TaxTMI 
TaxTMI 
2017 (11) TMI 1523
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....d Noorpur Khirki, Village Farid Nagar, Tehsil Dhampur, District Bijnor (U.P.). 5. To secure the loan amount, the Borrower had secured their assets, which consisted of the land, factory building, plant and machinery situated at Dhampur. The Borrower, however, failed to clear their loan amount and became a defaulter in its repayment. The PNB, therefore, invoked their powers under Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "SARFAESI Act") and issued a public sale notice in leading English newspapers for sale of the mortgaged assets of the Borrower in the public auction fixed for 17.06.2014 (Annexure-P-1). The appellant herein was one of the bidders, whose bid was declared the highest. 6. The appellant's bid was accordingly accepted by the PNB followed by execution of memorandum of understanding between the appellant and the PNB (Annexure P-4). The PNB also sent a letter to the appellant stating that the entire plant, machinery, land and the building is auctioned in favour of the appellant. The letter also authorized the appellant to dismantle and sell the scrap plant and th....
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....the appeal and confirmed the order of the Single Judge. The Division Bench was also of the view that the writ petition filed by the appellant was rightly not entertained by the Single Judge (writ Court) on the ground that the proper remedy of the appellant was to file an application before the DRT under Section 17 of the SARFAESI Act to question the action of forfeiture made by PNB and not in filing the writ petition under Article 226 of the Constitution. Felt aggrieved, the auction purchaser has filed the present appeal by way of special leave in this Court. 12. Heard Mr. Jaideep Gupta, learned senior counsel for the appellant and Mr. M.T. George, learned counsel for the respondents. 13. Mr. Jaideep Gupta, learned senior counsel appearing for the appellant (auction purchaser) while questioning the legality and correctness of the view taken by the two Courts below contended that the reasoning and the conclusion arrived at by the writ Court and the Appellate Court is not correct and hence deserves to be set aside. His main submission was that the action impugned by the appellant in their writ petition, namely, "forfeiture of the deposit of money by PNB" is not one of the measures ....
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....the writ petition does attract Section 13(4) read with the Rules framed thereunder and hence the remedy of the appellant lies in approaching DRT by filing an application under Section 17 of the SARFAESI Act as was rightly held by the two Courts below. 17. Having heard the learned counsel for the parties and on perusal of the record of the case, we find no merit in the appeal. In other words, the view taken by the High Court appears to be just and reasonable and hence does not call for any interference. 18. The short question that arise for consideration in this appeal is whether the High Court was justified in holding that the remedy of the appellant (auction purchaser) lies in challenging the action of the secured creditor (PNB) in forfeiting the deposit by filing an application under Section 17 of the SARFEASI Act before the DRT or the remedy of auction purchaser is in filing the writ petition under Article 226/227 of the Constitution of India to examine the legality of such action. 19. Section 13(4) and Section 17 of the SARFAESI Act, Rules 8 and 9 of the Security Interest(Enforcement) Rules,2002(hereinafter referred to as "the Rules") to the extent they are relevant for deci....
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....ing the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section (4) of section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management or restoration of possession, of the secured assets to the borrower or other aggrieved person, it may, by order,- (a) to (c)........................ (4) If, the Debts Recovery Tribunal declares the recourse taken by a secured creditor under sub-section (4) of section 13, is in accordance with the provisions of this Act and the rules made thereunder, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor shall be entitled to take recourse to one or more of the measures specified under sub-section (4) of section 13 to recover his secured debt. (4A).............................................................. (5)................................................................. (6)................................................................. (7) Save as otherwise provided in this Act, the ....
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...." may make an application to the DRT within 45 days from the date of measures taken under Section 13(4). Sub-section (2) of Section 17 was added by way of amendment w.e.f. 11.11.2004. It provides that the Tribunal, on such application being made under Section 17(1), shall consider whether the measures referred to and taken under Section 13(4) by the secured creditor are in accordance with the "provisions of this Act and the Rules made thereunder". Similarly, subsections (3), (4) and (7) of Section 17 which deal with the power of the DRT also use the expression "in accordance with provisions of the Act and the Rules made thereunder". 24. Rule 8, which has 8 sub-rules, deals with the manner of sale of immovable secured assets and provides detail procedure as to how and in what manner the sale of secured assets, is to be held. Rule 9 deals with time of sale, issue of sale certificate and delivery of possession 25. Rule 9(6) empowers the authorized officer to issue sale certificate in favour of the purchaser. Rule 9(9) then empowers the authorized officer to deliver the properties to the purchaser whereas Rule 9(10) empowers the authorized officer to mention in sale certificate that ....
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....) commence with any of the action taken in clauses (a) to (d) and end with measures specified in Rule 9. 30. In our view, therefore, the expression "any of the measures referred to in Section 13(4) taken by secured creditor or his authorized officer" in Section 17(1) would include all actions taken by the secured creditor under the Rules which relate to the measures specified in Section13(4). 31. The auction purchaser (appellant herein) is one such person, who is aggrieved by the action of the secured creditor in forfeiting their money. The appellant, therefore, falls within the expression "any person" as specified under Section 17(1) and hence is entitled to challenge the action of the secured creditor (PNB) before the DRT by filing an application under Section 17(1) of the SARFAESI Act. 32. Learned counsel for the appellant placed reliance on the decision of the Division Bench of High Court of Bombay in Umang Sugars Pvt. Ltd. vs. State of Maharashtra & Anr., 2014(4) Mh.L.J. 113 which, according to him, supports his submission. We have gone through the decision and unable to agree with the view taken therein. Their Lordships, while holding that Section 17(1) does not apply to a....
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....essal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute. 44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution. 45. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignorin....