V.V.S. RAO, J :-

These writ petitions are filed either by the borrowers or sureties who entered into loan transactions with banks/financial institutions (FIs). In a couple of cases, the petitions are filed against Securitization and Reconstruction Companies (SRCs) in whose favour the loans were assigned. Similar questions of law that arise necessitating this common order are (l) Whether a writ petition under Article 226 of the Constitution of India would lie against private banks/FIs or SRCs; and (2) Whether it is not necessary for the petitioners to exhaust the effective and efficacious alternative remedy available to them. These questions arise in the context of recovery proceedings initiated by the private bodies for enforcement of security interest under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the SARFAESI Act or the Act).

Background Facts

2. It would be suffice to refer to three cases to notice the factual matrix illustratively.

WP No.24887 of 2010

3. WP No.24887 of 2010 is filed against the ICICI Bank Limited (ICICI) and Asset Reconstruction Management Services (ARMS) which is a division of Asset Reconstruction Company (India) Limited (ARCIL). The petitioner's son availed loan about Rs.16.39 lakhs for construction of house. The loan is secured by the insurance policy issued by ICICI Lombard Limited and - mortgage on the property. The borrower was a software engineer in Mumbai. He died in suspicious circumstances. A Sessions Case being SC No.91 of 2008 on the file of the Sessions Judge, Alibagh in Maharashtra against the borrower's wife and others was pending. After death of his son, the petitioner got issued lawyer's notice dated 9.9.2006 requesting the ICICI to adjust the insurance amount towards the loan. The ICICI responded by issuing notice of demand under Section 13(2) of the Act. The petitioner sent two more legal notices on 21.10.2008 and 6.2.2009 requesting ICICI to settle the insurance claim, in vain. The petitioner moved Banking Ombudsman, Mumbai who passed an order to the effect that since the criminal case was pending, the matter will be decided after conclusion of the criminal case. It appears ICICI Lombard denied liability on the ground that the insured committed suicide disentitling the nominee to claim insurance amount.

4. The notice of demand dated 4.9.2008 under Section 13(2) of the Act was not pursued by ICICI. It appears in 2009 or 2010, the loan was assigned to ARMS. They issued and delivered notice of possession under Section 13(4) of the Act duly affixing to the door of the house. It is alleged that their officers are regularly visiting the house in connection with recovery of loan. Challenging the possession notice, the petitioner filed the writ petition.

5. ARMS is contesting the matter. While objecting to the exercise of writ jurisdiction on the ground of non-exhaustion of alternative remedy, third respondent would submit as follows. Non-joinder of ICICI Lombard entails in dismissal of the writ petition; the petitioner is a co-borrower for the loan; the plea to adjust insurance amount is untenable; action was initiated by ARMS as per the provisions of the Act and respondents 1 and 2 have no role; the notice was sent to both the borrowers to the last known address; and also affixed outside the property which is deemed service and hence, possession notice is duly served. The petitioner did not pay any outstanding amount till date and an amount of Rs.28 lakhs is due as on the date of filing of the counter.

WP No.22259 of 2010

6. The petitioner's father purchased house site (205.7 1/2 square yards) under registered sale deed dated 19.12.1952. After his death, the property devolved on owner's wife who appears to have executed a settlement deed in favour of petitioner's son on 21.7.1972 giving vested remainder. The respondents 3 and 4 availed loan from Dhanalakshmi Bank Limited. The petitioner's son was a guarantor.