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2024 Supreme(Online)(MP) 15968
HIGH COURT OF MADHYA PRADESH
SUSHRUT ARVIND DHARMADHIKARI, SHRI JUSTICE GAJENDRA SINGH, JJ
Smt. Shyamlata Madloi – Appellant
Versus
The State Of Madhya Pradesh – Respondent
WP 6633/2024
Sheel Kumar Bakaure,Advocate General
The High Court should not exercise writ jurisdiction when an alternative remedy exists under the SARFAESI Act, as established by precedent.
Headnote:(A) Constitution of India - Article 226 - Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 13(4) and 14 - Petitioners challenged the order declaring their loan account as Non-Performing Asset (NPA) and sought restructuring of the loan due to financial crises during the Covid Pandemic - The court found that the petitioners had an alternative remedy under Section 17 of the SARFAESI Act and thus dismissed the writ petition. (Paras 6, 9, 14)
(B) Jurisdiction - The High Court should refrain from exercising writ jurisdiction when an alternative remedy is available, as established in several judgments. (Paras 6, 10)
Facts of the case:
The petitioners applied for a loan of Rs.19,05,585/- from the respondent bank, which was declared NPA due to non-payment of installments during the Covid Pandemic. The bank initiated proceedings under the SARFAESI Act without proper notice to the petitioners. (Paras 3, 4)
Findings of Court:
The court ruled that the petitioners should approach the Debt Recovery Tribunal (DRT) for their grievances instead of the High Court under Article 226. (Paras 9, 14)
Issues: The main issues were whether the petitioners were given proper notice and opportunity to be heard before the order was passed, and whether the High Court had jurisdiction to entertain the writ petition. (Paras 5, 8)
Ratio Decidendi: The court emphasized that the existence of an alternative remedy precludes the exercise of writ jurisdiction, and the petitioners should have approached the DRT as per the provisions of the SARFAESI Act. (Paras 10, 14)
Result: Writ petition dismissed.
Heard on the question of admission and interim relief.
In this petition under Article 226 of the Constitution of India, the petitioners have assailed the orders dated 16.11.2022, passed by the respondent No.1.
2. Being aggrieved, the petitioners have filed the present petition seeking for the following reliefs:
- Reliefs :-
- (a) That, a writ, direction or order in the nature of certiorari or mandamus or as deemed fit be issued quashing the impugned order dated 16.11.2022 passed by respondent No.1 and all subsequent proceedings.
- (b) That, a writ, direction or order in the nature of certiorari or mandamus or as deemed fit be issued restructure of the loan of the petitioners and may kindly be granted sufficient time to pay the outstanding amount to the respondent bank and regularize the account.
- (c) This petition may kindly be allowed.
- d) Any other relief which this Hon'ble Court deems fit be issued.
3. Brief facts of the case are that the petitioners had applied for loan from the respondent no.2 Bank and by way of accepting the proposal, the respondent No.2 has disbursed the loan of Rs.18,12,500/- on 30.09.2016 and Rs.93,085/- on 05.01.2017 total Rs.19,05,585/- to the petitioners. A loan agreement was executed between the petitioners and the respondent no.2 and the petitioners mortgaged the house situated at East Part of Plot No.3087/2-E, Sudama Nagar, Sector-E, Indore towards security of the said loan.
4. After taking such financial assistance, the monthly installments were regularly paid by the petitioners to respondent No.2. Due to financial crises, some installments could not be paid to the respondent no.2 during Covid Pandemic due to which the respondent No.2 has declared the loan account as Non-Performing Asset(NPA). Thereafter, the respondent Bank has issued notice under Section 13(4) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002(referred to as "SARFAESI Act" hereinafter) to get possession of the questioned property.
Thereafter, the Bank has filed an application under Section 14 of the SARFAESI Act before the respondent No.1 on 08.02.2022. Notices were issued to the petitioner and the same could not be served thus, the petitioners were not aware of the said proceedings because of wrong address mentioned in the petition alongwith affidavit and notices issued by the respondent no.1. Vide order dated 16.11.2022, an order has been passed by the respondent no.1 wherein it was directed to hand over the possession of House in question to the respondent no.2. The respondent no.2 has filed a case with regard to the SARFAESI Act, on other hand respondent bank had produced cheque for recovery of loan amount and the same was presented before the bank without giving any intimation to the petitioners and also issued notice after dishonour of the said cheque under the Negotiable Instruments Act, 1881 wherein it was not mentioned that the petitioners loan account had been declared NPA and the proceedings of recovery has been initiated against the petitioners.
5. Learned counsel for the petitioners submits the order passed by respondent is wholly illegal and is arbitrary and is passed on the basis of fraudulent documents. The respondent has neither issued the notice under Section 13(2) of the SARFAESI Act to the petitioners nor the same has been served/received by the petitioners. The respondent No.2 mentioned wrong address i.e. 3807E Sudama Nagar, Indore in the application under Section 14 of the SARFAESI Act due to which the notice issued by the respondent no.1 was not served upon the petitioners. Thus, the petitioners were not aware about the proceedings initiated by the respondents which resulted into passing of an ex- parte order. It is further submitted that no opportunity of hearing was provided to the petitioners while passing the impugned order, which is in violation of principles of natural justice. The respondent no.2 has misled the respondent no.1 by giving false
