When Remedy Under Statute Is Available, High Court Should Discourage Writs: Supreme Court Reiterates

The bench of Justices Ajay Rastogi & Vikram Nath rendered this observation while considering SLP preferred by secured creditor assailing Telangana HC's orders passed in a SARFAESI matter.

Factual Background

Proceedings were initiated under SARFAESI, 2002 against the respondent/borrower after he had committed default and his account was declared as NPA. An application u/s 14 was also filed & the authorized officer along with the Commissioner on 29th January, 2019, took over the physical possession of the secured asset.

This was challenged by the respondent/borrower in writ and thereafter further action was initiated by the petitioner in publishing the auction-cum-sale notice dated 27th February, 2019.

Later another writ was filed assailing the auction notice. After filing of the writ petitions, the respondent/borrower approached the Debt Recovery Tribunal with an appeal along with an application for stay on auction. On March 28, 2019 a conditional order was passed by the Debt Recovery Tribunal wherein directions were issued to the bank to proceed with the auction sale, but not to confirm the same.

Taking note of the conditional order of DRT dated 28th March 2019, the High Court on 8th April, 2019 passed an order with a further direction to the petitioner to return the possession of the subject property to the respondent/borrower and by a subsequent order dated 13th April, 2019 made certain modifications in regard to payment of instalments.

Proceedings Before Supreme Court

While issuing notice on 3rd July, 2019, the Top Court granted the bank interim relief and directed the parties to maintain status quo.

Later, the Top Court was informed that the securitization application filed by the Respondent borrower came to be dismissed in default on 16th July, 2019 and no steps were taken for its restoration by the respondent.

On being apprised of the same, the Top Court said,

"Since the substantive issue was to be examined by the DRT in the pending SA No.109 of 2019 and since the respondent/borrower has remained a defaulter and after the account became NPA, possession of the secured assets was taken over by the petitioner bank, in this backdrop, nothing further survives to be examined in this petition and the special leave petition has become infructuous."

Referring to the ratio laid down in United Bank of India vs. Satyawati Tandon & Ors. (2010) 8 SCC 110, the bench said, "Before parting with the order, we would like to observe that this Court is consistent of the view and can be noticed from the judgment in United Bank of India vs. Satyawati Tandon & Ors. (2010) 8 SCC 110, that when a remedy under the statute is available and in the instant case which indeed was availed by the respondent/borrower, filing of a writ petition under Article 226 of the Constitution is to be discouraged by the High Court."

Case Title: Kotak Mahindra Bank Limited v Dilip Bhosale| SLP (C) 13241 of 2019

Coram: Justices Ajay Rastogi & Vikram Nath

Citation : 2022 LiveLaw (SC) 545

Constitution of India - Article 226- when a remedy under the statute is available filing of a writ petition under Article 226 of the Constitution is to be discouraged by the High Court.