Kerala High Court Advises Against Writ Courts’ Interference With Statutory Proceedings Under SARFAESI Act

Kerala High Court Advises Against Writ Courts’ Interference With Statutory Proceedings Under SARFAESI Act

While dismissing the appeal, the bench considered that it was an abuse of the process of law

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 (SARFAESI) Act, 2002, particularly when there is no specific case for writ issuance.

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 facts 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 had availed financial assistance amounting to Rs.1,14,50,000 from the Ernakulam Branch of the Indian Overseas Bank.

The authorized officer issued a notice for the sale of the mortgaged property. Thereafter, the appellant approached the court with a plea to quash the notice. He requested for grant of time to repay the entire loan amount by selling a portion of his property and keep in abeyance all further proceedings through the issuance of the writs of certiorari and mandamus.

The single judge bench had disposed of the plea permitting the appellant and his wife to pay the overdue amount of Rs.7,60,000 in 12 equal monthly instalments. The first instalment falling due on or before 22 April 2023 and subsequent instalments on or before the 22nd day of the succeeding months.

The judge further clarified that in case of any default in instalment payment, the respondent bank would be at liberty to proceed with the coercive steps for recovery of the amount.

On ascertaining that the appellants had not availed the benefit of the bench’s judgment, the bank issued a notice of sale under the proviso to Rule 8(6) of the Security Interest (Enforcement) Rules, 2002.

Thereafter, the single judge disposed of the petition, relying upon the decision of the Supreme Court in the South Indian Bank Ltd v. Naveen Mathew Philip case, which stated that the high court shall not interfere with proceedings initiated under the SARFAESI Act in writ proceedings under Article 226 of the Constitution of India, except in extraordinary circumstances.

The apex court also noted that the appellant had not availed of the measures stipulated by the court in the earlier decision. It added that it would be up to him to work out the statutory remedies in accordance with the law. It was against the single judge’s order that the present writ appeal was filed.

The appellant argued that the single judge dismissed his plea without considering his financial difficulty. Moreover, the appellant had made a payment amounting to Rs.1,50,000 towards his liability in the financial assistance availed from the bank.

The Division Bench noted the plethora of precedents including in the Naveen Mathew Philip (Supra), Mardia Chemicals Ltd. v. Union of India (2004); the Federal Bank Ltd. v. Sagar Thomas (2003); and the Varimadugu Obi Reddy v. B. Sreenivasulu (2023) and Others case, wherein the top court deprecated the interference of the high courts in matters pertaining to the SARFAESI Act.

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

The bench observed that the appellant had failed to make out a definite case to quash the impugned sale notice issued by the authorized officer. It noted that none of the grounds raised in the petition was sufficient to signify an error of law in the sale notice. As for the issuance of the writ of mandamus for abeyance of further proceedings, the court declared that the writ could not be issued in the absence of any legal right.

Justice Mustaque and Justice Narendran stated, “The appellant did not avail the benefit of Ext.P1 judgment of this court in W.P.(C)No.8920 of 2023. He 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 authorized officer of the respondent bank. He 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.”