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2020 Supreme(AP) 376
ANDHRA PRADESH HIGH COURT AT AMARAVATI
C. Praveen Kumar, Lalitha Kanneganti, JJ.
M/s. Sri Sai Rama Tractors - Appellant
Versus
State Bank Of India - Respondent
Writ Petition No. 14911 of 2019
Decided On : 13-08-2020
C.V.R. Rudra Prasad, Advocate, S. Satyanarayana Moorthy, Advocate
A writ petition is not maintainable against the issuance of a notice under Section 13(2) of the SARFAESI Act, as an efficacious alternative remedy is available to the petitioner under Section 17 of the Act.
Headnote:
SARFAESI ACT - SECTION 13(2) - WRIT PETITION - MAINTAINABILITY - EFFICACIOUS ALTERNATIVE REMEDY - WRIT JURISDICTION - CIRCUMSTANCES WHEN WRIT PETITION MAINTAINABLE AGAINST NOTICE UNDER SECTION 13(2) OF THE SARFAESI ACT.
Fact of the Case:
The petitioner, a partnership firm engaged in transport business, availed a term loan under fleet finance from the respondent bank and purchased 12 vehicles by hypothecating them. Due to recent developments in the political and economic scenario, the petitioner was unable to pay the instalments regularly, resulting in the loan accounts being classified as NPAs. The respondent bank issued a demand notice under Section 13(2) of the SARFAESI Act, calling upon the petitioner to pay the entire outstanding loan amount. The petitioner filed a writ petition challenging the demand notice, alleging that the bank officials were threatening to seize the hypothecated vehicles without waiting for the statutory period of 60 days.
Finding of the Court:
The court held that a writ petition is not maintainable against the issuance of a notice under Section 13(2) of the SARFAESI Act, as an efficacious alternative remedy is available to the petitioner under Section 17 of the Act. The court noted that the petitioner did not give any reply to the impugned notice and directly approached the court under Article 226 of the Constitution of India, circumventing the remedy available before the Debts Recovery Tribunal.
Issues: 1. Whether a writ petition is maintainable against the issuance of a notice under Section 13(2) of the SARFAESI Act? 2. Whether the petitioner has an efficacious alternative remedy under Section 17 of the Act?
Ratio Decidendi: The court relied on several Supreme Court judgments which held that a writ petition is not maintainable where an efficacious alternative remedy is available. The court observed that the SARFAESI Act provides a detailed mechanism for redressal of grievances, including the right to appeal to the Debts Recovery Tribunal and the Appellate Tribunal. The court held that the petitioner should have exhausted the remedies available under the Act before approaching the court under Article 226 of the Constitution.
Final Decision: The court dismissed the writ petition, holding that it was not maintainable. The court granted liberty to the petitioner to approach the Debts Recovery Tribunal for appropriate relief.
JUDGMENT
C.Praveen Kumar, J. - The present Writ Petition came to be filed seeking issuance of writ of Mandamus declaring the action of the respondent in seeking to seize and take away the hypothecated vehicles mentioned at Schedule-C Part-1 in the demand notice in DONDAPARTHI/SARFAESI/SSRT, dated 06.09.2019, received by the Petitioner, on 12.09.2019, under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [ for short 'SARFAESI'], as arbitrary, illegal and in violation of the procedure contemplated under the SARFAESI and Article 14 and 19 of the Constitution of India.
2. The circumstances which lead to filing of the present Writ Petition are as under :
(i) The Petitioner is a Partnership Firm represented by its Managing Partner Sri Pradhana Rajendra Prasad, engaged in transport business.
(ii) In the month of September, 2018, the Petitioner Firm availed a Term Loan under Fleet Finance to a tune of Rs.5,15,00,000/- from the Respondent Bank and purchased 12 Tata 4923 Model Lorries [Trip Trailors] by hypothecating the said vehicles and other securities. It is said that, the Petitioner Firm is regularly paying the instalment amounts and so far paid Rs. 48,34,757/-.
(iii) The Petitioner Firm has taken a separate Term Loan of Rs.37,61,000/- under SME Car Loan from the Respondent Bank to purchase a Toyota Fortuner and paid instalment amount of Rs.9,05,886.84 paise.
(iv) The Petitioner Firm entered into a sub-contract with Steel City Shipping Services (P) Limited, Visakhapatnam, which is the main contractor with Visakhapatnam Port Trust, for engaging 10 Nos. TATA 7923 Model Tipper Trailer Lorries for handling of Coal, Limestone, Bauxite, Iron Ore and Fertilizers and other materials at Visakhapatnam under Work Order, dated 20.04.2019, valid for a period of five years. It is said that, the Petitioner Firm engaged 10 vehicles out of the 12 vehicles purchased under the aforesaid Fleet Finance on monthly hire charge basis.
(v) It is said that, the Petitioner Firm was prompt in paying instalments, however, due to recent developments in political and economic scenario in the country and more particularly in the State of Andhra Pradesh, most of the works are stalled for time being, affecting the imports, which resulting in the Petitioner Firm not paying the instalments regularly. Accordingly, the loan accounts of the Petitioner Firm were classified as NPA's.
(vi) Having regard to the above, the Respondent Bank issued the impugned demand notice, dated 06.09.2019, under Section 13(2) of the SARFAESI Act, calling upon the Petitioner Firm to pay the entire outstanding loan amount on both the loan accounts. It is said that, the Respondent officials are also threatening to seize the hypothecated vehicles without waiting till the expiry of the statutory period of 60 days. Hence, the Writ Petition is filed.
3. A counter came to filed denying the averments made in the affidavit filed in support of the Writ Petition. Apart from that, it is stated that, the Writ Petitioner did not give any reply to the impugned notice, but, however, approached this court directly under Article 226 of the Constitution of India, circumventing the remedy available to him before the Debts Recovery Tribunal.
4. The short question that arises for consideration is, whether a writ would be maintainable against the issuance of Notice under Section 13(2) of the SARFAESI Act, more so, when remedy under Section 17 of the Act is available to the Petitioner?
5. Before proceeding further, it is to be noted that writ jurisdiction is an extraordinary jurisdiction of the High Court under Article 226 and 227 of the Constitution of India. It is settled legal position that a writ petition under Article 226 of the Constitution of India is normally not entertained where there is an efficacious alternative remedy.
6. In Kanaiyalal Lalchand Sachdev & Ors v. State Of Maharashtra & Ors,2002 2 SCC 782 where the High Court has dis
