Writ Courts Need Not Interfere With Statutory Proceedings Under SARFAESI Act Except In Extraordinary Circumstances: Kerala High Court

The Kerala High Court has reiterated that writ courts should not interfere in matters pertaining to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('SARFAESI Act'), particularly when the factual circumstances do not make out a specific case for issuance of the writs. 

The Division Bench comprising Justice A. Muhamed Mustaque and Justice Anil K. Narendran observed:

"When the tribunal constituted under the SARFAESI Act is expected to go into the issues of fact and law, including a statutory violation, the attempt made by the appellant to circumvent the particular mode prescribed under the statute shall not be encouraged by the writ court". 

The appellant herein had availed financial assistance amounting to Rs.1,14,50,000/- from the Ernakulam Branch of Indian Overseas Bank. The Authorized Officer issued a notice for sale of the mortgaged property. The appellant thus, approached the High Court with a plea to quash the said notice, and to grant him time to repay the entire loan amount due, by selling a portion of his property and to keep in abeyance all further proceedings, through the issuance of the writs of certiorari and mandamus, respectively. 

The Single Judge had disposed the plea permitting the appellant and his wife to to pay off the overdue amount of Rs.7,60,000/- in 12 equal monthly instalments, the first instalment falling due on or before April 22, 2023, and the subsequent instalments falling due on or before the 22nd day of the succeeding months. They were also directed to pay regular monthly instalments. The Court further clarified that in case of any default in payment of instalments, the respondent Bank would be at liberty to proceed with the coercive steps for recovery. 

Subsequently, on ascertaining that the appellants had not availed the benefit of the afore judgment of the Single Judge, the respondent Bank issued a notice of sale under the proviso to Rule 8(6) of the Security Interest (Enforcement) Rules, 2002. 

The Single Judge thereafter disposed the petition, relying upon the Apex Court decision in South Indian Bank Ltd v. Naveen Mathew Philip [2023 LiveLaw (SC) 320], which laid down that the High Court shall not interfere with proceedings initiated under the SARFAESI Act, in writ proceedings under Article 226 of the Constitution, except in extraordinary circumstances. It also took note of the appellant not having availed the measures stipulated by it in the earlier decision, and added that it would be upto him to work out his statutory remedies, in accordance with law. It is against the said judgment of the Single Judge that the present writ appeal was filed. 

It was argued by the appellant that the Single Judge had dismissed his plea without considering his financial difficulty. It was added that the appellant had also made payment amounting to f Rs.1,50,000/- towards his liability in the financial assistance availed from the respondent Bank. 

The Division Bench in this case, took note of a plethora of precedents such as Naveen Mathew Philip (Supra), Mardia Chemicals Ltd. v. Union of India (2004), Federal Bank Ltd. v. Sagar Thomas (2003), Varimadugu Obi Reddy v. B. Sreenivasulu (2023), and others, wherein the Apex Court had deprecated the interference of the High Courts in matters pertaining to the SARFAESI Act, time and again. 

The Court relied upon the Apex Court decision in Central Council for Research in Ayurvedic Sciences v. Bikartan Das (2023), which laid down that a writ of certiorari, being a high prerogative writ, could not be issued on mere asking, but the party ought to make out a definite case for the same. 

The Court accordingly found that in the present case, the appellant had failed to make out a definite case, warranting the issuance of a writ of certiorari to quash the impugned sale notice issued by the Authorized Officer. The Court observed that none of the grounds raised in the writ petition was sufficient to make out a case of an error of law apparent on the face of the impugned sale notice. 

As regards the issuance of the writ of mandamus for the abeyance of further proceedings in the matter, the Court declared that the said writ could not be issued in the absence of any legal right.

"As already noticed, the appellant did not avail the benefit of Ext.P1 judgment of this Court in W.P.(C)No.8920 of 2023. The appellant, who failed to make out a definite case for the issuance of a writ of certiorari to quash Ext.P2 sale notice dated 22.06.2023 issued by the Authorised Officer of the respondent Bank, cannot seek a writ of mandamus in W.P.(C)No.23832 of 2023 praying for time to repay the entire loan amount due, by selling a portion of his property," the Court observed. 

On considering the grounds raised in the writ appeal, the Court was of the considered opinion that the appeal was an abuse of process of law, and accordingly, proceeded to dismiss the same. 

Counsel for the Appellant: Advocate Subi K. 

Counsel for the Respondent: Advocates Sunil Shankar A., Vidya Gangadharan, Jerin George, and Sandhra S. 

Citation: 2023 LiveLaw (Ker) 510

Case Title: Sanil Kumar V. v. Authorized Officer, Indian Overseas Bank

Case Number: W.A.NO.1411 OF 2023

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