M/S Priyesh Agro Industries vs. Union Bank Of INDIA

Held

The Court held that the writ petition was not maintainable. It found that the petitioners had an alternative and efficacious statutory remedy available under Section 17 of the SARFAESI Act to challenge the measures taken by the respondent bank under Section 13(4) of the Act. The Court emphasized that the Debts Recovery Tribunal (DRT), under Section 17(3) of the SARFAESI Act, has the power to examine the facts and circumstances and declare measures taken by the secured creditor as invalid if they are not in accordance with the Act and rules. The Court noted that issues of non-compliance with provisions like sub-sections (2), (3), or (3A) of Section 13 could be agitated before the DRT. The Court also cited the Supreme Court's decision in Alok Shanker Pandey vs. Union of India and Ors. and Rameshwar Sugar Industries Ltd. vs. Prem Heady Engineering Works (P) Ltd. and Anr. regarding judicial impropriety in ignoring settled legal positions. Since the petitioners had not exhausted the alternative remedy, the petition was dismissed. The Court set aside all orders, including the impugned order, due to the non-maintainability of the writ petition.

Facts

The petitioners, M/s Priyesh Agro Industries (a partnership firm) and petitioner no. 2, filed a writ petition challenging the declaration of their account as Non-Performing Asset (NPA) on March 31, 2018, by the respondent Union Bank of India. The petitioners claimed their business suffered due to demonetization and GST, and the bank failed to follow RBI guidelines for MSMEs. The bank issued a demand notice under Section 13(2) of the SARFAESI Act, 2002, followed by a possession notice. The petitioners raised objections, which the bank responded to. Subsequently, the bank filed an application under Section 14 of the SARFAESI Act before the District Magistrate for physical possession. The District Magistrate allowed the application, authorizing the Mamlatdar and Executive Magistrate to take possession. The Mamlatdar issued a notice for possession on January 18, 2019. The petitioners filed the writ petition on January 15, 2019, seeking to quash these actions.

Key Issues

1. Whether the writ petition is maintainable when an alternative statutory remedy under Section 17 of the SARFAESI Act is available to the petitioners for challenging the measures taken by the respondent bank under Section 13(4) of the SARFAESI Act. Petitioner's Argument: The petitioners argued that the writ petition was maintainable because the respondent bank failed to follow the procedures prescribed under sub-sections (2), (3), and (3A) of Section 13 of the SARFAESI Act. Therefore, the measures taken under sub-section (4) were not required to be challenged under Section 17. They also contended that their account could not have been declared NPA in view of RBI guidelines and relied on cases like Rajkot Nagarik Sahkari Bank Ltd. vs. Jignesh Jayantilal Ramanuj and Tirupati Storage and Allied Pvt. Ltd. vs. The United Commercial Bank, Kolkata. Respondent's Argument: The respondent bank raised a preliminary objection regarding the maintainability of the petition, asserting that Section 17 of the SARFAESI Act provides an alternative and efficacious statutory remedy.