Safiya Malik

The High Court at Calcutta Single Bench of Justice Hiranmay Bhattacharyya declined to entertain a borrower's plea filed under Article 227 of the Constitution of India against an order passed by the Debts Recovery Tribunal (DRT) under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The Court concluded that the petitioner had an effective statutory remedy by way of appeal before the Debts Recovery Appellate Tribunal (DRAT) and accordingly dismissed the application. The Court observed that the SARFAESI Act is a complete code by itself with sufficient and effective remedies for borrowers and financial institutions. The Court, while noting the pendency of proceedings before the DRT, declined to examine disputed questions of fact raised by the petitioner, and granted liberty to the petitioner to pursue appropriate remedies as provided under the statute.

The petitioner availed a term loan sanctioned by the State Bank of India (SBI) for the purchase of a flat. The authorised officer of SBI issued a demand notice under Section 13(2) of the SARFAESI Act dated December 8, 2023, demanding repayment of Rs. 4,96,881/- within the stipulated time. Following this, a possession notice dated February 26, 2024, was affixed on the property and subsequently published in leading newspapers on February 27, 2024.

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The petitioner challenged the demand notice, the possession notice, and its publication by filing an application under Section 17 of the SARFAESI Act, which was registered as S.A. No. 366 of 2024 and is currently pending. Subsequently, the District Magistrate, 24 Parganas (South), issued an order dated August 2, 2024, under Section 14 of the SARFAESI Act, authorising the bank to take possession of the secured asset.

Challenging the order of the District Magistrate, the petitioner filed an interlocutory application, I.A. No. 3743 of 2024, before the DRT seeking a stay on the operation of the Section 14 order. The DRT dismissed this application by its order dated November 22, 2024.

Aggrieved by this decision, the petitioner approached the High Court under Article 227 of the Constitution of India. The petitioner contended that the loan sanctioned by SBI was Rs. 10,71,000/- and that he had been regularly paying EMIs of Rs. 11,673/-. It was argued that the bank fraudulently issued the Section 13(2) notice by stating the sanctioned amount as Rs. 10,99,000/- instead of Rs. 10,71,000/-. It was further contended that this misrepresentation amounted to fraud and therefore justified invoking the Court's jurisdiction under Article 227.

In support of his argument, the petitioner relied on the Supreme Court's decision in Central Bank of India vs. Prabha Jain (Civil Appeal No. 1876 of 2016) decided on January 9, 2025, asserting that when fraud is alleged, the bar of alternate remedy does not apply. The petitioner also cited Whirlpool Corporation vs. Registrar of Trade Marks, Jyoti vs. State of Punjab, and Premier Feed Meals Pvt. Ltd. to support the maintainability of the petition.

In opposition, counsel for the bank argued that the petition was not maintainable under Article 227, as the petitioner had a statutory right of appeal to the DRAT under Section 18 of the SARFAESI Act. They relied on decisions such as United Bank of India vs. Satyawati Tandon, K. Sreedhar vs. Raur Constructions Pvt. Ltd., Punjab National Bank vs. O.C. Krishnan, Raj Kumar Shivhare vs. Directorate of Enforcement, and PHR Invent Educational Society vs. UCO Bank & Ors. to demonstrate the legal principle that High Courts must not entertain writ petitions when an efficacious alternative remedy is available under statute.

The High Court examined the scope of Sections 13, 14, 17, and 18 of the SARFAESI Act. It noted that Section 13(2) enables the creditor to demand repayment of debt upon default, while Section 13(4) authorises measures such as taking possession of the secured asset. Section 14 empowers the District Magistrate to facilitate possession. Section 17 allows the aggrieved borrower to file an application before the DRT, and Section 18 allows for an appeal before the DRAT upon a pre-deposit of a percentage of the debt.

The High Court further noted that the allegations regarding the loan amount and insurance policy involved disputed questions of fact which were already raised before the DRT in the pending S.A. 366 of 2024. As such, adjudication of these issues under Article 227 was held to be inappropriate.

"Section 18 provides that any person aggrieved by any order made by Debts Recovery Tribunal under Section 17 may prefer an appeal to the Appellate Tribunal within 30 days from the date of receipt of the order of the Debts Recovery Act."

"The expression 'any order' used in Section 18 has a very wide connotation as it includes interim and final orders. Therefore, an appeal lies under Section 18 against an interlocutory order passed on an application in a proceeding before the DRT under Section 17."

"Though it is well settled that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, this Court is not inclined to entertain this application under Article 227 of the Constitution of India against an order passed by the DRT as the alternative remedy of appeal before DRAT is not only efficacious but effective as well."

"Whether the loan sanctioned is correctly reflected in the hard copy of the agreement as annexed to this petition or in the system is a disputed question of fact which is pending adjudication before the DRT in the application under Section 17 of the SARFAESI Act."

"Such an adjudication cannot be done in an application under Article 227 of the Constitution of India and that too in a challenge thrown against the order of DRT refusing to stay the operation of the order passed under Section 14 of the SARFAESI Act."

"The Hon’ble Supreme Court in Satyawati Tondon (supra)... held that it is a matter of serious concern that despite repeated pronouncement, the High Courts continue to ignore the availability of statutory remedies under DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse effect on the right of the banks and other financial institutions to recover their dues."

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"The Hon’ble Supreme Court in PHR Invent Educational Society vs. UCO Bank... held that the rule that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution of India if an effective speedy remedy is available to an aggrieved person applies with great rigour in matters involving recovery of taxes, cess, fees and other types of public money and the dues of bank and financial institutions."

The Court concluded that it would not exercise its jurisdiction under Article 227 in light of the effective alternative remedy under Section 18 of the SARFAESI Act.

"For all the reasons as aforesaid, this Court is not inclined to grant any relief to the petitioner. CO No. 1354 of 2025 stands dismissed as being not entertained with liberty to the petitioner to avail the appropriate remedy in accordance with law."

"There shall be, however, no order as to costs."

Advocates Representing the Parties:

For the Petitioner: Mr. Bijoy Adhikary, Mr. Supriyo Ghosh, Ms. Susmita Adhikary, Ms. Ashis Bhukta

For the Respondents: Mr. Debasish Saha, Mr. Sanjoy Ghosh, Mr. Avirup Roy Sanyal, Ms. Sucheta Pal

Case Title: Prosenjit Sen vs. State Bank of India & Anr.

Case Number: C.O. 1354 of 2025

Bench: Justice Hiranmay Bhattacharyya