SARFAESI Act| Self-Imposed Restriction Of Non-Interference In WP In Case Where Statutory Remedies Are Available Is To Be Rigorously Applied: Rajasthan HC
The Rajasthan High Court has held that apart from exceptional circumstances, the self-imposed restriction of non-interference in Writ Petitions in cases where statutory remedies are available is to be rigorously applied in cases covered by the SARFAESI Act.
The Court dismissed a Writ Petition challenging the Order of the Debts Recovery Tribunal (DRT) rejecting the Petitioner’s prayer for a stay on proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).
A Single Bench of Justice Avneesh Jhingan held, “Apart from the exceptional circumstances, the self imposed restriction of non interference in writ petition in case where statutory remedies are available is to be rigorously applied in cases covered by the Act..”
Advocate Abhinav Sharma represented the Petitioner, while Advocate Vineet Sharma appeared for the Respondents.
The seller mortgaged the Petitioner’s property to secure a loan from India Bulls Ltd., which was later taken over by ICICI Home Finance (Respondent). Following default on repayment, the loan account was declared a Non-Performing Asset (NPA).
The Petitioner alleged that during due diligence, no charges were found against the property and claimed to be a bona fide purchaser. However, the Respondent initiated proceedings under Section 13 of the SARFAESI Act and took physical possession of the property. Aggrieved, the Petitioner filed a Securitization Application (SA) before the DRT, accompanied by a stay application.
The Respondent contended that the seller and Petitioner acted in collusion to defraud the financial institution after the loan account was declared NPA. They highlighted that the property was duly registered under the Central Registry of Securitization Asset Reconstruction and Security Interest of India (CERSAI) and alleged fraud led to the initiation of criminal proceedings against the petitioner and seller.
The High Court clarified that the remedy of Appeal was neither inherent nor a natural right but a statutory right. “The statute can embargo the right of appeal with a precondition of making a pre-deposit,” it stated.
The Bench referred to the decision in Union of India v. Satyawati Tondon (2010), wherein the Apex Court held that “while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues, are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.”
Consequently, the Court held that since the Petitioner had already availed the statutory remedy before the DRT, “by raising the issues on merits in a writ petition challenging the order passed on stay application, the petitioner is availing two parallel remedies and intends to sail into two boats and it cannot be permitted.”
Accordingly, the High Court dismissed the Petition.
Cause Title: Naseem Ahmad Khan v. Icici Home Finance & Ors. (Neutral Citation: 2024:RJ-JP:52505)
Appearance:
Petitioner: Advocate Abhinav Sharma
Respondents: Advocates Vineet Sharma, Ajay Shukla, Raghav Sharma and Aakash Sharma