* Author
[2024] 4 S.C.R. 541 : 2024 INSC 297
PHR Invent Educational Society
v.
UCO Bank and Others
(Civil Appeal No. 4845 of 2024)
10 April 2024
[B.R. Gavai,* Rajesh Bindal and Sandeep Mehta, JJ.]
Issue for Consideration
Matter pertains to the High Courts entertaining petitions arising
out of the DRT Act and the SARFAESI Act in spite of availability
of an effective alternative remedy.
Headnotes
Constitution of India – Art. 226 – Cases related to recovery of
dues of banks and auction sale – Exercise of power u/Art 226
by filing writ petition, in spite of availability of an alternative
remedy – Maintainability of the writ petition:
Held: Ordinarily the High Court would not entertain a petition u/Art.
226 if an effective remedy is available to the aggrieved person –
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 – While dealing with such
petitions, the High Court must keep in mind that the statutes enacted
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 – Though the powers of the High
Court u/Art. 226 are of widest amplitude, still the Courts cannot
be oblivious of the rules of self-imposed restraint – On facts, the
High Courts entertained petitions arising out of the DRT and the
SARFAESI Act in spite of availability of an effective alternative
remedy – High Court interfered with the writ petition only on the
ground that the matter was pending for sometime before it and if
the petition not entertained, the Borrower would be left remediless
– However the High Court failed to take into consideration the
conduct of the Borrower – Though the High Court was specifically
informed that, on account of confirmation of sale and registration
thereof, the position had reached an irreversible stage, the High
Court failed to consider that aspect – High Court ought to have
542 [2024] 4 S.C.R.
Digital Supreme Court Reports
taken into consideration that the confirmed auction sale could have
been interfered with only when there was a fraud or collusion, which
was not a case – Effect of the order of the High Court would be
again reopening the issues which attained finality – Also instant
case would not come under any of the exceptions – Thus, the
High Court grossly erred in entertaining the petition – Impugned
order passed by the High Court quashed and set aside – Costs
of Rs.1,00,000/- imposed upon the Borrower – Securitization and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002. [Paras 15, 24, 26, 32, 34]
Constitution of India – Art. 226 – Power of High Courts to issue
certain writs – Exceptions, when a petition u/Art. 226 could
be entertained in spite of availability of an alternative remedy:
Held: It is when the statutory authority has not acted in accordance
with the provisions of the enactment in question; it has acted in
defiance of the fundamental principles of judicial procedure; it has
resorted to invoke the provisions which are repealed; and when
an order has been passed in total violation of the principles of
natural justice [Para 29]
Case Law Cited
United Bank of India v. Satyawati Tondon and Others
[2010] 9 SCR 1 : (2010) 8 SCC 110 : 2010 INSC 428;
Celir LLP v. Bafna Motors (Mumbai) Private Limited and
Others [2023] 13 SCR 53 : (2024) 2 SCC 1 : 2023 INSC
838; South Indian Bank Limited and Others v. Naveen
Mathew Philip and Another [2023] 4 SCR 18 : (2023)
SCC OnLine SC 435 : 2023 INSC 379; State of U.P.
v. Mohammad Nooh [1958] 1 SCR 595 : AIR 1958 SC
86 : 1957 INSC 81; Agarwal Tracom Private Limited v
Punjab National Bank and Others [2017] 11 SCR 164 :
(2018) 1 SCC 626 : 2017 INSC 1146; Authorized Officer,
State Bank of Travancore and Another v Mathew K.C
[2018] 1 SCR 233 : (2018) 3 SCC 85 : 2018 INSC
71; Phoenix ARC Private Limited v Vishwa Bharati
Vidya Mandir and Others [2022] 1 SCR 950 : (2022)
5 SCC 345 : 2022 INSC 44; Varimadugu OBI Reddy
v B Sreenivasulu and Others [2022] 16 SCR 1108 :
(2023) 2 SCC 168:2022 INSC 1205; Valji Khimji and
Company v. Official Liquidator of Hindustan Nitro Product
(Gujarat) Limited and Others [2008] 12 SCR 1 : (2008)
[2024] 4 S.C.R. 543
PHR Invent Educational Society v. UCO Bank and Others
9 SCC 299 : 2008 INSC 925; Dwarika Prasad v. State
of Uttar Pradesh and Others [2018] 3 SCR 29 : (2018)
5 SCC 491 : 2018 INSC 210; Commissioner of Income
Tax and Others v. Chhabil Dass Agarwal (2014) 1 SCC
603 – referred to.
List of Acts
Constitution of India; Securitization and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002.
List of Keywords
Alternative remedy; Effective remedy; Recovery of taxes, cess, fees,
other types of public money; Dues of banks and other financial
institutions; Quasi-judicial bodies; Rule of exhaustion of alternative
remedy; Rules of self-imposed restraint; Deprecation; Alternative
statutory remedy; Debts Recovery Tribunal; Securitization
application; Sale of his mortgaged properties; Rule of self-restraint;
Redressal of grievance; Costs; Principles of judicial procedure;
Principles of natural justice.
Case Arising From
CIVIL APPELLATEJURISDICTION: Civil Appeal No.4845 of 2024
From the Judgment and Order dated 04.02.2022 of the High Court
for the State of Telangana at Hyderabad in WP No. 5275 of 2021
Appearances for Parties
R. Basant, Sr. Adv., Khalid M.S, A. Karthik, Manu Krishnan, Ms.
Gunjan Rathore, Kavinesh R M, Advs. for the Appellant.
Jayant Bhushan, Sr. Adv., Partha Sil, Sanjiv Kr. Saxena, Chirag Joshi,
Ms. Sayani Bhattacharya, Abhiraj Chaudhary, Venkateswara Rao
Anumolu, Sunny Kumar, Puneet Aggarwal, Advs. for the Respondents.
Judgment / Order of the Supreme Court
Judgment
B.R. Gavai, J.
1. Leave granted.
2. This appeal challenges the order dated 4th February 2022, passed
by the Division Bench of the High Court for the State of Telangana
544 [2024] 4 S.C.R.
Digital Supreme Court Reports
at Hyderabad in Writ Petition No. 5275 of 2021, whereby the High
Court disposed of the writ petition filed by Dr. M.V. Ramana Rao,
respondent No. 3 herein (hereinafter referred to as ‘the Borrower’).
The High Court set aside the order dated 2nd February 2021, passed
by the Debts Recovery Tribunal-II at Hyderabad (hereinafter referred
to as ‘DRT’) and allowed Miscellaneous Application (M.A.) No.
97 of 2020 in Securitization Application (S.A.) No. 1476 of 2017
filed by the Borrower for the restoration of the said S.A. No. 1476
of 2017 filed by him under Section 17 of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (‘SARFAESI Act’ for short). The Borrower had
filed S.A. No. 1476 of 2017 against the Notice dated 2nd September
2017 issued by the UCO Bank (hereinafter referred to as the
‘Respondent-Bank’) for the sale of his mortgaged properties which
was to be conducted by the Authorized Officer (Respondent No.2)
of the Respondent-Bank in light of the default in repayment of loan
by the Borrower. The DRT, in its aforementioned order dated 2nd
February 2021, had dismissed the M.A. No. 97 of 2020 for the
restoration of S.A. No. 1476 of 2017, which had been previously
dismissed as withdrawn vide DRT vide order dated 21st September
2020. The Division Bench of the High Court, in the impugned
order, while setting aside the order of DRT dated 2nd February
2021, further directed DRT to proceed with S.A. No. 1476 of 2017
in accordance with law.
3. The facts, in brief, giving rise to the present appeal are as under:
3.1 The Borrower had availed a loan from the Respondent-Bank and
in order to secure the said loan, the Borrower had mortgaged
four properties (hereinafter referred to as ‘scheduled properties’)
situated at Vijayawada, Andhra Pradesh as collateral security.
However, the Borrower defaulted in the repayment of the loan
amount, which led the Respondent-Bank to initiate proceedings
against the borrower under the SARFAESI Act.
3.2 Thereafter, the Respondent-Bank issued an Auction Sale
Notice on 2nd September 2017 for auctioning off the scheduled
properties and published information about the same in the Times
of India and one other vernacular newspaper. According to the
said Auction Sale Notice, the auction was to be conducted on
14th December 2017.
[2024] 4 S.C.R. 545
PHR Invent Educational Society v. UCO Bank and Others
3.3 Aggrieved by the Auction Sale Notice, the Borrower preferred
a securitization application being S.A. No.1476 of 2017 before
DRT under Section 17 of the SARFAESI Act, thereby inter alia
praying for setting aside of the same.
3.4 In the meanwhile, the auction was conducted on 14th December
2017 by the Respondent-Bank through Respondent No.2. The
PHR Invent Educational Society, (hereinafter referred to as
the ‘auction purchaser’), i.e., the appellant herein participated
in the said auction and emerged as the highest bidder for a
bid of Rs.5,72,22,200/-. The appellant deposited 25% of the
bid amount i.e. Rs. 1,38,05,550/- including the Earnest Money
Deposit of the said amount. The fact remains that the Borrower
did not deposit the amount.
3.5 On the same day i.e., 14th December 2017, DRT passed an
interim order in S.A. No. 1476 of 2017, thereby refusing to
interfere with the sale of the scheduled properties which was to
be conducted on that very day. The Borrower had also filed an
interlocutory application being I.A. No. 3446 of 2017, thereby
praying for stay of further proceedings qua the auction of the
scheduled properties, wherein DRT directed the RespondentBank not to confirm the sale of the scheduled properties subject
to the Borrower depositing 30% of the outstanding dues as
claimed for in the Auction Sale Notice in two equal installments.
The first installment of 15% amount was to be deposited within a
week from the date of the said order, and the second installment
of 15% amount was to be deposited within two weeks thereafter.
The DRT further directed that, in the event that the Borrower
failed to make the aforesaid deposits, the interim stay would
stand vacated and the Respondent-Bank would be at liberty
to confirm the sale in favor of the highest bidder, although the
sale itself was made subject to the final outcome in S.A. No.
1476 of 2017.
3.6 Subsequently, the appellant deposited Rs.4,29,16,650/- towards
the payment of the balance auction price on 28th December 2017.
3.7 In the meanwhile, the Borrower proposed One Time Settlement
(‘OTS’ for short) for all the outstanding loan accounts. However,
the Respondent-Bank refused to accept the same and requested
the Borrower to settle all the outstanding loan accounts with
546 [2024] 4 S.C.R.
Digital Supreme Court Reports
interest payable at the contractual rate, as applicable thereon
vide letter dated 12th May 2020.
3.8 Following which, DRT passed an order dated 21st September
2020, whereby S.A. No. 1476 of 2017 was dismissed as
withdrawn at the behest of the Borrower who submitted that
the matter had been settled out of court. On the other hand,
the Respondent-Bank filed a Memo of Non-Settlement before
DRT thereby informing that no such out-of-court settlement
had been reached.
3.9 Upon S.A. No. 1476 of 2017 being dismissed as withdrawn,
the Respondent-Bank confirmed the sale of the scheduled
properties in favor of the appellant herein. A Sale Certificate
was issued by the Respondent-Bank on 2nd November 2020
and the possession of the scheduled properties was accordingly
delivered to the appellant. Subsequently, on 11th November
2020, the Sale Certificate came to be registered in favor of
the appellant herein.
3.10 In the meantime, the Borrower preferred M.A. No. 97 of 2020 in
S.A. No. 1476 of 2017 before DRT, praying for the restoration of
S.A. No. 1476 of 2017 to the file and setting aside the aforesaid
order of DRT dated 21st September 2020. However, on 2nd
February 2021, DRT passed an order thereby dismissing the
said M.A. filed by the Borrower.
3.11 Aggrieved thereby, the Borrower filed writ petition before the
High Court. The High Court, by the impugned order, disposed
of the said writ petition, thereby setting aside the order of
DRT, and further directing it to proceed with S.A. No. 1476
of 2017 in accordance with law. The M.A. No. 97 of 2020 in
S.A. No. 1476 of 2017 was thus allowed restoring S.A. No.
1476 of 2017.
4. Being aggrieved thus, the auction purchaser has preferred the
present appeal.
5. We have heard Shri R. Basant, learned Senior Counsel appearing
on behalf of the appellant-auction purchaser, Shri Partha Sil,
learned counsel appearing on behalf of the UCO Bank and Shri
Jayant Bhushan, learned Senior Counsel appearing on behalf of
the respondent No.3-Borrower.
[2024] 4 S.C.R. 547
PHR Invent Educational Society v. UCO Bank and Others
6. Shri Basant, learned Senior Counsel appearing for the appellantauction purchaser submitted that the High Court has grossly erred in
entertaining the writ petition filed by the Borrower when an efficacious
alternative remedy of statutory appeal was available to the Borrower
under the SARFAESI Act. He relies on the judgments of this Court
in the cases of United Bank of India v. Satyawati Tondon and
Others1
, Celir LLP v. Bafna Motors (Mumbai) Private Limited and
Others2 and South Indian Bank Limited and Others v. Naveen
Mathew Philip and Another3
.
7. Shri Basant further submitted that the conduct of the Borrower also
disentitled him to an equitable relief. It is submitted that the Borrower
had filed the writ petition after the entire payment was made by the
appellant-auction purchaser and a Sale Certificate was also issued
in its favour. The learned Senior Counsel therefore submitted that
the writ petition filed by the Borrower deserves to be dismissed and
the present appeal deserves to be allowed.
8. Shri Partha Sil, learned counsel appearing on behalf of the UCO
Bank, also advanced similar arguments and prayed for dismissal of
the writ petition filed by the Borrower.
9. Shri Bhushan, learned Senior Counsel, appearing on behalf of the
Borrower, on the contrary, submitted that non-exercising of the
jurisdiction under Article 226/227 of the Constitution of India on
the ground of availability of an alternative remedy is a rule of selfrestraint. It is submitted that, in deserving cases, the High Court is
not precluded from entertaining a petition under Article 226 of the
Constitution in order to do justice to the parties. The learned Senior
Counsel relies on the judgment of this Court in the case of State of
U.P. v. Mohammad Nooh4
.
10. The facts in the present case are not disputed. It is not in dispute
that in the auction held on 14th December 2017, the appellantauction purchaser was the highest bidder having offered a bid for an
amount of Rs.5,72,22,200/- and that the appellant-auction purchaser
deposited 25% of the bid amount i.e. Rs.1,38,05,550/- immediately.
1 [2010] 9 SCR 1 : (2010) 8 SCC 110 : 2010 INSC 428
2 [2023] 13 SCR 53 : (2024) 2 SCC 1 : 2023 INSC 838
3 [2023] 4 SCR 18 : 2023 SCC OnLine SC 435 : 2023 INSC 379
4 [1958] 1 SCR 595 : AIR 1958 SC 86 : 1957 INSC 81
548 [2024] 4 S.C.R.
Digital Supreme Court Reports
It is also not in dispute that on 14th December 2017, the learned
DRT, though refused to interfere with the sale but directed the
Respondent-Bank not to confirm the sale of the scheduled properties
subject to the Borrower depositing 30% of the outstanding dues in
two equal installments within one week and two weeks thereafter
respectively. The learned DRT had also directed that, in case of
failure of compliance, the interim stay would stand automatically
vacated and the Respondent-Bank would be entitled to confirm the
sale. It is also not in dispute that the Borrower did not comply with
the said order of the learned DRT. It is thus clear that, on non-deposit
of the amount as directed by the learned DRT vide order dated
14th December 2017, the interim direction passed on the said date
stood automatically vacated. After the aforesaid period was over,
the appellant-auction purchaser deposited the balance amount of
Rs.4,29,16,650/-.
11. It appears that, during the pendency of the proceedings before
the learned DRT, the Borrower submitted an OTS proposal to the
Respondent-Bank on 29th March 2019, thereby offering to settle the
accounts for an amount of Rs.3,75,00,000/-. It further appears that the
Borrower also deposited 10% upfront amount i.e. Rs.37,50,000/. On
12th May 2020, the Respondent-Bank, in reply to the OTS application,
asked the Borrower to settle all the four loan accounts with interest
at the contractual rate.
12. On 20th August 2020, the Borrower filed an application being I.A. No.
1691 of 2020 in the proceedings pending before DRT requesting for
advancing the date of hearing stating that there was urgency in the
matter and also that the appellant-auction purchaser had withdrawn
from the auction. Thereafter, vide order dated 21st September 2020,
the said S.A. No. 1476 of 2017 came to be withdrawn on a statement
made by the counsel for the Borrower that the matter had been settled
out of court. It is also relevant to mention that on 5th October 2020,
the Respondent-Bank had filed a memo before DRT informing that
there was no settlement.
13. After the disposal of the S.A. No. 1476 of 2017 as withdrawn, the
Respondent-Bank confirmed the sale in favour of the appellant-auction
purchaser on 2nd November 2020. Thereafter, on 4th November 2020,
the Borrower filed a miscellaneous application being M.A. No. 97 of
2010 for restoration of the said S.A. No. 1476 of 2017 on the ground
[2024] 4 S.C.R. 549
PHR Invent Educational Society v. UCO Bank and Others
that the said S.A. No. 1476 of 2017 had been withdrawn because
the Chief Manager and AGM of the Respondent-Bank had orally told
the Borrower that unless the S.A. No. 1476 of 2017 was withdrawn,
they could not process the OTS proposal. It is further relevant to
note that on 11th November 2020, the Sale Certificate was registered.
Vide order dated 2nd February 2021, DRT dismissed the said M.A.
No. 97 of 2010. Thereafter, the writ petition being No. 5275 of 2021
came to be filed by the Borrower on 25th February 2021 before the
High Court. Vide the impugned order, the High Court set aside the
order passed by DRT and directed it to proceed with S.A. No. 1476
of 2017.
14. The law with regard to entertaining a petition under Article 226
of the Constitution in case of availability of alternative remedy is
well settled. In the case of Satyawati Tondon (supra), this Court
observed thus:
“43. Unfortunately, the High Court 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,
550 [2024] 4 S.C.R.
Digital Supreme Court Reports
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.”
15. It could thus be seen that, this Court has clearly held 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. It has been held 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. The
Court clearly observed that, 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. It has been held that, though the powers of the High Court
under Article 226 of the Constitution are of widest amplitude, still
the Courts cannot be oblivious of the rules of self-imposed restraint
evolved by this Court. The Court further held that though the rule
of exhaustion of alternative remedy is a rule of discretion and not
one of compulsion, still it is difficult to fathom any reason why the
High Court should entertain a petition filed under Article 226 of the
Constitution.
[2024] 4 S.C.R. 551
PHR Invent Educational Society v. UCO Bank and Others
16. The view taken by this Court has been followed in the case of
Agarwal Tracom Private Limited v. Punjab National Bank and
Others5
.
17. In the case of Authorized Officer, State Bank of Travancore and
Another v. Mathew K.C.6
, this Court was considering an appeal
against an interim order passed by the High Court in a writ petition
under Article 226 of the Constitution staying further proceedings at
the stage of Section 13(4) of the SARFAESI Act. After considering
various judgments rendered by this Court, the Court observed thus:
“16. The writ petition ought not to have been entertained
and the interim order granted for the mere asking
without assigning special reasons, and that too without
even granting opportunity to the appellant to contest the
maintainability of the writ petition and failure to notice
the subsequent developments in the interregnum. The
opinion of the Division Bench that the counter-affidavit
having subsequently been filed, stay/modification could be
sought of the interim order cannot be considered sufficient
justification to have declined interference.”
18. The same position was again reiterated by this Court in the case of
Phoenix ARC Private Limited v. Vishwa Bharati Vidya Mandir
and Others7
.
19. Again, in the case of Varimadugu OBI Reddy v. B. Sreenivasulu
and Others8
, after referring to earlier judgments, this Court observed
thus:
“34. The order of the Tribunal dated 1-8-2019 was an
appealable order under Section 18 of the SARFAESI
Act, 2002 and in the ordinary course of business, the
borrowers/person aggrieved was supposed to avail the
statutory remedy of appeal which the law provides under
Section 18 of the SARFAESI Act, 2002. In the absence
of efficacious alternative remedy being availed, there was
5 [2017] 11 SCR 164 : (2018) 1 SCC 626 : 2017 INSC 1146
6 [2018] 1 SCR 233 : (2018) 3 SCC 85 : 2018 INSC 71
7 [2022] 1 SCR 950 : (2022) 5 SCC 345 : 2022 INSC 44
8 [2022] 16 SCR 1108 : (2023) 2 SCC 168 : 2022 INSC 1205
552 [2024] 4 S.C.R.
Digital Supreme Court Reports
no reasonable justification tendered by the respondent
borrowers in approaching the High Court and filing writ
application assailing order of the Tribunal dated 1-8-2019
under its jurisdiction under Article 226 of the Constitution
without exhausting the statutory right of appeal available
at its command.”
20. It could thus be seen that this Court has strongly deprecated the
practice of entertaining writ petitions in such matters.
21. Recently, in the case of Celir LLP (supra), after surveying various
judgments of this Court, the Court observed thus:
“101. More than a decade back, this Court had expressed
serious concern despite its repeated pronouncements
in regard to the High Courts ignoring the availability of
statutory remedies under the RDBFI Act and the SARFAESI
Act and exercise of jurisdiction under Article 226 of the
Constitution. Even after, the decision of this Court in
Satyawati Tondon [United Bank of India v. Satyawati
Tondon, (2010) 8 SCC 110 : (2010) 3 SCC (Civ) 260] , it
appears that the High Courts have continued to exercise
its writ jurisdiction under Article 226 ignoring the statutory
remedies under the RDBFI Act and the SARFAESI Act.”
22. It can thus be seen that it is more than a settled legal position of law
that in such matters, the High Court should not entertain a petition
under Article 226 of the Constitution particularly when an alternative
statutory remedy is available.
23. The only reasoning that could be seen from the impugned order
given by the learned Division Bench of the High Court is as under:
“11. It is true that under Section 18 of the SARFAESI
Act, petitioner has the alternative remedy against the
impugned order by filing appeal before the appellate
Tribunal. However, having regard to the fact that the writ
petition is pending before this Court for quite some time
and also considering the fact that if the impugned order is
allowed to stand, petitioner would be left without a remedy
to ventilate his grievance, we deem it fit and proper not
to non-suit the petitioner on the ground of not availing the
alternative remedy.
[2024] 4 S.C.R. 553
PHR Invent Educational Society v. UCO Bank and Others
12. Section 17 of the SARFAESI Act provides that any
person including a borrower who is aggrieved by the action
of secured creditor under Section 13 (4) of the SARFAESI
Act may file an application thereunder. Supreme Court
has held time and again that the Tribunal exercises wide
jurisdiction under Section 17 of the SARFAESI Act, even
to the extent of setting aside an auction sale. In the instant
case, we are consciously not referring to the merit of the
case. All that we are concerned is whether for whatever
reason a person who is aggrieved in law should be left
remediless. In the instant case, petitioner had invoked his
remedy by filing securitization application under sub-section
(1) of Section 17 of the SARFAESI Act. The application
was pending for three years before the Tribunal. From
the docket order dated 21.09.2020, we find that a junior
counsel appearing on behalf of the petitioner had reported
that the matter was settled out of Court and therefore, leave
was sought for withdrawing the securitization application
which was accordingly granted.
13. When the settlement did not materialize, petitioner
went back to the Tribunal for revival of the securitization
application which was however dismissed on the ground
that version of the petition did not deserve acceptance.
14. On thorough consideration of the matter we are of the
view that dismissal of the miscellaneous application of the
petitioner by the Tribunal dies not appear to be justified.
15. Though subsequent developments may have a bearing
on the grant of ultimate relief to a litigant but the same by
itself cannot denude the adjudicating authority of its power
to adjudicate the grievance raised by the aggrieved person
which it otherwise possess.”
24. It can thus clearly be seen that though it was specifically contended
on behalf of the appellant herein that the writ petition was not
maintainable on account of availability of alternative remedy, the High
Court has interfered with the writ petition only on the ground that the
matter was pending for sometime before it and if the petition was not
entertained, the Borrower would be left remediless. We however find
that the High Court has failed to take into consideration the conduct
554 [2024] 4 S.C.R.
Digital Supreme Court Reports
of the Borrower. It is further to be noted that, though the High Court
had been specifically informed that, on account of subsequent
developments, that is confirmation of sale and registration thereof,
the position had reached an irreversible stage, the High Court has
failed to take into consideration those aspects of the matter.
25. This Court, in the case of Valji Khimji and Company v. Official
Liquidator of Hindustan Nitro Product (Gujarat) Limited and
Others9
, has observed thus:
“30. In the first case mentioned above i.e. where the
auction is not subject to confirmation by any authority, the
auction is complete on the fall of the hammer, and certain
rights accrue in favour of the auction-purchaser. However,
where the auction is subject to subsequent confirmation
by some authority (under a statute or terms of the auction)
the auction is not complete and no rights accrue until the
sale is confirmed by the said authority. Once, however, the
sale is confirmed by that authority, certain rights accrue in
favour of the auction-purchaser, and these rights cannot be
extinguished except in exceptional cases such as fraud.
31. In the present case, the auction having been confirmed
on 30-7-2003 by the Court it cannot be set aside unless
some fraud or collusion has been proved. We are satisfied
that no fraud or collusion has been established by anyone
in this case.”
26. In our view, the High Court ought to have taken into consideration
that the confirmed auction sale could have been interfered with only
when there was a fraud or collusion. The present case was not a
case of fraud or collusion. The effect of the order of the High Court
would be again reopening the issues which have achieved finality.
27. It is further to be noted that this Court, in the case of Dwarika Prasad
v. State of Uttar Pradesh and Others10, has clearly held that the
right of redemption stands extinguished on the execution of the
registered sale deed. In the present case, the sale was confirmed
on 2nd November 2020 and registered on 11th November 2020.
9 [2008] 12 SCR 1 : (2008) 9 SCC 299 : 2008 INSC 925
10 [2018] 3 SCR 29 : (2018) 5 SCC 491 : 2018 INSC 210
[2024] 4 S.C.R. 555
PHR Invent Educational Society v. UCO Bank and Others
28. Insofar as the contention of the Borrower and its reliance on the
judgment of this Court in the case of Mohammad Nooh (supra) is
concerned, no doubt that non-exercise of jurisdiction under Article
226 of the Constitution on the ground of availability of an alternative
remedy is a rule of self-restraint. There cannot be any doubt with that
proposition. In this respect, it will be relevant to refer to the following
observations of this Court in the case of Commissioner of Income
Tax and Others v. Chhabil Dass Agarwal11:
“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 [AIR 1964 SC 1419] , 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.”
29. It could thus clearly be seen that the Court has carved out certain
exceptions when a petition under Article 226 of the Constitution
could be entertained in spite of availability of an alternative remedy.
Some of them are thus:
(i) where the statutory authority has not acted in accordance with
the provisions of the enactment in question;
(ii) it has acted in defiance of the fundamental principles of judicial
procedure;
11 (2014) 1 SCC 603
556 [2024] 4 S.C.R.
Digital Supreme Court Reports
(iii) it has resorted to invoke the provisions which are repealed; and
(iv) when an order has been passed in total violation of the principles
of natural justice.
30. It has however been clarified 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.
31. Undisputedly, the present case would not come under any of the
exceptions as carved out by this Court in the case of Chhabil Dass
Agarwal (supra).
32. We are therefore of the considered view that the High Court has
grossly erred in entertaining and allowing the petition under Article
226 of the Constitution.
33. While dismissing the writ petition, we will have to remind the High
Courts of the following words of this Court in the case of Satyawati
Tondon (supra) since we have come across various matters wherein
the High Courts have been entertaining petitions arising out of the
DRT Act and the SARFAESI Act in spite of availability of an effective
alternative remedy:
“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.”
34. In the result, we pass the following order:
(i) The appeal is allowed;
(ii) The impugned order dated 4th February 2022 passed by the
High Court in Writ Petition No. 5275 of 2021 is quashed and
set aside; and
[2024] 4 S.C.R. 557
PHR Invent Educational Society v. UCO Bank and Others
(iii) Writ Petition No. 5275 of 2021 is dismissed with costs quantified
at Rs.1,00,000/- imposed upon the Borrower.
35. Pending application(s), if any, shall stand disposed of.
Headnotes prepared by: Nidhi Jain Result of the case:
Appeal allowed.
