The Supreme Court bench comprising Justices Dipankar Datta and Manoj Mishra held that a writ petition challenging a sale notice issued by a secured creditor under the SARFAESI Act, 2002 was not maintainable.
The Apex Court emphasized that the borrower had a remedy available before the Debts Recovery Tribunal, which was not pursued. Despite the delay in disposing of the secured asset by the secured creditor, the Court recognized the creditor's right to recover its dues. The Court proposed to stay the sale notice for a limited period and granted the borrower an opportunity to deposit a specified amount and present an improved settlement offer.
In the present case, the petitioner, a secured creditor, had issued a sale notice for a secured asset under Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The respondent, who was the borrower/ guarantor, challenged this sale notice through an interlocutory application filed in a pending Special Leave Petition.
The High Court had earlier directed the secured creditor to hand over physical possession of the secured asset to the borrower upon the deposit of Rs 10,00,000/-. However, this direction was stayed by the Supreme Court in a previous order. The borrower's counsel argued that the offer for a one-time settlement of Rs.20,00,000/- had been rejected by the secured creditor, following which the sale notice was issued.
The Supreme Court noted that the writ petition before the High Court was not maintainable according to its earlier decision in United Bank of India v. Satyawati Tondon and Others, REED 2010 SC 07202. The Court pointed out that the borrower had a remedy available before the jurisdictional Debts Recovery Tribunal under Section 17 of the Act, which was not pursued.
Despite more than six years passing since the impugned order was made by the High Court, the secured asset could not be disposed of by the secured creditor. The Court acknowledged that the secured creditor cannot be made to wait indefinitely for recovering its dues.
In light of these considerations, the Supreme Court proposed to stay the operation of the sale notice unconditionally for a period of four weeks. The borrower was granted liberty to deposit Rs.20,00,000/- with the secured creditor within three weeks. If the deposit was made, the sale notice would not be proceeded with further without the Court's leave. The borrower was also given three weeks to present an improved offer for settlement.
The Court ordered that the Special Leave Petition, along with the interlocutory application, be listed again on 28.07.2023 for further orders after reporting the developments in the meanwhile.