R. Arumugasamy Vs. The District Collector, Kancheepuram and Ors. - (High Court of Madras) (22 Aug 2019)

Aggrieved parties cannot challenge SARFAESI proceedings directly by filing a writ petition without exhausting appeal remedy available to them

MANU/TN/4692/2019

Banking

The Petitioner is a borrower, who has taken a loan from United Bank of India. The Petitioner defaulted in repaying the said loan, hence, notice was issued by the Tahsildar, to the Petitioner. In the said notice, it is stated that, the District Collector had directed to take possession and handover the same to the Bank pertaining to the house and shop property under Securitisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002 (SARFAESI Act, 2002) since the Petitioner viz., R. Arumugasamy had failed to repay the amount borrowed from M/s. United Bank of India. The Petitioner is seeking quashing of the notice dated 16.08.2019 issued by the Tahsildar.

As against the notice dated 16.08.2019 issued to the Petitioner, the petitioner has efficacious alternate remedy of approaching the Debts Recovery Tribunal. However, the petitioner has not exhausted the alternate remedy and has approached this Court directly.

The Supreme Court in The Authorized Officer, State Bank of Travancore and another Vs. Mathew K.C., and Agarwal Tracom Private Limited Vs. Punjab National Bank and others, held that the aggrieved parties cannot challenge the SARFAESI proceedings directly by filing a writ petition under Article 226 of the Constitution of India without exhausting the appeal remedy available to them.

In a recent decision of the Supreme Court in ICICI Bank Limited v. Umakanta Mohapatra, the Supreme Court has referred to the decision in Mathew K.C. case, and has observed that despite several judgments, including the decision of Mathew K.C., the High Courts continue to entertain matters which arise under the SARFAESI Act and keep granting interim orders in favour of persons who are Non-Performing Assets. Further, the Supreme Court held that, writ petition filed by the aggrieved party without exhausting the statutory remedy available under the SARFAESI Act and Recovery of Debts Due to Banks and Financial Institutions Act, is not maintainable.

The Supreme Court repeatedly held that, the aggrieved party should file appeal before the Debts Recovery Tribunal under Section 17 of the Act challenging the SARFAESI proceedings and the writ petition filed circumventing such procedure should not be entertained.

Since the Petitioner has got efficacious alternate remedy, present Court is not inclined to interfere and the Petitioner is relegated to remedy of approaching the Debts Recovery Tribunal against the notice issued to him. The writ petition is disposed of.

Relevant : Authorized Officer, State Bank of Travancore and Ors. vs. Mathew K.C. MANU/SC/0054/2018; Aggarwal Tracom Pvt. Ltd. vs. Punjab National Bank and Ors. MANU/SC/1494/2017, ICICI Bank Ltd. and Ors. vs. Umakanta Mohapatra and Ors. MANU/SC/1279/2018

Tags : NOTICE VALIDITY ALTERNATE REMEDY