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Rajasthan High Court
High Courts

Writ Against SARFAESI Notices Not Maintainable When Section 17 Remedy Exists: Rajasthan High Court Imposes ₹2 Lakh Costs

Published: · NyayVidhan

The Rajasthan High Court dismissed, with costs of ₹2 lakh, a textile park company's writ petition against notices under Sections 13(2) and 13(4) of the SARFAESI Act, 2002. Section 17 gives a specific remedy before the Debts Recovery Tribunal and Section 35 gives the Act overriding effect, so the writ was not maintainable (para 14). The company had also not come with clean hands and had not impleaded the consortium banks against whose action it sought relief (paras 15, 18).

Writ Against SARFAESI Notices Not Maintainable When Section 17 Remedy Exists: Rajasthan High Court Imposes ₹2 Lakh Costs

Judgment Intelligence

Petition Dismissed
Jaipur Texweaving Park Ltd. v. Union of India & Ors.
S.B. Civil Writ Petition No. 12090/2018
Court
Rajasthan High Court
Date of Decision
9 March 2022
Bench
Justice Sameer Jain
Relevant Acts & Sections
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 — Sections 13(2), 13(4), 17, 35; Constitution of India — Article 226
Final Outcome

The writ petition was dismissed with costs of ₹2 lakh, half (₹1 lakh) to be deposited with respondent No. 4 and half with the Rajasthan State Legal Services Authority, Jaipur, within 60 days; pending applications were disposed of (paras 19-20). A special appeal, D.B. SAW/587/2022, has been filed.

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Key holdings

  1. Section 17 is a specific remedy and Section 35 gives the Act overriding effect, so the writ was not maintainable (para 14).
  2. Article 226 is not a rule of compulsion; SARFAESI matters call for a slow and cautious approach (para 14).
  3. Seeking relief against the unimpleaded consortium banks, without clean hands, defeated the petition (para 15).
  4. Ministry approval was needed only for assets acquired wholly or substantially out of Government grants (para 16).
  5. Whirlpool did not help in a case under a self-contained special law (para 17).

Case explainer by NyayVidhan: an account of this judgment and the law it laid down, not the court's text. The judgment itself is the authoritative version.

Brief Facts

Jaipur Texweaving Park Ltd. set up an integrated textile park under a Ministry of Textiles scheme and took a loan from a consortium of 15 banks and financial institutions under a Common Loan Agreement (para 2). On 31.05.2017 respondent No. 4, the security trustee (para 9), asked it to deposit Rs. 19,23,68,956/-, and on 09.03.2018 it took symbolic possession of the whole park (para 2). The company challenged the notices under Sections 13(2) and 13(4), saying the action needed the Ministry's permission and respondent No. 4 had no authority (paras 1, 13). A no-coercive-action order was passed on 01.06.2018, during an Advocates' strike (para 3).

Court's Findings

The writ was not maintainable for three reasons. The SARFAESI Act provides a specific remedy under Section 17, and Section 35 gives it overriding effect. Under Satyawati Tandon and Phoenix ARC, a High Court stay in bank-recovery cases seriously harms the financial health of lenders and the economy. The Article 226 power is not a rule of compulsion: in SARFAESI matters a slow and cautious approach applies, and a writ court should not entertain a petition when a specific remedy is available (para 14). The petition also failed as the company had not come with clean hands and had not impleaded the consortium banks though it sought relief against their action (para 15). The Ministry's approval under Clause 4 of its letter was needed only for assets acquired wholly or substantially out of Government grants; here the investment came from the lenders and the members' equity (para 16). Whirlpool, on alternative remedy in trade mark, tender or public interest matters, did not help in a case under a self-contained special law (para 17). The company obtained an ex parte stay during the strike while defending the matter before the Debts Recovery Tribunal, avoiding dues of Rs. 20 crores (para 18).

Legal Principle

A High Court will not ordinarily entertain an Article 226 petition against SARFAESI notices under Sections 13(2) and 13(4), as Section 17 gives a specific remedy before the Debts Recovery Tribunal and the Act overrides other laws. A petitioner lacking clean hands or omitting necessary parties may be refused relief with costs (paras 14-15, 18).

Precedents Relied Upon

  1. United Bank of India v. Satyawati Tandon & Ors. (2010) 8 SCC 110
    Relied Upon Discussed at ¶ 7, 13, 14, 17

    The rule of exhaustion of alternative remedy is one of discretion, but a High Court should not entertain a writ where the legislation provides a detailed remedy; a stay in recovery of bank dues harms the financial health of lenders and the economy.

  2. Phoenix ARC Private Limited v. Viswa Bharati Vidya Mandir and others 2022 SCC OnLine SC 44
    Relied Upon Discussed at ¶ 7, 14

    Cited by the respondents; relied on with Satyawati Tandon for the adverse effect of High Court stays in recovery of dues of banks and secured creditors.

  3. U.P. Junior Doctors' Action Committee v. B. Sheetal Nandwani and Ors. AIR 1991 SC 909
    Relied Upon Discussed at ¶ 9, 15

    Cited by the respondents; relied on to hold the petition not maintainable as the petitioner had not come with clean hands and had not impleaded the consortium banks.

View all precedents (11)
  1. S.P. Chengalvaraya Naidu (Dead) by L.Rs. v. Jagannath (Dead) by L.Rs. and Ors. (1994) 1 SCC 1
    Relied Upon Discussed at ¶ 15

    Fraud avoids all judicial acts; relied on in holding the petition not maintainable.

  2. Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and Ors. (1998) 8 SCC 1
    Distinguished Discussed at ¶ 13, 17

    Cited by the petitioner; its view on alternative remedy arose in trade mark, tender or public interest matters and did not apply to a case under the self-contained SARFAESI Act.

  3. Kanhaiya Lal v. State of Maharashtra (2011) 2 SCC 782
    Referred To Discussed at ¶ 7

    Cited by the respondents against bypassing Section 17; not discussed further in the judgment.

  4. Shalini Shyam Shetty and Ors. v. Rajendra Shankar Patil (2010) 8 SCC 329
    Referred To Discussed at ¶ 13

    Cited by the petitioner (para 13); not discussed further in the judgment.

  5. Ramesh Ahluwalia v. State of Punjab and Ors. (2012) 12 SCC 331
    Referred To Discussed at ¶ 13

    Cited by the petitioner (para 13); not discussed further in the judgment.

  6. Harbanslal Sahnia and Ors. v. Indian Oil Corpn. Ltd. and Ors. (2003) 2 SCC 107
    Referred To Discussed at ¶ 13, 17

    Cited by the petitioner (para 13, printed there as India Oil Corpn., (2002) 2 SCC 107); also named among the exceptions in the passage of Satyawati Tandon quoted in para 17.

  7. Unitech Limited and Ors. v. Telangana State Industrial Infrastructure Corporation (TSIIC) and Ors. (2021) 2 SCJ 19
    Referred To Discussed at ¶ 13

    Cited by the petitioner (para 13); not discussed further in the judgment.

  8. Rapid Metro Rail Gurgaon Limited Etc. v. Haryana Mass Rapid Transport Corporation Limited & Ors. Civil Appeal No. 925-926 of 2021, decided on 26.03.2021
    Referred To Discussed at ¶ 13

    Cited by the petitioner (para 13); not discussed further in the judgment.

Topics: Writ Jurisdiction (Article 226) Suppression of Material Facts Non-Joinder of Necessary Party Alternative Remedy
NyayVidhan
Court Judgments · 3 min read
Decided: March 9, 2022 Justice Sameer Jain
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