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Judgment
This Writ Petition is filed seeking the following relief:-
“.....to issue a writ, order or direction more particularly one in the nature of WRIT OF MANDAMUS declaring the action of respondents, particularly 3 respondent in attempting to conduct sale of the petitioner mortgaged property without registering the mortgage in CERSAI and without furnishing loan account statement as illegal, arbitrary and violative of Articles 14 and 21 of the Constitution of India and consequently set aside sale notice dated 15.04.2025 issued by the 3 respondent and to submit to the Petitioner all documents relating to the loan transaction including loan sanction letter, loan agreement, account statement, interest breakup and ledger ...”
The case of the writ petitioner, in brief, is that –
[i] The petitioner has availed a mortgage loan from the 3rd respondent-Bank for a sum of ₹20,00,000/- on 19.04.2018, repayable with interest at the rate of 13.5% per annum and the same was secured by way of mortgaging the residential property of the petitioner located in Plot No.335, Azith Singh Nagar, Vijayawada. The mortgage should have been registered with the Central Registry of Securitization Asset Reconstruction and Security Interest of India (CERSAI), which is online portal.
[ii] Section 26D of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) mandates the same, which reads as follows:
―26D. Right of enforcement of securities.—
Notwithstanding anything contained in any other law for the time being in force, from the date of commencement of the provisions of this Chapter, no secured creditor shall be entitled to exercise the rights of enforcement of securities under Chapter III unless the security interest created in its favour by the borrower has been registered with the Central Registry.‖
[iii] Without registering the subject property, the proceedings in terms Sections 13(2), 13(4) of SARFAESI Act cannot be initiated. Sale Notice dated 15.04.2025 issued by the 3rd respondent reflects unfair and arbitrary calculation of interest and there is clear violation of 26D of the SARFAESI Act. Therefore, the action of the respondents in issuing the Sale Notice dated 15.04.2025 is illegal, arbitrary and liable to be set aside. Accordingly, the present Writ Petition is filed seeking the relief of a writ of Mandamus.
Counter is filed on behalf of the 3rd respondent-Bank, contending that –
[i] the petitioner has availed Mortgage Loan of ₹20,00,000/- on 19.04.2018 repayable in 180 equated monthly instalments and the 3rd respondent has duly registered the security interest with the CERSAI, in terms of Section 26D of the SARFAESI Act and the particulars of the mortgage are uploaded in the CERSAI portal. The allegations contra are not correct. The sale Notice dated 15.04.2025 is perfectly legal and valid. Since the petitioner failed to repay the said loan, the loan is declared as NPA and there was no alternative remedy, demand notice dated 15.05.2023 was issued under Section 13(2) of SARFAESI Act, demanding the petitioner to discharge the debt liability for total outstanding amount of Rs.35,33,562/- as on 30.04.2023.
[ii] The notice was served personally to the petitioner and the same was endorsed on the copy of the notice. The petitioner has paid Rs.1,00,000/-on 12.12.2023, thereafter paid nothing. Then the 3rd respondent issued possession Notice under Section 13(4) of SARFAESI Act, which is personally received by the petitioner and his wife. Notice was also affixed on the wall of the subject property and also published in ―Andhra Prabha‖ Telugu daily newspaper. The procedure envisaged as per the Act is followed at each and every stage, following the RBI guidelines. Sale notice is issued strictly in accordance with the provisions of the SARFAESI Act. The petitioner has legal obligation to co-operate with the legal proceedings and he has efficacious remedy, by way of appeal before the Debts Recovery Tribunal (DRT). Therefore, the present writ petition is liable to be dismissed.
[iii] Further, the 3rd respondent has produced the particulars relating to entry in Central Registry (CERSAI).
Heard learned counsel appearing on both sides. Learned counsel for the respective parties reiterated their respective contentions.
Perused the petition as well as counter and other material placed by both sides.
Thoughtful consideration is given to the arguments advanced by both sides.
Analysis:
The following points are clear:-
The writ petitioner has availed loan.
The loan was declared as NPA.
The 3rd respondent-Bank has initiated the proceedings for recovery of dues in terms of SARFAESI Act under Sections 13(2), 13(4).
The 3rd respondent-Bank has registered the mortgage with CERSAI belatedly.
It is not clear as to whether the requirement of registration with CERSAI is intended for the benefit of the writ petitioner, and it is also not clear as to what prejudice has been caused to the writ petitioner on account of the non-registration of the mortgage.
There is no convincing explanation as to the significance or effect of the amendment omitting the earlier requirement of registration within thirty (30) days.
In view of the omission of the provision prescribing registration within thirty (30) days, the contention regarding belated registration works in favour of the loanee found not acceptable.
It is not explained as to why the petitioner cannot raise the same grounds before the competent DRT questioning the legal and factual objections.
Precedential guidance:-
[i] With regard to the scope of interference in the matters pertaining to the SARFAESI Act, the Hon’ble Apex Court in PHR Invent Educational Society v. UCO Bank1, while deciding an appeal challenging the orders passed by the Division Bench of the High Court of Telangana in a writ petition, exhaustively considered various several judgments from paragraph 22 onwards. In para 41 of the judgment of the Hon’ble Apex Court, observed as follows:-
“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 pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection.‖
[ii] The observations of the Hon’ble Apex Court in Satyawati Tondon's2 case which are referred to in paragraph 22 of PHR Invent Educational Society v. UCO Bank’s case [cited 2 surpa], reads as follows:
―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 ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.
44.While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution.
45.It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance.”
[iii] In a case, M/s. South Indian Bank Ltd. And Ors. Versus Naveen Mathew Philip And Anr. etc. while considering the issue as to entertaining the Writ Petitions under the Constitution of India in the matters involving recovery of dues in terms of SARFAESI Act, particularly where an effective
3 2023 Supreme(SC) 750: (2023) 17 SCC 311 alternative remedy is available, the Hon’ble Apex Court held that, unless there are extra-ordinary circumstances exist, the High Courts cannot interfere in such matters. After referring to various judgments, deprecated the practice of approaching the High Courts, without exhausting of statutory remedy. In para 16 of the judgment, the scope of approaching the High Court and entertaining a Writ of Mandamus, the prerogative writ has been addressed by placing reliance of another judgment in Radha Krishan Industries v. State of H.P.4, certain principles are referred. Exceptions contemplated to interfere even when there is alternative remedy, are :
Writ Petition is filed for enforcement of fundamental right contemplated by part III of the Constitution of India.
Violation of principles of natural justice.
The order or proceedings wholly without jurisdiction.
The vires of legislation is challenged, and that
merely an alternative remedy by itself does not divert the High Courts of its power under article 226 of the Constitution of India in appropriate case, though ordinary Writ should not be entertained.
[iv] Further, in para 18 of the judgment in M/s. South Indian Bank Ltd. And Ors.’s case (cited 4 supra) the Hon’ble Apex court observed as follow:-
“18. ......, 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.‖
Upon considering the factual scenario and the legal position referred supra vide the observations of the Hon’ble Apex Court in PHR Invent Educational Society, Satyawati Tondon, M/s. South Indian Bank Ltd. And Ors.’s, and Radha Krishan Industries cases (cited 2 to 5), having regard to the observations of the Division Bench of this Court in M/s.Bheem Eco Build Tech Vs. Union of India5 in W.P.No.3973 of 2025, this Court is of the considered view that the petitioner is not entitled to the relief of a writ of Mandamus as prayed for and the writ petition is liable to be dismissed, as extra-ordinary circumstances, which are contemplated in M/s. South Indian Bank Ltd. And Ors. (cited 4 supra) are not found.
Accordingly, the Writ Petition is dismissed. However, the petitioner is given liberty to approach the competent DRT within period of (4) weeks from the date of receipt of a copy of this order and raise all the defences and contentions available under law. Till then, the respondents shall maintain status quo with regard to alienation, registration, or creation of third-party interests in respect of the subject property for a period of four (04) weeks from today. No costs.
As a sequel, miscellaneous petitions pending, if any, shall stand closed.