The Allahabad High Court has recently reiterated that it will not interfere in matters related to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, unless there is a clear case of patent illegality or mala fide actions by the bank authorities.
The division bench, comprising Justice Shekhar B. Saraf and Justice Dr. Yogendra Kumar Srivastava, stated:
"This Court is required not to interfere in matters with regard to the SARFAESI Act unless it finds patent illegality and/or mala fide actions being taken by the bank authorities."
The judgment came while hearing a petition filed by M/S K.C. International and two others against Indian Bank, Kanpur Main Branch. The petitioners sought the quashing of recovery proceedings initiated under Section 13(4) of the SARFAESI Act, arguing that their objections under Section 13(3A) had not been decided before moving forward.
Background of the Case
- The petitioners filed a representation on October 5, 2024, which the bank decided by an order dated October 17, 2024.
- Attempts to deliver the order to petitioners were unsuccessful for two of them as their residence was locked, and there was an issue with the postal code for the first petitioner.
- Despite this, the notice under Section 13(4) was received by the petitioners.
- They subsequently approached the Debts Recovery Tribunal (DRT) by filing S.A. No.-1087 of 2024 on December 13, 2024.
- However, they later filed a writ petition before the High Court on January 2, 2025, without initially disclosing their earlier action before the DRT.
The Court noted that during the pending proceedings before the DRT, the petitioners tried to challenge the same matters before the High Court, which the Court disapproved.
Highlighting the principle laid down by the Supreme Court in United Bank of India vs Satyawati Tondon & Ors, the bench observed:
"Where an effective alternative remedy is available, courts must refrain from interfering under Article 226 unless the case involves exceptional circumstances."
The High Court pointed out that the bank had indeed passed a reasoned order on the objections and attempted proper service. It remarked:
"This is not a case where the bank kept the decision in a drawer. Efforts were made to serve the order, and subsequently, the Section 13(4) notice was received."
Additionally, the Court emphasized that no mala fide intentions could be attributed to the bank, especially since sale proceedings under Section 13(8) had already taken place.
The judges further stated:
"The petitioners have missed the bus. Having challenged the Section 13(4) notice before the DRT, they cannot sail on two boats by simultaneously approaching the High Court."
Finally, considering the availability of an alternative remedy and the lack of patent illegality, the Court dismissed the writ petition.
Case Title: M/S K.C. International Situate And 2 Others vs. Indian Bank Kanpur Main Branch 2025
