Supreme Court Deprecates HC Practice Of Entertaining Writ Petitions Filed In SARFAESI Matters Without Exhausting Alternative Remedy

The Supreme Court deprecated the practice of entertaining writ petitions filed in SARFAESI matters without exhausting the alternative statutory remedy.In this case, the Telangana High Court set aside the e-auction sale held by the Bank under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 on. In this context, the bench comprising Justices Ajay Rastogi and CT Ravikumar noted that in United Bank of India vs. Satyawati Tondon 8 SCC 110 and observed: "In the instant case, although the respondent borrowers initially approached the Debts Recovery Tribunal by filing an application under Section 17 of the SARFAESI Act, 2002, but the order of the Tribunal indeed was appealable under Section 18 of the Act subject to the compliance of condition of pre­deposit and without exhausting the statutory remedy of appeal, the respondent borrowers approached the High Court by filing the writ application under Article 226 of the Constitution. On the issue regarding the breach of Rule 9 of Security Interest Rules, 2002, the bench observed thus: In the given facts and circumstances, the four days' delay which was caused in terms of the original auction notice, in no manner, would frustrate or annul the auction proceedings and the Debts Recovery Tribunal has rightly held that because in such state of flux, particularly when the bank/secured creditor requested the auction purchaser to wait for some time because the borrowers are negotiating with the bank in the light of interim order dated 26th March, 2015 of the Tribunal, delay in depositing 75% of the bid amount by four days in no manner would frustrate the rights of the parties inter se, more so, when the conduct of the borrowers in getting extension orders on two different occasions and still not depositing Rs.6 lakhs in terms of the order of the Tribunal would clearly reflect that the intention of the borrowers was only to frustrate the auction sale by one reason or the other, which they could not succeed. Headnotes Constitution of India, 1950 ; Article 226 - SARFAESI Act, 2002 ; Section 18 - Without exhausting the statutory remedy of appeal under Section 18 of SARFAESI Act, the borrowers approached the High Court by filing the writ application - Practice of entertaining the writ application by the High Court in exercise of jurisdiction under Article 226 of the Constitution without exhausting the alternative statutory remedy deprecated - Referred to United Bank of India vs. Satyawati Tondon & Others 8 SCC 110 SARFAESI Act, 2002 ; Section 13 - Security Interest Rules, 2002 - It is true that the secured creditor is under an obligation to undertake the exercise and cross­check the description of the mortgaged property at the stage when the initial proceedings under Section 13 are initiated or in the later consequential proceedings, but at the same time, mere typographical error due to inadvertence which has not caused any prejudice to the borrowers, that in itself could not be considered to be the ground to annul the process held by the secured creditor which, in our view, is in due compliance with the requirement as contemplated under the provisions of Rules, 2002.