Writ Jurisdiction Cannot Be Invoked When Party Has Already Approached DRT Under SARFAESI Act: Delhi High Court

The Delhi High Court has dismissed a petition while upholding that if a borrower has already approached the Debt Recovery Tribunal (DRT) under the SARFAESI Act, for a one-time settlement, a writ seeking the same relief under Article 226 of the Constitution is not maintainable. Background of the Case The petitioner has availed the credit facilities from the consortium of banks, i.e., Punjab National Bank, Indian Bank, and UCO Bank. Later on, the account of the petitioner was declared as the NPA in 2021. In the year 2022, a recall notice was issued, and the petitioner proposed a One-Time Settlement (OTS) of Rs. 300 Cr. through a third-party investor (respondent no. 4). The said OTS was agreed upon in a Joint Lenders Meeting on March 28, 2025. However, the UCO Bank issued sale notices for secured assets on March 28, 2025, and May 05, 2025. The petitioner, who happens to be the corporate borrower, filed the writ petition before the High Court seeking a stay on the auctions and the enforcement of the OTS. Submission of the Petitioner Petitioner submitted that it brought respondent no. 4, who was willing to settle the dues of Rs. 300 Cr., and the consortium of banks agreed to the terms of the OTS. However, the UCO Bank unilaterally proceeded with the securitization proceedings and issued the sale notice. Referring to the decision of the Hon'ble Supreme Court in the case of Plasto Pack, Mumbai v. Patnakar Bank Ltd., (2001) 6 SCC 683, the petitioner submitted that the unilateral action of the UCO Bank is a breach of the consensus. Contentions of the Respondent The respondent preliminarily objected to the maintainability of the petition by arguing that, as under sections 17 and 18 of the SARFAESI Act, it is the DRT and the DRAT, respectively, who have the jurisdiction for the relief sought. It also contended that the sale notices had already been challenged before the DRT and the same had been dismissed by the DRT. The review petition of the dismissal order was also unsuccessful, and the petitioner has failed to challenge the same before the DRAT. Hence, by neglecting the remedies provided under the SARFAESI Act, the petitioner cannot invoke the writ jurisdiction seeking the same relief. Reliance was placed on the decisions in Celir LLP vs. Bafna Motors (Mumbai) Pvt. Ltd. and Ors., (2024) 2 SCC 1; Mardia Chemicals Ltd. and Ors. vs. Union of India and Ors., (2004) 4 SCC 311; and Bijnor Urban Cooperative Bank Ltd. vs. Meenal Agarwal and Ors., (2023) 2 SCC 805. Respondent contended that the petitioner's reliance on Plasto Pack, Mumbai (Supra) is misplaced, as the decision is prior to the enactment of the SARFAESI Act. It argued that the petitioner has suppressed the facts by not disclosing the orders of the DRT in this writ petition. It also highlighted that the OTS has already been rejected by the email dated April 11, 2025. Judgment of the Delhi High Court The High Court dismissed the petition and observed that the borrower had already pursued the remedies before the DRT under the SARFAESI Act and the writ jurisdiction should not be invoked for the same. The court noted that it would not exercise its writ jurisdiction under Article 226 of the Constitution if an effective remedy is available to the aggrieved person. It was observed that the Supreme Court, in the case of Bafna Motors (Supra), categorically held that equitable considerations cannot be applied under Article 226 of the Constitution to override the statutory auction process prescribed under the SARFAESI Act, particularly when the borrower had already approached the DRT under Section 17 of the Act. The court also observed that the petitioner has suppressed the facts by not disclosing the DRT proceedings, especially when both applications had been dismissed and no appeals were preferred. Case Title: Bhadra International India Pvt. Ltd. & Ors. v. Punjab national Bank & Ors. Citation: 2025 LiveLaw (Del) 823Case No.: W.P. (C) 7939/ 2025 For Petitioner: Mr. Rajiv Nayyar and Mr. Ashish Mohan, Senior Advocates with Mr. Samarth Chowdhury, Advocates For Respondent No.1 (PNB): Ms. Nishi Chaudhary, Mr. Yashartha Gupta For Respondent No.2 (Indian Bank): Mr. Santosh Kumar Rout with team For Respondent No.3 (UCO Bank): Mr. Brijesh Kumar Tamber, Ms. Avani Mukherjee, Mr. Prateek Kushwaha, Mr. Yashu Rustagi and Mr. Sahas Bhasin For Respondent No.4: Mr. Sandeep Sethi, Mr. Jeevesh Nagrath, Senior Advocates with team Coram: Hon'ble Mr. Justice Manoj Kumar Ohri Judgment Date: 30.05.2025Click Here To Read/Download The Order

Writ Jurisdiction Cannot Be Invoked When Party Has Already Approached DRT Under SARFAESI Act: Delhi High Court

Mohd.Rehan Ali

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