2022 (2) TMI 1476 - HC - Indian Laws

Bank wins challenge after counsel wrongly withdrew securitization application citing failed settlement under SARFAESI Act Section 17

Dr. M.V. Ramana Rao Versus UCO Bank and 2 Others

The Telangana HC allowed a writ petition challenging a Debts Recovery Tribunal-II order, despite availability of alternative remedy under SARFAESI Act ... Maintainability of petition - availablility of alternative remedy under SARFAESI Act - seeking quashing of order passed by the Debts Recovery Tribunal-II at Hyderabad - seeking a direction for restoration and hearing of securitization application by the Tribunal on merit - HELD THAT:- It is true that under Section 18 of the SARFAESI Act, petitioner has the alternative remedy against the impugned order by filing appeal before the appellate Tribunal. However, having regard to the fact that the writ petition is pending before this Court for quite some time and also considering the fact that if the impugned order is allowed to stand, petitioner would be left without a remedy to ventilate his grievance, we deem it fit and proper not to non-suit the petitioner on the ground of not availing the alternative remedy. Section 17 of the SARFAESI Act provides that any person including a borrower who is aggrieved by the action of secured creditor under Section 13 (4) of the SARFAESI Act may file an application there under. Supreme Court has held time and again that the Tribunal exercises wide jurisdiction under Section 17 of the SARFAESI Act, even to the extent of setting aside an auction sale. In the instant case, the merit of the case not referred to. All that concerned is whether for whatever reason a person who is aggrieved in law should be left remediless - In the instant case, petitioner had invoked his remedy by filing securitization application under Sub-Section (1) of Section 17 of the SARFAESI Act. The application was pending for three years before the Tribunal. From the docket order dated 21.09.2020, it is found that a junior counsel appearing on behalf of the petitioner had reported that the matter was settled out of Court and therefore, leave was sought for withdrawing the securitization application which was accordingly granted. When the settlement did not materialize, petitioner went back to the Tribunal for revival of the securitization application which was however dismissed on the ground that version of the petitioner did not deserve acceptance. The dismissal of the miscellaneous application of the petitioner by the Tribunal does not appear to be justified - the securitization application filed by the petitioner should be heard and decided on its own merit by the Tribunal. The order is set aside - petition disposed off. Issues:Petition seeking quashing of order passed by Debts Recovery Tribunal, restoration and hearing of the case, revival of proceedings under SARFAESI Act, restoration of securitization application, justification of Tribunal's decision, significant material changes affecting the case, petitioner's argument for restoration, consideration of impugned order, alternative remedy under SARFAESI Act, wide jurisdiction of Tribunal under Section 17, dismissal of miscellaneous application, justification of dismissal, authority to adjudicate grievances, decision on securitization application, setting aside the order, allowing the miscellaneous application, further proceedings before the Tribunal.Analysis:The petitioner filed a petition under Article 226 seeking to quash an order passed by the Debts Recovery Tribunal and to restore and hear a case related to default on a loan from UCO Bank under the SARFAESI Act. The petitioner had initiated proceedings under Section 17 of the SARFAESI Act, but after talks of negotiations for a One Time Settlement (OTS), withdrew the securitization application. Subsequently, the Tribunal dismissed the case as withdrawn. The petitioner then filed a miscellaneous application for restoration, which was also dismissed. The Tribunal justified its decision based on the bank's communication regarding repayment terms and significant changes in the case, including auction sale and issuance of a sale certificate to a third party.The petitioner argued that withdrawal of the securitization application was based on the understanding of ongoing negotiations for an amicable settlement. The Court considered the impugned order and noted that the petitioner had an alternative remedy under the SARFAESI Act but chose to proceed with the writ petition. The Court emphasized the wide jurisdiction of the Tribunal under Section 17 of the SARFAESI Act, including setting aside auction sales. Despite acknowledging the developments in the case, the Court found the dismissal of the petitioner's miscellaneous application unjustified.The Court held that subsequent events should not deprive an aggrieved person of the opportunity to have their case adjudicated. Without delving into the case's merits, the Court directed the Tribunal to hear and decide the securitization application on its own merit. Consequently, the Court set aside the Tribunal's order and allowed the miscellaneous application, instructing the Tribunal to proceed with the case in accordance with the law, allowing all parties to present their arguments. The writ petition was disposed of without costs, and any pending miscellaneous applications were closed.