The SARFAESI Act provides an efficacious and expeditious remedy to borrowers under Section 17, allowing them to challenge the actions of the secured creditor. The absence of a judicial remedy under Chapter II does not render the entire chapter ultra vires the Constitution of India.

JUDGMENT

Subramonium Prasad, J. The Petitioners have filed the instant writ petition praying for the following reliefs:

"1. Issue an appropriate Writ striking down Chapter II of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 for not providing an avenue of judicial redress against ARCs who have defaulted in their statutory obligations including for borrowers, the petitioners herein;

Alternatively, issue a Writ of Mandamus to the Reserve Bank of India to exercise its powers under Section 12 of the SARFAESI Act (mandating RBI to work in, the public interest and to regulate the financial system of the country) to provide legal remedies to the borrowers for the purposes of enforcement of provisions of Chapter II of the Act in its letter and spirit;

Further alternatively, issue a Writ of Mandamus to the Union of India to exercise its powers under Section 38(1) of the SARFAESI Act (mandating central government to make rules for carrying "out the provisions of the Act") to provide legal remedies to the borrowers for the purposes of enforcement of provisions of Chapter II of the Act in its letter and spirit;

2. Issue a Writ of Mandamus directing the Reserve Bank of India to amend Securitization Companies and Reconstruction Companies (Reserve Bank) Guidelines and Directions, 2003 to make provisions in it to the effect that defaulting ARC companies including RARC respondent herein, shall not be entitled to proceed as per provisions of SARFAESI Act and shall lose their rights to enforce security under provisions of SARFAESI Act;

3. Issue appropriate writ of mandamus directing Reserve Bank of India to take appropriate decision as per law on the representation dated 9.10.2020 for recalling the certificate of registration of respondent RARC to carry on business of Securitization and Asset Reconstruction within the meaning of SARFAESI Act;

4. Issue an appropriate Writ restraining/prohibiting the RARC/respondent from proceeding any further under the provisions of SARFAESI Act against the Petitioners and/or their only aforesaid residential house bearing H. No. 84, Bharat Nagar, New Friends Colony, New Delhi."

2. Shorn of details, the facts leading to the instant writ petition are as under:

i. The State Bank of Bikaner and Jaipur (hereinafter referred to as `SBBJ') granted cash credit (hypothecation) to the Petitioners with a limit to the sum of Rs. 10 crores and a sub-limit of Rs.4 crores on 24.11.2009. The Petitioners were also granted Bank Guarantee loan of Rs.5crores.

ii. The Petitioners in order to secure the cash credit (hypothecation) and the Bank Guarantee granted by SBBJ gave an equity mortgage of two properties which are as under:

a) Ground Floor, first floor, second floor, third floor of No. 84, Bharat Nagar, Opposite D-Block, New Friends Colony, New Delhi (Bharat Nagar Property). It is stated by the Petitioners that the mortgage of the second floor of the said property was subject to the tenancy rights of the tenant since the year 2000.

b) K-47A, Lajpat Nagar-II, New Delhi (Lajpat Nagar Property)

iii. It is stated that Laxmi Vilas Bank (hereinafter referred to as `LVB') i.e., Respondent No.5 herein, gave cash credit (hypothecation) to the Petitioners with a limit for the sum of Rs.5 crores and sub-limit of Rs.2 crores. The Bank Guarantee for the sum of Rs.10 crore was also given to the Petitioners and the abovementioned two properties i.e. Bharat Nagar and Lajpat Nagar property were made by the Petitioners by way of pari passu to secure the said amount.

iv. The cash credit (hypothecation) was enhanced by SBBJ to Rs.10 crores with sub-limit of Rs.4 crores and Bank Guarantee was enhanced to Rs.10 crore.

v. On account of a survey conducted by the Income Tax Department, the bank accounts of the Petitioners were frozen. The loan accounts of the Petitioners were also frozen by the Income Tax Department. The Bank Guarantees issued by LVB were removed by MMTC Ltd. and the accounts of the Petitione