(Prayer: This Writ Appeal is filed u/S 4 of the Karnataka High Court Act, praying to set aside the final order dated 29/08/2023 passed in WP No.19133/2023 and pass such other order as deem fir and proper.)

CAV Judgment

Vijaykumar A. Patil, J.

1. This appeal is filed under Section 4 of the Karnataka High Court Act, 1961, challenging the order dated 29.08.2023 passed by the learned Single Judge in W.P.No.19133/2023 (GM-RES).

2. Sri.X.M.Joseph, learned counsel appearing for the appellant submits that the learned Single Judge, without appreciating the fact that the appellant is neither a borrower nor a guarantor to the loan in question and also without appreciating the pleading and the material on record, has proceeded to dismiss the writ petition. It is submitted that the fundamental rights of the appellant are violated. Hence, the remedy under Article 226 of the Constitution of India would lie. It is further submitted that the respondent No.1 has played a mischief and obtained the orders under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'the SARFAESI Act'). It is also submitted that the proviso to Section 14 of the SARFAESI Act mandates an affidavit. However, no such affidavit is filed and without considering the same, the learned Magistrate passed an order under Section 14 of the SARFAESI Act. It is contended that the appellant obtained financial assistance from the respondent No.3 by executing a conditional sale deed and thereafter, the entire amount was refunded. However, the respondent No.3 evaded execution of the cancellation of sale deed which compelled the appellant to file O.S.No.3299/2019. It is further contended that the respondent No.1 without knowledge of the appellant, granted loan to the respondent No.3 and on default, the proceedings were initiated, which is impermissible. Hence, he seeks to allow the appeal by granting the reliefs sought in the writ petition.

3. We have heard the arguments of the learned counsel for the appellant and meticulously perused the material available on record. We have given our anxious consideration to the submissions made by the learned counsel for the appellant.

4. The appellant filed a writ petition seeking the following reliefs:

          "a) To declare that the first plaintiff is absolute owner in peaceful possession and enjoyment of the suit schedule property.

          b) To direct the first defendant to cancel registered Sale Deed dated 23.08.2018, registered as Document No.HLS-1-02681/2018-19 of Book-I, stored in C.D. No.HLSD 166, registered in the office of the Sub-Registrar, Shivajinagar (Halsuru), Bengaluru, executed by the first plaintiff in favour of first defendant in respect of schedule property.

          c) To grant permanent injunction restraining the defendants, their agents, servants, representatives or any person or persons claiming thorough or under them from interfering the peaceful possession and enjoyment of the plaintiffs and dispossessing the plaintiffs from the suit schedule property."

5. The learned Single Judge considered the contentions advanced and relegated the appellant to file an appeal under Section 17(4) of the SARFAESI Act. The contention of the appellant is that the appellant is neither a borrower nor a guarantor and hence, he cannot be relegated to the remedy of appeal. The said contention has no merit. A plain reading of Section 17 of the SARFAESI Act makes it clear that for 'any person' aggrieved by a notice under Section 13(4) or any action under Section 14, remedy lies under Section 17(4) of the SARFAESI Act. The Hon'ble Supreme Court in the case of UNITED BANK OF INDIA Vs. SATYAWATI TANDON AND ORS. (AIR 2010 SC 3413) at paragraph 17 held as under:

          "17. 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. 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 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."

6. The other contention of the appellant is that the appellant has borrowed a sum of Rs.65,00,000/- from the respondent No.3 and in lieu of the same has executed a conditional sale deed and on return of the said amount with interest, the respondent No.3 ought to have executed the deed of cancellation. In the meantime, a loan has been obtained from the respondent No.1 showing the appellant's property as security, hence, the initiation of proceedings under the provisions of the SARFAESI Act is not maintainable. The said contention is also liable to be rejected. The respondent No.1 being the financial institution issued a notice to the defaulter for recovery of loan amount and also initiated proceedings under Section 14 of the SARFAESI Act before the learned Magistrate. The records indicate that the learned Magistrate passed an order at Annexure-G under Section 14 of the SARFAESI Act appointing a Court Commissioner to take possession of the assets. The order of the learned Magistrate or the initiation of action by the respondent No.1 under the provisions of the SARFAESI Act can be challenged under Section 17(1) of the SARFAESI Act by raising all the contentions raised by the appellant in the writ petition and the writ appeal, we do not find any error or perversity in the impugned order. The learned Single Judge has reserved liberty to the appellant to avail the remedy of application within a period of four weeks and kept all the contentions open. We extend four weeks' time from today to file an application as ordered by the learned Single Judge. It is made clear that our observations recorded supra would not come in the way of the appellant agitating his right before the Tribunal independently. The appeal is devoid of merit and is accordingly rejected. Consequently, the pending interlocutory application stands disposed.

No order as to costs.