High Courts cannot entertain any writ petition challenging the order of the Debts Recovery Tribunal unless any exceptional circumstances arise

Karnataka High Court: While deciding the present petition wherein the issue was that whether a writ petition challenging an order passed by the Debts Recovery Tribunal (DRT) while disposing an appeal filed under Section 17 of the SARFAESI Act, 2002, is maintainable, especially when Section 18 of the 2002 Act offers the alternative remedy, a three judge Bench comprising of S.A. Nazeer, A.B. Hinchigeri and A.N. Venugopala Gowda, JJ., held that unless the Court is convinced that a case falls under exceptional circumstances, any writ petition challenging the order passed by the DRT while exercising its jurisdiction under Section 17, cannot be entertained by the High Courts in the light of the mandate of Article 141 of the Constitution. The Court further declared Hotel Vandana Palace v. The Authorised Officer, 2011 SCC OnLine Kar 3928, with regard to the maintainability of a writ petition without exhausting the remedy as provided by Section 18 of the 2002 Act, to be per incuriam.

The petitioners filed an appeal to the High Court against the order of the DRT without resorting to the remedy provided under Section 18 of SARFAESI Act, as it required ‘deposit of huge court fee, which is neither efficacious nor feasible’. The Chief Justice of Karnataka High Court eventually had to constitute the present Bench to decide the issue as there existed two conflicting opinions on the point.

The Bench took into consideration two conflicting views of this Court on this point in Hotel Vandana Palace case and Lily Joseph v. The Authorised Officer, 2013 SCC OnLine Kar 1450  where the writ petition challenging the order of DRT was declined in view of the existence of an alternative remedy under Section 18. The Court observed that the Lily Joseph case was correctly decided in the light of the principles laid down by the Supreme Court in Kanaiyalal Lalchand Sachdev v. State of Maharashtra (2011) 2 SCC 782. In view of the constitutional mandate under Article 141 which states that the law declared by the Supreme Court is to be binding on all courts, the Bench observed that Vanadana Palace case had been wrongly decided. It was further held that the legislative intent of the SARFAESI Act and the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 does not allow the Court to entertain any writ petition challenging a DRT order unless any exceptional circumstances like- statutory body not acting in accordance with the provisions of the Act in question; defiance of principles of judicial procedure etc. arise. [M/s. Deepak Apparels Pvt. Ltd. v. City Union Bank Ltd., 2016 SCC OnLine Kar 686, decided on 22.03.2016]

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