Dismissed

M/S Sismagic India and Another v. State of U.P. and 2 Others

Allahabad HC18 Feb 2021WRIC/3682/2021

Case brief

AI extract

What is this about?

The petitioner challenged an order passed by the Additional District Magistrate under the SARFAESI Act. The court held that the SARFAESI Act is a self-contained law providing an alternative remedy under Section 17. Citing Supreme Court precedents, the court declined interference and disposed of the writ petition, leaving the petitioner to approach the Tribunal.

What did the court decide?

Writ petition disposed of; petitioner left to approach the Tribunal under Section 17 of the SARFAESI Act.

M/S Sismagic India and Another Vs State of U.P. and 2… — Banking and Recovery | Allahabad HC (2021)

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Court No. - 21

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Case :- WRIT - C No. - 3682 of 2021

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Petitioner :- M/S Sismagic India And Another Respondent :- State Of U.P. And 2 Others Counsel for Petitioner :- Rajesh Yadav Counsel for Respondent :- C.S.C.,Dharmendra Vaish

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Hon'ble Mahesh Chandra Tripathi,J. Hon'ble Sanjay Kumar Pachori,J.

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Heard Shri Rajesh Yadav, learned counsel for the petitioners, Shri B.P. Singh Kachhawah, learned Standing Counsel for the State respondent nos.1 & 2 and Shri Dharmendra Vaish, learned counsel for the respondent No.3.

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Present petition is being preferred by the petitioners for the following relief:-

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"(A) Issue a writ, order or direction in the nature of certiorari quashing the impugned judgment and order dated 29.02.2020 (Annexure No.2 to the writ petition) passed by respondent No.2/Additional District Magistrate, Administration, Moradabad Division, Moradabad.

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(B) Issue a writ, order or direction in the nature of Mandamus directing the respondent No.3 to receive the loan amount to the petitioners in easy installments."

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Record in question reflects that the petitioner no.1 had taken a loan of Rs.40 lakhs from the respondent bank in the year 2014. He could not deposit the loan amount due to brain hemorrhage. Consequently, the respondent bank has filed a case under Section 14 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short, SARFAESI Act) against the petitioner in which the Additional District Magistrate (Administration), Moradabad Division, Moradabad/respondent no.2 has passed an order on 29.2.2020 in favour of respondent bank.

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Learned counsel for the petitioner submits that the respondent bank has failed to serve the demand notice under Section 13 (2) of SARFAESI Act to borrower as well as guarantor and as such, the impugned order is not sustainable in the eyes of law and liable to be set aside.

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On the other hand, Shri Dharmendra Vaish, learned counsel for the respondent-bank has raised a preliminary objection regarding maintainability of the writ petition on the ground that SARFAESI Act is a self-contained Act and full fledged

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mechanism is provided therein under Section 17(1) of the SARFAESI Act.

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In Mardia Chemicals Ltd. & Ors. v. Union of India & Ors., (2004) 4 SCC 311 the Supreme Court upheld the constitutional validity of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) as well as Security Interest (Enforcement) Rules, 2002, except the deposit of 75% as pre-condition of filing the appeal in Debts Recovery Tribunal under Section 17 of the Act. It was held that the proceedings under Section 17 are not an appellate proceedings but rather an initial action, which is brought before a forum prescribed under the Act and is like a suit under the CPC in the Court of first instance.

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In Transcore v. Union of India & Anr., (2008) 1 SCC 125 following Mardia Chemical's case the Supreme Court held that it was not necessary to withdraw the DRT application before proceeding under the SARFAESI Act (NPA Act). The object behind both Section 13 of the SARFAESI Act, and Section 17 read with Section 19 of the DRT Act is the same, namely for the recovery of debts. There is no inherent or implied inconsistency between the remedies provided under the two Acts.

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The Mardia Chemical's case and Transcore's case were followed by the United Bank of India v. Satwati Tandon & Ors., (2010) 8 SCC 110 in which the Supreme Court reminded the High Court not to interfere with the proceedings under the SARFAESI Act, in view of alternative remedy provided under Section 17 (1) of the Act, in which expression 'any person' includes even guarantor or any other person, who may be affected by the action taken under Section 13 (4) or Section 14 of the Act.

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In Indian Bank v. Blue Jaggers Estates Ltd. & Ors., (2010) 8 SCC 129 the Supreme Court did not interfere with 19.89% agreed interest with quarterly rest, on the grounds that it is unconscionable, ex-proprietary and contrary to law, and held that when the agreement has been signed with open eyes and was abided with upto the time, when the defaults were made, the bank rightly initiated action under the SARFAESI Act.

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In Kanaiyalal Lalchand Sachdev & Ors. v. State of Maharashtra & Ors., (2011) 2 SCC 782 decided on February 7, 2011, the Supreme Court once again cautioned the High Courts not to interfere in such matters under Art.226 of the Constitution of India.

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Once the proceedings in question are under SARFAESI Act,

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which is a self-contained Act, then against the action so proposed the petitioner can always approach the Tribunal concerned by filing claim under Section 17 of the SARFAESI Act.

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We leave it open to the petitioner to take recourse of law as available in law.

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The writ petition stands disposed of accordingly.

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The party shall file computer generated copy of such order downloaded from the official website of High Court Allahabad, self attested by the petitioner alongwith a self attested identity proof of the said person (preferably Aadhar Card) mentioning the mobile number to which the said Aadhar Card is linked.

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The concerned Court/Authority/Official shall verify the authenticity of such computerized copy of the order from the official website of High Court Allahabad and shall make a declaration of such verification in writing.

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Order Date :- 18.2.2021 T. Sinha

M/S Sismagic India and Another v. State of U.P. and 2 Others

Case brief

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M/S Sismagic India and Another v. State of U.P. and 2 Others

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