Himachal Pradesh High Court
Reserved On: 23.12.2024 vs The Deputy General Manager Of Baroda & ... on 10 January, 2025
Author: Vivek Singh Thakur
Bench: Vivek Singh Thakur
2025:HHC:2289-DB IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA CWP No. 12538 of 2024 Reserved on: 23.12.2024 Date of Decision : 10.01.2025 M/s Satyam Prasad Bhandar ...Petitioner.
Versus The Deputy General Manager of Baroda & others ...Respondents.
Coram Hon'ble Mr Justice Vivek Singh Thakur, Judge. Hon'ble Mr Justice Rakesh Kainthla, Judge. Whether approved for reporting?1 Yes.
For the petitioner : Mr. Vishal Mohan, Senior Advocate, with Mr. Shriyek Sharda, Advocate.
For the Respondents : Mr Vijay Kumar Arora, Senior Advocate, with M/s Sanjay Dalmia, Gaurav Kumar, Hitansh Raj, Aastha and Lalita Sharma, Advocates.
Rakesh Kainthla, Judge The present petition has been filed for seeking a writ of certiorari for quashing the e-auction notice dated 5.8.2024 along with any consequential proceedings conducted in furtherance of the notice; writ of mandamus, directing the respondent-Bank to refund the money received from any of the successful auction bidder/purchaser; to release the outstanding dues from the inventory/stock videographed, photographed and 1 Whether reporters of Local Papers may be allowed to see the judgment? Yes.
22025:HHC:2289-DB verified at the time of the seizure of the mortgaged property;
directing the respondent Bank to return high-value inventory/ stock, which was videographed/photographed at the time of sealing of the mortgaged premises by the Bank; to revive the One Time Settlement (OTS) proposal as per the terms and conditions proposed in the year 2022; produce all the relevant records; and provide an opportunity to clear all the outstanding dues.
2. As per the petitioner, the petitioner is a sole proprietorship firm. The property measuring 0-05-99 hectares, located at Mohal Nari, Sub Tehsil Bharwain, District Una, H.P., is owned by petitioner No. 2 (even though only one petitioner has filed the petition). A building named M/s Satyam Prasad Bhandar is constructed on the land and is utilised by the pilgrims visiting Mata Chintpurni Temple as a rest house. The petitioner availed a loan of ₹45.00 lacs (₹35.00 lacs term loan and ₹10.00 lacs CC Limit) from Kangra Cooperative Bank, Bharwain. This loan was taken over by Vijaya Bank (now Bank of Baroda) in 2015 as per the petitioner's request. The loan amount was enhanced to ₹2,55,00,000/- for the construction of a shop, hotel/building.
The borrower deposited ₹1,80,00,000/- in the form of various instalments. He defaulted in the payment of a few instalments, 3 2025:HHC:2289-DB and the building was sealed on 12.9.2019 with the assistance of the Tehsildar, Police and Up-Pradhan. The Bank asked the borrower and guarantor to deposit ₹10.00 lacs on 11.9.2019, which amount was deposited. The Bank obtained writing from the petitioner and guarantor to deposit the remaining amount within one month and promised not to seal the building for one month.
However, the Bank officials sealed the building on 12.9.2019. The borrower and guarantor approached the Debt Recovery Tribunal, Chandigarh, with a prayer to give notice under Section 13(2) and 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFEASI Act) declaring the action taken by the Bank to be void. He also approached this Court by filing a Civil Miscellaneous Petition Main (Objection) bearing CMPMO No. 326 of 2020. The Court directed the Bank not to finalise the process of auction. The Bank used to advertise the auction notice in the newspaper, mentioning the proceedings pending before the Debt Recovery Tribunal; however, these proceedings were not mentioned in the notice dated 22.6.2024 and 26.7.2024. The reserve price mentioned in the auction notice was based on the valuation report obtained more than a year before the auction. The 4 2025:HHC:2289-DB approved valuer valued the property at more than ₹3.00 crores in 2018. As per the valuation got done by the Bank, the property was valued at ₹4,25,00,000/-. The market value of the property is more than ₹6.00 crores approximately. The value of the items lying inside the building worth cores of rupees was not mentioned in the valuation. The borrower approached the Bank for One Time Settlement (OTS) on 23.5.2022. An amount of ₹1,80,00,000/- was settled under the One Time Settlement Scheme (OTS). The petitioner remained present in the office of the General Manager with the Demand Draft of ₹5.00 lacs. He had deposited ₹ 13.00 lacs in the Parking Account/Sundry Account of the Bank. The Bank did not issue any compromise letter/sanction letter to the petitioner despite repeated reminders. The Bank had also added another loan of the petitioner of ₹ 14.00 lacs, which was a regular account. The bank issued a letter to the petitioner on 28.11.2022 asking the borrowers/guarantors to deposit ₹50.00 lacs on or before 30.11.2022. The borrower/guarantor asked to extend the time, but the Bank did not comply with the request.
The Bank official transferred ₹18.00 lacs from the sundry account to the loan account. The reserve price of ₹1,60,00,000/- was mentioned in the auction notice, and the borrower/guarantor was 5 2025:HHC:2289-DB ready to pay ₹1,80,00,000/- in addition to ₹18.00 lacs already paid to the Bank under One Time Settlement Scheme, approved by the Bank; however, the Bank insisted upon auctioning the property at a throwaway price much less than the fair value.
Thefts were committed on the premises after it was sealed by the Bank. The complaints were made to the police. The petitioner challenged the auction notice dated 6.11.2023, issued by the Bank before this Court in CMPMO No. 656 of 2023, and the Court granted an interim order on 5.4.2024. The Bank issued another sale proclamation dated 21.6.2024 for conducting an e-auction on 23.7.2024. CMPMO No. 425 of 2024 was filed, and an interim order was issued, staying the auction fixed on 23.7.2024. The petitioner had also filed different interim applications before the Debt Recovery Tribunal, and the Bank had not responded to all of them. The Bank had arbitrarily exercised power under Sections 13(2) and 13(4) of the SARFEASI Act, and inadequate time was given to liquidate the loan under the One Time Settlement Scheme. The Bank is proceeding despite the pendency of the proceedings before the learned Debt Recovery Tribunal, Chandigarh. The Bank had seized the stock worth ₹1,50,00,000/-
which was not returned to the petitioner. The property is being 6 2025:HHC:2289-DB sold at a throw-away price. The action of the Bank violates Rule 8(5) of the Security Interest (Enforcement) Rules, 2002 (the Rules) and other statutory provisions. Hence, the petition.
3. The petition was opposed by filing a short reply, making preliminary submissions regarding lack of maintainability; the petitioner having concealed the material facts from the Court; the petitioner not adhering to the terms and conditions of the loan agreement and having committed successive defaults in the repayment schedule of the Bank; the petitioner having approached the Debt Recovery Tribunal, Chandigarh and is not entitled to approach the Court. It was asserted that the e-auction sale notice was issued almost twelve times, but no person participated in the bid. The Bank obtained a valuation report from the approved valuer before auctioning the property. The bidder has deposited the whole amount, and the petitioner has the alternative remedy of filing a petition before the Debt Recovery Tribunal, Chandigarh. Therefore, it was prayed that the present petition be dismissed.
4. A rejoinder denying the contents of the reply and affirming those of the petition was filed.
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5. We have heard Mr Vishal Mohan, learned Senior Advocate, instructed by Mr Shriyek Sharda, Advocate for the petitioner and Mr Vijay Kumar Arora, learned Senior Advocate, instructed by M/s Sanjay Dalmia, Gaurav Kumar, Hitansh Raj, Aastha and Lalita Sharma, Advocates for the respondents.
6. Mr Vishal Mohan, learned Senior Counsel for the petitioner, submitted that the respondent bank is under obligation to obtain a fair valuation of the property before putting it to auction under Rule 8(5) of the Rules. The value of the property is being reduced arbitrarily, and the property is being sold at a throwaway price. The petitioner is being deprived of his right to have the property under Article 300A of the Constitution of India. Therefore, he prayed that the present petition be allowed and the action of the respondents be set aside. He relied upon Eureka Forbes Ltd. v. Allahabad Bank, (2010) 6 SCC 193, J. Rajiv Subramaniyan v. Pandiyas (2014) 5 SCC 651, Bhupinder Singh v.
State Bank of Patiala, 2008 SCC OnLine P&H 473: AIR 2008 P&H 148, Swastik Agency v. State Bank of India, Bhubaneswar, 2009 SCC OnLine Ori 3: AIR 2009 Orisa 147 and Whirlpool Corpn. v. Registrar of Trade Marks, (1998) 8 SCC 1 in support of his submission.
82025:HHC:2289-DB
7. Mr. Vijay Kumar Arora, learned Senior Counsel for the respondents-Bank, submitted that the petitioner has a remedy to approach the Debt Recovery Tribunal under Section 17 of the SARFEASI Act. The writ petition is not maintainable when an alternative remedy is available to the petitioner. The Bank had followed the statutory requirements before carrying out the auction. Rule 8(5) of the Rules was duly complied with. Therefore, he prayed that the present petition be dismissed. He relied upon SBI v. Arvindra Electronics (P) Ltd., (2023) 1 SCC 540, Bijnor Urban Coop. Bank Ltd. v. Meenal Agarwal, (2023) 2 SCC 805, and AIR 2023 SC 4564 in support of his submission.
8. Section 13(4) of the SARFEASI Act Act reads as under: -
(4) In case the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:--
(a) take possession of the secured assets of the borrower, including the right to transfer by way of lease, assignment or sale for realising the secured asset;
(b) take over the management of the business of the borrower, including the right to transfer by way of lease, assignment or sale for realising the secured asset:
Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt:9
2025:HHC:2289-DB Provided further that where the management of the whole of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower, which is relatable to the security for the debt;
(c) appoint any person (hereafter referred to as the manager) to manage the secured assets, the possession of which has been taken over by the secured creditor;
(d) require at any time, by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower to pay the secured creditor so much of the money as is sufficient to pay the secured debt.
9. Section 17 of the SARFEASI Act Act reads as under: -
17. Application against measures to recover secured debts.
--(1) Any person (including borrower) aggrieved by any of the measures referred to in sub-section (4) of Section 13 taken by the secured creditor or his authorised officer under this chapter may make an application along with such fee, as may be prescribed, to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measure had been taken:
Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower.
Explanation.--For the removal of doubts, it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under this sub-section.] 10 2025:HHC:2289-DB (1-A) An application under sub-section (1) shall be filed before the Debts Recovery Tribunal within the local limits of whose jurisdiction--
(a) the cause of action, wholly or in part, arises;
(b) where the secured asset is located; or
(c) the branch or any other office of a bank or financial institution is maintaining an account in which the debt claimed is outstanding for the time being.] (2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in sub-section (4) of Section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder. (3) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section(4) of Section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management or restoration of possession, of the secured assets to the borrower or other aggrieved person, it may, by order,--
(a) declare the recourse to any one or more measures referred to in sub-section (4) of Section 13 taken by the secured creditor as invalid; and
(b) restore the possession of secured assets or management of secured assets to the borrower or such other aggrieved person who has made an application under sub-section (1), as the case may be; and
(c) pass such other direction as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub- section (4) of Section 13.
(4) If, the Debts Recovery Tribunal declares the recourse taken by a secured creditor under sub-11
2025:HHC:2289-DB section (4) of Section 13, is in accordance with the provisions of this Act and the rules made thereunder, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor shall be entitled to take recourse to one or more of the measures specified under sub-
section (4) of Section 13 to recover his secured debt. xxxxxx
10. It is apparent from the combined reading of these provisions that a person has the right to approach the Debt Recovery Tribunal against any measure taken under Section 13(4), which includes the sale of secured assets. It was laid down by the Hon'ble Supreme Court in United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110: (2010) 3 SCC (Civ) 260: 2010 SCC OnLine SC 776 that an appeal lies before the Debt Recovery Tribunal (DRT) against the proceedings conducting under Section 13 (4) of the SARFEASI Act including the sale of the secured assets. It was observed at page 116:
"14. Sub-section (4) of Section 13 specifies various modes which can be adopted by the secured creditor for recovery of secured debt. The secured creditor can take possession of the secured assets of the borrower and transfer the same by way of lease, assignment or sale for realising the secured assets. This is subject to the condition that the right to transfer by way of lease, etc., shall be exercised only where a substantial part of the business of the borrower is held as secured debt. If the management of the whole or part of the business is severable, then the secured creditor can take over management only of such business of the borrower, which is relatable to security. The secured 12 2025:HHC:2289-DB creditor can appoint any person to manage the secured asset, the possession of which has been taken over. The secured creditor can also, by notice in writing, call upon a person who has acquired any of the secured assets from the borrower to pay the money, which may be sufficient to discharge the liability of the borrower.
15. Sub-section (7) of Section 13 lays down that where any action has been taken against a borrower under sub- section (4), all costs, charges and expenses properly incurred by the secured creditor or any expenses incidental thereto can be recovered from the borrower. The money which is received by the secured creditor is required to be held by him in trust and applied, in the first instance, for such costs, charges and expenses and then in the discharge of dues of the secured creditor. The residue of the money is payable to the person entitled thereto according to his rights and interest. Sub-section (8) of Section 13 imposes a restriction on the sale or transfer of the secured asset if the amount due to the secured creditor, together with costs, charges and expenses incurred by him, are tendered at any time before the time fixed for such sale or transfer.
16. Sub-section (9) of Section 13 deals with the situation in which more than one secured creditor has stakes in the secured assets and lays down that in the case of financing a financial asset by more than one secured creditor or joint financing of a financial asset by secured creditors, no individual secured creditor shall be entitled to exercise any or all of the rights under sub-section (4) unless all of them agree for such a course.
17. There are five unnumbered provisos to Section 13(9), which deal with pari passu charge of the workers of a company in liquidation. The first of these provisos lays down that in the case of a company in liquidation, the amount realised from the sale of secured assets shall be distributed in accordance with the provisions of Section 529-A of the Companies Act, 1956. The second proviso deals with the case of a company being wound up on or after the commencement of this Act. If the secured creditor of such company opts to realise its security instead of 13 2025:HHC:2289-DB relinquishing the same and proving its debt under Section 529(1) of the Companies Act, then it can retain sale proceeds after depositing the workmen's dues with the liquidator in accordance with Section 529-A.
18. The third proviso requires the liquidator to inform the secured creditor about the dues payable to the workmen in terms of Section 529-A. If the amount payable to the workmen is not certain, then the liquidator has to intimate the estimated amount to the secured creditor. The fourth proviso lays down that in case the secured creditor deposits the estimated amount of the workmen's dues, then such creditor shall be liable to pay the balance of the workmen's dues or entitled to receive the excess amount, if any, deposited with the liquidator. In terms of the fifth proviso, the secured creditor is required to give an undertaking to the liquidator to pay the balance of the workmen's dues, if any.
19. Sub-section (10) of Section 13 lays down that where dues of the secured creditor are not fully satisfied by the sale proceeds of the secured assets, the secured creditor may file an application before the Tribunal under Section 17 for recovery of the balance amount from the borrower. Sub-section (11) states that without prejudice to the rights conferred on the secured creditor under or by this section, it shall be entitled to proceed against the guarantors or sell the pledged assets without resorting to the measures specified in clauses (a) to (d) of sub-section (4) in relation to the secured assets.
20. Sub-section (12) of Section 13 lays down that rights available to the secured creditor under the Act may be exercised by one or more of its officers authorised in this behalf. Sub-section (13) lays down that after receipt of notice under sub-section (2), the borrower shall not transfer by way of sale, lease or otherwise (other than in the ordinary course of his business) any of his secured assets referred to in the notice without the prior written consent of the secured creditor.
21. In terms of Section 14, the secured creditor can file an application before the Chief Metropolitan Magistrate or the 14 2025:HHC:2289-DB District Magistrate, within whose jurisdiction the secured asset or other documents relating thereto are found for taking possession thereof. If any such request is made, the Chief Metropolitan Magistrate or the District Magistrate, as the case may be, is obliged to take possession of such asset or document and forward the same to the secured creditor.
22. Section 17 speaks of the remedies available to any person, including the borrower, who may have a grievance against the action taken by the secured creditor under sub- section (4) of Section 13. Such an aggrieved person can make an application to the Tribunal within 45 days from the date on which action is taken under that sub-section. By way of abundant caution, an Explanation has been added to Section 17(1), and it has been clarified that the communication of reasons to the borrower in terms of Section 13(3-A) shall not constitute a ground for filing an application under Section 17(1).
23. Sub-section (2) of Section 17 casts a duty on the Tribunal to consider whether the measures taken by the secured creditor for enforcement of security interest are in accordance with the provisions of the Act and the Rules made thereunder. If the Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that the measures taken by the secured creditor are not in consonance with sub-section (4) of Section 13, then it can direct the secured creditor to restore management of the business or possession of the secured assets to the borrower. On the other hand, if the Tribunal finds that the recourse taken by the secured creditor under sub-section (4) of Section 13 is in accordance with the provisions of the Act and the Rules made thereunder, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor can take recourse to one or more of the measures specified in Section 13(4) for recovery of its secured debt.
24. Sub-section (5) of Section 17 prescribes a time limit of sixty days within which an application made under Section 15 2025:HHC:2289-DB 17 is required to be disposed of. The proviso to this sub- section envisages an extension of time, but the outer limit for adjudication of an application is four months. If the Tribunal fails to decide the application within a maximum period of four months, then either party can move the Appellate Tribunal for issue of a direction to the Tribunal to dispose of the application expeditiously.
25. Section 18 provides for an appeal to the Appellate Tribunal.
11. This position was reiterated in Agarwal Tracom (P) Ltd.
v. Punjab National Bank, (2018) 1 SCC 626: (2018) 1 SCC (Civ) 425:
2017 SCC OnLine SC 1368 wherein it was observed at page 634:
"22. So far as Section 17 is concerned, it provides a remedy to a person who is aggrieved by the measures taken by the secured creditor or his authorised officer under Section 13(4) in relation to the secured assets of the borrower. It says that "any person (including borrower)" may make an application to the DRT within 45 days from the date of measures taken under Section 13(4). Sub-section (2) of Section 17 was added by way of amendment w.e.f. 11-11- 2004. It provides that the Tribunal, on such application being made under Section 17(1), shall consider whether the measures referred to and taken under Section 13(4) by the secured creditor are in accordance with the "provisions of this Act and the Rules made thereunder". Similarly, sub- sections (3), (4) and (7) of Section 17, which deal with the power of the DRT, also use the expression "in accordance with the provisions of the Act and the Rules made thereunder".
23. Rule 8, which has 8 sub-rules, deals with the manner of sale of immovable secured assets and provides detailed procedure as to how and in what manner the sale of secured assets is to be held. Rule 9 deals with the time of sale, issue of sale certificate and delivery of possession.
24. Rule 9(6) empowers the authorised officer to issue a sale certificate in favour of the purchaser. Rule 9(9) then 16 2025:HHC:2289-DB empowers the authorised officer to deliver the properties to the purchaser, whereas Rule 9(10) empowers the authorised officer to mention in the sale certificate that the property is free from encumbrances.
xxxxxxx
27. The reason is that Section 17(2) empowers the Tribunal to examine all the issues arising out of the measures taken under Section 13(4), including the measures taken by the secured creditor under Rules 8 and 9 for the disposal of the secured assets of the borrower. The expression "provisions of this Act and the Rules made thereunder" occurring in sub- sections (2), (3), (4), and (7) of Section 17 clearly suggests that it includes the action taken under Section 13(4) as also includes therein the action taken under Rules 8 and 9 which deal with the completion of the sale of the secured assets. In other words, the measures taken under Section 13(4) would not be completed unless the entire procedure laid down in Rules 8 and 9 for the sale of secured assets is fully complied with by the secured creditor. It is for this reason that the Tribunal has been empowered by Sections 17(2), (3), and (4) to examine all the steps taken by the secured creditor with a view to find out as to whether the sale of secured assets was made in conformity with the requirements contained in Section 13(4) read with the Rules or not?
xxxxxx
29. In our view, therefore, the expression "any of the measures referred to in Section 13(4) taken by the secured creditor or his authorised officer" in Section 17(1) would include all actions taken by the secured creditor under the Rules which relate to the measures specified in Section 13(4)."
12. A similar view was taken by this Court in Neelkanth Yarn v. Punjab National Bank, 2023 SCC OnLine HP 1816: (2023) 2 Latest HLJ 1116 wherein it was observed:
172025:HHC:2289-DB
17. After section 13(4) notice, it is open to the borrower to approach the Debts Recovery Tribunal under section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The Debts Recovery Tribunal is competent to go into all aspects leading to bank/financial institution taking recourse under section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Per force, when the Debts Recovery Tribunal examines the claim of borrower/guarantor/person aggrieved opposing measures taken under section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, such as taking symbolic possession, a notice of sale of the secured asset, taking physical possession, etc., the borrower/guarantor/person aggrieved can plead before the Debts Recovery Tribunal its defence against such action including alleged violation of the Reserve Bank of India Guidelines leading to its account being classified as non-
performing asset illegally.
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26. We may at this stage take note of another recent judgment of the Hon'ble Supreme Court in G. Vikram Kumar v. State Bank of Hyderabad [(2023) 23 Comp Cas-OL 1 (SC); 2023 SCC OnLine SC 549; AIR 2023 SC 2359.], wherein the Hon'ble Supreme Court has again reiterated that the writ petition assailing the action of the bank under section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, is not maintainable and the aggrieved party has a remedy of an appeal under section 17 to approach the Debts Recovery Tribunal. It was further held that the High Court erred in entertaining the writ petition since a statutory alternative remedy was available. It shall be apt to reproduce paragraph 8 of the judgment, which reads as under (page 16 of 23 Comp Cas-OL):
"At the outset, it is required to be noted that what was challenged before the High Court by respondent No. 1 in a writ petition under article 226 of the Constitution of 18 2025:HHC:2289-DB India was the e-auction notice, which was pursuant to the action initiated by the bank in the exercise of powers under section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. At this stage, it is required to be noted that an e-auction was held/conducted on August 31, 2016, in which the appellant participated and was declared as a successful bidder, and he made a payment of 25 per cent of the bid amount on the very day, i.e., on August 31, 2016. However, thereafter, respondent No. 1 filed the writ petition before the High Court challenging the e-auction notice dated July 28, 2016, on September 14, 2016, that is, after conducting the auction. It is required to be noted that against any steps taken by the bank under section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the aggrieved party has a remedy under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 by way of appeal under section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 to approach the Debts Recovery Tribunal. Therefore, in view of the availability of the alternative statutory remedy available by way of proceedings/appeal under section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the High Court ought not to have entertained the writ petition under article 226 of the Constitution of India in which the e-auction notice was under challenge. Therefore, the High Court has committed a very serious error in entertaining the writ petition under Article 226 of the Constitution of India challenging the e-auction notice issued by the bank in the exercise of power under section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002."19
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13. It was held in S.S.M. Engineers (P) Ltd. v. Oriental Bank of Commerce, 2015 SCC OnLine Utt 1993 that the borrower has a right to approach the Debt Recovery Tribunal for a valuation dispute. It was observed:
"As regards the challenge to the order or other measures under Section 13 relating to the sale, we would think that the appellant should be relegated to approach the Tribunal. Accordingly, we relegate the appellant to seek remedies before the Tribunal under Section 17 of the Act."
14. It was held in Raj Pal v. PNB Housing Finance Limited, 2011 SCC OnLine P&H 10752 that the borrower who complained about the undervaluation should file a representation before the authorized officer and an appeal lies against the sale. It was observed:
"4.....Again, undervaluation of the property itself could never be a ground for setting aside a sale. Prejudice must be surely shown as to how the valuation was made without following due procedure. There is no explanation given as to why the petitioner was not able to file an objection before the Recovery Officer that the property was worth more. In any event, if the property is sold on 10.02.2011, the petitioner cannot have the sale set aside unless he establishes fraud in the conduct of sale or a deliberate misstatement in the value by not following the prescribed procedure for the assessment of value. The counsel relies on the valuation as the Bank itself had taken from their consultants which showed that it was worth Rs. 12.22 lakhs. It must be noticed in the same report which the petitioner relies on, the Valuer had stated that the realizable value of the property through the distress or a forced sale could be only Rs. 8.50 lakhs. This is obvious, 20 2025:HHC:2289-DB since a Court sale cannot be expected to fetch the same price as what two parties can willingly negotiate and strike out a mutually beneficial bargain. It has been held in several decisions that, it is a notorious fact that the Court's sale do not fetch the best bargain and that alone shall not be the basis for setting aside such sales.
5. The writ petition before this Court itself after the sale had taken place is a frivolous attempt to further delay the process. There is a provision for an appeal under Section 17 of the SARFAESI Act against even the conduct of sale as held by the Hon'ble Supreme Court in Indian Overseas Bank v. Ashok Saw Mills-2009 (8) SCC 366. If a sale had been already confirmed, no relief could be granted by a Writ Court that the sale shall be set aside, unless fraud is established in the conduct of sale."
15. Therefore, the submission that the petitioner has an alternative remedy available to him has to be accepted as correct.
It was laid down by the Hon'ble Supreme Court in Celir LLP v.
Bafna Motors (Mumbai) (P) Ltd., (2024) 2 SCC 1: (2024) 242 Comp Cas 45: 2023 SCC OnLine SC 1209 that the High Court should not exercise jurisdiction under Article 226 of the Constitution of India in cases involving SARFEASI Act because of the availability of the alternative and efficacious remedy. It was observed at page 78:
"97. This Court has, time and again, reminded the High Courts that they should not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person under the provisions of the SARFAESI Act. This Court in Satyawati Tondon [United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110 : (2010) 3 SCC (Civ) 260] made the following observations : (SCC pp. 123 & 128, paras 43-45 & 55) 21 2025:HHC:2289-DB "43. Unfortunately, the High Court [Satyawati Tondon v. State of U.P., 2009 SCC OnLine All 2608] 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 challenges to the action taken for recovery of 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 a 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, 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 22 2025:HHC:2289-DB Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing an application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance. ***
55. It is a matter of serious concern that despite repeated pronouncements 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."
98. In CIT v. Chhabil Dass Agarwal [CIT v. Chhabil Dass Agarwal, (2014) 1 SCC 603], this Court in para 15 made the following observations: (SCC p. 611, para 15) "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 [Thansingh Nathmal v. Supdt. of Taxes, 1964 SCC OnLine SC 13] , 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 23 2025:HHC:2289-DB grievances, a writ petition should not be entertained ignoring the statutory dispensation."
99. In Phoenix ARC (P) Ltd. v. Vishwa Bharati Vidya Mandir [Phoenix ARC (P) Ltd. v. Vishwa Bharati Vidya Mandir, (2022) 5 SCC 345 : (2022) 3 SCC (Civ) 153], it was observed as under : (SCC pp. 359-61, paras 18 & 21) "18. Even otherwise, it is required to be noted that a writ petition against the private financial institution -- ARC
-- the appellant herein under Article 226 of the Constitution of India against the proposed action/actions under Section 13(4) of the SARFAESI Act can be said to be not maintainable. In the present case, the ARC proposed to take action/actions under the SARFAESI Act to recover the borrowed amount as a secured creditor. The ARC, as such, cannot be said to be performing public functions which are normally expected to be performed by the State authorities.
During the course of a commercial transaction and under the contract, the bank/ARC lent the money to the borrowers herein and therefore, the said activity of the bank/ARC cannot be said to be performing a public function which is normally expected to be performed by the State authorities. If proceedings are initiated under the SARFAESI Act and/or any proposed action is to be taken, and the borrower is aggrieved by any of the actions of the private bank/bank/ARC, the borrower has to avail the remedy under the SARFAESI Act, and no writ petition would lie and/or is maintainable and/or entertainable. Therefore, decisions of this Court in Praga Tools Corpn. [Praga Tools Corpn. v. C.A. Imanual, (1969) 1 SCC 585] and Ramesh Ahluwalia [Ramesh Ahluwalia v. State of Punjab, (2012) 12 SCC 331 : (2013) 3 SCC (L&S) 456: 4 SCEC 715] relied upon by the learned counsel appearing on behalf of the borrowers are not of any assistance to the borrowers.
***
21. Applying the law laid down by this Court in Mathew K.C. [State Bank of Travancore v. Mathew K.C., (2018) 3 SCC 85 : (2018) 2 SCC (Civ) 41] to the facts on hand, we 24 2025:HHC:2289-DB are of the opinion that filing of the writ petitions by the borrowers before the High Court under Article 226 of the Constitution of India is an abuse of process of the court. The writ petitions have been filed against the proposed action to be taken under Section 13(4). As observed hereinabove, even assuming that the communication dated 13-8-2015 was a notice under Section 13(4), in that case also, in view of the statutory, efficacious remedy available by way of appeal under Section 17 of the SARFAESI Act, the High Court ought not to have entertained the writ petitions. Even the impugned orders passed by the High Court directing to maintain the status quo with respect to the possession of the secured properties on payment of Rs 1 crore only (in all Rs 3 crores) is absolutely unjustifiable. The dues are to the extent of approximately Rs 117 crores. The ad interim relief has been continued since 2015, and the secured creditor is deprived of proceeding further with the action under the SARFAESI Act. Filing of the writ petition by the borrowers before the High Court is nothing but an abuse of the process of the court. It appears that the High Court has initially granted an ex parte ad interim order mechanically and without assigning any reasons. The High Court ought to have appreciated that by passing such an interim order, the rights of the secured creditor to recover the amount due and payable have been seriously prejudiced. The secured creditor and/or its assignor have a right to recover the amount due and payable to it from the borrowers. The stay granted by the High Court would have a serious adverse impact on the financial health of the secured creditor/assignor. Therefore, the High Court should have been extremely careful and circumspect in exercising its discretion while granting a stay in such matters. In these circumstances, the proceedings before the High Court deserve to be dismissed."
100. In Varimadugu Obi Reddy [Varimadugu Obi Reddy v. B. Sreenivasulu, (2023) 2 SCC 168: (2023) 1 SCC (Civ) 58], it was held as under : (SCC p. 183, para 36) 25 2025:HHC:2289-DB "36. In the instant case, although the respondent borrowers initially approached the Debts Recovery Tribunal by filing an application under Section 17 of the SARFAESI Act, 2002, but the order of the Tribunal indeed was appealable under Section 18 of the Act subject to the compliance of condition of pre-deposit and without exhausting the statutory remedy of appeal, the respondent borrowers approached the High Court by filing the writ application under Article 226 of the Constitution. We deprecate such practice of entertaining the writ application by the High Court in the exercise of jurisdiction under Article 226 of the Constitution without exhausting the alternative statutory remedy available under the law. This circuitous route appears to have been adopted to avoid the condition of pre-deposit contemplated under the second proviso to Section 18 of the 2002 Act."
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.
16. A similar view was taken in South Indian Bank Ltd. v.
Naveen Mathew Philip, 2023 SCC OnLine SC 435, wherein it was observed:
13. In view of the fair stand taken by the learned Senior Counsel appearing for the Appellants, we do not wish to interfere with the impugned orders passed. We may, however, reiterate the settled position of law on the interference of the High Court invoking Article 226 of 26 2025:HHC:2289-DB the Constitution of India in commercial matters, where an effective and efficacious alternative forum has been constituted through a statute. We are also constrained to take judicial notice of the fact that certain High Courts continue to interfere in such matters, leading to a regular supply of cases before this Court. One such High Court is that of Punjab & Haryana.
xxxxxx
17. We shall reiterate the position of law regarding the interference of the High Courts in matters pertaining to the SARFAESI Act by quoting a few of the earlier decisions of this Court wherein the said practice has been deprecated while requesting the High Courts not to entertain such cases.
xxxxxx
18. While doing so, we are conscious of the fact that the powers conferred under Article 226 of the Constitution of India are rather wide but are required to be exercised only in extraordinary circumstances in matters pertaining to proceedings and adjudicatory scheme qua a statute, more so in commercial matters involving a lender and a borrower, when the legislature has provided for a specific mechanism for appropriate redressal."
17. This position was reiterated in PHR Invent Educational Society v. UCO Bank, (2024) 6 SCC 579: (2024) 245 Comp Cas 80:
2024 SCC OnLine SC 528 wherein it was observed at page 585:
22. 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 Satyawati Tondon [United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110: (2010) 3 SCC (Civ) 260: 2010 INSC 428], this Court observed thus: (SCC p. 123, paras 43-45) "43. Unfortunately, the High Court [Satyawati Tondon v. State of U.P., 2009 SCC OnLine All 2608] overlooked the settled law that the High Court will 27 2025:HHC:2289-DB 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 challenges to the action taken for recovery of 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 a 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, 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 an application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance."
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23. 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 the recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. The Court observed that, while dealing with the petitions involving challenges to the action taken for recovery of the public dues, etc., the High Court must keep in mind that the legislation enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain a 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 the widest amplitude, still the courts cannot be oblivious to 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.
24. The view taken by this Court has been followed in Agarwal Tracom (P) Ltd. v. Punjab National Bank [Agarwal Tracom (P) Ltd. v. Punjab National Bank, (2018) 1 SCC 626: (2018) 1 SCC (Civ) 425: 2017 INSC 1146].
25. In State Bank of Travancore v. Mathew K.C. [State Bank of Travancore v. Mathew K.C., (2018) 3 SCC 85: (2018) 2 SCC (Civ) 41: 2018 INSC 71], 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: (SCC p. 94, para 16) "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 an opportunity to the appellant to contest the 29 2025:HHC:2289-DB 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."
26. The same position was again reiterated by this Court in Phoenix ARC (P) Ltd. v. Vishwa Bharati Vidya Mandir [Phoenix ARC (P) Ltd. v. Vishwa Bharati Vidya Mandir, (2022) 5 SCC 345:
(2022) 3 SCC (Civ) 153: 2022 INSC 44].
27. Again, in Varimadugu Obi Reddy v. B. Sreenivasulu [Varimadugu Obi Reddy v. B. Sreenivasulu, (2023) 2 SCC 168: (2023) 1 SCC (Civ) 58: 2022 INSC 1207], after referring to earlier judgments, this Court observed thus : (SCC pp. 181- 82, para 34) "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 no reasonable justification tendered by the respondent borrowers in approaching the High Court and filing a 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."
28. It could thus be seen that this Court has strongly deprecated the practice of entertaining writ petitions in such matters.
29. Recently, in Celir LLP [Celir LLP v. Bafna Motors (Mumbai) (P) Ltd., (2024) 2 SCC 1 : (2024) 1 SCC (Civ) 62: 2023 INSC 838], after surveying various judgments of this Court, the Court observed thus : (SCC p. 81, para 101) "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 30 2025:HHC:2289-DB 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: 2010 INSC 428], 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."
30. 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.
33. This Court in Valji Khimji & Co. v. Hindustan Nitro Product (Gujarat) Ltd. (Official Liquidator) [Valji Khimji & Co. v. Hindustan Nitro Product (Gujarat) Ltd. (Official Liquidator), (2008) 9 SCC 299: 2008 INSC 925], has observed thus : (SCC p. 305, paras 30-31) "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."
34. 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 fraud or collusion. The present case was not a case of fraud or collusion. The effect of 31 2025:HHC:2289-DB the order of the High Court would be again reopening the issues which have achieved finality.
35. It is further to be noted that this Court, in Dwarika Prasad v. State of U.P. [Dwarika Prasad v. State of U.P., (2018) 5 SCC 491: (2018) 3 SCC (Civ) 316: 2018 INSC 210], 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 2-11-2020 and registered on 11-11- 2020.
36. Insofar as the contention of the borrower and its reliance on the judgment of this Court in Mohd. Nooh [State of U.P. v. Mohd. Nooh, 1957 SCC OnLine SC 21: AIR 1958 SC 86: 1957 INSC 81] 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 CIT v. Chhabil Dass Agarwal [CIT v. Chhabil Dass Agarwal, (2014) 1 SCC 603] : (SCC p. 611, para 15) "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 [Thansingh Nathmal v. Supdt. of Taxes, 1964 SCC OnLine SC 13 : AIR 1964 SC 1419] , Titaghur Paper Mills case [Titaghur Paper Mills Co. Ltd. v. State of Orissa, (1983) 2 SCC 433] 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 32 2025:HHC:2289-DB petition should not be entertained ignoring the statutory dispensation."
37. 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 the 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;
(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.
38. 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.
39. Undisputedly, the present case would not come under any of the exceptions as carved out by this Court in Chhabil Dass Agarwal [CIT v. Chhabil Dass Agarwal, (2014) 1 SCC 603].
40. 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.
41. While dismissing the writ petition, we will have to remind the High Courts of the following words of this Court in Satyawati Tondon [United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110 : (2010) 3 SCC (Civ) 260: 2010 INSC 428] 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 : (SCC p. 128, para 55) "55. It is a matter of serious concern that despite repeated pronouncements of this Court, the High Courts continue to 33 2025:HHC:2289-DB 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."
18. Mr. Vishal Mohan, learned Senior Counsel for the petitioner, heavily relied upon the judgment of the Hon'ble Supreme Court in J. Rajiv Subramaniyan (supra) to submit that the Writ Petition is maintainable when the Bank does not follow the procedure prescribed under the Rules. This judgment was considered by the Hon'ble Supreme Court in Phoenix ARC (P) Ltd.
v. Vishwa Bharati Vidya Mandir, (2022) 5 SCC 345: 2022 SCC OnLine SC 44, and it was held that the question of maintainability of the writ petition was not considered in the J. Rajiv Subramaniam (supra). It was observed:
"17. Now, insofar as the reliance placed upon the decision of this Court in J. Rajiv Subramaniyan [J. Rajiv Subramaniyan v. Pandiyas, (2014) 5 SCC 651 : (2014) 3 SCC (Civ) 295] by the learned Senior Counsel appearing on behalf of the borrowers in support of his submission that writ petition would be maintainable, it is to be noted that in the aforesaid case, the learned counsel appearing on behalf of the Bank did not press the maintainability and/or entertainability of the writ petition under Article 226 and therefore, this Court had no occasion to consider the entertainability and/or maintainability of the writ petition.
Therefore, the aforesaid decision is not of any assistance to the respondent borrowers." (Emphasis supplied) 34 2025:HHC:2289-DB
19. Thus, no advantage can be derived from J. Rajiv Subramaniyam (supra).
20. Mr Vishal Mohan, learned Senior Counsel for the petitioner, submitted that the remedy under Section 17 is not efficacious because the petitioner cannot approach the bank for the redemption of the secured assets after the issuance of the auction notice by the Bank. This submission will not help the petitioner because if there is a violation of the mandatory provisions of Section 13 read with relevant rules, the Debt Recovery Tribunal is competent to declare so, and any action taken by the Bank would be invalidated. This is different from the redemption of the secured asset by the borrower; hence, there is no impediment in approaching the bank.
21. It was submitted that there is a violation of Rule 8(5) of the Rules, which would justify the issuance of the writ. It is difficult to accept this submission. Rule 8(5) is part of the sale process, and the borrower has a right to challenge the violation before the Debt Recovery Tribunal; hence, there is no reason why this Court should entertain a petition for adjudicating an auction alleged to be conducted in violation of the Rules.
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22. It was submitted that the valuation from the approved valuer was not obtained. This is factually incorrect. The report of the approved valuer (Annexure R-1) has been placed on record, which shows that he had determined the fair market valuation of the property as ₹2,01,04,900/-, realisable value of the property as ₹1,70,89,200/- and distress sale value of the property as ₹1,40,73,400/- as per the report dated 24.5.2024.
23. It was submitted that this valuation is incorrect because the property's value has been reduced from ₹3,55,23,000/- on 26.4.2018 to ₹2,01,04,900/-. A reference was also made to the valuation dated 24.5.2018 (Annexure P-6), in which the property's value was determined as ₹4,23,76,625/-. It was held in Paritran Medical College & Hospital v. PNB, 2024 SCC OnLine Jhar 2637 that the Writ Court cannot determine the factual dispute regarding valuation. It was observed:
"39. The co-ordinate Bench of this Court has, however, issued notice by taking note of the order passed by the Recovery Officer dated 08.03.2021, and after appearance, learned counsel for the respondent-Bank and private respondent have drawn the attention of this Court towards the dispute, which is factual one since the dispute is with respect to the rate of valuation of the property in question which has been kept as collateral security; therefore, this Court is of the view coupled with the rider put by the Hon'ble Apex Court in the judgments rendered in Punjab National Bank v. O.C. Krishnan (supra); United Bank of 36 2025:HHC:2289-DB India v. Satyawati Tondon (supra) and; Varimadugu Obi Reddy v. B. Sreenivasulu (supra) that herein the issue of valuation of the mortgaged property is the question which cannot be adjudicated by the High Court in summary proceeding like the writ jurisdiction under Article 226 of the Constitution of India."
24. Hence, it is impermissible for this Court to determine the valuation in the Writ Petition.
25. The Rules require that the Bank should get the property valued from the approved valuer, and once the property is so valued, the requirement has been complied with. Any dispute relating to the actual valuation has to be raised before the Debt Recovery Tribunal, a statutory authority. It was held in Kanha International v. Union of India, 2011 SCC OnLine Guj 7725:
(2011) 3 BC 316: AIR 2011 Guj 108 that the debtor is free to put his valuation within 30 days of the valuation made by the Bank and approach the Debt Recovery Tribunal for the redressal of his grievance regarding the valuation. It was observed at page 319:
"12. A plain reading of Sub-rule (5) of Rule 8 of the Rules of 2002 goes to show that the authorised officer has to obtain a valuation report from an approved valuer. Therefore, the procedure as envisaged by the rule-making authority of obtaining the valuation of the property from an approved valuer is to be observed and followed by the authorised officer. The second requirement is the consultation with the secured creditor. It is only after the approved valuer's report that the authorised officer may consult the secured creditor and fix the reserve price of the property. Merely 37 2025:HHC:2289-DB because there is no right expressly provided to the borrower to get a copy of the valuation report or there is no express provision for consultation of the say of the borrower by the authorised officer while fixing the reserve price, that by itself is not sufficient ground to make the rule unconstitutional nor can be termed as unreasonable. We invited the attention of the learned Counsel to Rule 8(6) of the Rules of 2002, which reads as under: "(6) The authorised officer shall serve the borrower a notice of thirty days for the sale of the immovable secured assets, under Sub-rule (5):
Provided that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding a public auction, the secured creditor shall cause a public notice in two leading newspapers, one in vernacular language having sufficient circulation in the locality by setting out the terms of sale, which shall include,--
(a) The description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor;
(b) the secured debt for recovery of which the property is to be sold;
(c) reserve price, below which the property may not be sold;
(d) time and place of public auction or the time after which sale by any other mode shall be completed;
(e) depositing earnest money as may be stipulated by the secured creditor;
(f) any other thing which the authorised officer considers material for a purchaser to know to judge the nature and value of the property."
13. It is very clear that Rule 8(6) again gives an opportunity to the borrower to put forward his valuation, which perhaps may be in some conflict with the valuation, which is fixed as per Rule 8(5).
382025:HHC:2289-DB
14. According to us, Rule 8(6) of the Rules of 2002 provides the necessary safeguard if the action is taken in an arbitrary and unreasonable manner and if the valuation of the property is not properly fixed. The whole object of Rule 8(6) of the Rules of 2002 appears to be that the borrower gets clear thirty days' notice before the sale takes place. During this period, the borrower can raise objections and can also point out before the appropriate Forum as regards the correct and true valuation of the property. The essential purpose of Sub-rule (5) of Rule 8 of the Rules of 2002 is to see that there is proper valuation by an approved valuer, who would be considered an expert, and the view of the secured creditor on the aspect of fixation of reserved price is taken into consideration by the authorised officer. Just because the borrower is excluded from Rule 8(5) of the Rules of 2002 or has no voice at the time when the valuation is fixed and the reserved price is also fixed, by itself will not render Rule 8(5) unconstitutional.
21. We would like to clarify while upholding the constitutional validity of Rule 8(5) of the Rules of 2002 that Rule 8(6) of the Rules of 2002 protects the interest of the borrower. The whole idea of the Legislature in giving thirty days' clear notice to the borrower regarding the sale of the mortgaged property is to give him an opportunity to redress any grievance as regards the fixation of the valuation of the property and the upset price. We clarify that if any action under Rule 8(5) is arbitrary and unreasonable, such action can be gone into by the appropriate Forum, and if, in a given case, the borrower is having the valuation of the property by another approved valuer having a substantial difference, he may forward the copy of the valuation report to the authorised officer to take into consideration the said aspect and such material may also be considered by the authorised officer even after fixation of the reserved price."
26. Reliance was placed upon Bhupinder Singh (supra) and Swastik Agency (supra) to submit that the Court can issue a Writ in case of undervaluation. In Bhupinder Singh (supra), no auction 39 2025:HHC:2289-DB had taken place, and the auction purchaser was a dummy bidder.
In Swastik Agency (supra), the Court found that the offer received at the auction was more than three times the valuation, the secured creditor had not complied with the direction to consider the matter and the sale notice was not published in Odia language. These factors are missing in the present case, and the cited judgments will not assist the petitioner.
27. The petitioner is claiming a violation of the provisions of the SARFEASI Act and the rules framed thereunder. It was laid down by the Hon'ble Supreme Court in Raja Ram Kumar Bhargava v. Union of India, (1988) 1 SCC 681: 1987 SCC OnLine SC 423 that where the rights not recognised in the common law are conferred for the first time by a statute, which also provides for a mechanism to enforce those rights, recourse can only be had to the mechanism created under the Act and not to the ordinary Courts. It was observed at page 688:
"19....Generally speaking, the broad guiding considerations are that wherever a right, not pre-existing in common law, is created by a statute and that statute itself provided machinery for the enforcement of the right, both the right and the remedy having been created uno flatu and finality is intended to the result of the statutory proceedings, then, even in the absence of an exclusionary provision the civil court's jurisdiction is impliedly barred. If, however, a right pre-existing in common law is recognised by the statute 40 2025:HHC:2289-DB and a new statutory remedy for its enforcement is provided without expressly excluding the civil court's jurisdiction, then both the common law and the statutory remedies might become concurrent remedies, leaving open an element of election to the persons of inherence. To what extent, and in what areas and under what circumstances and conditions, the civil court's jurisdiction is preserved even where there is an express clause excluding their jurisdiction, are considered in the Dhulabhai case [AIR 1969 SC 78: (1968) 3 SCR 662].
28. It was held by the Hon'ble Supreme Court in South Indian Bank Ltd. v. Naveen Mathew Philip, 2023 SCC OnLine SC 435 that the Courts will not permit a litigant to circumvent a mode prescribed under the statute by not approaching the Tribunal and filing a writ petition before constitutional courts. It was observed:
"16. Approaching the High Court for the consideration of an offer by the borrower is also frowned upon by this Court. A writ of mandamus is a prerogative writ. In the absence of any legal right, the Court cannot exercise the said power. More circumspection is required in a financial transaction, particularly when one of the parties would not come within the purview of Article 12 of the Constitution of India. When a statute prescribes a particular mode, an attempt to circumvent shall not be encouraged by a writ court. A litigant cannot avoid the non-compliance of approaching the Tribunal, which requires the prescription of fees, and use the constitutional remedy as an alternative. We wish to quote with profit a recent decision of this Court in Radha Krishan Industries v. State of H.P., (2021) 6 SCC 771, "25. In this background, it becomes necessary for this Court to dwell on the "rule of alternate remedy" and its judicial exposition. In Whirlpool Corpn. v. Registrar of Trade Marks, (1998) 8 SCC 1, a two-judge Bench of this Court, after reviewing the case law on this point, noted : (SCC pp. 9-10, paras 14-15) 41 2025:HHC:2289-DB "14. The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari for the enforcement of any of the Fundamental Rights contained in Part III of the Constitution but also for "any other purpose".
15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has the discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions, one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case-laws on this point, but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field". (emphasis supplied)
26. Following the dictum of this Court in Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8 SCC 1], in Harbanslal Sahnia v. Indian Oil Corpn. Ltd. [(2003) 2 SCC 107], this Court noted that: (Harbanslal Sahnia case, SCC p. 110, para 7) "7. So far as the view taken by the High Court that the remedy by way of recourse to an arbitration clause was available to the appellants and, therefore, the writ petition filed by the appellants was liable to be dismissed is concerned, suffice it to observe that the rule of exclusion of writ jurisdiction by the availability of an alternative remedy is a rule of discretion and not 42 2025:HHC:2289-DB one of compulsion. In an appropriate case, in spite of the availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies : (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. (See Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8 SCC 1].) The present case attracts applicability of the first two contingencies. Moreover, as noted, the appellants' dealership, which is their bread and butter, came to be terminated for an irrelevant and non-existent reason. In such circumstances, we feel that the appellants should have been allowed relief by the High Court itself instead of driving them to the need of initiating arbitration proceedings."(emphasis supplied)
27. The principles of law which emerge are that:
27.1. The power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights but for any other purpose as well.
27.2. The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is where an effective alternate remedy is available to the aggrieved person. 27.3. Exceptions to the rule of alternate remedy arise where : (a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution; (b) there has been a violation of the principles of natural justice; (c) the order or proceedings are wholly without jurisdiction; or (d) the vires of a legislation is challenged.
27.4. An alternate remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case, though ordinarily, a writ petition should not be entertained 43 2025:HHC:2289-DB when an efficacious alternate remedy is provided by law.
27.5. When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, a resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion.
27.6. In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with." (Emphasis supplied)
29. In the present case, the rights were created by the SARFEASI Act and the Rules framed thereunder, which also provided a mechanism for enforcing the rights under Section 17 of the Act; therefore, the petitioner has to approach the Debt Recovery Tribunal for the redressal of his grievances and not this Court.
30. The record shows that the petitioner had approached the Debt Recovery Tribunal complaining about the auction of the property. Para-17 of the order passed by the Debt Recovery Tribunal shows that the petitioner had raised a grievance that the Bank was selling the property without getting it properly valued and in violation of the orders passed by the Court. These pleas did not find favour with the Debt Recovery Tribunal at Chandigarh, 44 2025:HHC:2289-DB and the petition was dismissed. The petitioner approached the Debt Recovery Appellate Tribunal, but he failed to deposit proper Court fees. He also applied for an exemption from making the pre-deposit. This application was dismissed by the Debt Recovery Appellate Tribunal after holding that there is no power to waive pre-deposit in its entirety. Hence, the appeal was dismissed for want of compliance with the condition of pre-deposit and non-
payment of Court fees. A liberty was given to revive the appeal after the payment of the requisite Court fee and the pre-deposit.
31. It appears that the petitioner, instead of complying with the order of the Debt Recovery Appellate Tribunal, approached this Court raising the same pleas which were raised before the Debt Recovery Tribunal and were negated by it. He failed to avail the statutory remedy of appeal available to him before the Debt Recovery Appellate Tribunal and approached this Court by filing a writ petition. It was laid down by the Hon'ble Supreme Court in G. Vikram Kumar v. State Bank of Hyderabad, (2023) 14 SCC 159: (2023) 23 Comp Cas-OL 1: 2023 SCC OnLine SC 549 that a borrower cannot approach the High Court by filing a writ petition for getting a relief which was denied to him by the Debt Recovery Tribunal. It was observed at page 169:
452025:HHC:2289-DB "29. At this stage, it is pertinent to note that thereafter when, the Bank issued a public notice on 28-7-2016 for auctioning the properties of the borrower. Before the date of the auction, on 24-8-2016, the borrower filed an application before DRT, praying for a stay of all proceedings of the Bank pursuant to the auction notice dated 28-7-2016. DRT was pleased to reject the said application for stay vide the order dated 24-8-2016 by observing that the sale of the flat in question without the permission of the Bank or the Tribunal is void. The order dated 24-8-2016 is reproduced hereinabove. Thus, as such, the transaction in favour of Respondent 1 with respect to Flat No. 6401 was already held to be void by DRT.
30. That thereafter, after the borrower having failed to obtain any order, Respondent 1 had straightway filed the writ petition challenging the e-auction notice, which the borrower failed to get any relief before DRT. If Respondent 1 would have approached DRT against the e-auction notice, he would have been non-suited in view of the earlier order passed by DRT dated 24-8-2016. Therefore, calculatively, Respondent 1 filed the writ petition before the High Court challenging the e-auction notice and that too after conducting the e-auction on 31-8-2016 and the sale in favour of the appellant was confirmed.
31. The aforesaid facts were pointed out before the High Court, and despite the same, the High Court has allowed the writ petition, which is not sustainable at all. By the impugned order [J. Sithi Kantha Murthy v. State Bank of Hyderabad, 2017 SCC OnLine Hyd 571] Respondent 1 has got the relief, which, as such, the borrower failed to get from DRT. On the aforesaid grounds, the impugned judgment and order [J. Sithi Kantha Murthy v. State Bank of Hyderabad, 2017 SCC OnLine Hyd 571] passed by the High Court is unsustainable.
32. This position was reiterated in Varimadugu Obi Reddy v. B. Sreenivasulu, (2023) 2 SCC 168: 2022 SCC OnLine SC 1593, wherein it was observed at page 181:46
2025:HHC:2289-DB "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 no reasonable justification tendered by the respondent borrowers in approaching the High Court and filing a 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.
35. This Court in the judgment in United Bank of India v. Satyawati Tondon [United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110 : (2010) 3 SCC (Civ) 260], was concerned with the argument of alternative remedy provided under the Sarfaesi Act, 2002 and dealing with the argument of alternative remedy, this Court had observed that where an effective remedy is available to an aggrieved person, the High Court ordinarily must insist that before availing the remedy under Article 226 of the Constitution, the alternative remedy available under the relevant statute must be exhausted. Paras 43, 44 and 45 of the said judgment are relevant for the purpose and are extracted below (SCC p. 123) "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 challenges to the action taken for recovery of 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 47 2025:HHC:2289-DB unto themselves inasmuch as they not only contain a 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, 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 an application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance."
36. In the instant case, although the respondent borrowers initially approached the Debts Recovery Tribunal by filing an application under Section 17 of the Sarfaesi Act, 2002, but the order of the Tribunal indeed was appealable under Section 18 of the Act subject to the compliance of condition of pre-deposit and without exhausting the statutory remedy of appeal, the respondent borrowers approached 48 2025:HHC:2289-DB the High Court by filing the writ application under Article 226 of the Constitution. We deprecate such practice of entertaining the writ application by the High Court in the exercise of jurisdiction under Article 226 of the Constitution without exhausting the alternative statutory remedy available under the law. This circuitous route appears to have been adopted to avoid the condition of pre-deposit contemplated under the 2nd proviso to Section 18 of the 2002 Act.
33. The respondents stated that the value of the property was reduced because the property was put to auction 12 times, but no bid was received. It was submitted that this is factually incorrect because the petitioner had filed CMPMO No. 326 of 2020, CMPMO No. 44 of 2021, CMPMO No. 626 of 2023 and CMPMO No. 425 of 2024 before this Court, and this Court had shown indulgence to the petitioner. This submission will not help the petitioner. The conduct of the petitioner in approaching the Courts repeatedly whenever the auction notices are issued shows his attempt to frustrate a secured creditor by litigating the matter before the Court repeatedly to prevent the secured creditor from realising the fruits of the secured assets. This tendency of the borrowers to frustrate the auction was noticed by the Hon'ble Supreme Court in SBI v. C. Natarajan, (2024) 2 SCC 637: 2023 SCC OnLine SC 510 and it was observed at page 653:
"24...Drawing from our experience on the Bench, it can safely be observed that in many a case, the borrowers 49 2025:HHC:2289-DB themselves, seeking to frustrate auction sales, use their own henchmen as intending purchasers to participate in the auction, but thereafter, they do not choose to carry forward the transactions citing issues which are hardly tenable. This leads to auctions being aborted and issuance of fresh notices. Repetition of such a process of participation--withdrawal for a couple of times or more has the undesirable effect of rigging of the valuation of the immovable property. In such cases, the only perceivable loss suffered by a secured creditor would seem to be the extent of expenses incurred by it in putting up the immovable property for sale. However, what does generally escape notice in the process is that it is the mischievous borrower who steals a march over the secured creditor by managing to have a highly valuable property purchased by one of its henchmen for a song, thus getting such property freed from the clutches of mortgage and by diluting the security cover which the secured creditor had for its loan exposure. Bearing in mind such stark reality, sub-rule (5) of Rule 9 cannot but be interpreted pragmatically to serve twin purposes -- first, to facilitate due enforcement of security interest by the secured creditor (one of the objects of the SARFAESI Act); and second, to prohibit wrongdoers from being benefitted by a liberal construction thereof."
34. It was held by the Hon'ble Supreme Court in Eureka Forbes Ltd. v. Allahabad Bank, (2010) 6 SCC 193: (2010) 2 SCC (Civ) 627: 2010 SCC OnLine SC 552 that the bank officials owe a public duty to recover the public dues expeditiously and protect the security available with them. It was observed at page 220:
"76. The legislative object of expeditious recovery of all public dues and due protection of security available with the Bank to ensure prepayments of debts cannot be achieved when the officers/officials of the Bank act in such a callous manner. There is a public duty upon all such 50 2025:HHC:2289-DB officers/officials to act fairly, transparently and with a sense of responsibility to ensure the recovery of public dues. Even inaction on the part of the public servant can lead to a failure of public duty and can jeopardise the interest of the State or its instrumentality.
77. In our considered opinion, the scheme of the Recovery Act and the language of its various provisions imposes an obligation upon the banks to ensure a proper and expeditious recovery of its dues. In the present case, there is certainly an ex-facie failure of statutory obligation on the part of the Bank and its officers/officials. In the entire record before us, there is no explanation, much less any reasonable explanation as to why effective steps were not taken and why the interest of the Bank was permitted to be jeopardised."
35. Thus, the Bank cannot be faulted for making repeated attempts to sell the property.
36. It was submitted that the time to deposit the amount was extended without written agreement. This is a factual dispute not to be adjudicated before this Court, and the petitioner is free to raise it before the Debt Recovery Tribunal if so advised.
37. In the present case, the purchaser had deposited the amount and the sale has concluded. It was laid down by the Hon'ble Supreme Court in Celir LLP v. Sumati Prasad Bafna, 2024 SCC OnLine SC 3727, that the Court should not interfere with the auction sales after their conclusion. It was observed:
"iv. Circumstances when a sale of property by auction or other means under the SARFAESI Act may be set aside after its confirmation.51
2025:HHC:2289-DB
210. We must also address one very important aspect as regards when the sale of secured assets, either by auction or any other method under the SARFAESI Act, may be challenged or set aside after its confirmation.
211. In B. Arvind Kumar v. Govt of India, (2007) 5 SCC 745, this Court, whilst dealing with a plea to set aside the sale of the property therein by way of public auction by the official receiver, it was held that when the sale is confirmed by the court, the sale becomes absolute and therefrom the title vests in the auction purchaser. The relevant observations read as under:--
"12. [...] When a property is sold by public auction in pursuance of an order of the court, the bid is accepted, and the sale is confirmed by the court in favour of the purchaser, the sale becomes absolute, and the title vests in the purchaser. A sale certificate is issued to the purchaser only when the sale becomes absolute. The sale certificate is merely the evidence of such a title. It is well settled that when an auction-purchaser derives title on confirmation of sale in his favour, and a sale certificate is issued evidencing such sale and title, no further deed of transfer from the court is contemplated or required. In this case, the sale certificate itself was registered, though such a sale certificate issued by a court or an officer authorised by the court does not require registration. Section 17(2)(xii) of the Registration Act, 1908 specifically provides that a certificate of sale granted to any purchaser of any property sold by a public auction by a Civil or Revenue Officer does not fall under the category of non-testamentary documents which require registration under subsections (b) and (c) of Section 17(1) of the said Act. We, therefore, hold that the High Court committed a serious error in holding that the sale certificate did not convey any right, title or interest to the plaintiff's father for want of a registered deed of transfer." (Emphasis supplied)
212. In LICA (P) Ltd. v. Official Liquidator, (1996) 85 Comp Cas 788 (SC), this Court held that the purpose of an open 52 2025:HHC:2289-DB auction is to get the most remunerative price with the highest possible public participation, and as such, the courts shall exercise their discretion to interfere where the auction suffers from any fraud or inadequate pricing or underbidding that too with circumspection, keeping in view the facts of each case. The relevant observations read as under:--
"The purpose of an open auction is to get the most remunerative price, and it is the duty of the court to keep the openness of the auction so that the intending bidders would be free to participate and offer higher value. If that path is cut down or closed, the possibility of fraud or to secure inadequate price or underbidding would loom large. The court would, therefore, have to exercise its discretion wisely and with circumspection and keeping in view the facts and circumstances in each case." (Emphasis supplied)
213. This Court in Valji Khimji (supra) held that once an auction is confirmed, the objections to the same should not ordinarily be allowed, except on very limited grounds like fraud, as otherwise, no auction would ever be complete. The relevant observations read as under:-- "11. It may be noted that the auction sale was done after adequate publicity in well-known newspapers. Hence, if anyone wanted to make a bid in the auction, he should have participated in the said auction and made his bid. Moreover, even after the auction, the sale was confirmed by the High Court only on 30-7-2003, and any objection to the sale could have been filed prior to that date. However, in our opinion, entertaining objections after the sale is confirmed should not ordinarily be allowed, except on very limited grounds like fraud; otherwise, no auction sale will ever be complete.
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29. [...] It may be mentioned that auctions are of two types - (1) where the auction is not subject to subsequent confirmation, and (2) where the auction is 53 2025:HHC:2289-DB subject to subsequent confirmation by some authority after the auction is held.
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." (Emphasis supplied)
214. In Ram Kishun v. State of Uttar Pradesh reported in (2012) 11 SCC 511, this Court although held that where public money is to be recovered, such recovery should be made expeditiously, yet the same must be done strictly in accordance with the procedure prescribed by law. However, this Court, after examining a plethora of other decisions, further held that once the sale has been confirmed, it cannot be set aside unless a fundamental procedural error has occurred or the sale certificate has been obtained by misrepresentation or fraud. The relevant observations read as under:--
"13. Undoubtedly, public money should be recovered, and recovery should be made expeditiously. But it does not mean that the financial institutions, which are concerned only with the recovery of their loans, may be permitted to behave like property dealers and be permitted further to dispose of the secured assets in any unreasonable or arbitrary manner in flagrant violation of the statutory provisions.
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28. In view of the above, the law can be summarised to the effect that the recovery of the public dues must be made strictly in accordance with the procedure prescribed by law. The liability of a surety is coextensive 54 2025:HHC:2289-DB with that of the principal debtor. In case there is more than one surety, the liability is to be divided equally among the sureties for the unpaid amount of the loan. Once the sale has been confirmed, it cannot be set aside unless a fundamental procedural error has occurred or a sale certificate had been obtained by misrepresentation or fraud." (Emphasis supplied)
215. In PHR Invent Educational Society v. UCO Bank, (2024) 6 SCC 579, it was again reiterated that an auction sale which stands confirmed can only be interfered with when there was any fraud or collusion and entertaining of issues regarding the validity of such auction would amount to reopening issues which have achieved finality. The relevant observations read as under:--
"34. 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 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."
216. In V.S. Palanivel v. P. Sriram, 2024 INSC 659, this Court again reiterated unless there are some serious flaws in the conduct of the auction as, for example, perpetration of a fraud/collusion, grave irregularities that go to the root of such an auction, courts must ordinarily refrain from setting them aside keeping in mind the domino effect such an order would have. The relevant observations read as under:--
"36.14. This Court must underscore the well-settled legal position that once an auction is confirmed, it ought to be interfered with on fairly limited grounds. (Refer: Valji Khimji and Co. v. Hindustan Nitro Product (Gujarat) Ltd. (Official Liquidator) (2008) 9 SCC 299: 2008: INSC: 925 and Celir LLP v. Bafna Motors (Mumbai) Private Limited (2024) 2 SCC 1: 2023: INSC: 838). Repeated interferences in public auctions also result in causing uncertainty and frustrate the very purpose of holding auctions. (Refer: K. Kumara Gupta v. Sri Markendaya and Sri Omkareswara Swamy Temple (2022) 55 2025:HHC:2289-DB 5 SCC 710: 2022: INSC: 207). Unless there are some serious flaws in the conduct of the auction, such as, for example, perpetration of a fraud/collusion or grave irregularities that go to the root of such an auction, courts must ordinarily refrain from setting them aside, keeping in mind the domino effect such an order would have. Given the facts noted above, we shall refrain from cancelling the sale or declaring the Sale Deed as void. Instead, it is deemed appropriate to balance the equities by directing the Auction Purchaser to pay an additional amount in respect of the subject property." (Emphasis supplied)
217. In the present lis, it is not the case of the Borrower herein that the 9th auction conducted by the Bank was a result of any collusion or fraud either at the behest of the Bank or the Successful Auction Purchaser herein. Aside from the lack of any 15-day gap between the notice of sale and the notice of auction, no other illegality has been imputed to the aforesaid auction proceedings. It is also not the case of the Borrower that due to the absence of the aforesaid statutory period, any prejudice was caused or that it was prevented from effectively exercising its rights due to such procedural infirmity. Despite a total of eight auctions being conducted by the Bank from April 2022 to June 2023, not once did the Borrower express its desire to redeem the mortgage. Even when the auction notice came to be issued on 12.06.2023, the Borrower never intimated that it was in the process of redeeming the mortgage with the aid of the Subsequent Transferee and that the auction be delayed even though, as per the parties' own submissions, they started exploring the possibility of redeeming the mortgage and thereafter transferring in June 2023 itself. In such circumstances, given the fact that although the S.A. No. 46 of 2022 was still pending, yet since there was nothing before this Court to doubt the validity of the 9th auction, this Court in the Main Appeals confirmed the sale in favour of the petitioner and brought the auction proceedings to its logical conclusion by directing the issuance of the sale certificate. The Borrower never raised the issue of the validity of the 9th auction notice despite 56 2025:HHC:2289-DB having sufficient opportunities to do so even after the pronouncement of the decision in the Main Appeals, and such pleas are being raised only after the auction was confirmed in favour of the petitioner, we find no good reason to interfere with the 9th auction conducted by the Bank.
218. Any sale by auction or other public procurement methods, once already confirmed or concluded, ought not to be set aside or interfered with lightly except on grounds that go to the core of such sale process, such as either being collusive, fraudulent or vitiated by inadequate pricing or underbidding. Mere irregularity or deviation from a rule which does not have any fundamental procedural error does not take away the foundation of authority for such a proceeding. In such cases, courts, in particular, should be mindful to refrain from entertaining any ground for challenging an auction which either could have been taken earlier before the sale was conducted and confirmed or where no substantial injury has been caused on account of such irregularity.
219. In the present lis, apart from the want of a statutory notice period, no other challenge has been laid to the 9th auction proceedings on the ground of it being either collusive, fraudulent or vitiated by inadequate pricing or underbidding; thus, the auction cannot be said to suffer from any fundamental procedural error, and as such does not warrant the interference of this Court, particularly when the plea sought to be raised to challenge the same could have been raised earlier.
220. The aforesaid may be looked at from one another angle even if the 9th auction were to be held illegal and bad in law by virtue of the aforesaid S.A. No. 46 of 2022, it would not mean that the auction purchaser would, by virtue of such finding, lose all its rights to the secured asset, even after having the sale confirmed in its favour. In this regard, we may refer to the decision of this Court in Janak Raj v. Gurdilal Singh, AIR 1967 SC 608, wherein it was held that even if a decree pursuant to which the auction was previously conducted was later set aside, the 57 2025:HHC:2289-DB successful auction purchaser's rights would remain unaffected and he would still be entitled to confirmation of sale in its favour. The relevant observations read as under:
--
"27. For the reasons already given and the decisions noticed, it must be held that the appellant-auction purchaser was entitled to a confirmation of the sale, notwithstanding the fact that after the holding of the sale, the decree had been set aside. The policy of the Legislature seems to be that unless a stranger auction-purchaser is protected against the vicissitudes of the fortunes of the suit, sales in execution would not attract customers, and it would be to the detriment of the interest of the borrower and the creditor alike if sales were allowed to be impugned merely because the decree was ultimately set aside or modified. The Code of Civil Procedure of 1908 makes ample provision for the protection of the interest of the judgment-debtor who feels that the decree ought not to have been passed against him. On the facts of this case, it is difficult to see why the judgment-debtor did not take resort to the provisions of O. XXI r. 89. The decree was for a small amount, and he could have easily deposited the decretal amount besides 5 per cent of the purchase money and thus have the sale set aside. For reasons which are not known to us, he did not do so."
(Emphasis supplied)
38. It was submitted that the petitioner was ready to deposit the amount under One Time Settlement (OTS) and a direction be issued to the Bank to take money under OTS. It was laid down by the Hon'ble Supreme Court in SBI v. Arvindra Electronics (P) Ltd., (2023) 1 SCC 540: 2022 SCC OnLine SC 1522 that the Court cannot direct the Bank to accept the money under OTS 58 2025:HHC:2289-DB contrary to the scheme framed by it or beyond the time prescribed by it. It was observed at page 546:
"14. While considering the aforesaid issue, the recent decision of this Court in Meenal Agarwal [Bijnor Urban Coop. Bank Ltd. v. Meenal Agarwal, (2023) 2 SCC 805: 2021 SCC OnLine SC 1255] is required to be referred to.
15. In Meenal Agarwal [Bijnor Urban Coop. Bank Ltd. v. Meenal Agarwal, (2023) 2 SCC 805: 2021 SCC OnLine SC 1255] This Court answered the following two questions :
(SCC para 6) "6.1. (i) Whether benefit under the OTS Scheme can be prayed as a matter of right?
6.2. (ii) Whether the High Court, in the exercise of powers under Article 226 of the Constitution of India, can issue a writ of mandamus directing the Bank to positively consider the grant of benefit under the OTS Scheme and that too dehors the eligibility criteria mentioned under the OTS Scheme?"
16. On a detailed analysis of the OTS Scheme, it is observed and held by this Court in Meenal Agarwal [Bijnor Urban Coop. Bank Ltd. v. Meenal Agarwal, (2023) 2 SCC 805: 2021 SCC OnLine SC 1255] that:
(i) No borrower can, as a matter of right, pray for a grant for the benefit of the One-Time Settlement scheme;
(ii) No writ of mandamus can be issued by the High Court in exercise of Article 226 of the Constitution of India, directing the financial institution/bank to positively grant a benefit of OTS to a borrower;
(iii) The grant of benefit of the OTS Scheme is subject to the eligibility criteria and the guidelines issued from time to time.
17. Though the decision of this Court in Meenal Agarwal [Bijnor Urban Coop. Bank Ltd. v. Meenal Agarwal, (2023) 2 SCC 805: 2021 SCC OnLine SC 1255] was specifically 59 2025:HHC:2289-DB pressed in service on behalf of the Bank and was pointed out to the High Court, the High Court instead following the binding decision of this Court in Meenal Agarwal [Bijnor Urban Coop. Bank Ltd. v. Meenal Agarwal, (2023) 2 SCC 805:
2021 SCC OnLine SC 1255] has not followed the same by observing that the earlier decision of this Court in Sardar Associates [Sardar Associates v. Punjab & Sind Bank, (2009) 8 SCC 257 : (2009) 3 SCC (Civ) 350] is more elaborate. We do not approve of such an observation by the High Court and not following the subsequent binding decision of this Court, which, as such, was on the point. Being a subsequent decision on the point/issue, the High Court was bound to follow the same.
18. Even otherwise, it is required to be noted that the decision of this Court in Sardar Associates [Sardar Associates v. Punjab & Sind Bank, (2009) 8 SCC 257 : (2009) 3 SCC (Civ) 350] is distinguishable on facts. In Sardar Associates [Sardar Associates v. Punjab & Sind Bank, (2009) 8 SCC 257 : (2009) 3 SCC (Civ) 350], it was found that the Bank deviated from the OTS guidelines issued by the Reserve Bank of India and therefore this Hon'ble Court held that the RBI Guidelines are binding on the Bank and that the Bank shall deal with the case of the borrower under the RBI Guidelines on OTS. Therefore, even otherwise on facts, the said decision was not applicable at all.
19. In the present case, in the sanctioned letter dated 21- 11-2017, it was specifically provided that the entire payment was to be made by 21-5-2018. The schedule to make the payment under the instalments was also mentioned. It is an admitted position that the borrower did not make the payment due and payable under the sanctioned OTS Scheme on or before the date mentioned in the sanctioned letter. The prayer of the borrower for an extension of nine months came to be rejected as far as back on 16-5-2018, and the borrower was directed to make the payment of Rs 2.52 crores by 21-5-2018, but the borrower failed to make the payment.
xxxxx 60 2025:HHC:2289-DB
22. Even otherwise, as rightly submitted on behalf of the Bank, directing the Bank to reschedule the payment under OTS would tantamount to modification of the contract, which can be done by mutual consent under Section 62 of the Contract Act. By the impugned judgment and order, rescheduling the payment under the OTS Scheme and granting an extension of time would tantamount to rewriting the contract, which is not permissible while exercising the powers under Article 226 of the Constitution of India."
39. The Debt Recovery Tribunal noticed that the Bank had allowed the OTS proposal and extended it till 31.01.2023; however, the borrower failed to pay the money till 31.01.2023, and the Bank cancelled the proposal on 10.02.2023. Thus, it is apparent that the borrower had failed to pay the money in time, and it is not entitled to seek a direction to the Bank to extend the benefit of OTS to it.
40. Therefore, we see no reason to grant the reliefs prayed by the petitioner, and we relegate the petitioner to the statutory remedies available to him under the SARFAESI Act. Hence, the present petition is dismissed with the liberty to approach the Debt Recovery Tribunal, if so advised and permissible, for the redressal of his grievances.
41. In view of the above, the present petition fails, and the same is dismissed.
612025:HHC:2289-DB
42. It is expressly made clear that any observation made by us will not affect the adjudication of the dispute by the Debt Recovery Tribunal, if any, petition is so filed before it.
43. Pending applications, if any, also stand disposed of.
(Vivek Singh Thakur) Judge (Rakesh Kainthla) Judge 10th January, 2025 (Chander)