The bank or the Ii nancial inst it ut ion seeki ng t o recover debt Irom a borrower can

make an applicat ion t o t he tribunal concer ned, whereupon summons are sent by
it t o t he deIendant. AIt er gi vi ng hi m an opport unity oI bei ng heard t he tribunal
adjudicat es the clai m by passing an order. II t he clai m is proved t he tribunal
adjudicat es the clai m by passing an order. II t he clai m is proved t he tribunal will
issue a recovery cert iIicat e. No court or t he ot her aut horit y shall have t he
jurisdiction or powers t o ent ert ain and deci de such clai ms oI Banks and
Financial Inst it ut i ons.
Recent ly in t he year 2002 anot her si milar Act, Securit izat ion and Reconstruct ion
oI t he Iinancial asset s and enIorcement oI security int erest act 2002 was passed
Ior t he beneIit oI banks and Iinancial inst itutions maki ng recover y easi er and
speedi er under it. Very recent l y t he DRT Rules 1993 have also been amended
omitt ing t he most controversial rule 10 and changi ng cert ain ot her provisi ons.
l have personally seen some cases where Lhe borrower ls lefL wlLh
no effecLlve remedy before Lhe Debt kecovery1r|buna| compelllng
Lhe borrower Lo approach Lhe Plgh CourL under ArLlcle 227 of Lhe
ConsLlLuLlon of lndla more ofLen and under ArLlcle 226 of Lhe
ConsLlLuLlon of lndla aL Llmes


The jurisdiction of High Court and the Civil Courts in respect of action initiated by the Bank under
the provisions of SARFAESI Act, 2002 is almost settled now. There should be a careful
understanding and interpretation of the legal position in this regard. There are judgments of
Supreme Court and High Courts emphasizing the need of exercising due care while entertaining
Writ Petitions under Article 226 of Constitution of India in respect of SARFAESI cases. However, it
doesnt mean that the High Courts should not entertain any Writ Petition under Article 226 of
Constitution of India in respect of SARFAESI cases. Depending upon the facts of each and every
case, the High Court may come to a conclusion as to whether to entertain a Writ Petition or not in
respect of SARFAESI cases. There was a practice of filing Writ Petitions earlier in respect of
SARFAESI cases and even High Courts used to entertain such Petitions. However, there is a
consistency in this regard now and the High Court will normally hesitate to entertain Writ
Petitions in respect of SARFAESI matters under Article 226 of Constitution of India in view of clear
alternative remedy under section 17 of SARFAESI Act, 2002 before the Debt #ecovery Tribunal.
The issue as to whether the remedy before Debt #ecovery Tribunal is effective or not is a
different issue altogether. In many cases, the borrower or litigant used to get an interim stay of
SARFAESI action in his Writ Petition under Article 226 of Constitution of India, however, the Writ
Petition will soon gets dismissed. This is what happening now when a litigant/borrower approaches
the HighCourt challenging the action initiated by the Bank under the provisions of SARFAESI Act,
2002. It is settled legal proposition that a Writ Petition under Article 226 of Constitution of India is
not maintainable where there is an efficacious alternative remedy. Cleverly, in all cases, it may be
contended that though there is an alternative remedy, the same is not efficacious. These
contentions are not accepted normally except in exceptional cases warranting the High Court to
exercise its extraordinary jurisdiction under Article 226 of Constitution of India. Why litigants
approach the High Courts frequently in respect of SARFAESI matters is that it is not costly filing a
Writ Petition and there is a need to pay a Court Fee when a borrower/litigant approaches the
Debt #ecovery Tribunal under section 17 of SARFAESI Act, 2002. Again, there will be lot of work
pressure in High Court and if once a Writ Petition is entertained or admitted, it will take lot of
time to look at the matter again and to dispose of the case. However, the practice is different now
in respect of SARFAESI matters and even the Bank takes due precaution in defending Writ
Petitions challenging the Banks action under the provisions of SARFAESI Act, 2002.
On the same footing, the litigants/borrowers do approach Civil Courts challenging the action
initiated by the Bank under the provisions of SARFAESI Act, 2002 despite the clear bar under
Section 34. There is confusion and there are complications in this regard. The jurisdiction of
Civil Court is not completely overruled in respect of SARFAESI matters and limited jurisdiction is
upheld even in the land-mark Mardia Chemicals case. Despite ruling in favour of limited jurisdiction
of Civil Courts, it is really difficult to maintain a Civil Suit before a Civil Court in respect of
SARFAESI cases. Again it is very difficult to rule against the Civil Courts jurisdiction based on the
Banks reference to the provisions of SARFAESI Act, 2002. It all depends upon the facts and
circumstances of the case.
The borrower/litigants may not be able to get an effective remedy under the provisions of
SARFAESI Act, 2002 before the Debt #ecovery Tribunal and Debt#ecovery Appellate Tribunal.
There may be lot of work pressure before the DRT and DRAT, they may not understand the
seriousness at the grievance of the borrower in some cases and it may be attributed to the work
pressure in most of the cases. That is why; many Writ Petitions and Petitions under Article 227 of
Constitution of India were filed even in respect of cases which are pending before the
Debt #ecovery Tribunal or the Debt #ecovery Appellate Tribunal under the provisions of
SARFAESI Act, 2002. When the litigant/borrower approaches the right forum as provided in the
statute and then approaches the High Court on the ground that the remedy is really not
efficacious, then, the High Court may give directions to the Debt #ecovery Tribunal or the
Debt #ecovery Appellate Tribunal. It can not be said that the borrower/litigant is always wrong
and Bank is always right. There are serious allegations against the Bank Officials too in
many casesand there are allegations at the manner in which the Bank conducts the auctions or
sells the `secured asset through Private Treaty.
The litigants/borrowers may not be aware of the legal position and technicalities. Many feel that
the Bank will be automatically restrained if the borrower approaches the High Court by filing a
Writ Petition or files Civil Suit before a Civil Court. Its not at all true and the borrowers may
actually be prejudiced by approaching the High Court and Civil Court without approaching the
Debt #ecovery Tribunal or Debt #ecovery Appellate Tribunal when they have a grievance at the
Banks action under the provisions of SARFAESI Act, 2002. For example, the litigant/borrower may
have a very good case against the Bank and despite having good case; the borrower might have
chosen to file Writ Petitions and Civil Suit. The Bank proceeds under the provisions of SARFAESI
Act, 2002 despite the pendency of Writ Petitions and Civil Suit unless there is a specific restraint
order. There may be a finding in the Writ Petition or the Civil Suit against the borrower that he
approaches the High Court with wrong intention despite having clear alternative remedy under
section 17 of SARFAESI Act, 2002. All this attitude of the litigant/borrower may work against the
litigant/borrower despite the fact that he has a genuine grievance against the Bank. This is what
happening in most of thecases today. The litigant/borrower keep on approaching High Court or
the Civil Court and in the meanwhile the Bank proceeds with completion of the procedure in
proceeding against the `Secured Asset under the provisions of SARFAESI Act, 2002. Then, it would
be difficult for the litigant/borrower to turn the clock back and to explain as to why he did not
approach the Debt #ecovery Tribunal under Section 17. The litigant/borrower may also plead at
the professional advice and may claim that he has acted as per the professional advice, but, those
issues are not considered at all by the Courts except in exceptional cases.
Thus, the borrower should be very careful in raising his grievance against the Bank and a wrong
approach may really cost him a lot.
Note: the views expressed are my personal and a view point only.