TMI Blog2017 (10) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... rrower. Therefore, the remedy under Section 17 of the SARFAESI Act, 2002 before the Debts Recovery Tribunal is a broad remedy available to the borrower/guarantor vis-a-vis the jurisdiction of the High Court under Articles 226 and 227 of the Constitution and he has further opportunity to file further appeal under Section 18 of the Debt Recovery Appellate Tribunal against the order of Debts Recovery Tribunal in case he fails to get any relief under Section 17 of the SARFAESI Act, 2002 from the Debts Recovery Tribunal. The remedy of appeal under Section 18 of the SARFAESI Act, 2002 also eludes a borrower who approaches the High Court under Article 226/227 of the Constitution of India directly against the proceedings under SARFAESI Act, 2002 where the scope of inquiry regarding the action of the secured creditor is very limited. The remedy under Article 226/227 of the Constitution is still available to the borrower after exhaustion of remedies under the SARFAESI Act, 2002. Therefore, in view of the legal position stated above this writ petition is being dismissed on the ground of alternative remedy available to the petitioner under Section 17 of the SARFAESI Act, 2002. - WRIT - C N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should not interfere with the proceedings of recovery initiated by the bank against the petitioner. He has further submitted that after the notice dated 05.7.2017 issued by the bank, under Section 13 (2) of the SARFAESI Act, 2002, the petitioner did not turn up to clear her liability and, therefore, after the expiry of period of 60 days given in the notice, the bank has proceeded to take possession of the property under Section 13, Sub Clause (4) of the SARFAESI Act, 2002 and the petitioner is unable to point out any illegality in the same. He has further stated that since the account of the petitioner has been declared Non Performing Asset (NPA) by the Bank as per the prudential norms of Reserve Bank of India, therefore, unless outstanding dues are cleared, the account of the petitioner cannot be regularized. We have given thoughtful consideration to the rival submissions made at the bar. Before we examine the submissions made at the bar, a brief look at the purpose of enactment of SARFAESI Act, 2002 may be useful. The accumulation of the Non-Performing Assets (NPAs), a glorified terminology used in the banking circles to refer to 'bad loans', has always been an ey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings under Section 13 (4) of the SARFAESI Act, 2002 lies before Debts Recovery Tribunal under Section 17 of the SARFAESI Act, 2002. Earlier, in the case of Mardia Chemical Ltd. Vs. Union of India (2004) 4 SCC 311, the Apex Court had already held that the borrower can challenge the action of the secured creditor taken under Section 13 (4) of the SARFAESI Act, 2002 by filing an application under Section 17 (1) of the Act itself. A Constitution Bench of the Apex Court in K.S. Rashid Sons Vs. Income Tax Investigation Commission, AIR 1954 SC 207 held that Article 226 of the Constitution of India confers on all the High Courts very wide powers in the matter of issuing writs. The said powers are limited. However, the remedy of writ is an absolutely discretionary remedy and the High Court always has the discretion to refuse to grant any writ if it is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere. Similar view has been reiterated by the Apex Court in the case of Sangram Singh Vs. Election Tribunal, Kotah, AIR 1955 SC 425 holding that the power of issuing writs shall not be exercised unless substantial injustice has been caused or likely to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 17 of the SARFAESI Act, 2002 is akin to a court of appeal competent to go into the questions of facts and law, both, for the first time, at the behest of the borrower, or the guarantor, against the action taken by the secured creditor. The SARFAESI Act, 2002 casts a heavy burden on the secured creditor of proceeding with the recovery against the borrower with strict compliance of the provisions of the act. The relevant provisions of Section 13 are as follows:- 13. Enforcement of security interest. (2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under sub section (4). [Provided that- (i) the requirement of classification of secured debt as non-performing asset und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt. It requires scrutiny of the manner of operation of account by the borrower and compliance of prudential norms of RBI by the secured creditor is classifying it as N.P.A. Further perusal of the above provisions of the act shows that the notice under Section 13 Sub Clause (2) of the SARFAESI Act, 2002 is issued by the secured creditor to the borrower after his account gets classified as NPA. The borrower is required to discharge his full liabilities within 60 days from the date of notice failing which the secured creditor becomes entitled to exercise all or any of the rights under Section 13 Sub Clause (4). Therefore, the secured creditor is bound by law to wait for 60 days before exercising any of his right under Section 13, Sub Clause (4) of the SARFAESI Act, 2002. Further Rule 4 of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as Rules ) provides that Authorized Officer of the secured creditor is required to take possession of movable property of the borrower in the presence of two witnesses after a panchnama drawn and signed by witnesses as clearly as possible in Appendix I of these rules. Secondly, after taking possession under Rule 4 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficient circulation in that locality by setting out the terms of sale, which may include,-- (a) details about the borrower and the secured creditor; (b) description of movable secured assets to be sold with identification marks or numbers, if any, on them; (c) reserve price, if any, and the time and manner of payment; (d) time and place of public auction or the time after which sale by any other mode shall be completed; (e) depositing earnest money as may be stipulated by the secured creditor; (f) any other thing which the authorised officer considers it material for a purchaser to know in order to judge the nature and value of movable secured assets. [Provided further that if sale of movable property by any one of the methods specified under sub-rule (1) fails and the sale is required to be conducted again, the authorised officer shall serve, affix and publish notice of sale of not less than fifteen days to the borrower for any subsequent.] (3) Sale by any methods other than public auction or public tender, shall be on such terms as may be settled [between the secured creditors and the proposed purchaser]. 8. Sale of immovable secured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets, under sub-rule (5): Provided that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in two leading newspapers; one in vernacular language having sufficient circulation in the locality by setting out the terms of sale, which shall include,-- (a) the description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor; (b) the secured debt for recovery of which the property is to be sold; (c) reserve price, below which the property may not be sold; (d) time and place of public auction or the time after which sale by any other mode shall be completed; (e) depositing earnest money as may be stipulated by the secured creditor; (f) any other thing which the authorised officer considers it material for a purchaser to know in order to judge the nature and value of the property. (7) Every notice of sale shall be affixed on a conspicuous part of the immovable property and may, if the authorised officer deems it fit, put on the web-site of the secured creditor on the Inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Debts Recovery Tribunal. The remedy of appeal under Section 18 of the SARFAESI Act, 2002 also eludes a borrower who approaches the High Court under Article 226/227 of the Constitution of India directly against the proceedings under SARFAESI Act, 2002 where the scope of inquiry regarding the action of the secured creditor is very limited. The remedy under Article 226/227 of the Constitution is still available to the borrower after exhaustion of remedies under the SARFAESI Act, 2002. The Apex Court has interfered and disapproved the action of the secured creditor in proceeding under the SARFAESI Act, 2002 in the case of Mathew Varghese Vs. M. Amritha Kumar and others (2014) 5 SCC 610 ; J. Rajiv Subramaniyan and another Vs. Pandiyas and others (2014) 5 SCC 651. In Mathew Varghese (supra), the Supreme Court disapproved the action of the secured creditor of not notifying the borrower afresh of 30 days clear individual notice of the fresh date of sale after the first sale could not take place and held that the subsequent sale was invalid. Oasis Dealcom Pvt. Ltd. Vs. Khazana Dealcom Pvt. Ltd., (2016) 10 SCC 214. In J. Rajiv Subramaniyan and another (supra), the sale of the secure ..... X X X X Extracts X X X X X X X X Extracts X X X X
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