SARFAESI action against bona fide flat purchasers set aside where notice and natural justice requirements were not followed.

Writ jurisdiction was held available despite an alternate remedy under the SARFAESI framework where the challenge raised alleged procedural non-compliance, absence of notice to persons in possession, and natural justice concerns. The Court also found the impugned SARFAESI notice and consequential coercive action unsustainable against flat purchasers claiming to be bona fide purchasers without notice, in light of the alleged delay in mortgage registration, disclosure issues, escrow controversy, and failure to notify occupants before action. The petitions succeeded to the extent of quashing the impugned action, while leaving the secured creditor free to proceed in accordance with law and requiring fresh examination by the Debt Recovery Tribunal.

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Issues: (i) Whether the writ petitions were maintainable despite the availability of an alternate statutory remedy under the SARFAESI regime. (ii) Whether the impugned SARFAESI notice and consequential action could be sustained against flat purchasers claiming to be bona fide purchasers without notice, in view of the bank's failure to issue notice and the surrounding factual circumstances.

Issue (i): Whether the writ petitions were maintainable despite the availability of an alternate statutory remedy under the SARFAESI regime.

Analysis: The availability of a statutory remedy before the Debt Recovery Tribunal did not, in the facts of the case, bar invocation of writ jurisdiction. The challenge raised substantial questions concerning compliance with statutory procedure, absence of notice to persons in possession, and alleged violation of natural justice. The discretionary writ power could be exercised where the impugned action was alleged to have been taken without adherence to the governing procedure and where the alternative forum was not shown to provide an effective and immediate answer to the grievance raised.

Conclusion: The petitions were maintainable in writ jurisdiction and were not rejected on the ground of alternate remedy.

Issue (ii): Whether the impugned SARFAESI notice and consequential action could be sustained against flat purchasers claiming to be bona fide purchasers without notice, in view of the bank's failure to issue notice and the surrounding factual circumstances.

Analysis: The Court balanced the bank's security interest against the purchasers' claim of having acquired flats for value without notice. It noted the long delay in registration of the mortgage, the purchasers' title verifications, the alleged absence of the RBI-mandated disclosure, the escrow-account controversy, and the absence of notice to the occupants before coercive steps were taken. In these circumstances, the bank's action was found unsustainable at that stage, though the underlying factual and legal questions concerning mortgage, security interest, and bona fide purchase required fresh examination by the Debt Recovery Tribunal.

Conclusion: The impugned notice and connected orders were not sustained, and the matter was required to be examined afresh by the Debt Recovery Tribunal.

Final Conclusion: The petitions succeeded to the extent of quashing the impugned SARFAESI action, while leaving it open to the secured creditor to proceed in accordance with law after compliance with the statutory framework and to seek fresh adjudication before the Debt Recovery Tribunal.

Ratio Decidendi: In a SARFAESI matter involving occupants claiming bona fide purchase without notice, coercive action cannot be sustained where the statutory procedure and principles of natural justice have not been followed, and writ relief may still be granted despite alternate remedy when the action complained of raises such foundational defects.

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