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2016 (11) TMI 840 - GUJARAT HIGH COURT

2016 (11) TMI 840 - GUJARAT HIGH COURT - TMI - Remedy of appeal under section 17 of the SARFAESI Act - Held that:- It is trite principal to be followed stead-fast in commercial matters that rather than straightway invoking the jurisdiction of the high court under Article 226 of the of the Constitution, an aggrieved party avails and exhausts the alternative remedy. The aforesaid principle unequivocally stem from the decisions of the apex court and of this court referred to hereinabove. - In t .....

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e petitioners to raise all the contentions before the Tribunal in the appeal which they may now file. - SPECIAL CIVIL APPLICATION NO. 18846 of 2016 - Dated:- 16-11-2016 - MR. N.V.ANJARIA, J. FOR THE PETITIONER : MR. BK. RAJ, ADVOCATE CAV ORDER Heard learned advocate Mr. B. K. Raj for the petitioners. 2 What is brought under challenge by filling this writ petition under Article 226 of the Constitution, is the order dated 28.09.2016 passed by the District Magistrate, Surat, being order under secti .....

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lted in payment of the loan amount, the third respondent bank invoking provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, issued notice dated 18.06.2015 under section 13(2) of the Act. Thereafter, notice under section 13(4) of the Act was also issued on 29.04.2016. As the petitioners failed to deliver the possession of the mortgaged property, an application dated 20.07.2016 was made under section 14 of the Act to the District M .....

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l Assets Reconstruction Company Limited and Others, reported in (2014)6 SCC 1. In support of various contentions raised, learned advocate for the petitioner relied on Harshad Govardhan Sondagar (supra). He also relied on another decision in J. Rajiv Subramaniyan and Another vs. Pandiyas and Others [(2014) 5 SCC 651]. He relied yet on another decision in Mathew Varghese vs. M. Amritha Kumar and Others [(2014) 5 SCC 610]. 5. As the facts noted and highlighted above, the order impugned is the order .....

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e 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. The petitioner is aggrieved person for the purpose of Section 17 of the Act. 5.1 Thus the petitioner has remedy of preferring an appeal under section 17 of the SARFAESI Act before the Debt Recovery Tribunal. In Kanaiyalal Lalchand Sachdev Vs State of Maharashtra [(2011) 2 SCC 782], the Apex Court in paragraphs Nos. 21 and .....

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35. In order to prevent misuse of such wide powers and to prevent prejudice being caused to a borrower on account of an error on the part of the banks or financial institutions, certain checks and balances have been introduced in Section 17 which allow any person, including the borrower, aggrieved by any of the measures referred to in sub-section (4) of Section 13 taken by the secured creditor, to make an application to the DRT having jurisdiction in the matter within 45 days from the date of su .....

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gh possession may have been made over to the transferee. 39. We are unable to agree with or accept the submissions made on behalf of the appellants that the DRT had no jurisdiction to interfere with the action taken by the secured creditor after the stage contemplated under Section 13(4) of the Act. On the other hand, the law is otherwise and it contemplates that the action taken by a secured creditor in terms of Section 13(4) is open to scrutiny and cannot only be set aside but even the status .....

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oviding for an appeal before the DRT. 5.2 Furthermore, the supreme court in United Bank of India V/s Satyawati Tondon and Others, reported in AIR 2010 SC 3413, as sounded a caution for readily entertaining the petition under Article 226 of the Constitution by the High Courts against the orders and at the stages when the remedy is available to the aggrieved party under section 17 of the Act. In paragraph No.17 of the Satyawati Tondon (supra), the Apex Court stated and held, 17. There is another r .....

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nal and the Appellate Tribunal are empowered to pass interim orders under Sections 17 and 18 and are required to decide the matters within a fixed time schedule. It is thus evident that the remedies available to an aggrieved person under the SARFAESI Act are both expeditious and effective. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved .....

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comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, 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. 5.3 The remedy of section 17 of the Act is available at such stage and position which is obtained in the present case as well. In this regard, yet .....

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der the provisions of Section 17 of the Act, 2002. The record reveals that on 18th January, 2011, the Division Bench of this Court passed the following order:- "2. We have heard learned counsel appearing for the petitioner on interim relief since it is contended by the learned counsel for the petitioner that the petitioner may be dispossessed anytime pursuant to the impugned order. 3. It appears that it is not the case of the petitioner that the loan is not taken or the amount is not recove .....

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is directed that there shall be stay against execution of the order of the Ld. Magistrate under section 14 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, on condition that the petitioner deposits the amount of ₹ 3,50,32,281/- [Rupees three crore fifty lac thirty two thousand two hundred eighty one only] with the respondent- bank within a period of one week from today. 5. It is also observed and clarified that if there is failure .....

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to deposit the amount is granted, the petitioner shall also not transfer or alienate the property in question. " 5. We would like to rely upon the observations made by the Division Bench of this Court in the case of Analkumar Rajkishore Mishra & ors. Vs. Dena Bank, reported in AIR 2011 Gujarat, 187 (to which one of us, J.B. Pardiwala, J. is a party) on the question of alternative remedy. The observations made in paragraph 9 are as under:- "9. From the aforesaid provisions of law, i .....

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hereunder. In this background, we are of the view that it was not open to the Debt Recovery Tribunal to reject the appeal u/Sec.17 of the Act on the ground that it was premature or not maintainable." 5.4. The division bench of this court in Sonali Sunil Bhanushali vs. Authorised Officer HDFC Bank being LPA No. 395 of 2016 decided on 6.5.2016 after surveying the several decisions including the above referred decisions, has upheld the view that the aggrieved party has to first avail the remed .....

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