Writ Jurisdiction Not Maintainable in SARFAESI Matters where Debts Recovery Tribunal has the Exclusive Remedy
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REEDLAW Legal News Network reports: In a significant ruling, the Kerala High Court reaffirmed that the writ jurisdiction under Article 226 of the Constitution is not maintainable in matters governed by the SARFAESI Act when an effective alternative statutory remedy is available before the Debts Recovery Tribunal (DRT) under Section 17. The Court underscored that secured creditors, once in lawful possession of a secured asset, cannot be divested of such possession unless the borrower satisfies the full outstanding dues, thereby reinforcing the principle of alternative remedy and procedural discipline under the SARFAESI framework.
The Kerala High Court Division Bench comprising Justice Anil K. Narendran and Justice Muralee Krishna S., while adjudicating a Writ Appeal, held that writ jurisdiction under Article 226 is not maintainable in SARFAESI Act matters where an efficacious statutory remedy exists before the Debts Recovery Tribunal under Section 17. The Bench observed that the SARFAESI Act provides a comprehensive mechanism for borrowers to challenge measures taken by secured creditors, and courts should refrain from invoking writ jurisdiction except in exceptional circumstances. It further held that the possession of a secured asset by the creditor cannot be disturbed unless the borrower fully discharges the outstanding debt.
The Appellants had approached the High Court by way of a writ appeal under Section 5(i) of the Kerala High Court Act, 1958, challenging the judgment dated 31 July 2025 passed by the learned Single Judge in a writ petition filed by the Respondent. The Respondent had availed a business loan of Rs. 16,00,000 from the Financial Creditor by depositing title deeds of property as security. Upon default, proceedings were initiated under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), and possession of the secured asset was taken on 17 March 2025. The Respondent then filed a writ petition under Article 226 of the Constitution seeking, inter alia, an instalment facility, release of the mortgaged property, and stay of the SARFAESI proceedings.
The learned Single Judge had, on 31 July 2025, disposed of the writ petition by permitting the Respondent to pay Rs. 4,00,000 by 1 September 2025, upon which the Financial Creditor was directed to return possession of the secured asset. The balance overdue amount, with interest and charges, was ordered to be repaid in 12 equal monthly instalments commencing from 1 October 2025. The learned Judge also directed that all coercive proceedings remain in abeyance, subject to compliance with the repayment conditions.
Aggrieved by this, the Appellants contended that the impugned directions were unsustainable as the secured asset had already been repossessed prior to the filing of the writ petition, and therefore, possession could not have been restored without full clearance of dues. It was argued that an effective statutory remedy was available under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal (DRT) and that invoking writ jurisdiction under Article 226 was impermissible. Reference was made to judgments of the Supreme Court, including Punjab National Bank v. O.C. Krishnan and Others, 2001(3) Bank CLR 1 (SC) and South Indian Bank Limited and Others v. Naveen Mathew Philip and Another Etc. Etc., REEDLAW 2023 SC 04201, which held that writ petitions in SARFAESI matters are not maintainable when a statutory appellate mechanism exists.
The Court observed that the possession of the secured asset had been taken much before the writ petition was filed, and the Respondent had already failed to comply with an earlier One Time Settlement extended pursuant to a previous judgment. Considering the settled legal position in Naveen Mathew Philip and other Supreme Court precedents, the Court held that the writ jurisdiction under Article 226 could not be invoked in such circumstances. The proper remedy for the borrower lay before the DRT under Section 17 of the SARFAESI Act.
Accordingly, the Division Bench found no reason to uphold the judgment of the learned Single Judge. The writ appeal was allowed, and the judgment dated 31 July 2025 in the writ petition was set aside. The writ petition filed by the Respondent was dismissed as not maintainable, without prejudice to the borrower’s right to avail the statutory remedy before the Debts Recovery Tribunal against the measures taken by the Financial Creditor and the Authorised Officer under the SARFAESI Act.
Mr. P.C. Sasidharan, Advocate, represented the appellants.
Mr. Anilkumar V., Advocate, appeared for the Respondent.
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