Case Law Details
S. Visalatchi Vs Authorised Officer (Kerala High Court)
The Kerala High Court has dismissed a writ petition challenging an e-auction sale notice issued under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, and Rule 9(1) of the Security Interest (Enforcement) Rules, 2002. The court, in the case of S. Visalatchi Vs. Authorised Officer, reiterated the established legal principle that writ jurisdiction under Article 226 of the Constitution of India should not be exercised when an effective alternative remedy is available under the SARFAESI Act. The judgment underscored the consistent stance of the Supreme Court on this matter, emphasizing judicial restraint in such circumstances.
The petitioner had approached the High Court seeking to challenge the e-auction sale notice. However, the court’s immediate observation was that the impugned proceedings were amenable to an appeal before the Debts Recovery Tribunal (DRT) as stipulated by the SARFAESI Act. This availability of a statutory appeal mechanism rendered the writ petition under Article 226 of the Constitution generally not maintainable.
To support its decision, the Kerala High Court heavily relied on a series of Supreme Court pronouncements that have consistently cautioned High Courts against entertaining writ petitions when efficacious alternative remedies exist. A key precedent cited was Celir LLP Vs. Bafna Motors (Mumbai) Private Limited and others, reported in (2024) 2 SCC 1. In this judgment, the Supreme Court explicitly held that High Courts are not justified in exercising writ jurisdiction under Article 226 when an effective alternative remedy is contemplated under the SARFAESI Act, especially if the borrowers have already availed the alternative remedy under Section 17 of the Act.
The Supreme Court in Celir LLP had referred to its earlier landmark decision in United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110. In Satyawati Tondon, the Supreme Court expressed “serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the Sarfaesi Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues.” The Satyawati Tondon ruling highlighted that legislations for recovery of public dues, including those of banks and financial institutions, are “a code unto themselves,” providing comprehensive procedures and quasi-judicial bodies for grievance redressal. It stressed that High Courts must insist on the exhaustion of statutory remedies before a person avails the extraordinary remedy under Article 226. While acknowledging the wide powers of High Courts under Article 226, the Supreme Court in Satyawati Tondon underscored the importance of self-imposed restraint and the rule of discretion, rather than compulsion, in applying the alternative remedy principle. It found no justifiable reason for High Courts to entertain writ petitions and grant interim orders when effective alternative remedies, such as applications, appeals, or revisions, are available under specific legislation with detailed grievance redressal mechanisms.
Further reinforcing this position, the Kerala High Court also referenced CIT v. Chhabil Dass Agarwal, (2014) 1 SCC 603. In Chhabil Dass Agarwal, the Supreme Court reiterated that the High Court will generally not entertain a petition under Article 226 if an effective alternative remedy is available, or if the statute under which the action was taken provides a mechanism for grievance redressal. The judgment in Chhabil Dass Agarwal recognized limited exceptions to this rule, such as instances where the statutory authority has acted outside the provisions of the enactment, in defiance of fundamental principles of judicial procedure, invoked repealed provisions, or passed an order in total violation of natural justice principles. However, it firmly maintained that “when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation.”
Drawing from these authoritative Supreme Court pronouncements, the Kerala High Court in S. Visalatchi concluded that the writ petition was not maintainable. The court, therefore, dismissed the petition, granting the petitioner the liberty to approach the Debts Recovery Tribunal for redressal. This decision aligns with the consistent judicial policy of encouraging litigants to utilize the specific statutory remedies provided by law, particularly in specialized areas like debt recovery under the SARFAESI Act, before resorting to the extraordinary writ jurisdiction of the High Courts. The ruling serves as a reminder to petitioners and legal practitioners about the strict adherence required to the doctrine of alternative remedies in cases involving the SARFAESI Act.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The Writ Petition has been instituted challenging the e-auction sale notice issued under the provisions of SARFAESI Act read with Rule 9(1) of the Security Interest (Enforcement) Rules, 2002.
2. The impugned proceedings are susceptible to an appeal under the SARFAESI Act before the Debts Recovery Tribunal and therefore, a Writ Petition under Article 226 of the Constitution of India is not maintainable.
3. The Hon’ble Supreme Court of India in the case of Celir LLP Vs. Bafna Motors (Mumbai) Private Limited and others reported in (2024) 2 SCC 1 held that the High Court was not justified in exercising the writ jurisdiction under Article 226 of Constitution of India, since efficacious alternative remedy is contemplated under the provisions of SARFAESI Act. Paragraph Nos.97, 98, 110 and 110.1 would be relevant in this context and have been extracted herein:-
“97.This Court has time and again, reminded the High Courts that they should not entertain petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person under the provisions of the SARFAESI Act. This Court in Satyawati Tondon [United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110 : (2010) 3 SCC (Civ) 260] made the following observations : (SCC pp. 123 & 128, paras 43-45 & 55)
“43. Unfortunately, the High Court [Satyawati Tondon v. State of U.P., 2009 SCC OnLine All 2608] overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.
44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution.
45. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance.
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55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the Sarfaesi Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection.”
98. In CIT v. Chhabil Dass Agarwal [CIT v. Chhabil Dass Agarwal, (2014) 1 SCC 603] , this Court in para 15 made the following observations : (SCC p. 611, para 15)
“15. Thus, while it can be said that this Court has recognised some exceptions to the rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal case [Thansingh Nathmal v. Supdt. of Taxes, 1964 SCC OnLine SC 13] , Titaghur Paper Mills case [Titaghur Paper Mills Co. Ltd. v. State of Orissa, (1983) 2 SCC 433 : 1983 SCC (Tax) 131] and other similar judgments that the High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation.”
110.We summarise our final conclusion as under:
110.1. The High Court was not justified in exercising its writ jurisdiction under Article 226 of the Constitution more particularly when the borrowers had already availed the alternative remedy available to them under Section 17 of the SARFAESI Act.”
4. In view of the above legal position, granting liberty to the petitioner to approach the Debts Recovery Tribunal, the Writ Petition stands dismissed. There shall be no order as to costs. Consequently, connected miscellaneous petitions are closed.
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