Writ against 'cmm's order passed under sarfaesi act'

This query is : Resolved 

22 January 2020

I am to file a WRIT against the Order of Delhi CMM passed under Sarfaesi Act.

My question is, should I file a "Civil" or a "Criminal Writ"?

SHIRISH PAWAR, 7738990900 (Expert)
23 January 2020

Dear sir,

You have to file civil writ petition.


Raj Kumar Makkad (Expert)
23 January 2020

Civil Writ Petition is required to be filed.

Dr J C Vashista (Expert)
24 January 2020

How CMM Delhi can invoke powers and pass an order/ judgment under SARFAESI Act?
If your statement may be taken as true, the order is appealable before Seessions Court, why to move in a writ petition ?
Any order/ judgment of a criminal court (as stated by you the order of CMM Delhi) is to be assailed through Writ Petition (Criminal) before High Court, which is not maintainable under the circumstances explained by you.
What is the opinion and advise of the lawyer engaged and paid by you?
It is advisable to consult and engage another local prudent lawyer for better appreciation of facts, professional guidance and necessary proceeding without waiting for FREE advise on this platform.
However, if you feel so, may contact me with relevant case file (on appointment) at chamber No 647, Lawyer's Chmaber Block, Dwarka Courts complex, Sector 10, Dwarka, New Delhi-110075 Cell # 9891152939 email: majjagdish@yahoo.com or visit: vakil-saab.com

Raj Kumar Makkad (Expert)
25 January 2020

Appeal to Debt Recovery Appellate Tribunal
If a person is aggrieved by the order of the DRT,ha can file an appeal to the Appellate Tribunal within 30 day from the date of the receipt of DRT order. If the DRT or Appellate Tribunal holds that possession of asset by the secured creditor was wrongful and directs the secured creditors to return the assets to the borrower, the borrower shall be entitled to the compensation and costs as may be determined by the DRT or Appellate Tribunal. The Tribunal can also direct the return of the assets If the secured creditor had already sold or transferred the asset to a third party.

6. Interim stay order
The Jurisdictions of Civil Court has bean clearly barred under section 34 of the Act, stating that no Injunction shall be granted by any court or other authority In respect of any action taken or to be taken under Sarfaesi Act or the DRT Act.

The decision of the Supreme Court In the case of United Bank of India v/s Satyawati Tandon is a landmark Judgment on the issue of stay orders. It was held that normally the Supreme Court does not Interfere with the discretion exercised by the High Court to pass an interim order In a pending matter but, having carefully examined the matter, an exception have been made, because the order under challenge has the effect of defeating the very object of legislation enacted by the Parliament for ensuring that there are no unwarranted impediments in the recovery of debts due to banks.

The following observations are worth noting:-

I. The Nigh Court will ordinarily not entertain a petition under Article 226 of the Constitution, If an affective alternate remedy is available to the aggrieved person and that this rule applies with greater vigour in matters involving recovery of taxes, cess, fees, other type of public money and dues of the banks and financial institutions.

II. 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 statutes.

III. It is true that the rule of exhaustion of alternate remedy is rule of discretion and not one of compulsion, but it is difficult to fathom any reason why High Court should entertain a petition under Article 226 and pass interim order ignoring the fact that petitioner can avail effective alternative remedy by filing application, appeal, revision etc. and the particular legislations contain a detailed mechanism of redressal of his grievance.

Raj Kumar Makkad (Expert)
25 January 2020

Filing of Writ petition under Article 226 of Constitution
Writ jurisdiction is an extraordinary jurisdiction of the High Court under Article 226 and 227 of the Constitution of India. There is consistency in the decisions that the High Court normally hesitates to entertain writ petition in the matter of Sarfaesi action by banks. This is in view of clear cut alternative remedy provided u/s. 17 and 18 of the Sarfaesi Act. The remedy of appeal to DRTand DRAT is available u/s. 17 and 18 of the Act, against notice for possession and enforcement of security interest.

It is settled legal preposition that a writ petition under Article 226 of the constitution is not maintainable, where there is an efficacious alternative remedy. It is generally pleaded that though alternative remedy is available, it is not efficacious.

The writ petition is however preferred by the borrower for the following reasons:-

a. Writ petition is not a costly affair, as no court fee is payable, whereas court fee has to be paid in case of appeal to DRT depending upon amount involved.

b. Writ petition once admitted takes lot of time in consideration for decision and the petitioner gets the desired breather. In comparison the matter is time bound exercise under DRT.

c. Borrowers feel that the action under the Sarfaesi Act will be automatically restrained if writ is admitted.

Raj Kumar Makkad (Expert)
25 January 2020

Classification of NPA can be questioned through writ
Where the Bank is not correct in classifying the account as NPA, which is preliminary to initiate proceeding under the provisions of Sarfaesi Act, the High Court does interfere with the action initiated by the bank as held in Sravan Dal Mill Pvt. Ltd. v/s Central Bank of India1. Further interim relief may be granted to the borrower to regularise the account by continuing making payments.

Kumari Cheenu (Querist)
27 January 2020

Thanks Mr. Makkad, plz go through:----

) This Writ Petition is maintainable as in Harshad Govardhan Sondagar Vs. International Assets Reconstruction Co. Ltd. & Ors, 03 April, 2014, in paragraph 29 the Honorable Supreme Court held: -
“In our view, therefore, the decision of the Chief Metropolitan Magistrate or the District Magistrate can be challenged before the High Court under Articles 226 and 227 of the Constitution by any aggrieved party and if such a challenge is made, the High Court can examine the decision of the Chief Metropolitan Magistrate or the District Magistrate, as the case may be, in accordance with the settled principles of law."

Now let me know what is your take. In fact , I am opting WRIT only because I am already late.

Raj Kumar Makkad (Expert)
28 January 2020

There is no dispute that any person, including a borrower, aggrieved by any of the measures referred to in sub-section (4) of section 13 of the SARFAESI Act has a right to prefer an appeal under section 17 before the Debt Recovery Tribunal. It is now an established proposition of law that the order passed under section 14 of the Act is a post-section 13(4) action and is an appealable order. However, it is a settled proposition of law that alternative remedy is no bar from filing a writ petition in cases where there has been denial of natural justice or if an action is without jurisdiction or there is a challenge to the vires of any statute.

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