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2023 Supreme(P&H) 3327

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
LISA GILL, RITU TAGORE, JJ.
M/s. Technico Strips and Tubes Private Limited & Anr. – Petitioners
Versus
Deutsche Bank AG & Anr. – Respondents
CWP NO. 21657 of 2022(O&M), CWP 21597 of 2023 (O&M
Decided On : 18-12-2023

Advocates Appeared:
Mr. Rohit Suri, Advocate; For the Petitioners) in CWP Nos.21657, 21661,17076 of 2022 and CWP Nos. 8509 and 18306 of 2023.
Mr. Anand Chibbar, Sr. Advocate with Mr. Chandeep Singh, Advocate and with Ms. Ateevraj Sandhu, Advocate; For the Petitioner (in CWP no. 11814 of 2020).
Mr. V.K. Sachdeva, Advocate and Mr. Pulkit Sachdeva, Advocate; For the Petitioner(s) in CWP-3700, 3707,14638-2023,and 27731-2019 and for Respondent in CWP No. 2676 of 2019.
Mr. Akhilesh Vyas, Advocate; For the Petitioner (s) in CWP-6018-2023, 20061 of 2023 CWP-23554-2022, CWP-13692-2023. CWP-23673-2022, 24282-2022, 29512-2022, 28268-2022 and CWP-22132, 22177 of 2023.
Mr. Aditya Dassaur, Advocate and Mr. C.L.Verma, Advocate; For the Petitioner (s) in CWP-7570-2023.
Mr. Sandeep Kumar, Advocate; For the Petitioner in CWP-9879-2023
Mr. Ashok Malik, Advocate and Ms. Pridhi Singla, Advocate; For the Petitioner (s) in CWP Nos. 29642, 26450 and 10165 of 2022.
Mr. Vikram Singh, Advocate and Ms. Sumitra, Advocate; For the Petitioner (s) in CWP-8229-2023.
Mr. Vivek Goyal, Advocate and Mr. Shubham Pabbi, Advocate; For the Petitioner (s) in CWP-16152-2023 and CWP-26687-2022.
Ms. Ridhi Bansal, Advocate and Ms. Sidhi Bansal, Advocate; For the Petitioner (s) in CWP-17718-2023 and CWP-16156-2023.
Mr. Praveen Chander, Advocate; For the Petitioner (s) in CWP-33352-2019.
Er. Sandeep Suri, Advocate; For the Petitioners) in CWP-6685-2022.
Mr. Dheeraj Kumar, Advocate for Mr. H. P. S. Ishar, Advocate; For the Petitioner(s) in CWP-21044-2022.
Mr. Vikas Bali, Advocate; For the Petitioner (s) in CWP Nos. 15272, 21854, 21602, 22406, 26071, 21870 of 2022, CWP No. 10093, 6745 and 13492 of 2023.
Mr. Vishal Sharma Haritwal, Advocate; For the Petitioner in CWP-28992-2022.
Mr. Harsh Chopra, Advocate; For the Petitioner (s) in CWP-22114-2022 and CWP-28572-2022.
Mr. Ashok Kumar Khubbar, Advocate; For the Petitioners) in CWP-17184-2022. Mr. Aalok Jagga, Advocate; For the Petitioner(s) in CWP Nos. 13710, 8039,153, 27163, 27150,11941 of 2022 and CWP-30358-2018.
Mr. Anupam Bhanot, Advocate Mr. Brijesh Nandan, Advocate; For the Petitioner in CWP-10554-2023
Mr. Jyoti Sareen, Advocate; For the Petitioner in CWP No. 29461 of 2022.
Mr. Sahil Khunger, Advocate; For the Petitioner(s) in CWP-17717-2023 & CWP-11275-2023.
Mr. Ashish Sindher, Advocate; For the Petitioner in CWP-26312-2022.
Mr. Arav Gupta, Advocate; For the Petitioner in CWP Nos. 12358, 20970 of 2022.
Mr. Ankush Bharti, Advocate for Mr. K.K. Goel, Advocate; For the Petitioner in CWP-19238-2023 & CWP-18042-2023.
Mr.Ivan Singh Khosa, Advocate; For the Petitioner in CWP-26404-2022
Mr. Mukul Goyal, Advocate; For the Petitioner in CWP-7478-2028
Mr. A.S. Virk, Advocate; For the Petitioner in CWP-19865-2022.
Mr. Vivek Thakral, Advocate; For the Petitioner(s) in CWP-12447-2023.
Mr. Chetan Mittal, Senior Advocate with Mr. Gaurav Goel, Advocate for Respondents in CWP-27731-2019.
Mr. Gaurav Goel, Advocate with Mr. Mayank Aggarwal, Advocate for Respondent - Bank in CWP Nos.23676 of 2019,19165, 29461, 26404, 27093, 28349, 29749, 29345, 29890, 29922 of 2022 and 10554,10920,17717, 3707,15521, 3700,12447 of 2023.
Mr. C. S. Pasricha, Advocate; For the Petitioner in CWP-15521-2023 for the respondent(s)-Bank in CWP No. 6018 of 2023, CWP No. 23554, 22114, 21661, 20570, 28892 and 22447 of 2022, 6018,13692,16152,17718 of 2023.
Ms. Madhu Dayal, Advocate for Respondents no. 1 and 2 in CWP No. 21870 of 2022.
Mr. Manish Jain, Advocate and Mr. Mayur Kanwar, Advocate for Respondent no.2-Bank in 21870 of 2022.
Mr. Abhinav Sood, Advocate for Mr. Nitesh Jhajhria, Advocate for Respondent-HDFC Bank in CWP No. 26312 of 2022 and for Respondent No. 1 in CWP-21657-2022 & 26312-2022
Mr. Nitin Sachdeva, Advocate for Respondents no.5 and 6 in CWP No. 33352 of 2019.
Mr. Chandeep Singh, Advocate for Respondent-SBI in CWP No. 11814 of 2020
Mr. Dheeraj Siwach, Advocate For Mr. Mahesh Dheer, Advocate Respondent SBI in CWP No. 7570 of 2023
Mr. Anshul Rana, Advocate for Mr. J.S.Bagga, Advocate for Respondent-Bank in CWP Nos. 33352 of 2019 and 28268 of 2022.
Mr Atul Bhatia, Advocate for Respondents no. 1 and 2 in CWP No. 6685 of 2022.
Mr. S.K.Dhir, Advocate for the respondent-Bank in CWP No. 19268 of 2023, 23554 and 25595 of 2022.
Mr. Jatinder Sharma, Advocate for Respondent-Bank in CWP No. 17184 of 2022.
Mr. Rakesh Gupta, Advocate Mr. Rakshit Gupta, Advocate Mr. Amandeep Singh Punia, Advocate for Respondent-Bank in CWP No. 13710 of 2021, 8039, 21602, 26459, 11941, 27150, 27163 of 2022 and 10093, 22177 and 22132 of 2023.
Mr. Pankaj Nanda, Advocate for Respondent No. 1 in CWP-30358-2018
Mr. R.S. Bhatia, Advocate for PNB in CWP-153-2022.
Mr. Rakesh Gupta, Advocate for PNB in CWP No. 17853 of 2022.
Mr. Bhushan Bhatia, Advocate for PNB in CWP- 29642-2022.
Mr. D. K. Gupta, Advocate and Mr. Naresh Bagri, Advocate for Respondent No. 1 in CWP-21044-2022 for Respondents No. 1 to 3 in CWP-19865-2022 for Respondents No. 1 and 2 in CWP-21854-2022 and CWP- 22406-2022.
Mr. Arvind Rajotia, Advocate for Respondent - Bank in CWP-23159-2022.
Ms. Puneeta Sethi, Sr. Panel Counsel for Respondent no. 1-UOI in CWP No.23159 of 2022.
Mr. Vivek Sethi, Advocate and Mr. Mohit Sareen, Advocate for Respondents No.2 and 3 in CWP-23673-2022.
Mr. K. P. S. Dhillon, Advocate for Respondents) in CWP-23959-2022.
Mr. I.P.Singh, Advocate for Respondent no.2-Central Bank of India In CWP No. 394 of 2020.
Mr. Ankit Kaushal, Advocate for Respondent-Bank in CWP No. 15272 and 20407 of 2022.
Ms. Manjari Joshi, Advocate for Respondent-Bank in CWP No. 1997, 21128, 26687 of 2022, 652 and 2329 of 2023.
Mr. Himanshu Sharma, Advocate for Respondent - Bank in CWP Nos. 8509 and 18042 of 2023.
Mr. Sartaj Singh Gill, Advocate for Respondents No.2 to 4 in CWP-28992-2022.
Mr. Sumit Batra, Advocate for Respondents) in CWP No. 209674 and 22778 of 2022.
Mr. Rahul Tyagi, Advocate and Ms. Nikita Capoor, Advocate for Respondent no. 1 in CWP-21657-2022 (through video conferencing).
Mr. Ashok Kumar, Advocate for Respondent No.3 in CWP-28572-2022.
Mr. Rajan Chawla, Advocate and Mr. Arpit Chawla, Advocate; For the Petitioner in CWP-19463-2022 for Respondent (s) in CWP-14638-2023.
Mr. Amit Bansal, Advocate for Akshay Jain, Advocate for Respondent No.2 in CWP-23941-2022.
Mr. Mangesh Goel, Advocate and Mr. Neeraj Goel, Advocate; For the Petitioner in CWP No. 23941 and 7740 of 2023.
Mr. Brij Mohan Vinayak, Advocate for Respondent no. 1 in CWP No. 17076 of 2022.
Mr. Shekhar Verma, Advocate and Ms. Maninee, Advocate for HDFC in CWP No. 20970 of 2022.
Mr. Atul Sharma, Advocate And Mr. Tegjeet Singh, Advocate for petitioner in CWP No. 29345 of 2022.
Ms. Anamika Sheoran, Advocate for Mr. Vikas Singh, Advocate for Respondent no.4 in CWP No., 16707 of 2022.
Mr. Deepak Malhotra, Advocate for Respondent No. 2 in CWP-7538-2021.
Mr. Umang Goyal, Advocate; For the Petitioner in CWP No. 21597 of 2023.
Mr. P.S.Sobti, Advocate for Respondent no.2 in CWP No. 24282 of 2022.
Mr. Aditya Grover, Advocate for Respondent-IDFC Bank in CWP No. 29765 of 2022
Mr. Ajay Singla, Advocate for Respondent in CWP No. 26071 of 2022.
Mr. Jitender Dhanda, Advocate for Respondent in CWP No. 28892 of 2022.
Mr. G.S.Anand, Advocate for Respondent in CWP No. 12358 of 2022.
Mr. Nikita Garg, Advocate for Respondent no.2-Axis Bank in CWP No. 29512 of 2022.
Mr. Sandeep Jain, Addl.AG, Punjab.
Mr. Sukh

The High Court should not exercise jurisdiction under Article 226 in matters governed by the SARFAESI Act where effective remedies exist, and classification of accounts as NPAs is not subject to judicial review at this stage.

Headnote:(A) Constitution of India - Article 226 - SARFAESI Act, 2002 - Writ petitions challenging SARFAESI proceedings initiated against MSMEs for declaring accounts as Non-Performing Assets (NPA) - Petitioners argue violation of RBI Circular dated 17.03.2016 - Court finds no merit in claims, emphasizing that SARFAESI Act is a complete code and petitioners must exhaust remedies under the Act before seeking judicial intervention. (Paras 1, 32, 34)

(B) Jurisdiction - High Court's jurisdiction under Article 226 is to be exercised in extraordinary circumstances, particularly in matters involving recovery of public dues, and should not interfere when effective remedies are available under SARFAESI Act. (Paras 24, 26)

(C) Principles of Law - Classification of an account as NPA is not justiciable at the stage of judicial review, and issues related to compliance with RBI guidelines fall within the jurisdiction of the Debt Recovery Tribunal (DRT). (Paras 30, 32)

Facts of the case:
Petitioners, claiming to be MSMEs, challenged the declaration of their accounts as NPA under the SARFAESI Act, alleging violations of the RBI Circular regarding the mandatory referral to a Designated Committee for restructuring. (Paras 3, 4)

Findings of Court:
The Court ruled that the writ petitions were not maintainable as petitioners had not availed of the statutory remedies available under the SARFAESI Act. (Paras 33, 34)

Issues: The main issues were whether the High Court should exercise jurisdiction under Article 226 to intervene in SARFAESI proceedings and the legality of declaring accounts as NPA without mandatory referral to the Designated Committee. (Paras 1, 4)

Ratio Decidendi: The Court concluded that the SARFAESI Act provides a complete mechanism for redressal of grievances and that the classification of accounts as NPA is a matter for the DRT to adjudicate. (Paras 30, 32)

Result: Writ petitions dismissed with liberty to petitioners to seek remedies under the SARFAESI Act. (Paras 34, 35)

JUDGMENT

Mrs. Lisa Gill, J.

All the abovesaid writ petitions, details of which are tabulated in the schedule attached at the foot of the order, are taken up for hearing together at request and with consent of learned counsel for the parties as it is agreed that a common preliminary question arises for consideration in all these petitions i.e. "Whether jurisdiction should be exercised under Article 226 of the Constitution of India by the High Court for setting aside Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest proceedings ('for short SARFAESI Proceedings') on the ground of violation of Reserve Bank of India Circular (RBI) dated 17.03.2016 and whether the matter is within the realm of consideration by learned Debt Recovery Tribunal?"

2. Petitioners, in all the abovesaid writ petitions, claiming to be MSME's have challenged proceedings under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest, Act 2002 (for short 'SARFAESI Act') initiated against them. Learned counsel for the parties are ad idem that in majority of these writ petitions, notice(s) under Section 13(2) and 13(4) of SARFAESI Act stand issued after declaration of account as Non Performing Asset (NPA) on account of financial indiscipline. In some of the cases, order under Section 14 of SARFAESI Act has also been passed by learned District Magistrate. Details thereof as stated in respective writ petitions are reproduced as under:-

Sr No	CWP No.	Date of declaration of account as NPA	Notice u/S 13(2) of SARFAESI Act	Notice u/S 13(4) of SARFAESI Act	Objections
1	14638/2023	2/11/2022	30/11/22 27/02/2023, 15/02/2023	5/05/2023	23/01/2023
2	7538/2021	8/05/2018	06/06/2018	11/10/2018 18/10/2018	30/06/2018
3	19268/2023	31/03/2023	26/05/2023	NM	2/08/2023
4	3700/2023 alongwith	5/5/2022	15/7/2021 22/7/2021	23/01/2023	NM
5	3707/2023		01/08/2022 6/9/2022
6	28992/2022	Not Mentioned (NM)	Allegedly Never Served	25/07/2022	Not Mentioned, if filed (NM)
7	28268/2022	31/03/22	2/5/22	14/9/22	NM
8	23676/2019	31/03/2015	21/09/2016	09/12/2016	NM
9	7478/2022	NM	30/03/2021	9/3/2022	NM
10	6685/2022	15/04/2021	21/02/2022	11/03/2022	NM
11	8509/2023	31/10/2021	26/11/2021	NM	NM
12	8229/2023	31/07/2021	21/09/2022	NM	NM
13	18042/2023	1/05/2019	1/06/2019	28/08/2019 12/10/2020, 04/01/2021, 07/09/2021	6/08/2019
14	22114/2022	23/05/2021	21/09/2021	26/08/2022	NM
15	26687/2022	14/07/2022	16/07/2022	27/10/2022	NM
16	23673/2022	03/04/2022	19/04/2022	08/08/2022	25/05/22
17	13692/2023	22/11/2022	04/01/2023	30/05/2023 1/06/2023	18/01/2023
18	22778/2022	15/04/2022	25/05/2022	03/08/2022	NM
19	21854/2022	04/05/2022	06/05/2022	09/08/2022 23/08/2022	5/07/22
20	2127/2021	29/06/2019	27/12/2019	09/03/2020	NM
21	21249/2022	29/10/2017	26/02/2018	NM	NM
22	21044/2022	30/09/2021	14/10/2021	NM	NM
23	20970/2022	30/04/2021	05/08/2021	24/03/2022	NM
24	19865/2022	29/04/2021	30/04/2021 11/02/2022	20/06/2022	NM
25	17853/2022	28/02/2020	13/04/2021 02/07/2022	NM	18/05/2021 24/04/2021
26	11941/2022	27/09/2019	31/12/2019	04/06/2022	28/02/2020
27	8039/2022	27/11/2017 29/09/2019	01/01/2018 14/01/2019	NM	NM
28	26459/2022	11/08/2022	12/08/2022	NM	NM
29	27163/2022	28/10/2019	20/12/2019	04/06/2020	NM
30	27150/2022	28/10/2019	20/12/2019	04/06/2020	18/02/2020
31	28572/2022	15/10/2019	07/11/2019	NM	NM
32	21657/2022	NM	16/04/2022	24/08/2022	16/04/2020
33	22406/2022	04/05/2022	06/05/2022	10/08/2022 23/08/2022	05/07/2022
34	1997/2022	25/06/2020	03/11/2021	11/01/2022	29/12/2021
35	2

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2023 Supreme(P&H) 3327

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARHLISA GILL, RITU TAGORE, JJ.M/s. Technico Strips and Tubes Private Limited & Anr. – PetitionersVersusDeutsche Bank AG & Anr. – RespondentsCWP NO. 21657 of 2022(O&M), CWP 21597 of 2023 (O&MDecided On : 18-12-2023

The High Court should not exercise jurisdiction under Article 226 in matters governed by the SARFAESI Act where effective remedies exist, and classification of accounts as NPAs is not subject to judicial review at this stage.

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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
LISA GILL, RITU TAGORE, JJ.
M/s. Technico Strips and Tubes Private Limited & Anr. – Petitioners
Versus
Deutsche Bank AG & Anr. – Respondents
CWP NO. 21657 of 2022(O&M), CWP 21597 of 2023 (O&M
Decided On : 18-12-2023