High Court Upholds Bank Notices under SERFAESI Act, Emphasizes Statutory Remedies

The High Court dismissed the petition challenging notices issued by a bank under the SERFAESI Act, emphasizing the availability of a statutory remedy under Section 17 of the Act for aggrieved parties. The court highlighted the importance of exhausting statutory remedies before seeking relief through writ petitions, directing the petitioners to pursue their contentions before the Debt Recovery Tribunal. The judgment underscored the necessity of diligently following the statutory appeal process in commercial matters, refraining from entertaining petitions when alternative recourse is available.

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Issues:
1. Challenge to notices issued by respondent Bank under SERFAESI Act, 2002
2. Claim for release of working capital by petitioners
3. Availability of alternative statutory remedy under Section 17 of the Act

Analysis:
1. The petitioners sought to set aside multiple notices issued by the respondent Bank under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SERFAESI Act). The notices demanded payment of specific sums along with interest, threatening property sale upon failure. The petitioners, including borrowers, guarantors, and sureties, contested the actions taken by the bank under the Act, raising concerns about promises made by the bank regarding working capital release.

2. The petitioners contended that the bank had assured them of sanctioning term loans and providing working capital, based on which they invested significant amounts. However, the bank initiated proceedings under the SERFAESI Act due to repayment defaults. The court noted the loan facilities extended to the petitioners for property purchases and the subsequent defaults leading to the initiation of measures under the Act, including the potential sale of mortgaged properties.

3. The court emphasized the availability of a statutory remedy under Section 17 of the Act, allowing aggrieved persons to appeal measures taken by secured creditors before the Debt Recovery Tribunal. Citing relevant legal precedents, the court highlighted the importance of exhausting statutory remedies before seeking relief through writ petitions. The judgment underscored the need to adhere to the statutory appeal process for matters involving recovery of dues, urging caution and restraint in entertaining petitions under Article 226 of the Constitution.

4. Ultimately, the court dismissed the petition on the grounds of the availability of an alternative statutory remedy, clarifying that it had not delved into the merits of the case. The petitioners were directed to raise their contentions and prayers before the Tribunal through the appeal process. The judgment reinforced the principle that in commercial matters like these, the statutory remedy provided by the Act should be pursued diligently, and the High Court would refrain from entertaining petitions when such an alternative recourse exists.

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