Andhra Pradesh High Court Declines To Interfere With SARFAESI Action, Cites Alternative DRT Remedy
Holding that a litigant with an effective statutory remedy before the Debts Recovery Tribunal cannot ordinarily invoke the High Court's writ jurisdiction, the Andhra Pradesh High Court dismissed a writ petition challenging a Canara Bank communication concerning unhypothecated machinery at an auctioned property.
The decision was rendered by a Division Bench of Justice Battu Devanand and Justice A. Hari Haranadha Sarma.
The court observed, "From the above factual position, it is evident that an alternative remedy is available and the petitioner has even opted the same and that the petitioner had sufficient opportunity to ventilate his case in proper forum."
The court further held, "In view of the observations of the Hon'ble Supreme Court in Satyawati Tondon's case, reiterated in PHR Invent Educational Society v. UCO Bank, and in the facts and circumstances of the present case, it can be unhesitatingly concluded that the relief prayed for by the petitioner cannot be granted and that there are no grounds to invoke extraordinary jurisdiction of this Court under Article 226 of Constitution of India."
The petitioner, proprietor of Bheem Eco Build Tech, had availed MSME loans from Canara Bank. After the loan accounts were classified as Non-Performing Assets (NPA), the bank initiated proceedings under the SARFAESI Act, issued possession and auction notices, and sold the secured immovable property in an e-auction.
The petitioner challenged the SARFAESI measures by filing a securitisation application before the Debts Recovery Tribunal (DRT), which was pending.
Meanwhile, as the petitioner's non-hypothecated machinery continued to remain in the auctioned premises, the bank issued a communication directing her to remove it, stating that, failing compliance, it would dismantle and sell the machinery and adjust the sale proceeds towards the expenses incurred. The petitioner submitted a representation against the proposed action.
Aggrieved by the bank's decision to proceed with dismantling and sale of the non-hypothecated machinery without considering her representation, while her securitisation application was pending before the Debts Recovery Tribunal (DRT), the petitioner approached the High Court contending that the proposed action was illegal, arbitrary and contrary to the SARFAESI Act.
The bank submitted that, despite being advised on several occasions, the petitioner failed to remove the non-hypothecated machinery from the premises. It further contended that she had executed a notarised declaration regarding the movables and utilised the surplus sale proceeds credited to her account. It maintained that the impugned communication merely informed the petitioner that, in the event of her failure to remove the machinery, it would be dismantled and sold.
The court noted that the petitioner had earlier challenged the measures initiated by the bank under the SARFAESI Act, including the auction of the secured property, but was relegated to the statutory remedy before the Debts Recovery Tribunal (DRT). Pursuant to that order, she had already approached the DRT.
The court further found that, even after the auction, the bank had repeatedly called upon the petitioner to remove the non-hypothecated machinery from the premises, but she failed to do so.
Holding that no exceptional circumstances were made out to bypass the statutory remedy, the Court concluded that the writ petition was devoid of merit and dismissed it without costs.
For Petitioner: Advocate M. Kishore Babu
For Respondents: Advocates Aishwarya Nagula; Pasala Ponna Rao, Deputy Solicitor General of India; T.B.L. Murthy.