Writ Court Ought Not To Interfere When Statutory Remedy Under SARFAESI Act Before Debt Recovery Tribunal Is Invoked: Telangana High Court

The Telangana High Court was of the opinion that writ jurisdiction cannot be exercised when the statutory remedy under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) has been invoked. The petition under Article 226 of the Constitution of India was filed by the petitioners for quashing the sale notice issued by Canara Bank/respondent under Section 13(4) of SARFAESI Act and for a direction to the respondents to apply the circulars of the Reserve Bank of India while considering the case of the petitioners which was a Medium, Small and Micro Enterprise (MSME). The petitioners had availed financial assistance from respondents by way of term loan facility for carrying out their business activities. Without any prior intimation, the respondent had issued a demand notice under Section 13(2) of the SARFAESI Act. The petitioner submitted objection/representation against the demand notice. However, without considering the objection raised by the petitioners, respondent issued fresh demand notice under Section 13(2) of the SARFAESI Act demanding an amount of around 5.5 crores to be paid within 60 days, it was alleged. Thereafter, respondent issued prior notice to sale. Petitioners tried for settling the loan account through One Time Settlement but such efforts did not bear fruit. Finally, the respondent issued the impugned sale notice dated 21.01.2022 proposing to hold auction sale of the schedule property on 28.02.2022. The petitioners had in the meanwhile filed the Securitization Application before the Debt Recovery Tribunal under Section 17 of the SARFAESI Act and an interlocutory application for stay. Since the Presiding Officer is not present in the Tribunal, hence, the writ petition. The court stated that since petitioners had already invoked their statutory remedy under Section 17 of the SARFAESI Act, it would be just, if they are relegated to the forum of the Tribunal for adjudication of their grievances. Further, if the petitioners deposit 15% of the outstanding dues as claimed by the respondents within a period of thirty days, respondents shall not take further steps, however, in default, it would be open to respondent to proceed against the petitioners for realization of dues. Case Title: M/s. Jupiter Industries v. Canara BankCitation: 2022 LiveLaw (Tel) 19Coram: Justice Ujjal Bhuyan and Justice A. Venkateshwara Reddy Click Here To Read/Download Order

Writ Court Ought Not To Interfere When Statutory Remedy Under SARFAESI Act Before Debt Recovery Tribunal Is Invoked: Telangana High Court

Jagriti Sanghi

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