SARFAESI Act = No writ is maintainable due to alternative remedy= justified in dismissing the appellant’s writ petition on the ground of availability of alternative statutory remedy of filing an application under Section 17(1) of SARFAESI Act before the concerned Tribunal to challenge the action of the PNB in forfeiting the appellant’s deposit under Rule 9(5). -The appellant is, accordingly, granted liberty to file an application before the concerned Tribunal (DRT) under Section 17(1) of the SARFAESI Act, which has jurisdiction to entertain such application within 45 days from the date of this order.

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No. 19847 OF 2017
(ARISING OUT OF SLP (C) No. 33514/2016)
Agarwal Tracom Pvt. Ltd. …Appellant(s)
VERSUS
Punjab National Bank & Ors. …Respondent(s)
J U D G M E N T
Abhay Manohar Sapre, J.
1. Leave granted.
2. This appeal is directed against the final
judgment and order dated 11.05.2016 passed by
the High Court of Delhi at New Delhi in LPA No.699
of 2015 whereby the Division Bench of the High
Court dismissed the appeal filed by the appellant
herein for quashing the order dated 01.09.2015
2
passed by the Single Judge, which dismissed the
appellant’s W.P.(c) No.8314 of 2015.
3. The controversy involved in the appeal centers
around the short facts and is essentially a legal one.
However, few relevant facts need mention, in brief,
to appreciate the controversy.
4. Respondents-Punjab National Bank(hereinafter
referred to as “PNB”) is a Nationalised Bank. The
PNB had given loan facility to a Company called
“M/s India Iron & Steel Corporation Limited” (in
short, “Borrower”) for their business, which they
were carrying at a place called Noorpur Khirki,
Village Farid Nagar, Tehsil Dhampur, District Bijnor
(U.P.).
5. To secure the loan amount, the Borrower had
secured their assets, which consisted of the land,
factory building, plant and machinery situated at
Dhampur. The Borrower, however, failed to clear
their loan amount and became a defaulter in its
3
repayment. The PNB, therefore, invoked their
powers under Section 13(4) of the Securitization and
Reconstruction of Financial Assets and Enforcement
of Security Interest Act, 2002 (hereinafter referred to
as “SARFAESI Act”) and issued a public sale notice
in leading English newspapers for sale of the
mortgaged assets of the Borrower in the public
auction fixed for 17.06.2014 (Annexure-P-1). The
appellant herein was one of the bidders, whose bid
was declared the highest.
6. The appellant’s bid was accordingly accepted
by the PNB followed by execution of memorandum
of understanding between the appellant and the
PNB (Annexure P-4). The PNB also sent a letter to
the appellant stating that the entire plant,
machinery, land and the building is auctioned in
favour of the appellant. The letter also authorized
the appellant to dismantle and sell the scrap plant
and the machinery which was lying at the
4
Borrower’s factory’s premises after depositing the
necessary installment of sale amount, as agreed
upon between the parties in the memorandum of
understanding.
7. The appellant, however, failed to pay the
regular installments towards sale money in terms of
memorandum of understanding to PNB and sought
extension of time to pay and remove the scrap
material from the site.
8. This gave rise to the disputes between the
parties, namely, PNB, appellant (auction purchaser)
and the Borrower before the Debt Recovery Tribunal
(DRT), Lucknow being S.A. No 310 of 2014 wherein
an order was passed on 03.07.2014
(Annexure-P-11) directing the appellant not to
remove any material from the factory premises. The
appellant then wrote a letter to PNB requesting
them to refund their money with interest. This led to
another dispute between the parties which was filed
5
in the DRT and then before the appellate authorityDRAT
and finally, in the High Court at Allahabad in
Writ Petition(c) No. 22246/2015 by the Borrower.
This writ petition was disposed of finally on
29.05.2015 observing therein that since the
appellant had failed to comply with the term of
memorandum of understanding inasmuch as the
appellant having failed to deposit the requisite
installment of sale money, the PNB cannot proceed
with the auction sale held on 17.06.2014 and nor
can the appellant be permitted to remove the scrap
material lying in the factory premises.
9. This led the PNB to forfeit the appellant’s
deposit by their letter dated 26.06.2015
(Annexure-P25). The appellant objected to the action
of PNB by letters and then filed the writ petition in
the High Court of Delhi challenging therein the
action of PNB in forfeiting the appellant’s deposit of
money.
6
10. The Single Judge of the High Court, by order
dated 01.09.2015, dismissed the appellant’s writ
petition on the ground of availability of alternative
statutory remedy to the appellant of filing the
application under Section 17 of the SARFAESI Act
before the DRT to challenge the action of PNB in
forfeiting the deposit money of the appellant. The
Single Judge, therefore, declined to go into the
merits of the case.
11. The appellant, felt aggrieved of the order of the
Single Judge, filed intra Court appeal (LPA 699 of
2015) before the Division Bench. By impugned
judgment, the Division Bench dismissed the appeal
and confirmed the order of the Single Judge. The
Division Bench was also of the view that the writ
petition filed by the appellant was rightly not
entertained by the Single Judge (writ Court) on the
ground that the proper remedy of the appellant was
to file an application before the DRT under Section
7
17 of the SARFAESI Act to question the action of
forfeiture made by PNB and not in filing the writ
petition under Article 226 of the Constitution. Felt
aggrieved, the auction purchaser has filed the
present appeal by way of special leave in this Court.
12. Heard Mr. Jaideep Gupta, learned senior
counsel for the appellant and Mr. M.T. George,
learned counsel for the respondents.
13. Mr. Jaideep Gupta, learned senior counsel
appearing for the appellant (auction purchaser)
while questioning the legality and correctness of the
view taken by the two Courts below contended that
the reasoning and the conclusion arrived at by the
writ Court and the Appellate Court is not correct
and hence deserves to be set aside. His main
submission was that the action impugned by the
appellant in their writ petition, namely, “forfeiture
of the deposit of money by PNB” is not one of the
measures specified under Section 13(4) of the
8
SARFAESI Act and, therefore, provisions of Section
17 of SARFAESI Act are not attracted so far as the
appellant’s right to challenge such action under
Section 17 before the DRT is concerned.
14. In other words, the submission was that in
order to attract the rigor of Section 17 of the
SARFAESI Act, it is necessary that the action
complained of by the party concerned must satisfy
the conditions set out in Section 13 (4). It was urged
that the “forfeiture of deposit” impugned in the writ
petition is not and nor it could be considered as one
of the measures falling in Section 13 (4) so as to
attract the rigor of Section 17 of the SARFAESI Act.
It was urged that the dispute in question was
essentially between the PNB (secured creditor) and
the auction purchaser (appellant) and arose after
the measures under Section 13(4) had been taken
by the secured creditor (PNB) against the borrower
and, therefore, the dispute in question fell outside
9
the purview of Section 13(4) and, in consequence,
fell out of purview of Section 17. In short, the
dispute in question had nothing to do with any of
the measures specified in Section 13(4).
15. It was further urged that reading of Section 17
would go to show that the application under Section
17 can be made to DRT by “any person” including
borrower to challenge any of the measures referred
to in Section 13(4) once taken by the secured
creditor. However, since forfeiture of the amount
made by the secured creditor against the auction
purchaser is not one of the measures under Section
13(4) and hence, the action of forfeiture made by the
secured creditor cannot be challenged by the
auction purchaser under Section 17 of the
SARFAESI Act by filing an application. It was
urged that under these circumstances the appellant
had rightly filed the writ petition under Article
226/227 of the Constitution to challenge the action
10
of forfeiture of deposit money in the High Court,
that being the only remedy available to them and,
therefore, the writ petition should have been
entertained for its hearing on merits by the writ
court. It is these submissions, which were
elaborated by the learned counsel for the appellant
by pointing out relevant provisions of the SARFAESI
Act.
16. In reply, learned counsel for the respondents
(PNB) supported the impugned judgment and
contended that the action impugned in the writ
petition does attract Section 13(4) read with the
Rules framed thereunder and hence the remedy of
the appellant lies in approaching DRT by filing an
application under Section 17 of the SARFAESI Act
as was rightly held by the two Courts below.
17. Having heard the learned counsel for the
parties and on perusal of the record of the case, we
find no merit in the appeal. In other words, the view
11
taken by the High Court appears to be just and
reasonable and hence does not call for any
interference.
18. The short question that arise for consideration
in this appeal is whether the High Court was
justified in holding that the remedy of the appellant
(auction purchaser) lies in challenging the action of
the secured creditor (PNB) in forfeiting the deposit
by filing an application under Section 17 of the
SARFEASI Act before the DRT or the remedy of
auction purchaser is in filing the writ petition under
Article 226/227 of the Constitution of India to
examine the legality of such action.
19. Section 13(4) and Section 17 of the SARFAESI
Act, Rules 8 and 9 of the Security
Interest(Enforcement) Rules,2002(hereinafter
referred to as “the Rules”) to the extent they are
relevant for deciding the question involved in the
appeal are quoted below:
12
Section 13(4)
13. Enforcement of security interest-
(1) to (3A)……………………………………………….
(4) In case the borrower fails to discharge his
liability in full within the period specified in
sub-section (2), the secured creditor may take
recourse to one or more of the following
measures to recover his secured debt,
namely:-
(a) take possession of the
secured assets of the
borrower including the right
to transfer by way of lease,
assignment or sale for
realizing the secured asset;
(b) take over the management
of the business of the
borrower including the right
to transfer by way of lease,
assignment or sale for
realizing the secured asset:
Provided that the right
to transfer by way of lease,
assignment or sale shall be
exercised only where the
substantial part of the
business of the borrower is
held as security for the
debt:
Provided further that
where the management of
whole, of the business or
part of the business is
severable, the secured
creditor shall take over the
management of such
business of the borrower
which is relatable to the
security or the debt;
13
(c) appoint any person
(hereafter referred to as the
manager), to manage the
secured assets the
possession of which has
been taken over by the
secured creditor;
(d) require at any time by
notice in writing, any
person who has acquired
any of the secured assets
from the borrower and from
whom any money is due or
may become due to the
borrower, to pay the secured
creditor, so much of the
money as is sufficient to
pay the secured debt.”
Section 17
“17. Application against measures to recover
secured debts-(1) Any person (including
borrower), aggrieved by any of the measures
referred to in sub-section (4) of section 13
taken by the secured creditor or his
authorized officer under this Chapter, may
make an application along with such fee, as
may be prescribed to the Debts Recovery
Tribunal having jurisdiction in the matter
within forty-five days from the date on which
such measures had been taken:
(2) The Debts Recovery Tribunal shall
consider whether any of the measures
referred to in sub-section (4) of section 13
taken by the secured creditor for
enforcement of security are in accordance
with the provisions of this Act and the rules
made thereunder.
14
(3) If, the Debts Recovery Tribunal, after
examining the facts and circumstances of the
case and evidence produced by the parties,
comes to the conclusion that any of the
measures referred to in sub-section (4) of
section 13, taken by the secured creditor are
not in accordance with the provisions of this
Act and the rules made thereunder, and
require restoration of the management or
restoration of possession, of the secured
assets to the borrower or other aggrieved
person, it may, by order,-
(a) to (c)……………………
(4) If, the Debts Recovery Tribunal declares
the recourse taken by a secured creditor
under sub-section (4) of section 13, is in
accordance with the provisions of this Act
and the rules made thereunder, then,
notwithstanding anything contained in any
other law for the time being in force, the
secured creditor shall be entitled to take
recourse to one or more of the measures
specified under sub-section (4) of section 13
to recover his secured debt.
(4A)……………………………………………………..
(5)………………………………………………………..
(6)………………………………………………………..
(7) Save as otherwise provided in this Act,
the Debts Recovery Tribunal shall, as far as
may be, dispose of application in accordance
with the provisions of the Recovery of Debts
Due to Banks and Financial Institutions Act,
1993(51 of 1993) and the rules made
thereunder.
Rule 8
8. Sale of immovable secured assets-
(1) to (8)………………………………………………….
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Rule 9
9. Time of sale, issue of sale certificate and
delivery of possession, etc.-
(1) to (4)…………………………………………………
(5) In default of payment within the period
mentioned in sub-rule (4), the deposit shall be
forfeited to the secured creditor and the
property shall be resold and the defaulting
purchaser shall forfeit all claim to the
property or to any part of the sum for which
it may be subsequently sold.
(6) On confirmation of sale by the secured
creditor and if the terms of payment have
been complied with, the authorized officer
exercising the power of sale shall issue a
certificate of sale of the immovable property
in favour of the purchaser in the form given
in Appendix V to these rules.”
(Emphasis supplied)
20. Section 13(4) is invoked by the secured
creditor against their borrower when the borrower
fails to discharge his liability in full within the
specified time. The secured creditor then can take
possession of the assets of the borrower, transfer
the assets by lease or by assignment or sell the
assets to recover the outstanding dues under clause
(a).
16
21. The secured creditor under clause (b) can also
take over the management of the business of the
borrower or transfer by way of lease, assignment or
sale. However such power can be invoked only when
the creditor holds substantial part of the borrower’s
business as security and further it satisfies the
condition set out in second proviso.
22. The secured creditor under clause (c) can also
appoint any manager to manage the borrower’s
business and lastly under clause (d), the secured
creditor can ask any person to whom the money is
due or become due to pay to the secured creditor
instead of paying to borrower which is sufficient to
satisfy the debt.
23. So far as Section 17 is concerned, it provides a
remedy to a person who is aggrieved by the
measures taken by the secured creditor or his
authorized officer under Section 13(4) in relation to
secured assets of the borrower. It says that “any
17
person (including borrower)” may make an
application to the DRT within 45 days from the date
of measures taken under Section 13(4). Sub-section
(2) of Section 17 was added by way of amendment
w.e.f. 11.11.2004. It provides that the Tribunal, on
such application being made under Section 17(1),
shall consider whether the measures referred to and
taken under Section 13(4) by the secured creditor
are in accordance with the “provisions of this Act
and the Rules made thereunder”. Similarly, subsections
(3), (4) and (7) of Section 17 which deal
with the power of the DRT also use the expression
“in accordance with provisions of the Act and the
Rules made thereunder”.
24. Rule 8, which has 8 sub-rules, deals with the
manner of sale of immovable secured assets and
provides detail procedure as to how and in what
manner the sale of secured assets, is to be held.
18
Rule 9 deals with time of sale, issue of sale
certificate and delivery of possession
25. Rule 9(6) empowers the authorized officer to
issue sale certificate in favour of the purchaser.
Rule 9(9) then empowers the authorized officer to
deliver the properties to the purchaser whereas Rule
9(10) empowers the authorized officer to mention in
sale certificate that the property is free from
encumbrances.
26. So far as this case is concerned, sub-rule (5) of
Rule 9 is relevant. It provides that, if the auction
purchaser commits any default in payment of sale
consideration within the time specified, the deposit
made by auction purchaser shall be “forfeited” to
the secured creditor and the auctioned property
shall be resold and the defaulting purchaser shall
“forfeit” all claims to the property or its part of the
sum for which it may be sold subsequently.
19
27. Reading of the aforementioned Sections and
the Rules and, in particular, Section 17(2) and Rule
9(5) would clearly go to show that an action of
secured creditor in forfeiting the deposit made by
the auction purchaser is a part of the measures
taken by the secured creditor under Section 13(4).
28. The reason is that Section 17(2) empowers the
Tribunal to examine all the issues arising out of the
measures taken under Section 13(4) including the
measures taken by the secured creditor under Rules
8 and 9 for disposal of the secured assets of the
borrower. The expression “provisions of this Act
and the Rules made thereunder” occurring in
sub-sections (2), (3), (4) and (7) of Section 17 clearly
suggests that it includes the action taken under
Section 13(4) as also includes therein the action
taken under Rules 8 and 9 which deal with the
completion of sale of the secured assets. In other
words, the measures taken under Section 13 (4)
20
would not be completed unless the entire procedure
laid down in Rules 8 and 9 for sale of secured assets
is fully complied with by the secured creditor. It is
for this reason, the Tribunal has been empowered
by Section 17(2),(3) and (4) to examine all the steps
taken by the secured creditor with a view to find out
as to whether the sale of secured assets was made
in conformity with the requirements contained in
Section 13(4) read with the Rules or not?
29. We also notice that Rule 9(5) confers express
power on the secured creditor to forfeit the deposit
made by the auction purchaser in case the auction
purchaser commits any default in paying
installment of sale money to the secured creditor.
Such action taken by the secured creditor is, in our
opinion, a part of the measures specified in Section
13(4) and, therefore, it is regarded as a measure
taken under Section 13(4) read with Rule 9(5). In
our view, the measures taken under Section 13(4)
21
commence with any of the action taken in clauses
(a) to (d) and end with measures specified in Rule 9.
30. In our view, therefore, the expression “any of
the measures referred to in Section 13(4) taken by
secured creditor or his authorized officer” in Section
17(1) would include all actions taken by the secured
creditor under the Rules which relate to the
measures specified in Section13(4).
31. The auction purchaser (appellant herein) is
one such person, who is aggrieved by the action of
the secured creditor in forfeiting their money. The
appellant, therefore, falls within the expression “any
person” as specified under Section 17(1) and hence
is entitled to challenge the action of the secured
creditor (PNB) before the DRT by filing an
application under Section 17(1) of the SARFAESI
Act.
32. Learned counsel for the appellant placed
reliance on the decision of the Division Bench of
22
High Court of Bombay in Umang Sugars Pvt. Ltd.
vs. State of Maharashtra & Anr., 2014(4) Mh.L.J.
113 which, according to him, supports his
submission. We have gone through the decision
and unable to agree with the view taken therein.
Their Lordships, while holding that Section 17(1)
does not apply to auction purchaser and, therefore,
writ petition filed by him can be entertained in such
cases, did not notice the Rules, which deal with the
measures taken under Section 13(4) and nor
considered its effect on the measures.
33. In United Bank of India vs. Satyawati
Tondon & Ors., (2010) 8 SCC 110, this Court had
the occasion to examine in detail the provisions of
the SARFAESI Act and the question regarding
invocation of the extraordinary power under Article
226/227 in challenging the actions taken under the
SARFAESI Act. Their Lordships gave a note of
caution while dealing with the writ filed to challenge
23
the actions taken under the SARFAESI Act and
made following pertinent observations which, in our
view, squarely apply to the case on hand:
“42. There is another reason why the
impugned order should be set aside. If
Respondent 1 had any tangible grievance
against the notice issued under Section 13(4)
or action taken under Section 14, then she
could have availed remedy by filing an
application under Section 17(1). The
expression “any person” used in Section
17(1) is of wide import. It takes within its
fold, not only the borrower but also the
guarantor or any other person who may be
affected by the action taken under Section
13(4) or Section 14. Both, the Tribunal and
the Appellate Tribunal are empowered to pass
interim orders under Sections 17 and 18 and
are required to decide the matters within a
fixed time schedule. It is thus evident that
the remedies available to an aggrieved person
under the SARFAESI Act are both expeditious
and effective.
43. Unfortunately, the High Court overlooked
the settled law that the High Court will
ordinarily not entertain a petition under
Article 226 of the Constitution if an effective
remedy is available to the aggrieved person
and that this rule applies with greater rigour
in matters involving recovery of taxes, cess,
fees, other types of public money and the
dues of banks and other financial
institutions. In our view, while dealing with
the petitions involving challenge to the
action taken for recovery of the public dues,
etc. the High Court must keep in mind that
the legislations enacted by Parliament and
24
State Legislatures for recovery of such dues
are a code unto themselves inasmuch as they
not only contain comprehensive procedure
for recovery of the dues but also envisage
constitution of quasi-judicial bodies for
redressal of the grievance of any aggrieved
person. Therefore, in all such cases, 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 statute.
44. While expressing the aforesaid view, we
are conscious that the powers conferred upon
the High Court under Article 226 of the
Constitution to issue to any person or
authority, including in appropriate cases, any
Government, directions, orders or writs
including the five prerogative writs for the
enforcement of any of the rights conferred by
Part III or for any other purpose are very wide
and there is no express limitation on exercise
of that power but, at the same time, we
cannot be oblivious of the rules of
self-imposed restraint evolved by this Court,
which every High Court is bound to keep in
view while exercising power under Article
226 of the Constitution.
45. It is true that the rule of exhaustion of
alternative remedy is a rule of discretion and
not one of compulsion, but it is difficult to
fathom any reason why the High Court
should entertain a petition filed under Article
226 of the Constitution and pass interim
order ignoring the fact that the petitioner
can avail effective alternative remedy by
filing application, appeal, revision, etc. and
the particular legislation contains a detailed
mechanism for redressal of his grievance.”
25
34. In the light of foregoing discussion, we are of
the considered opinion that the Writ Court as also
the Appellate Court were justified in dismissing the
appellant’s writ petition on the ground of availability
of alternative statutory remedy of filing an
application under Section 17(1) of SARFAESI Act
before the concerned Tribunal to challenge the
action of the PNB in forfeiting the appellant’s
deposit under Rule 9(5). We find no ground to
interfere with the impugned judgment of the High
Court.
35. The appellant is, accordingly, granted liberty to
file an application before the concerned Tribunal
(DRT) under Section 17(1) of the SARFAESI Act,
which has jurisdiction to entertain such application
within 45 days from the date of this order. In case,
if the appellant files any such application, the
Tribunal shall decide the same on its merits in
accordance with law uninfluenced by any of the
26
observations made by this Court and the High
Court in the impugned judgment.
36. With these observations and liberty granted to
the appellant, the appeal fails and is accordingly
dismissed.
……………………………………..J.
[R.K. AGRAWAL]

……………………………………….J.
[ABHAY MANOHAR SAPRE]
New Delhi;
November 27, 2017