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IN THE HIGH COURT OF KERALA AT ERNAKULAM
ANIL K. NARENDRAN, MURALEE KRISHNA S., JJ.
M/s. Thiruvonam Industries - Appellant
Versus
Hero Fincorp Ltd. - Respondent
W.A. No. 1708 of 2025
Decided On : 18-07-2025
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.
| Table of Content |
|---|
| 1. writ jurisdiction and sarfaesi act invocation (Para 1 , 2) |
| 2. high court's limited jurisdiction under sarfaesi (Para 3 , 4 , 5 , 6) |
| 3. maintainability of writ petitions against private entities (Para 7 , 8) |
| 4. threshold for sarfaesi applicability regarding overdue amounts (Para 10 , 11 , 12) |
| 5. dismissal of writ appeal (Para 13) |
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 respondent Hero Fincorp Limited for Rs.88,00,000/-. The property having an extent of 75.5 cents comprised in Re-survey No.46/2 and 46/3-2 of Thaikkattussery Village, which is owned by the 3rd petitioner, was offered as security. On account of the default committed by the borrower in remitting the monthly instalments, the 1st respondent initiated proceedings under the SARFAESI Act. The document marked as Ext.P1 is a copy of the notice dated 16.03.2023 issued by the 2nd respondent Authorised Officer, under the provisions of the SARFAESI Act. Thereafter, the 1st respondent approached the Chief Judicial Magistrate, Alappuzha, under Section 14 of the SARFAESI Act. In M.C.No.221 of 2024, the Chief Judicial Magistrate appointed an Advocate Commissioner, who took possession of the secured asset on 23.04.2025, as evident from Ext.P2 inventory.
3. On 13.05.2025, when W.P.(C)No.18126 of 2025 came up for admission, the learned Single Judge issued urgent notice on admission by speed post to respondents 1 to 3 and granted an interim order staying the operation of Exts.P1 and P2, for a period of one month, on condition that the petitioners shall remit an amount of Rs.10 lakhs, within a period of one month. The petitioners did not comply with the said condition stipulated in the interim order dated 13.05.2025. On 18.06.2025, when the writ petition came up for consideration, the learned Single Judge dismissed the same by the impugned judgment. Paragraphs 2 to 5 of that judgment read thus;
“2. An interim order was passed by this court on 13.05.2025 as follows.
“Issue urgent notice on admission by speed post to respondents 1 to 3. There will be an interim order staying the operation of Exts.P1 and P2 for a period of one month on condition that the petitioners remit an amount of Rs. 10 lakhs within a period of one month.”
3. It is not disputed before me that no amount has been paid pursuant to the above order.
4. This Court exercises very limited jurisdiction in matters arising under the SARFAESI Act, as repeatedly held by the Honourable Supreme Court in several judgments, including in South Indian Bank Ltd. and Ors. v. Naveen Mathew Philip and Ors. 2023 17 SCC 311 that the powers conferred under Article 226 of the Constitution of India are rather wide but are required to be exercised only in extraordinary circumstances in matters pertaining to proceedings and adjudicatory scheme qua a statute, more so in commercial matters involving a lende
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.
A writ petition cannot be entertained against SARFAESI Act proceedings when an adequate statutory remedy before the Debts Recovery Tribunal is available.
Writ jurisdiction under Article 226 not entertainable against SARFAESI proceedings due to efficacious DRT remedy under Section 17.
Writ petitions challenging actions under SARFAESI Act are not maintainable if alternative statutory remedies are available.
An aggrieved party must exhaust statutory remedies under the SARFAESI Act before invoking the High Court's jurisdiction under Article 226.
Writ petitions under Article 226 not maintainable against private scheduled banks' SARFAESI actions; borrowers must exhaust Section 17 remedy before Debts Recovery Tribunal; High Courts cannot direct....
Writ petitions against private banks are not maintainable when statutory remedies under the SARFAESI Act exist, illustrating the separation of judicial authority from statutory mechanisms.
Point of Law : Section 17 of SARFAESI Act reads application against measures to recover secured debts.
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