Summary
The High Court should not have entertained a borrower’s writ against refusal to restore its withdrawn SARFAESI application when a statutory appeal was available and no recognised exception was shown. The borrower had defaulted on conditional interim protection, withdrawn proceedings and allowed the auction purchaser’s sale to be confirmed and registered. The Supreme Court restored finality to those proceedings, set aside the writ judgment and dismissed the writ with Rs.1 lakh costs on the borrower.
Issues
- Whether Article 226 should be invoked despite the available SARFAESI appellate remedy.
- Whether the borrower’s conduct and the completed auction justified restoration through writ proceedings.
Provisions considered
- Article 226, Constitution of IndiaAlternative remedy is a rule of judicial restraint, applied with particular rigour to recovery of public dues; none of the recognised exceptions justified intervention here. (¶¶ 14, 15, 16, 17, 18, 19, 20, 21, 22, 28, 29, 30, 31)
- Sections 17 and 18, Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002The borrower had invoked Section 17 and could challenge the refusal of restoration through the statutory appellate mechanism rather than bypassing it by writ. (¶¶ 2, 3, 4, 23, 28, 29, 30, 31)
Held
- The existence of an effective statutory remedy ordinarily warrants refusal of Article 226 relief, particularly where legislation provides a complete machinery for recovery disputes. This is judicial restraint rather than an absolute jurisdictional bar. The High Court’s reasons that the writ had remained pending and the borrower might be left remediless did not justify bypassing the appeal. (¶¶ 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 28)
- Exceptions include action outside the enactment, defiance of fundamental judicial procedure, invocation of repealed provisions and total violation of natural justice. The borrower established no such exceptional ground in the present case. (¶¶ 29, 30, 31)
- The High Court failed to account for the borrower’s default under conditional interim protection, subsequent withdrawal of its application and the purchaser’s completed payment, confirmed sale and registered certificate. The bank had denied any out-of-court settlement. These circumstances and the purchaser’s accrued rights could not be ignored when considering restoration. (¶¶ 2, 3, 4, 5, 6, 7, 8, 9, 10, 23, 24)
- The Court emphasised finality of a confirmed auction and the absence of fraud or collusion warranting interference on this record. The High Court grossly erred in entertaining and allowing the writ despite the statutory remedy and completed sale. (¶¶ 25, 26, 27, 31, 32)
- The appeal was allowed, the High Court judgment set aside and the borrower’s writ dismissed with costs of Rs.1 lakh payable by the borrower. Pending applications were disposed of. (¶¶ 33, 34, 35)
Result
Appeal allowed; High Court judgment set aside and borrower’s writ petition dismissed with Rs.1 lakh costs on the borrower. Pending applications disposed of.