IMPORTANT POINT
The High Court should not interfere with SARFAESI Act proceedings when effective statutory remedies are available, emphasizing the importance of adhering to legislative intent.

JUDGMENT :

S. MANU, J.

1. The Appellant Bank is aggrieved by the judgment dated 4 November 2024 of the learned Single Judge in W.P. (C) No. 38607/2024.

2. W.P. (C) No. 38607 of 2024 was filed seeking the following prayers:

“(I) To issue a writ of mandamus or any other appropriate writ, order or direction directing the 1st respondent bank to close the loan accounts of the petitioner by allowing him to pay the outstanding amounts in monthly installments.

(II) To issue a writ of mandamus or any other appropriate writ, order or direction commanding the Respondent banks not to proceed further under the Securitization and Reconstruction of Financial assets and Enforcement of Security Interest Act 2002 or under any other law against the petitioner.

(III) To dispense with the translation of documents from vernacular language to English on the undertaking that the same shall be produced as and when directed by the Hon'ble Court.”

3. The Respondent had availed a Cash Credit Open Loan (CCOL) for an amount of Rs. 40,00,000/- and a term loan under the Emergency Credit Line Guarantee Scheme (ECLGS) for an amount of Rs. 7,80,000/- from the Appellant Bank, by creating an equitable mortgage of 20.25 Ares (50.04 Cents) of land along with his residential building in Survey No. 180/20 A 182 of Mannarkad Village. Since there was default in paying the amounts, the Bank classified the accounts as Non-Performing Assets (NPA) and proceedings under the SARFAESI Act were also initiated. The learned counsel for the Bank submitted that the total outstanding amount is Rs. 51,83,719.18 as on 02.11.2024.

4. The learned Single Judge disposed the writ petition directing the petitioner to pay the upfront amount of Rs. 10,00,000/- on or before 20.11.2024 and the remaining outstanding amount along with future interest, if any, in 12 equal monthly installments. The first installment was directed to be paid on or before 20.12.2024 and the remaining 11 installments on or before 20th day of each succeeding month. Further, the petitioner was directed that in case of failure to make payment of Rs. 10,00,000/- or any subsequent installments as directed above, the bank shall be free to proceed further against the petitioner for realizing the outstanding amount. The Bank is deeply aggrieved by the impugned judgment and it contends that the same is opposed to the principles laid down and reaffirmed in a catena of judgments by the Hon’ble Supreme Court.

5. In writ petitions under Article 226 pertaining to the proceedings under the SARFAESI Act if reliefs are granted, it would frustrate the proceedings under the SARFAESI Act and facilitate bypassing of the adjudicatory mechanism under the Act. Scope of intervention in such cases has been analyzed by the Hon'ble Supreme Court in numerous judgments and in unmistakable terms the Apex Court has declared that it is improper for the High Courts to entertain such challenges.

6. We advert to the statement of objects and reasons of the SARFAESI Act also in this context and extract it hereunder:

“Statement of Objects and Reasons - The financial sector has been one of the key drivers in India's efforts to achieve success in rapidly developing its economy. While the banking industry in India is progressively complying with the international prudential norms and accounting practices, there are certain areas in which the banking and financial sector do not have a level playing field as compared to other participants in the financial markets in the world. There is no legal provision for facilitating securitisation of financial assets of banks and financial institutions. Further, unlike international banks, the banks and financial institutions in India do not have power to take possession of securities and sell them. Our existing legal framework relating to commercial transactions has not kept pace with the changing commercial practices and financial sector reforms. This has resulted in slow pace of recovery of defaulting loans and mounting levels of