Paragraph numbers below are the court’s original numbering, recovered from the source text.
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).
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 (ct), the secured creditor can ask any person to whom the money is due or become due lb pay to the secured creditor instead of paying to borrower which is snfflcient 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 uf the borrower. It says that "any person (including borrower)" may make an application to the DRTwithin 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. l l.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, sub- sections (3), (4) and (7) of Section 17 which deal with the power of the ORT also use the expression "in accordance with provisions of the Act and the Rules made AGARWAL TRACOM PVT. LTD. v. PUNJAB NATIONAL BANK & ORS. [ABHAY MANOHAR SAPRE, J.] 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 secw·ed assets. is to be held. 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. Ruic 9(9) then empowers the authorized officer to deliver the properties to the purchaser whereas Ruic 9( I 0) 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-mle (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 c 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.
27. Reading of the aforementioned Sections and lhe Rules and, in patticular, Section 17(2) and Ruic 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 measw·es 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) 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 c (2017) l l S.C.R. 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 pLU'chascr 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 Ruic 9(5). Jn our view, the measures taken under Section 13(4) 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 secw·ed creditor or his authorized officer" in Section 17( I) would include all actions taken by the secured creditor under the Rules which relate to the measures specified in Section! 3( 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( I) 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 SARFAESIAct.
32. Learned counsel for the appellant placed reliance on the decision of the Division Bench of 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 lo agree with the view taken therein. Their Lordships, while holding that Section 17( I) 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 the actions taken under the SARFAESI Act and made following pertinent observations AGARWAL TRACOM PVT. LTD. v. PUNJAB NATIONAL BANK & ORS. [ABHAY MANOHAR SAPRE, J.] 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 arc 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. c 43. Unfortunately, the High Court overlooked the settled D 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, ccss, 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 State Legislatures for recovery of such dues arc 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 rcdrcssal of the grievance of any aggrieved person. Therefore, fo 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 arc conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or H c (2017] 11 S.C.R. 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 hy 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- imposc(I 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 thatthe 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 redrcssal of his grievance." 34. In the light of foregoing discussion, we arc 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) ofSARFAESIAct before the concerned Tribunal to challenge the action of the PNB in forfeiting the appellant's deposit under Ruic 9(5). We find no ground to interfere with the impugned judgment of the High Co mt. 35. The appellant is, accordingly, granted libe1tyto file an application before the concerned Tribunal (DRT) under Section 17( I) of the SARFAES! Act, which has jurisdiction to entc1tain 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 unint1ucnccd by any of the 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. Nidhi Jain Appeal dis1nisscd.