Himachal Pradesh HC: Exhaust Alternate Remedies First Before Approaching Article 226

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On 15th December 2020, a Division Bench consisting of Hon’ble Mr Justice Tarlok Singh Chauhan and Hon’ble Mr Justice Sandeep Sharma heard the case of Ramesh Kumar Sen v. Punjab National Bank & Another via video conferencing.

Facts of the Case

The Petition was filed by the Petitioner for grant of the following reliefs:

A Writ of Certiorari quashing the action undertaken by the Respondents under the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act). The action involved the bank taking physical possession of the mortgaged property and the house of the petitioner, which was illegal and contrary to the SARFAESI Act read along with Security Interest Rules 2002. Further, a direction is issued to the financial institution to not sell the property to auction especially when the petitioner is willing to pay the outstanding amount to the bank.

It was prayed that the operation of the notice issued by the respondent be stayed during the pendency of the writ petition.

It was prayed to direct the financial institutions to not charge illegal charges, and inflated interest rates especially when the petitioner has paid more than 2.5 lakhs against a term loan of Rs. 5 lakhs and was ready to restructure his account.

Court’s Analysis

The Court observed that the petitioner in the guise of invoking the special jurisdiction under Article 226 of the Indian Constitution, was trying to counter the proceedings initiated by the respondents under the SARFAESI Act.

The Court further observed that the petitioner had approached the Court instead of approaching the Debt Recovery Tribunal for challenging the orders of the District Magistrate.

The Court referred to the case of State Bank of Travancore v. Mathew K.C. (2018) 3 SCC 85, which held that:

“The SARFAESI Act is a complete code by itself, providing for expeditious recovery of dues arising out of loans granted by financial institutions, the remedy of appeal by the aggrieved under Section 17 before the Debt Recovery Tribunal followed by a right to appeal before the Appellate Tribunal under Section 18. The High Court ought not to have entertained the writ petition in view of the adequate alternate statutory remedies available to the Respondent.”

The Court further referred to the approach of the High Court in the case of Dwarikesh Sugar Industries Ltd. vs. Prem Heavy Engineering Works (P) Ltd. and Another, 1997 (6) SCC 450, which held that:

When a position, in law, is well settled as a result of judicial pronouncement of this Court, it would amount to judicial impropriety to say the least, for the subordinate courts including the High Courts to ignore the settled decisions and then to pass a judicial order which is clearly contrary to the settled legal position.

The Court further referred to a similar question of law in the case of ICICI Bank Limited and ors. v Umakanta Mohapatra and ors., (2019) 13 SCC 497, which held that:

The High Courts continue to entertain matters which arise under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) and keep granting interim orders in favour of person who are Non-Performing Assets (NPAs). The writ petition not being maintainable, all order passed must perish, which is set aside”.

Court’s Decision

The Court, while considering the well-settled position of law through various precedents coupling with the fact that the petitioner had not exhausted the alternate remedy available, under the SARFAESI Act, held that the petition was not maintainable, and thus dismissed the petition on this ground. 

Click here to view the Judgement.


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