Bank can proceed with SARFAESI recovery after borrower fails to challenge possession notices through statutory remedies under Section 13(2)

The HC dismissed a writ petition challenging possession and demand notices under Section 13(2) of SARFAESI Act, 2002, holding it non-maintainable due to availability of statutory remedies. The court emphasized that SARFAESI Act provides comprehensive recovery procedures with quasi-judicial bodies for grievance redressal, requiring exhaustion of statutory remedies before approaching HC under Article 226. The petitioner was directed to pay the entire outstanding amount within three months, with respondents restrained from coercive action until then. Upon non-compliance, the bank may proceed as per law.

---

---

Issues Involved:
1. Availability of remedies under the SARFAESI Act.
2. Non-maintainability of writ petitions under Article 226 against proceedings under the SARFAESI Act.
3. Non-maintainability of writ petitions against private financial institutions under the SARFAESI Act.
4. Settlement agreement between the petitioner and the respondents.

Issue-wise Detailed Analysis:

1. Availability of Remedies under the SARFAESI Act:
The court discussed the provisions of the SARFAESI Act, particularly Section 13, which allows secured creditors to enforce security interests without court intervention. Section 13(2) mandates a notice period of sixty days for borrowers to discharge liabilities, failing which creditors can exercise rights under Section 13(4), including taking possession of secured assets. Section 14 allows creditors to request assistance from the Chief Metropolitan Magistrate or District Magistrate to take possession of assets. Section 17 provides for an appeal to the Debts Recovery Tribunal (DRT) for aggrieved persons, and Section 18 allows for further appeal to an Appellate Tribunal.

2. Non-maintainability of Writ Petitions under Article 226 against Proceedings under the SARFAESI Act:
The court cited several judgments to emphasize that writ petitions under Article 226 are generally not maintainable when alternative remedies are available under the SARFAESI Act. In *United Bank of India v. Satyawati Tondon*, the Supreme Court held that the High Court should not entertain writ petitions if an effective remedy is available under the SARFAESI Act. This principle was reiterated in *Kanaiyalal Lalchand Sachdev v. State of Maharashtra* and *ICICI Bank Ltd. v. Umakanta Mohapatra*, where the Supreme Court disapproved of the High Courts entertaining such writ petitions and granting interim orders.

3. Non-maintainability of Writ Petitions against Private Financial Institutions under the SARFAESI Act:
The court referred to the Supreme Court's decision in *Phoenix ARC (P) Ltd. v. Vishwa Bharati Vidya Mandir*, which held that writ petitions against private financial institutions under Article 226 are not maintainable. The court noted that actions taken by Asset Reconstruction Companies (ARCs) under the SARFAESI Act are part of commercial transactions and do not involve public functions typically performed by state authorities. Therefore, borrowers must seek remedies under the SARFAESI Act rather than filing writ petitions.

4. Settlement Agreement between the Petitioner and the Respondents:
During the hearing, the petitioner expressed willingness to settle the outstanding amount within three months, which the respondents agreed to. The court recorded this submission and directed the petitioner to pay the entire outstanding amount, deducting any amount already paid, within three months. The respondents were instructed not to take any coercive steps during this period. If the petitioner fails to comply, the respondents are permitted to proceed in accordance with the law.

Conclusion:
The writ petition was disposed of with the direction for the petitioner to settle the outstanding amount within three months. The court emphasized the availability of alternative remedies under the SARFAESI Act and the non-maintainability of writ petitions under Article 226 when such remedies exist. The court also highlighted the non-maintainability of writ petitions against private financial institutions under the SARFAESI Act. No costs were awarded, and connected miscellaneous petitions were closed.

---