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IN THE HIGH COURT OF KERALA AT ERNAKULAM
ANIL K. NARENDRAN, MURALEE KRISHNA S.
Thiruvonam Industries – Appellant
Versus
Hero Fincorp Ltd. – Respondent
The legal document discusses the jurisdictional limitations of High Courts in intervening in proceedings initiated under the SARFAESI Act by private non-banking financial companies. The key points are as follows:
The High Court's jurisdiction under Article 226 of the Constitution is limited in matters involving proceedings under the SARFAESI Act, especially when an effective statutory mechanism exists for redressal and the parties are required to approach the Tribunal designated under the Act (!) (!) (!) .
The court emphasizes that interference should only occur in extraordinary circumstances and when there is a clear violation of legal procedures or statutory provisions. Non-compliance with interim orders and lack of bona fides on the part of the borrower can justify the dismissal of writ petitions or appeals (!) (!) .
The decision clarifies that private non-banking financial companies, such as Hero Fincorp Limited, do not generally fall under the category of instrumentalities or agencies of the State unless they perform a public function or are entrusted with statutory public duties. Therefore, courts are typically reluctant to entertain writ petitions against such private entities under Article 226, unless specific public law elements are involved (!) (!) (!) (!) (!) (!) (!) (!) .
Regarding the maintainability of the writ petition based on the amount overdue, the Court refers to statutory provisions that exclude proceedings where the overdue amount is less than 20% of the principal and interest, reinforcing that such proceedings are within the scope of the SARFAESI Act and are not subject to challenge in a writ petition unless other statutory conditions are violated (!) (!) (!) .
Ultimately, the Court dismissed the writ appeal, affirming that the proceedings initiated by the private financial institution were legally valid and that the High Court's intervention was unwarranted under the circumstances described (!) (!) .
In summary, the legal principles reinforce that courts should exercise restraint and adhere to statutory mechanisms when dealing with proceedings under the SARFAESI Act, particularly against private entities, and that the threshold for interference is high, especially when procedural compliance and bona fide conduct are lacking by the borrower.
JUDGMENT :
Anil K. Narendran, J.
1. The appellants-petitioners have filed W.P.(C)No.18126 of 2025, invoking the writ jurisdiction of this Court under Article 226 of the Constitution of India, seeking a declaration that Ext.P1 notice dated 16.03.2023 issued by the 2nd respondent Authorised Officer of the 1st respondent Hero Fincorp Limited, which is a private non-banking financial company, invoking the provisions under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and all further proceedings and documents issued pursuant thereto, are illegal and to quash the same; a writ of mandamus commanding the 1st respondent Hero Fincorp Limited to permit them to remit the due amount standing in the loan account mentioned in Ext.P1 notice dated 16.03.2023, in 25 instalments and regularise the loan account mentioned in the said notice; and a writ of mandamus commanding the 1st respondent Hero Fincorp Limited to allow them three months’ repayment holiday.
2. Going by the averments in the writ petition, the 1st petitioner M/s. Thiruvonam Industries, along with petitioners 2 and 3, availed financial assistance from the 1st respon
The High Court cannot intervene in SARFAESI Act proceedings initiated by a private non-banking financial company if alternatives are specified, especially when compliance with court orders is lacking....
Writ petitions against private financial institutions under the SARFAESI Act are not maintainable; statutory remedies must be pursued instead.
The review jurisdiction under Order XLVII Rule 1 is limited and requires evident errors for modification; mere non-compliance with judicial orders does not suffice to invoke review.
Writ petitions challenging actions under SARFAESI Act are not maintainable if alternative statutory remedies are available.
Point of Law : Section 17 of SARFAESI Act reads application against measures to recover secured debts.
Financial institutions cannot initiate SARFAESI proceedings for loan amounts below Rs.20,00,000/- as per Central Government regulations.
The High Court lacks jurisdiction to intervene in proceedings under the SARFAESI Act, reinforcing the necessity for adherence to the statutory remedy framework prior to court interference.
The SARFAESI Act provisions, including the enforcement of security interest, the rights of the borrower, the appeal process, and the non-maintainability of writ petitions against private financial in....
The High Court should not interfere with SARFAESI Act proceedings when effective statutory remedies are available, emphasizing the importance of adhering to legislative intent.
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