2019 (4) TMI 884 - HC - Indian Laws

Court dismisses writ petition challenging bank auction, emphasizes alternative remedy under SARFAESI Act.

The High Court dismissed the writ petition challenging auction proceedings by a bank, emphasizing the availability of an alternative remedy under Section ... Application under Section 17 of the SARFAESI Act - measures under Section 13(4) of the SARFAESI Act - availability of statutory alternative remedy bars writ jurisdiction - rule of self-imposed restraint in exercising writ jurisdiction - exceptional circumstances for exercise of writ jurisdiction - sale confirmation and rights of auction purchaserApplication under Section 17 of the SARFAESI Act - measures under Section 13(4) of the SARFAESI Act - availability of statutory alternative remedy bars writ jurisdiction - rule of self-imposed restraint in exercising writ jurisdiction - Maintainability of the writ petition in view of the availability of an alternative remedy under the SARFAESI Act. - HELD THAT: - The Court found that the impugned actions of the secured creditor in confirming the auction sale formed part of the continuum of measures under Section 13(4) of the SARFAESI Act, thereby vesting the petitioners with an efficacious statutory remedy in the form of an application under Section 17. Applying the well settled principle of self imposed restraint, the High Court held that where a complete and effective statutory machinery for redress exists, the writ jurisdiction should not ordinarily be exercised unless exceptional circumstances (such as total denial of natural justice, action beyond jurisdiction, or fraud/collusion shown on the merits) are made out. Reliance was placed on binding precedents establishing that the remedy provided by the statute must normally be exhausted before seeking relief under Article 226 and that confirmation of sale vests rights in the auction purchaser which can be displaced only in exceptional cases. The petitioners did not demonstrate any such exceptional or extraordinary circumstances sufficient to bypass the statutory forum; consequently the court declined to adjudicate the challenge to the auction sale in writ jurisdiction and directed that the petitioners may pursue remedies available under the Act. [Paras 6, 7, 15]The writ petition is not maintainable in view of the availability of the alternative statutory remedy under Section 17 of the SARFAESI Act and is dismissed, with liberty to the petitioners to pursue remedies in accordance with law.Final Conclusion: The writ petition is dismissed on the ground that an efficacious alternative remedy under Section 17 of the SARFAESI Act is available; petitioners are at liberty to pursue that remedy and nothing said shall be treated as an expression of opinion on the merits. Issues Involved:1. Legality of the auction proceedings conducted by the respondent bank.2. Adequacy and fairness of the auction price.3. Availability of alternative remedy under Section 17 of the SARFAESI Act.4. Jurisdiction of the High Court under Article 226 of the Constitution of India.Detailed Analysis:1. Legality of the Auction Proceedings:The petitioners challenged the auction proceedings conducted by the respondent bank, asserting that the sale notice dated 06.03.2018 and subsequent actions, including the auction on 20.04.2018 and the sale confirmation letter dated 23.04.2018, were arbitrary, illegal, and unfair. They contended that the auction was conducted in collusion with the sole bidder, resulting in a sale price significantly lower than the market value of the property. The petitioners argued that the bank should have considered their higher offer of Rs. 2.05 crore instead of confirming the sale at Rs. 1,81,50,000/-.2. Adequacy and Fairness of the Auction Price:The petitioners claimed that the auction price of Rs. 1,81,50,000/- was significantly lower than the market value of the property, which they asserted was capable of fetching a much higher price. They alleged that the bank acted unfairly by accepting the solitary bid and not exploring better offers, including their own offer of Rs. 2 crore, which was paid in court. The petitioners emphasized that the auction was conducted without considering the true market value of the property.3. Availability of Alternative Remedy under Section 17 of the SARFAESI Act:The court highlighted that the SARFAESI Act provides a comprehensive mechanism for addressing grievances related to the enforcement of security interests. Section 17(1) of the SARFAESI Act allows an aggrieved person to file an application within 45 days to the Tribunal against any measures taken under Section 13(4) of the Act. The court emphasized that the petitioners had an effective alternative remedy available under Section 17 of the SARFAESI Act to challenge the bank's actions, including the auction proceedings and sale confirmation.4. Jurisdiction of the High Court under Article 226 of the Constitution of India:The court referred to several precedents, including decisions by the Apex Court, which established that the High Court should not entertain a writ petition under Article 226 if an effective alternative remedy is available. The court cited cases such as Agarwal Tracom Private Limited vs. Punjab National Bank and others, and Union Bank of India vs. Satyawati Tondon, which reinforced the principle that the High Court should exercise restraint and insist on exhausting statutory remedies before invoking its writ jurisdiction. The court concluded that the petitioners should have availed the alternative remedy under Section 17 of the SARFAESI Act instead of approaching the High Court.Conclusion:The court dismissed the writ petition, emphasizing that the petitioners had an adequate and effective alternative remedy under Section 17 of the SARFAESI Act to challenge the auction proceedings and sale confirmation. The court reiterated that it would not interfere in writ jurisdiction when a statutory remedy is available, in line with the principles established by the Apex Court. The petitioners were advised to pursue the alternative remedies in accordance with the law, and the court clarified that its observations should not be construed as an opinion on the merits of the case.