2017 (1) TMI 123 - HC - Indian Laws

Court dismisses challenge to bank's recovery order under Securitization Act. Exhaust statutory remedies.

COMBAY SEZ HOTELS PVT LTD Versus SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI) AND 1

The court dismissed the petition challenging the District Magistrate's order granting the bank's application for recovery under the Securitization and ... Maintainability of appeal - alternative remedy already availed of by the petitioner - Held that:- In the present case, all the grounds urged were in the realm of legal contentions and no jurisdictional error could be pointed out which would persuade the court to entertain the petition. There is no gainsaying that order of the District Magistrate under section 14 is a stage post 13(4), at which stage remedy of appeal under section- 17 is available. In this case, it is already availed of.It is trite that in the matters involving commercial disputes, the rule of availing alternative statutory remedy has to be adhered to steadfast. It may not be out of place to mention while parting with that during the pendency of section 14 proceedings before the District Magistrate, the present petitioner had moved Special Civil Application on the ground that all the conditions required under section 14(2) were not complied with. The said petition was dismissed with costs. Also is an aspect staring on the face of the record that the petition filed in the month of March, 2015 was not pursued and was not heard for admission. Subsequently, civil applications were filed raising urgency that the mortgaged properties are to be auctioned. For the aforesaid reasons, when the petition itself is not entertained by this court on the aforesaid ground, no further prayers could be entertained. The petition is dismissed only on the ground of alternative remedy already availed of by the petitioner. Issues:Recovery of a substantial amount by a bank under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Challenge to the order of the District Magistrate under section 14 of the Act. Jurisdictional error in the order of the District Magistrate. Petitioner's approach to Debt Recovery Tribunal and invoking writ jurisdiction.Analysis:The respondent bank sought recovery of over 13 crores through proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Notices under sections 13(2) and 13(4) were issued, followed by an application under section 14 before the District Magistrate for physical possession due to non-compliance by the petitioner company. The District Magistrate's order granting the bank's application under section 14 was challenged in the writ petition filed in March 2016. Notably, the petitioner had already approached the Debt Recovery Tribunal during the symbolic possession stage under section 13(4), with the application pending at the time of the impugned order.Various contentions were raised challenging the District Magistrate's order, including the bank's right to proceed against a company in a Special Economic Zone and issues related to valuation and lease-hold rights. The court emphasized that these contentions, including lease-hold rights, could be raised before the Debt Recovery Tribunal, which provides an efficacious alternative statutory remedy. Referring to relevant case law, the court highlighted the importance of exhausting statutory remedies before seeking relief under Article 226 of the Constitution.The court stressed that commercial disputes require adherence to alternative statutory remedies and noted the petitioner's attempt to use writ jurisdiction to delay the bank's recovery actions. The court dismissed the petition on the grounds of the alternative remedy already availed by the petitioner, without delving into the merits of the case. The parties were directed to pursue their contentions before the Tribunal, with the petitioner encouraged to request expedited hearing of the appeal. The petition was disposed of accordingly, maintaining the opportunity for both parties to present their arguments before the Tribunal.