SC: High Court cannot entertain writ petition challenging bank e-auction notices when alternative remedy available under SARFAESI Act

07 May 2024 8:19 AM

By: Admin

On 2 May 2033, Supreme Court, in G. VIKRAM KUMAR Versus STATE BANK OF HYDERABAD & ORS., held that the High Court should not have entertained the writ petition challenging the e-auction notice as an alternative remedy was available under Section 17 of the SARFAESI Act. And quashed and set aside a judgment passed by the High Court of Telangana and directed the issuance of a sale certificate in favor of the appellant with respect to a flat, ordering the heirs of the original respondent to vacate the premises within three months.

The matter arose from a writ petition filed by the original respondent, challenging the e-auction notice issued by the bank in exercise of its powers under Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act. The respondent claimed to be the agreement to sale holder of the flat in question and agreed to pay/deposit the entire sale consideration in compliance with Section 13(8) of the SARFAESI Act.

The court observed that the High Court should not have entertained the writ petition challenging the e-auction notice as an alternative remedy was available under Section 17 of the SARFAESI Act. Additionally, it noted that the transaction between the respondent and the borrower pursuant to the agreement to sale dated 16.06.2016 was illegal and void as it was conducted without clearance from the DRT and the Bank.

The court also questioned whether Section 13(8) of the SARFAESI Act applies to a person who is only an agreement to sale holder and not the borrower who is ready and willing to pay the entire debt. The court observed that the borrower failed to get any relief from the DRT and did not invoke Section 13(8) to clear the entire dues. Therefore, the High Court had erred in allowing the writ petition.

The court directed the appellant to pay the remaining auction sale consideration, deducting the 25% of the amount already deposited, with 9% interest from the date of auction till the actual amount is paid, within four weeks. The sale certificate will be issued in favor of the appellant upon receipt of the full payment. The court also directed the respondent's heirs to vacate the premises within three months and ordered the return of the amount already deposited by the respondent with interest.

The case has important implications for the applicability of Section 13(8) of the SARFAESI Act and the availability of alternative remedies under the Act.

VIKRAM KUMAR Versus STATE BANK OF HYDERABAD & ORS.