Summary
An auction purchaser challenged a secured creditor’s forfeiture of its deposit through a writ petition, contending that forfeiture fell outside SARFAESI measures. The Court held that the purchaser could challenge forfeiture before the DRT under Section 17 and upheld the High Court’s refusal to entertain the writ petition.
Issues
- Whether forfeiture of an auction purchaser’s deposit is a measure reviewable under Section 17 of the SARFAESI Act.
- Whether the auction purchaser should pursue the statutory remedy rather than a writ petition.
Provisions considered
- Sections 13(4) and 17(1)–(4), Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002DRT review covers enforcement measures and compliance with rules; an aggrieved auction purchaser falls within any person. (¶¶ 19, 23, 27–31)
- Rule 9(5), Security Interest (Enforcement) Rules, 2002Forfeiture for default in payment forms part of enforcement measures reviewable by the DRT. (¶¶ 19, 26–30)
Held
- Measures under Section 13(4) include related actions under the sale rules and continue through completion of the prescribed sale procedure. Section 17 empowers the DRT to examine whether those steps comply with the Act and rules; forfeiture under Rule 9(5) is included. (¶ 27–30)
- An auction purchaser aggrieved by forfeiture is any person entitled to apply under Section 17(1). The contrary view in Umang Sugars was not accepted because it failed to account for the rules and their effect. (¶ 31–32)
- The statutory remedy justified refusal of the writ petition. The rule of alternative remedy concerns judicial restraint rather than an express exclusion of Article 226 jurisdiction. The merits of forfeiture remained for independent adjudication by the DRT. (¶ 33–35)
Result
Appeal dismissed, with liberty to apply to the competent DRT under Section 17(1) within 45 days of this order. Any application must be decided on merits, uninfluenced by observations of the Supreme Court or High Court.