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IN THE HIGH COURT OF ALLAHABAD
MOHD. ASLAM, J.
Maheshwar Dutt Mishra Alias Maheshwar Dutt And Others – Appellants
Versus
Punjab National Bank And Others – Respondents
Writ C No.7988 of 2022
Decided on : 15-11-2022
SARFAESI Act - Mala Fide Action - Sections 13, 17 & 18
Fact of the Case:
The petitioners filed a writ petition challenging the order passed by the Debts Recovery Tribunal, Lucknow, which rejected their application seeking extension of time to clear outstanding dues payable to the respondent bank. The petitioners alleged mala fide action by the respondent bank in hastily selling their mortgaged property, despite their earnest requests for time to clear the dues. The petitioners had availed an overdraft loan facility and a term loan from the respondent bank for establishing a school, but due to the COVID-19 pandemic, the school project failed, leading to the overdraft loan account being classified as a Non-Performing Asset (NPA). The respondent bank issued a sale notice and proceeded with the auction of the property, frustrating the petitioners' one time settlement proposal. The petitioners challenged the sale proceedings and sought extension of time to clear the dues, but the respondent bank confirmed the sale to a third party, leading to the petitioners' writ petition.
Finding of the Court:
The court found that the petitioners had an alternative remedy to challenge the order of the Debts Recovery Tribunal before the Appellate Tribunal, as provided under Section 18 of the SARFAESI Act. The court dismissed the instant writ petition, stating that the petitioners could go and challenge the order before the Appellate Tribunal.
Issues: The issues revolved around the mala fide action of the respondent bank in hastily selling the petitioners' mortgaged property, the rejection of the petitioners' application for extension of time to clear the dues, and the maintainability of the instant writ petition in light of the alternative remedy available under the SARFAESI Act.
Ratio Decidendi: The court held that the petitioners had an alternative remedy to challenge the order of the Debts Recovery Tribunal before the Appellate Tribunal, as provided under Section 18 of the SARFAESI Act. Therefore, the instant writ petition was not maintainable.
Final Decision: The court dismissed the instant writ petition, finding no ground to interfere with the impugned order.
JUDGMENT :
1. Heard Shrikant Mishra, learned counsel for the petitioners, Sri P.P. Singh, learned counsel for the respondent nos.1 to 4 and perused the record.
2. The instant writ petition has been filed on behalf of the petitioner with the following prayer:-
B. Issue a writ, order or direction in the nature of mandamus directing the respondent bank to accept the payment being made towards outstanding dues by means of bankers cheque dated 14.9.2021 prepared in its favour by the petitioners and release the mortgaged property from its charge.
C. Issue a writ, order or direction in the nature of certiorari quashing the sale proceedings conducted by the respondent bank pursuant to sale notice dated 18.8.2021 and all other consequential actions taken by the respondent bank."
3. It is submitted by learned counsel for the petitioners that the present petition is being filed by the petitioners being aggrieved by the mala fide action of the respondent bank in hastily selling the house of the petitioners situated at House No.3, Sangam Vihar Kaushpuri Colony, Faizabad (now Ayodhya), mortgaged with the respondent bank as security for availing the overdraft loan account facility offered by the respondent bank, to the respondent no.3 inspite of the earnest requests of the petitioner to grant them some time to clear the outstanding dues payable to the respondent bank. The respondent bank, while acting in collusion with the respondent no.3, deliberately and with the intention to deprive the petitioners of their property, frustrated the proposal for one time settlement submitted by the petitioners under the one time settlement scheme floated by respondent bank inspite of the petitioners having deposited an amount of Rs.11,00,000/-as required by the respondent bank for consideration of their proposal and still willing and ready to pay the entire outstanding dues. It is further submitted that the present petition assails the order dated 15.10.2022 passed by the Debts Recovery Tribunal, Lucknow in completely perverse manner rejecting the application of the petitioners seeking grant of extension of time to clear the outstanding dues of the petitioners payable to the respondent bank within a period of two months in terms of settlement recorded in order dated 5.10.2021 passed by Debts Recovery Tribunal, Lucknow. It is further submitted that the Debts Recovery Tribunal completely failed to consider and appreciate that the petitioners were put under extreme duress by the respondent bank when they accepted the terms of settlement dictated by the respondent bank, as recorded in order dated 5.10.2021 passed by Debts Recovery Tribunal, Lucknow, the petitioners were facing compelling circumstances since the respondent bank, notwithstanding the pendency of the securitisation application preferred by the petitioners, had already hastily and in a completely arbitrary manner auctioned the property of the petitioners and was about to be confirmed in favour of respondent no.3, thus the petitioners left with no other option and were coerced to accept the terms unilaterally dictated by the respondent bank with respect to repayment of the entire outstanding dues within a short time of two months in order to protect the roof over their head from being sold by the respondent bank to a third party, even when the one time settlement scheme which was floated by the respondent bank itself provided for a period of 90 days extendable upto 180 days for clearing the outstanding dues of the respondent bank, hence the impugned order dated 15.10.2022 has been passed without non-application of judicial mind, which is liable to be se
The main legal point established in the judgment is that when an alternative remedy is available to challenge an order under the SARFAESI Act, the instant writ petition is not maintainable.
The DRAT has the power to remand a SARFAESI application to the DRT for fresh adjudication, where the DRT has not considered various disputed issues raised by the parties, including service of notice,....
Auction sale under SARFAESI Act upheld; simultaneous civil proceedings do not invalidate the completed transaction, and allegations of undervaluation found unsubstantiated.
The main legal point established in the judgment is the interpretation of Rule 9(4) and 9(5) of the Security Interest (Enforcement) Rules, 2002, highlighting the requirement for the purchaser to pay ....
The court established that the right of redemption under the SARFAESI Act is extinguished upon the issuance of a sale certificate, and timely challenge to bank actions is essential.
Failure to comply with the provisions of Section 13(8) of the SARFAESI Act, 2002 and the availability of an alternative remedy before the Debts Recovery Tribunal rendered the writ petition not mainta....
The Tribunal must consider merits and apply due diligence in SARFAESI Act proceedings, treating them like civil suits, to ensure fair adjudication.
While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate....
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