2017 (9) TMI 2035 - HC - Indian Laws

Writ petition dismissed as petitioners must use statutory appeal under Section 17 of SARFAESI Act before Debt Recovery Tribunal

Janak Pramodbhai Patel Versus Sepcial Recovery Officer & 1

Gujarat HC dismissed writ petition challenging notices issued under Section 13(2) of SARFAESI Act for debt recovery. Court held that petitioners had ... Maintainability of petition - availability of alternative remedy - Challenge to action on part of the respondent No.2 Bank which proceeded against the petitioners for recovery of the amount as per the decree passed in the Lavad Suit - setting aside notices issued under Section 13(2) of the SARFAESI Act - HELD THAT:- There is no gainsaying that Section 17 of the SERFAESI Act provides for a statutory remedy of Appeal before the Debt Recovery Tribunal. It is a statutory alternative recourse available. The petitioners are the 'aggrieved person' within the meaning for the purpose of Section 17 of the Act. The petitioners may have several grounds to challenge to be considered in accordance with law in respect of the impugned notices which are issued under the SERFAESI Act, because of the said grounds raised, it could not be said that the notices were without jurisdiction. The Bank was entitled to invoke the provisions of the SERFAESI Act to recover the debt. The merits in law in Bank's action cannot be equated with absence or otherwise of the jurisdiction to take such action. Merely because certain grounds are raised to challenge notices under Section 13(2) of the SERFAESI Act, it is not possible to conclude that the action was without jurisdiction. The remedy of Appeal is proper, efficacious and appropriate remedy, required to be resorted to by the petitioners. Though the prayers are couched in different language, they all are centripetal in nature to the validity of notices under Section 13(2) of the SERFAESI Act, for which there is a specific statutory alternative efficacious remedy with the petitioner under Section 17 of the SERFAESI Act. It is a cardinal principle that the High Court would be loath to exercise discretion in favour of entertaining a writ petition where the Legislature has provided alternative statutory remedy. In the present case, a special forum is available in form of Debts Recovery Tribunal where appeal would lie. In the matters involving commercial disputes, it is trite that rule of availing alternative remedy should be adhered to steadfast. The principle on this aspect is unequivocal. In AUTHORIZED OFFICER, INDIAN OVERSEAS BANK VERSUS ASHOK SAW MILL [2009 (7) TMI 765 - SUPREME COURT], the Apex Court held that remedy by way of appeal under Section 17 is available not only upto the stage referable to Section 13(4), but even in respect of measures taken post- 13(4) stage. In the present case, the stage at which the petitioner is beset with, is such stage. In KANAIYALAL LALCHAND SACHDEV VERSUS STATE OF MAHARASHTRA [2011 (2) TMI 1277 - SUPREME COURT], the Supreme Court has stated that the measures under Section 14 constitutes the action taken after the stage of Section 13(4) and a remedy of appeal under Section 17 would be available. In that case, refusal by the High Court to entertain the writ petition was held to be fully justified. Thus, only on the ground that the petitioners have got alternative statutory remedy as above, these petitions, without entering into any other aspects of merits of either side, are not entertained. The petitioners are relegated to approach Debts Recovery Tribunal by preferring an Appeal under Section 17 of the SARFAESI Act. Petition dismissed. Issues Involved:1. Legality and enforceability of notices issued under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SERFAESI Act).2. Whether the bank's negligence discharged the guarantors' obligations.3. Validity of the decree obtained in absence of the Official Liquidator.4. Availability and appropriateness of alternative remedy under Section 17 of the SERFAESI Act.Detailed Analysis:1. Legality and Enforceability of Notices:The petitioners challenged the notices issued under Section 13(2) of the SERFAESI Act, arguing that the decree on which the bank's actions were based was unenforceable due to the passage of time and that the bank's actions were not executable under the SERFAESI Act. The petitioners contended that the notices were issued without jurisdiction, as the bank had already issued a similar notice in 2012, rendering the subsequent notice in 2015 incompetent. However, the court held that the bank was entitled to invoke the provisions of the SERFAESI Act to recover the debt, and the merits of the bank's actions could not be equated with the absence of jurisdiction. The court emphasized that the bank's invocation of the SERFAESI Act was within its rights, and the notices were not without jurisdiction.2. Bank's Negligence and Guarantors' Discharge:The petitioners argued that they were discharged from their obligations as guarantors because the bank's negligence led to the loss of security, specifically the machineries and Salt Purification Plant valued at Rs. 286 lakhs. They cited Sections 139 and 142 of the Contract Act, claiming that the bank's failure to take steps to protect the pledged property resulted in their discharge. The court noted that these contentions regarding the bank's conduct and the discharge of the guarantors were factual issues that required inquiry and evidence, which could be better addressed in the appeal proceedings before the Debts Recovery Tribunal.3. Validity of Decree without Official Liquidator:The petitioners claimed that the decree obtained in the absence of the Official Liquidator was illegal and unenforceable. The court did not delve into the merits of this argument, as it was intertwined with the overall challenge to the bank's notices and actions under the SERFAESI Act. The court reiterated that such contentions could be raised and adjudicated in the appeal proceedings before the Debts Recovery Tribunal.4. Alternative Remedy under Section 17 of the SERFAESI Act:The court highlighted that Section 17 of the SERFAESI Act provides a statutory remedy of appeal before the Debts Recovery Tribunal for any person aggrieved by measures taken under Section 13(4) of the Act. The court emphasized the principle that the High Court would typically not entertain a writ petition when a statutory alternative remedy is available. The court cited several precedents, including 'Authorised Officer, Indian Overseas Bank v. Ashok Saw Mill' and 'Kanaiyalal Lalchand Sachdev v. State of Maharashtra,' to support the position that the remedy by way of appeal under Section 17 is available even for actions post-Section 13(4) stage. The court concluded that the petitioners should be relegated to the alternative remedy of appeal before the Debts Recovery Tribunal, as it was the proper, efficacious, and appropriate remedy for their grievances.Conclusion:The court dismissed the petitions on the ground that the petitioners had an alternative statutory remedy available under Section 17 of the SERFAESI Act. The court did not enter into the merits of the case, allowing the petitioners to raise all their contentions in the appeal proceedings before the Debts Recovery Tribunal. The interim relief granted during the pendency of the petitions was extended to allow the petitioners to file an appeal within six weeks. The court clarified that it had not examined the merits of either side's case, leaving the Tribunal to decide the appeals based on the evidence presented.