A writ petition under Article 226 of the Constitution of India is not maintainable against a private financial institution for actions taken under the SARFAESI Act, as such entities do not perform public functions, and the efficacious statutory remedy lies under Section 17 before the Debts Recovery Tribunal.

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE POSSESSION NOTICE DATED 12-08-2025 ISSUED BY RESPONDENT NO.1 UNDER SECTION 13(4) OF SARFAESI ACT IN RESPECT OF SCHEDULE PROPERTY.

THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED ON 24.02.2026, COMING ON FOR PRONOUNCEMENT OF ORDER THIS DAY, THE COURT PRONOUNCED THE FOLLOWING:

CORAM: HON'BLE SMT. JUSTICE LALITHA KANNEGANTI

CAV JUDGMENT

The present writ petition is filed seeking the following prayer:

“PRAYER

WHEREFORE, the Petitioners humbly pray that this Hon'ble Court may be pleased to:

a) Issue a writ of certiorari quashing the possession notice dated 12-08-2025 issued by Respondent No.1 under Section 13(4) of SARFAESI Act in respect of Schedule Property at Annexure – B

b) Issue a writ of mandamus restraining Respondent No.1 and its agents from dispossessing the Petitioners from the Schedule Property except in accordance with law;

c) Direct Respondents Nos.2 to 4 to refund the security deposit of Rs.50,00,000/- to the Petitioners forthwith;

D) Pass such other orders as this Hon'ble Court deems fit in the interest of justice and equity.”

2. It is the case of petitioners that the petitioners under a registered Lease Deed dated 30.09.2021 had obtained the lawful possession of the commercial premises from respondent Nos.2 to 4 for a term of 3 years commencing from 01.10.2021 to 30.09.2024. The petitioners had paid a refundable security deposit of Rs.50,00,000/- and agreed to pay monthly rent of Rs.2,50,000/- which has been regularly paid without default till the expiry of lease. The petitioners upon expiry of the lease on 30.08.2024 expressed their willingness to vacate the subject property and for refunding the security deposit. The Lessors, however, have failed and neglected to refund the amount. During the subsistence of the lease, without disclosure or consent, respondent Nos.2 to 4 created a mortgage over the leased property in favour of respondent No.1 i.e., IIFL Home Finance Ltd. and upon default in repayment of loan, respondent No.1 invoked provisions under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘SARFAESI Act’) and issued possession notice on 12.08.2025. The petitioners had issued legal notice on 10.09.2025 to the respondent Nos.2 to 4 calling upon them to refund the security deposit of Rs.50,00,000/- subject to refund, petitioner will vacate the premises. After affixture of the notice, petitioner applied for encumbrance and learnt that the respondent Nos.2 to 4 mortgaged the property in favour of respondent No.1 and obtained financial assistance. It is stated that the petitioners being lawful tenants in possession of the registered lease are gravely prejudiced by the arbitrary action of respondent No.1, who has ignored the petitioner's tenancy rights and threatened to dispossess them without authority of law. Hence, they have come up before this Court.

3. Learned counsel appearing for the petitioners submits that the action of the respondent No.1 in seeking to dispossess the petitioners without adjudication of their lawful tenancy rights is arbitrary, unfair and violative of Articles 14 and 21 of the Constitution of India. He submits that the protection of Lease under Section 65A of the T.P. Act. The Lease Deed being a registered instrument executed prior to initiation of SARFAESI proceedings, petitioners’ rights as lawful tenants cannot be defeated by unilateral action of the secured creditor. Learned cousenl has relied on the judgment of the Hon’ble Apex Court in case of Harshad Govardhan Sondagar Vs.