Act, directing the petitioners to pursue the remedy before the Debts Recovery Tribunal.

Issue 4: Compliance with Restructuring Conditions
The respondent Bank argued that the petitioners failed to comply with the conditions set during the restructuring, such as the infusion of funds and submission of financial statements. Non-compliance with these conditions was cited as a reason for the Bank's actions under the SARFAESI Act.

Issue 5: Alternative Statutory Remedy
The High Court dismissed the petition, emphasizing the importance of exhausting the statutory remedy under Section 17 of the SARFAESI Act before approaching the Court under Article 226. The Court cited various precedents and highlighted the need to adhere to the rule of alternative remedy in commercial disputes.

Issue 6: Dismissal of the Petition
Ultimately, the High Court dismissed the petition, directing the petitioners to avail themselves of the remedy under Section 17 of the SARFAESI Act. The Court clarified that it did not delve into the merits of the case and maintained the dismissal, urging parties to raise contentions before the Tribunal.

This detailed analysis showcases the legal intricacies involved in the judgment, highlighting the key arguments presented by both parties and the Court's decision based on the statutory provisions and precedents cited.

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