Madras HC | Writ petition challenging Sale Certificate issued in proceedings under SARFAESI Act not maintainable

Madras High Court: A Bench of V.K.Tahilramani, CJ and M. Duraiswamy, J. dismissed a writ petition filed under Article 226 seeking to quash the subject Sale Certificate issued by the Authorised Officer of IDBI Bank.

The petition committed default in repaying the loan amount to IDBI Bank. Consequently, his property was auctioned and a Sale Certificate was issued in favour of the purchaser. The petitioner, represented by his counsel R. Amardeep, challenged the Sale Certificate contending that an insolvency petition on the file of Principal Sub Court. Salem filed by one Raji (Respondent 1) was pending and therefore the said certificate had to be set aside.

The High Court relied on Supreme Court decisions in State Bank of Travancore v. Mathew K.C.,(2018) 3 SCC 85Agarwal Tracom (P) Ltd. v. Punjab National Bank, (2018) 1 SCC 626 and ICICI Bank Ltd. v. Umajanta Mohapatra, 2018 SCC OnLine SC 2349 to hold that the present writ petition was not maintainable. It was clear from the cases relied on that the aggrieved parties cannot challenge the proceedings under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) directly by filing a writ petition under Article 226 of the Constitution without exhausting the appeal remedy available to them. Accordingly, the Court held, “Since the petitioner has not challenged the Sale Certificate before the Debts Recovery Tribunal under Section 17 of the SARFAESI Act, the writ petition cannot be entertained.”The writ petition was thus dismissed. [Rajagopal v. Raji, 2019 SCC OnLine Mad 733, dated 11-03-2019]

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