The Kerala High Court opined that as per Section 17(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “SARFAESI”), any person aggrieved with measures taken under Section 13(4) may make an application to the Debts Recovery Tribunal. The jurisdiction in respect of these matters has been conferred to the Debts Recovery Tribunal. The High Court, therefore, declined to interfere under Article 226. Further, it was also ruled that the secured creditor has the power to take recourse to measures to recover the debt.
Brief Facts:
The Petitioner is an MSME unit and availed a loan from M/s. UCO Bank. The Bank initiated action under the SARFAESI after the loan was not repaid.
As per the Petitioner, due to the pandemic, the financial burden got increased and after providing aid under the GECL Scheme of the Central Government, the Bank did not provide any support and instead classified the account as Non-Performing Asset.
The Petitioner submitted its representation of referring the case to the MSME committee before the Reserve Bank of India, however, it was rejected and held that the Petitioner’s complaint was not maintainable under clause 10(2)(a)(i) of the RBI-integrated Ombudsman Scheme, 2021.
Hence, the present writ.
Contentions of the Respondent (Bank):
It was argued that the correct remedy is under Section 17 of the SARFAESI and the Petitioner had no locus standi to approach the Court under Article 226 of the Constitution.
Observations of the Court:
It was noted that the Bank did provide various reliefs to the Petitioner. Further, the pleas of the Petitioner were raised when the action was initiated under SARFAESI.
The Bench opined that as per Section 17(1) of SARFAESI, any person aggrieved with measures taken under Section 13(4) may make an application to the Debts Recovery Tribunal. The jurisdiction in respect of these matters has been conferred to the Debts Recovery Tribunal.
Further, it was ruled that the secured creditor has the power to take recourse to measures to recover the debt.
The contentions of the Petitioner should be raised before the Debts Recovery Tribunal.
The decision of the Court:
Based on the abovementioned findings, the High Court declined to interfere under Article 226 and accordingly, dismissed the writ petition.
Case Title: Gilgal Cashew Exports v. UCO Bank & Ors.
Coram: Hon’ble Mr. Justice Shaji P. Chaly
Case No: WP(C) No. 23434 of 2022
Advocates for Petitioner: Advs. B.J. John Prakash, P. Pramel, Harishma, Ashik Tom, Celine John, Ramseena N.
Advocates for Respondents: Advs. Deepak Joy.K., Sri Manu S.
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