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2016 (12) TMI 253 - HC - Indian LawsIssuance of the notices under section 13(2) of the SARFAESI Act seeked to be set aside - present petition invoking writ jurisdiction of this Court under Article 226 - Held that - It is trite that in all the area of matters involving commercial disputes the rule of alternative remedy has to be adhered to steadfast instead of allowing the petitioners to straightway approach the High Court in a writ jurisdiction. In this view of the matter the petitioners are required to be relegated to the said remedy and the present petition is not liable to be entertained. All the contentions on merits are open to be raised by both the parties before the Tribunal. In the aforesaid view this petition is dismissed relating the petitioners to avail the remedy under Section 17 of the SARFAESI Act 2002. It is clarified that this Court has not gone into the merits of the case. The petition stands dismissed of as not entertained subject to above.
Issues:
1. Challenge to the action of the respondent State Bank of India under SARFAESI Act. 2. Declaration of the account as Non-Performing Asset (NPA). 3. Petitioners seeking relief under Article 226 of the Constitution. 4. Respondent Bank's contention regarding non-compliance with restructuring conditions. 5. Availability of alternative statutory remedy under Section 17 of the SARFAESI Act. 6. High Court's dismissal of the petition and direction for availing remedy under Section 17. Analysis: Issue 1: Challenge to Bank's Action under SARFAESI Act The petitioners challenged the action of the respondent Bank under the SARFAESI Act, primarily contesting the issuance of notices under Section 13(2) and the declaration of the account as NPA. The petitioners argued that the Bank's actions were not justified as they had complied with the restructuring terms and had not defaulted post-restructuring. Issue 2: Declaration of Account as NPA The respondent Bank contended that the petitioner company failed to comply with various financial requirements post-restructuring, leading to irregularities in the account. The Bank highlighted instances of non-cooperation, lack of financial submissions, and breach of trust regarding collateral security, justifying the declaration of the account as NPA. Issue 3: Relief under Article 226 The petitioners sought relief under Article 226 of the Constitution to set aside the Bank's actions. However, the High Court emphasized the availability of an alternative statutory remedy under Section 17 of the SARFAESI Act, directing the petitioners to pursue the remedy before the Debts Recovery Tribunal. Issue 4: Compliance with Restructuring Conditions The respondent Bank argued that the petitioners failed to comply with the conditions set during the restructuring, such as the infusion of funds and submission of financial statements. Non-compliance with these conditions was cited as a reason for the Bank's actions under the SARFAESI Act. Issue 5: Alternative Statutory Remedy The High Court dismissed the petition, emphasizing the importance of exhausting the statutory remedy under Section 17 of the SARFAESI Act before approaching the Court under Article 226. The Court cited various precedents and highlighted the need to adhere to the rule of alternative remedy in commercial disputes. Issue 6: Dismissal of the Petition Ultimately, the High Court dismissed the petition, directing the petitioners to avail themselves of the remedy under Section 17 of the SARFAESI Act. The Court clarified that it did not delve into the merits of the case and maintained the dismissal, urging parties to raise contentions before the Tribunal. This detailed analysis showcases the legal intricacies involved in the judgment, highlighting the key arguments presented by both parties and the Court's decision based on the statutory provisions and precedents cited.
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