Dismissed¶65

Adline Stella Bessie , v. The Union of India

Madras HC13 Jun 2025WP(MD)/10799/2025

Case brief

AI extract

What is this about?

SARFAESI Act e-auction purchaser; Rule 9(9) and 10, Security Interest (Enforcement Rules) 2002; delivery of property free from encumbrances; refund of auction sale price Rs.55,10,000 with 24% interest; City Union Bank auction 18.09.2024; maintainability of writ under Article 226; efficacious alternative remedy before Debt Recovery Tribunal; Celir LLP v. Bafna Motors (2024) 2 SCC 1 relied on; Satyawati Tondon; Chhabil Dass Agarwal; writ petition dismissed with liberty to approach DRT; Madurai Bench, Madras High Court; S.M. Subramaniam, J. (author) and G. Arul Murugan, J.; dated 13.06.2025.

What did the court decide?

Liberty granted to the petitioner to approach the Debt Recovery Tribunal; Tribunal requested to dispose of the matter expeditiously; no order as to costs. ¶65

Adline Stella Bessie , Vs The Union of India — Banking and Recovery | Madras HC (2025)

What the court decided

AI extract

Outcome

Liberty granted to the petitioner to approach the Debt Recovery Tribunal; Tribunal requested to dispose of the matter expeditiously; no order as to costs.

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Issue for consideration

Whether the authorised officer was required, under Rule 9(9) and 10 of the Security Interest (Enforcement Rules) 2002, to deliver the auction-purchased property to the purchaser free from encumbrances known to the secured creditor on deposit of the money specified in Sub Rule 7 of the said Rule. +1 more

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Ratio / Principle

Since the petitioner is the e-auction purchaser and possession has not been handed over free from encumbrances, his remedy lies before the Debt Recovery Tribunal, in view of Celir LLP v. Bafna Motors (Mumbai) Private Limited, (2024) 2 SCC 1, where it was held that the High Court was not justified in exercising writ jurisdiction under Article 226 since an efficacious alternative remedy is contemplated under the SARFAESI Act.

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Key takeaways

Granting liberty to the petitioner to approach the Debt Recovery Tribunal, the writ petition stands dismissed; the Tribunal is requested to dispose of the matter as expeditiously as possible, with no order as to costs.ratio¶65

Detailed headnote1 paragraphs

Writ Petition (Madurai Bench of Madras High Court, W.P(MD)No.10799 of 2025, decided 13.06.2025) by an e-auction purchaser under the SARFAESI Act who paid Rs.55,10,000/- as sale price for a house property auctioned by the Authorized Officer, City Union Bank Limited on 18.09.2024, alleging that possession was not handed over free from encumbrances; the petitioner sought a writ of mandamus directing the Union of India and the Reserve Bank of India to secure refund of the sale price with interest at 24 percent per annum from 18.09.2024. Reliance was placed on counsel's submission under Rule 9(9) and 10 of the Security Interest (Enforcement Rules) 2002 read with Sub Rule 7. Following Celir LLP v. Bafna Motors (Mumbai) Private Limited, (2024) 2 SCC 1 (paras 97, 98, 110 and 110.1, extracting United Bank of India v. Satyawati Tondon and CIT v. Chhabil Dass Agarwal), the Court held that since the petitioner is the e-auction purchaser and possession has not been handed over free from encumbrances, his remedy lies before the Debt Recovery Tribunal, an efficacious alternative remedy being contemplated under the SARFAESI Act. Writ petition dismissed with liberty to approach the Tribunal, which was requested to dispose of the matter expeditiously; no order as to costs.

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W.P(MD)No.10799 of 2025

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BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

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DATED : 13.06.2025

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CORAM:

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THE HONOURABLE MR.JUSTICE S.M.SUBRAMANIAM AND THE HONOURABLE MR.JUSTICE G.ARUL MURUGAN

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W.P(MD)No.10799 of 2025

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Adline Stella Bessie ... Petitioner

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The Union of India, Rep by its Secretary to Government Department of Banking and Financial Services, Ministry of Finance, 3rd Floor, Jeevan Deep Building, Sansa. 2. The Reserve Bank of Indian, Rep by its Regional Director, No.16, Rajaji Salai, Fort Glacis, Chennai 600 001.

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The Commissioner of Police,, Madurai City, Azhagar Kovil Main Road, K.Pudur, Madurai 625 007.

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https://www.mhc.tn.gov.in/judis

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The Inspector of Police, Thiruppalai Police Station, Madurai 625 014.

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The Authorized Officer, City Union Bank Limited, Credit Recovery and Management Department, No.24-B, Gandhi Nagar, Kumbakonam 612 001. Thanjavur District.

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The Branch Manager, City Union Bank Limited, Madurai Main Branch, No.82a, Tamil Sangam Road, Madurai 625 001.

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... Respondents

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PRAYER: Writ Petition filed under Article 226 of the Constitution of India, praying this Court to issue a Writ of Mandamus or any other order or direction in the nature of a writ directing the respondents 1 and 2 to take appropriate action against the respondents 5 and 6 herein for immediate refund of the entire sale price amount of Rs.55,10,000/received by the respondents 5 and 6 from the petitioner as a successful bidder pursuant to the auction sale conducted in respect of the house property in Door No.1/121, Re.S.No.138/3B1A1, of an extent of 2822 sq.feet., in Plot No.45, TWAD colony, 8th Street, Madurai, by the 5th respondent on 18.09.2024 together with the interest at the rate of 24

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percent per annum from 18.09.2024 to till the date of payment, by considering the representation of the petitioner, dated 19.03.2025.

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For Petitioner : Mr.A.Saravanan,

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For Respondent : Mr.M.Mithun (R1 & R2) Central Government Standing Counsel

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: Mr.T.Senthil Kumar (R3 & R4) Additional Public Prosecutor

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: Mr.N.Dilip Kumar (R5 & R6)

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O R D E R

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[Order of the Court was made by S.M.SUBRAMANIAM, J.]

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The grievances of the petitioner is that he is the auction purchaser,

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purchased the property from the Bank under the SARFAESI Act.

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2.The learned Counsel for the petitioner made a submission that under Rule 9(9) and 10 of Security Interest (Enforcement Rules) 2002, the authorised officer shall deliver the property to the purchaser free from encumbrances known to the secured creditor on deposit of money as

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specified in Sub Rule 7 of the said Rule.

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3.Since the petitioner is the e-auction purchaser and the possession has not been handed over free from encumbrances his remedy lies before the Debt Recovery Tribunal, in view of the judgment of the Hon'ble Supreme Court of India in the case of Celir LLP Vs. Bafna Motors (Mumbai) Private Limited and others reported in (2024) 2 SCC 1, where it is held that the High Court was not justified in exercising the writ jurisdiction under Article 226 of Constitution of India, since efficacious alternative remedy is contemplated under the provisions of SARFAESI Act. Paragraph Nos.97, 98, 110 and 110.1 would be relevant in this context and have been extracted herein:-

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“97.This Court has time and again, reminded the High Courts that they should not entertain 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)

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“43. Unfortunately, the High Court [Satyawati Tondon v. State of U.P., 2009 SCC

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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 quasijudicial 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.

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44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article

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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.

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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.

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55. It is a matter of serious concern that despite repeated pronouncement of this

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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.”

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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)

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“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

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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 grievances, a writ petition should not be entertained ignoring the statutory dispensation.”

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110.We summarise our final conclusion as under: 110.1. The High Court was not justified in exercising its writ jurisdiction under Article 226 of the Constitution more particularly when the borrowers had already availed the alternative remedy available to them under Section 17 of the SARFAESI Act.”

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4.Granting liberty to the petitioner to approach the Debt Recovery Tribunal, the present writ petition stands dismissed. In the even of any such approach, the Tribunal is requested to dispose of the matter as expeditiously as possible. There shall be no order as to costs.

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[S.M.S., J.] [G.A.M., J.] 13.06.2025

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Index:Yes/No Internet:Yes/No NCC:Yes/No LR

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To 1. The Union of India, Rep by its Secretary to Government Department of Banking and Financial Services, Ministry of Finance, 3rd Floor, Jeevan Deep Building, Sansa. 2. The Reserve Bank of Indian, Rep by its Regional Director, No.16, Rajaji Salai, Fort Glacis, Chennai 600 001.

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