High Court dismisses petition challenging possession notice under SARFAESI Act, emphasizes alternative remedy

The High Court dismissed the petition challenging a possession notice under Section 13(4) of the SARFAESI Act, 2002, emphasizing the availability of an alternative remedy under Section 17(1) before the Debts Recovery Tribunal. The court held that approaching the High Court directly without exhausting statutory remedies is impermissible, citing precedents. It highlighted the borrower's opportunity to challenge the secured creditor's actions before the DRT, which provides a comprehensive remedy. The court underscored the strict compliance requirements of the SARFAESI Act and ruled that the writ petition was not maintainable, with no costs awarded.

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Issues Involved:
1. Validity of possession notice under Section 13(4) of the SARFAESI Act, 2002.
2. Availability of alternative remedy under Section 17(1) of the SARFAESI Act, 2002.
3. Jurisdiction of the High Court under Article 226 of the Constitution of India.
4. Compliance with the provisions of the SARFAESI Act, 2002 and Security Interest (Enforcement) Rules, 2002.

Issue-wise Detailed Analysis:

1. Validity of Possession Notice under Section 13(4) of the SARFAESI Act, 2002:
The petitioner challenged the possession notice dated 26.9.2017 issued by the bank under Section 13(4) of the SARFAESI Act, 2002. The petitioner argued that her account became irregular due to demonetization and the implementation of GST, which caused business losses. The bank issued a notice under Section 13(2) on 05.07.2017 demanding payment of outstanding dues. The court observed that the account was classified as a Non-Performing Asset (NPA) due to the petitioner's failure to maintain financial discipline. The bank followed the procedure laid down in the SARFAESI Act, 2002 for recovery.

2. Availability of Alternative Remedy under Section 17(1) of the SARFAESI Act, 2002:
The respondent argued that the petitioner has an efficacious and alternative remedy under Section 17(1) of the SARFAESI Act, 2002, which allows the borrower to challenge the action of the secured creditor before the Debts Recovery Tribunal (DRT). The court cited the Supreme Court judgments in United Bank of India Vs. Satyawati Tandon and Mardia Chemical Ltd. Vs. Union of India, which established that the appropriate remedy for challenging actions under Section 13(4) lies before the DRT. The court emphasized that the petitioner should have pursued this statutory remedy instead of directly approaching the High Court.

3. Jurisdiction of the High Court under Article 226 of the Constitution of India:
The court reiterated that while Article 226 confers wide powers on the High Courts to issue writs, this power is discretionary and should not be exercised if an adequate alternative remedy is available. The court referred to various Supreme Court judgments, including K.S. Rashid & Sons Vs. Income Tax Investigation Commission and Union of India Vs. T.R. Varma, which held that the High Court should refrain from exercising jurisdiction when an alternative remedy exists. The court noted that the petitioner bypassed the statutory mechanism and directly approached the High Court, which is not permissible.

4. Compliance with the Provisions of the SARFAESI Act, 2002 and Security Interest (Enforcement) Rules, 2002:
The court examined the provisions of the SARFAESI Act, 2002 and the Security Interest (Enforcement) Rules, 2002, highlighting the detailed procedures for taking possession and selling secured assets. The court noted that the SARFAESI Act imposes strict compliance requirements on the secured creditor. The DRT is empowered to scrutinize the secured creditor's compliance with these provisions. The court emphasized that the borrower has the opportunity to challenge the secured creditor's actions before the DRT, which provides a comprehensive remedy.

Conclusion:
The court concluded that the writ petition cannot be entertained due to the availability of an alternative remedy under Section 17 of the SARFAESI Act, 2002. The court dismissed the petition, emphasizing that invoking the High Court's jurisdiction without exhausting statutory remedies is not permissible. The court highlighted that the statutory mechanism under the SARFAESI Act provides a broad and adequate remedy for borrowers to challenge the actions of secured creditors. There shall be no order as to costs.

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