Calcutta HC Directs Borrower to SARFAESI Appellate Tribunal, Declines Art. 227 Intervention Despite Procedural Objections Against DRT Order - 2025-05-20

Calcutta High Court Upholds DRT Order in SARFAESI Case, Directs Borrower to Appellate Tribunal Despite Procedural Objections

Kolkata: The Calcutta High Court, in a judgment delivered by Hon'ble Justice ShampaSarkar on May 19, 2025, has dismissed a revisional application filed by Ambhi Impex Private Limited & Ors. challenging a Debts Recovery Tribunal-II, Kolkata (DRT) order. The High Court declined to exercise its supervisory jurisdiction under Article 227 of the Constitution, emphasizing the availability of an efficacious alternative remedy through an appeal under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002. This decision came despite the petitioner's primary grievance that the DRT had disposed of their main Securitisation Application (S.A.) on merits when only an Interlocutory Application (I.A.) was purportedly scheduled for hearing.

Case Background

The dispute originated from SARFAESI proceedings initiated by Punjab National Bank (PNB) against Ambhi Impex Pvt. Ltd. (the petitioners). The petitioners had challenged these proceedings, including a sale notice dated November 7, 2022, for a secured asset. The DRT, in its order dated January 10, 2023, dismissed the petitioners' S.A. No. 217 of 2021 and I.A. No. 1605 of 2022. This DRT order upheld the e-auction sale of the secured asset to Mr. Ashok Kumar Ghosh (opposite party No. 3) for Rs. 5,53,22,000, against a reserve price of Rs. 3,03,97,000. The DRT found no irregularities in PNB's recovery procedure.

Petitioners' Arguments for High Court Intervention

Mr. Jaydip Kar, Senior Advocate representing the petitioners, argued before the High Court that: * The DRT's order was passed in violation of the principles of natural justice as the main S.A. was decided on merits without being formally fixed for hearing; only I.A. 1605 of 2022 (challenging the sale notice) was listed. * Arguments on the S.A.'s merits were made only to substantiate the challenge to the sale notice and not for the S.A.'s final disposal to their "fullest satisfaction." * The DRT's action constituted a procedural irregularity and wrongful assumption of jurisdiction , making the order amenable to the High Court's supervisory powers under Article 227, notwithstanding the statutory appeal provision. * Reliance was placed on precedents such as Atin Arora vs Oriental Bank of Commerce to support the plea for High Court intervention.

Respondents' Counter-Arguments

Mr. Samrat Sen, Senior Advocate for Punjab National Bank, and Mr. Bikash Ranjan Bhattacharya, Senior Advocate for the auction purchaser, opposed the petition, contending: * The High Court should not exercise its Article 227 jurisdiction due to the efficacious alternative remedy available under Section 18 of the SARFAESI Act. * The petitioners had effectively invited the DRT to consider the merits of the S.A. by extensively arguing points from it and filing detailed written notes covering all issues. * The petitioners failed to demonstrate any prejudice suffered due to the alleged procedural lapse. * The revisional application was an attempt to bypass the statutory appeal process and its pre-deposit requirement. * They cited Supreme Court judgments like Phoenix Arc Private Limited vs Vishwa Bharati Vidya Mandir and Punjab National Bank vs O.C. Krishnan , which advocate judicial restraint when alternative remedies exist, especially under the SARFAESI Act.

High Court's Reasoning and Decision

Justice ShampaSarkar , after considering the rival contentions and perusing the records, including the DRT's order and the written submissions, found no grounds to interfere.

The Court noted that the DRT's impugned order of January 10, 2023, itself recorded that counsel for the petitioners had "advanced arguments on all points, including all objections raised in the S.A." The DRT had framed and decided numerous issues pertinent to the S.A., such as estoppel, limitation, NPA classification, valuation, and one-time settlement.

> Pivotal to the High Court's reasoning was the content of the petitioners' own written notes of arguments submitted to the DRT. The Court observed: "although it was sought to be filed in I.A. No. 1605 of 2022, the merits of the entire case had been elaborately discussed in the said written notes." (Para 34 of the judgment)

The concluding prayer in the petitioners' written notes before the DRT sought a declaration that the bank's actions under SARFAESI were "illegal, unlawful and bad in law" and "liable to be dismissed with cost," which the High Court interpreted as indicating that the entire matter was argued.

> "The conduct of the parties, the nature of submissions made before the learned tribunal, the contents of the written notes, persuades this court to hold that although, the I.A. was fixed for hearing on the point of validity of the sale notice, the hearing actually proceeded on the merits of the case and entire matter were argued by both parties." (Para 37)

The Court found no arbitrariness or injustice in the DRT's disposal of the matter that would necessitate interference under Article 227. It held that the DRT had neither abused its power nor exceeded its jurisdiction.

Citing established Supreme Court precedents, including Phoenix Arc (supra) and Punjab National Bank (supra) , Justice Sarkar emphasized that the SARFAESI Act provides a fast-track procedure for debt recovery, and this should not be derailed by recourse to Articles 226/227 when a statutory appeal is available.

> "This court is not inclined to exercise jurisdiction under Article 227 of the Constitution of India and the points which have been raised by the petitioners before this court, are also available under Section 18 of the SARFAESI Act, before the learned appellate tribunal, including all challenges to the merits of the decision arrived at." (Para 38)

Final Order and Implications

The Calcutta High Court dismissed the revisional application (C.O. 553 of 2023). However, it granted liberty to the petitioners to approach the learned appellate tribunal under the SARFAESI Act. The Court directed that the appellate tribunal should consider the period of pendency of the revisional application before the High Court when deciding any issue of limitation and should not be influenced by the High Court's order. All interim orders were vacated.

This judgment reinforces the judicial policy of deference to statutory appellate mechanisms, particularly in specialized legislative frameworks like the SARFAESI Act. It underscores that even if procedural grievances are raised against a tribunal's order, the High Court, under its supervisory jurisdiction, will generally direct the aggrieved party to exhaust the alternative remedies provided by the statute, unless exceptional circumstances of perversity or jurisdictional error are unequivocally established.