In a recent decision the Himachal Pradesh High Court ruled that the remedy for proceedings lies before the Debt Recovery Tribunal (DRT) on initiation of proceedings under Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act).
The petitioner, M/s Dynamic Sales, approached the Court to issue an appropriate writ or direction or order in the nature of certiorari to quash/set aside all the actions undertaken under provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act, 2002”), against the petitioner purportedly issued by respondent No. 2 under Section 13(2), SARFAESI Act, 2002 and notices purportedly issued by respondent No. 2 under Section 13(4) SARFAESI Act, 2002.
The moot question, is whether the writ petition filed by the petitioner assailing the action of the Bank in issuing notice under Section 13(2) and thereafter under Section 13(4) of the SARFAESI Act is maintainable or not.
The Counsel for the respondent has raised preliminary objection regarding maintainability of the instant petition and argued that once proceedings under the SARFAESI Act have been initiated, then the party aggrieved has to avail of the remedy under SARFAESI Act itself and no writ petition would lie or be maintainable much less entertainable.
The Counsel further contended that the instant case not only the proceedings under Section 13(2) but proceedings under Section 13(4) of the SARFAESI Act stand initiated and if at all the petitioner has any grievance then it is required to approach the concerned Debt Recovery Tribunal under Section 17 of the SARFAESI Act in terms of the settled law.
In G. Vikram Kumar vs. State Bank of Hyderabad, wherein the Supreme Court reiterated that the writ petition assailing the action of the Bank under Section 13(4) of the Act is not maintainable and the aggrieved party has a remedy of an appeal under Section 17 to approach the Debt Recovery Tribunal. It was further held that the High Court erred in entertaining writ petition since statutory alternative remedy was available. A Division Bench comprising Justices Tarlok Singh Chauhan and Ranjan Sharma observed that “The instant petition is not maintainable and is accordingly dismissed leaving open to the petitioner-firm to avail remedy under Section 17 of the SARFAESI Act as and when Section 13(4) thereof is invoked by the respondent-Bank. However, it is made clear that we have not expressed any opinion on the merits of the case and all issues are left open to be urged before the competent authority. Pending application(s), if any, also stands disposed of. The parties are left to bear their own costs.”
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