Ai Papers Pvt. Ltd. vs Union Bank of India

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2023 Supreme(P&H) 2521

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
G.S. SANDHAWALIA, HARPREET KAUR JEEWAN, JJ.
M/s. Ai Papers Pvt. Ltd. – Petitioner
Versus
Union Bank of India & Ors. – Respondents
CWP NO. 5737 of 2023
Decided On : 20-03-2023

Advocates Appeared:
Mr. G.S. Brar, Advocate; For the Petitioners
Mr. R.S. Bhatia, Advocate for Respondent No.1-Bank.

Headnote:(A) Constitution of India - Articles 226 and 227 - Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Demand notice issued under Section 13(2) challenged - High Court holds alternative remedy available at Debts Recovery Tribunal - Principles reaffirmed from relevant case law regarding alternative remedies in financial recovery cases. (Paras 3, 5, 7)

(B) Writ Jurisdiction - Court's discretion to entertain writ petitions is limited when statutory remedies are available - High Courts must exercise caution before interfering in bank recovery proceedings. (Paras 3, 7)

Facts of the case:
The petitioner challenges a demand notice and possession order from a bank, claiming dues of over Rs. 10 Crores, stating that the bank should not act before the Tribunal decision.

Findings of Court:
The bank is entitled to pursue its statutory rights for asset recovery under the law, and the writ petition does not warrant intervention of High Court.

Issues: Whether High Court should intervene when a statutory remedy exists and the jurisdictional limits of writ petitions in recovery matters.

Ratio Decidendi: The court emphasized that when statutory remedies are available, particularly under the SARFAESI Act, the High Court should refrain from exercising its extraordinary jurisdiction and direct parties to pursue alternative legal remedies.

Result: Writ petition dismissed.

Table of Content
1. demand notice and outstanding amount details. (Para 1 , 2)
2. court's perspective on alternative remedies. (Para 3)
3. statutory remedies under sarfaesi act highlighted. (Para 4)
4. high court's discretion limited by alternative remedies. (Para 5)
5. a borrower’s access to drt under sarfaesi act. (Para 6)
6. rejection of extraordinary jurisdiction. (Para 7)
7. dismissal of writ petition with alternative remedies. (Para 8)

JUDGMENT

Mr. G.S. Sandhawalia, J. (Oral)

Challenge in the present writ petition filed under Articles 226/227 of the Constitution of India is to the demand notice issued under Section 13 (2) of the Securitization and Re-construction of Financial Assets and Enforcement of Security Interest Act, 2002 dated 25.04.2022 (Annexure P-4) and the possession order dated 02.05.2022 (Annexure P-5)

2. The said demand notice (Annexure P-4) would go on to show that as on 31.03.2022 a sum of Rs. 10,23,96,771.87 was outstanding.

3. We are, thus, of the considered opinion that the bank has only taken steps to secure possession by approaching the District Magistrate and if the petitioner has any grievance, he has an alternative and efficacious remedy in accordance with law to approach the Debts Recovery Tribunal as such against the possession notice which was issued on 24.09.2021 (Annexure P-2) and followed up by notice dated 28.01.2022 (Annexure P-3), keeping in view the law laid down in United Bank of India v. Satyawati Tondon & others , (2010) 8 SCC 110 . The principles laid down in the said case were also arising out of the proceedings of SARFAESI Act and resultantly discussing the law in detail it was held that as under:-

"27. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection.

28. Insofar as this case is concerned, we are convinced that the High Court was not at all justified in injuncting the appellant from taking action in furtherance of notice issued under Section 13(4) of the Act.

29. In the result, the appeal is allowed and the impugned order is set aside. Since the respondent has not appeared to contest the appeal, the costs are made easy."

4. In Union Bank of India and another v. Panchanan Subudhi , (2010) 15 SCC 552 , the High Court had disposed of the writ petition by directing the petitioners to pay a sum of Rs. 10 lakhs in installments for liquidating the dues of the appellant-Bank and proceedings were pending before the Debts Recovery Tribunal. During the pendency of the proceedings before the Tribunal, the Bank had issued notices under Section 13 (2) and 13 (4) of the Securitization and Re-construction of Financial Assets and Enforcement of Security Interest Act, 2002 and even the recovery amount had been quantified by the Tribunal. Resultantly, the High Court had been approached, which had directed that the amount be paid in installments. Thereafter, the appeal had been filed before the Apex Court, wherein it was held that there was no justification for the High Court to entertain the writ petition by ignoring the fact a statutory alternative remedy was available to the respondent under Section 17 of the SARFAESI Act. Section 17 reads as under:-

"17. Application against measures to recover secured debts.- (1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, 1 [may make an application along with such fee, as may be prescribed,] to the Debts Recovery Tribunal having jurisdiction in the matter within forty five da