Binding RBI restructuring framework must be considered before coercive SARFAESI action where a timely borrower request is pending.

A writ petition was held maintainable against a private bank where the challenge concerned enforcement of a binding statutory duty under an RBI framework, because the section 17 SARFAESI remedy arises only after section 13(4) measures and not at the section 13(2) notice stage. The bank was also required to consider the borrower's timely restructuring and ECLGS requests under Resolution Framework 2.0 before taking coercive steps. As the account was a standard asset when the request was made and the refusal was found unreasonable, the notice was quashed and the bank was directed to reconsider the requests afresh.

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Issues: (i) whether the writ petition was maintainable in view of the SARFAESI remedy before the Debts Recovery Tribunal; and (ii) whether the bank was bound to consider restructuring and allied reliefs under the RBI Resolution Framework 2.0 and the ECLGS request before proceeding under section 13(2) of the SARFAESI Act, 2002.

Issue (i): whether the writ petition was maintainable in view of the SARFAESI remedy before the Debts Recovery Tribunal.

Analysis: The statutory remedy under section 17(1) of the SARFAESI Act, 2002 becomes available only after measures are taken under section 13(4). The impugned notice was issued under section 13(2), so the stage for invoking the alternative remedy had not yet arrived. The petition was also not a simple SARFAESI challenge, but raised the bank's alleged failure to act in accordance with a statutory RBI framework. A writ petition can lie against a private bank where enforcement of a statutory duty is involved.

Conclusion: The writ petition was maintainable and the objection based on alternative remedy failed.

Issue (ii): whether the bank was bound to consider restructuring and allied reliefs under the RBI Resolution Framework 2.0 and the ECLGS request before proceeding under section 13(2) of the SARFAESI Act, 2002.

Analysis: The borrower's accounts were standard assets as on 31.3.2021, the restructuring request was made within the time contemplated by the framework, and the representations were placed before the bank before declaration of NPA and before issuance of the section 13(2) notice. The RBI framework had statutory force and was binding on the bank. The record also showed that the bank's refusal based on security-perfection concerns was not a sustainable basis to deny consideration of the restructuring request and the connected ECLGS request. The bank's action was found to be unreasonable and to have precipitated the coercive steps without proper application of mind.

Conclusion: The bank was required to reconsider restructuring and the ECLGS request in accordance with Resolution Framework 2.0, and the impugned notice could not be sustained.

Final Conclusion: The petition succeeded, the coercive notice was quashed, and the bank was directed to reconsider the restructuring and ECLGS issues afresh under the applicable RBI framework.

Ratio Decidendi: A writ petition is maintainable against a private bank where the challenge concerns enforcement of a binding statutory duty, and coercive action under section 13(2) of the SARFAESI Act, 2002 cannot be sustained where the lender fails to consider a timely restructuring request under a binding RBI framework governing the account.

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