Reetobroto Kumar Mitra, J.:

1. On a very short factual conspectus, a rather interesting question of law has arisen.

2. The facts in a nutshell are summarised hereunder:

                    a. the petitioners had availed of a home loan for a sum of Rs. 13,20,800/- from the respondent no. 1 on September 19, 2023, against the security of an equitable mortgage.

                    b. Though the petitioners made certain payments towards liquidation of the loan, they were unable to clear the entire outstanding amount. Thus, there was a default on the part of the petitioners in repayment of the loan. The petitioners' account was classified as a nonperforming asset on September 3, 2024.

                    c. Upon the petitioners' credit facility being classified as a nonperforming asset, the respondent no. 1 issued a notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter the Act) on September 14, 2024. The demand in this notice by the respondent no. 1 from the petitioners was for recovery of a sum of Rs. 13,86,974.82/-.

3. It is in this factual conspectus that the writ petition has been filed challenging the authority of the respondent to invoke the provisions of the said Act.

4. The petitioners’ challenge questions the root of the authority of the respondent, which is a housing finance company registered under Section 29A of the National Housing Bank Act, 1987 (hereinafter the Act of 1987), to invoke the provisions of the SARFAESI Act for recovery of a secured debt below Rs. 20 lakhs. Consequentially, the petitioner challenges the usurpation of power by a statutory authority under the said Act at the behest of the respondent to receive, try, and entertain any application by a secured creditor classified as a NBFC below the threshold limit of Rs. 20 lakhs.

5. Mr. Proshit Deb ld. Advocate appearing for the petitioners has made his submissions which may be summarized as under:-

                    a. The respondent no. 1 is a HFC under the Act of 1987. It is duly registered under Section 29(A) of the Act of 1987.

                    b. Pursuant to the press release of August 13, 2019 by the Reserve Bank of India (hereinafter referred to as the RBI), all HFCs would be treated as one of the categories of NBFCs, as stated: “HFCs will henceforth be treated as one of the categories of Non-Banking Financial Companies (NBFCs) for regulatory purposes. Reserve Bank will carry out a review of the extant regulatory framework applicable to the HFCs and come out with revised regulations in due course.”

                    c. By a notification dated February 24, 2020, NBFCs were entitled to invoke the provisions of the said Act for secured debts of Rupees 50 lakhs and above.

                    d. The amendment of February 12, 2021 reduced the threshold amount to Rs. 20 lakhs, which means presently, a NBFC will only be able to invoke the provisions of the said Act if the secured debt is of Rs. 20 lakh and above.

                    e. Consequentially, the respondent no. 1 falls squarely within the ambit of the notification dated February 24, 2020, as modified by the notification dated February 12, 2021. Both notifications restrain any NBFC, as defined in clause (f) of Section 45-I of the Reserve Bank of India Act, 1934, having assets worth Rupees 100 crores and above, from invoking proceedings under the said Act unless the secured debt is of rupees 20 lakhs and above.

                    f. He has also placed reliance on the Master Direction issued by the RBI relating to Housing Finance Companies (Reserve Bank) Directions, 2021, to support his contention that a HFC has been defined to mean a NBFC as stipulated in Clause 4.1.17.

                    g. He has also placed reliance on the Master Circular issued by the RBI on January 5, 2022, to buttress his argument that a NBFC, includes a HFC registered under Section 29(A) of the Act of 1987 as a Housing Finance Company.

                    h. He has placed reliance on a RBI release—a list of NBFCs in the Upper Layer (NBFC-UL) under Scale Based Regulation for NBFCs—dated September 14, 2023, where the name of the respondent no. 1 has been specifically included at serial no. 6 as an NBFC - UL.

                    i. He has finally placed reliance on a judgment of the Division Bench of the Hon’ble High Court of Himachal Pradesh in Gupta Hardware Store and Ors. v. Union of India and Ors. , reported in 2025 ibclaw.in 40 HC, where the Hon’ble Court has held that the notifications of February 24, 2020 and February 12, 2021 will apply to NBFCs and financial institutions.

6. Ms. Soni Ojha, learned advocate appearing for the respondent, has presented a two-fold defence, which may be summarized as under:-

                    a. The first is in respect of maintainability of the Writ Petition as an alternative and efficacious remedy is available, and lies with the Debt Recovery Tribunal under the said Act.

                    b. The second is that the respondent No. 1, being a housing finance company and duly registered under Section 29A of the Act of 1987, is not a NBFC.

                    c. Respondent no. 1 cannot be defined as a NBFC as it is a HFC. Since it cannot be defined as a NBFC, the question of applicability of the two notifications of February 24, 2020, as amended by the notification of February 12, 2021, does not arise.

                    d. She has placed reliance on a notification dated June 17, 2021, of the Ministry of Finance, by which HFCs are to be treated as Financial Institutions for the purpose of the said Act.

                    e. She has referred to an update of the Master Direction of 2021, made on August 29, 2023.

                    f. She has also placed reliance on a decision of the Hon’ble High Court of Madhya Pradesh in Virendra Rathore and Ors. v. Tehsildar, District Mandsaur reported in 2024 SCC OnLine MP 3427, whereby the Hon’ble Court has held that on a holistic approach, the applicability of the said Act to a Housing Finance Company registered under Section 29A of the Act of 1987 applies, and not the notification.

7. I have heard learned counsel for the parties at length and considered the decisions relied upon by them. I have also considered the documents on record.

8. Adverting to the question of maintainability of the writ petition, it is not in dispute that where a litigant has a statutory remedy available to him as an alternative and efficacious mode for ventilating his grievances, the writ court would be loath to entertain a writ petition, particularly as in the case of any action under the said Act.

9. In the present case, the issue is not of a proceeding or process adopted under the said Act but hinges on the very root of the jurisdiction of the respondents to initiate a proceeding under the said Act. A bare question of law has arisen as to whether the respondent No. 1 has been classified as a NBFC and consequently, its rights and duties thereunder.

10. When a question of jurisdiction is raised as to the maintainability of a particular proceeding, going to the very root of a statutory authority's/tribunal's jurisdiction created under the statute, then the question of the self-imposed restriction by the writ court of requiring a party to avail the alternative and efficacious remedy, is a mere technicality.

11. Since the petitioner has challenged the invocation of the process by the respondent No. 1 under the said Act, it relates to the usurpation of power by a Tribunal, at the behest of the respondent No. 1. Clearly, this is a matter which requires to be decided in the present writ petition and there is no alternative or efficacious remedy available to the petitioner to challenge such usurpation of power.

12. If the writ petition is not entertained on the ground of maintainability as argued by Ms. Ojha, it implies that the petitioners would have to approach the Debt Recovery Tribunal under the said Act. If a remedy under the said Act is availed by the petitioners, it would necessitate that he forgo his challenge to the applicability of the Act, which he has presently raised in this writ petition. Clearly, in a matter where the invocation of the said Act itself is being questioned, the availability of a proceeding under that same Act cannot be construed as an alternative or efficacious remedy.

13. The only remaining question that falls for consideration is whether the respondent no. 1, a Housing Finance Company, can be held to be a NBFC and covered by the relevant notifications of February 24, 2020 and February 12, 2021 or not?

14. The RBI, in its press release dated August 13, 2019, clearly recorded that the Finance No. 2 Act, 2019 had amended the Act of 1987, conferring certain powers of regulation of HFCs with the RBI. Pursuant thereto, by this press release, the RBI brought within its fold all HFCs and directed that such HFCs will henceforth (from 2019) be treated as one of the categories of NBFCs. The RBI also directed that HFCs will continue to comply with the directions and instructions of the National Housing Bank (hereinafter NHB) till such time that the RBI issues a revised framework for the HFCs.

15. Relying on the press release of August 13, 2019, the petitioners have urged that a HFC would be bound by the notifications of February 24, 2020 and February 12, 2021, which set a threshold limit for a NBFC to invoke the provisions of the Act. Classified as a NBFC by the press release of August 13, 2019 issued by the RBI, the petitioners urge that the respondent no. 1 falls within the classification of a NBFC, even though it is a HFC, and hence bound by the aforestated notifications.

16. Even if the press release is insufficient, the RBI, pursuant thereto, issued a revised framework in 2021.

17. The revised framework was issued by the RBI in the form of Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021. The RBI has, in Clause 2.1, specified that the entirety of the directions, except Chapter XII thereof, shall be applicable to every housing finance company (HFC) registered under Section 29(A) of the Act of 1987.

18. Certain parameters were framed, as will appear from Clause 4.1.17, that HFCs would be companies incorporated under the Companies Act, 2013 if they fulfil the following condition:

                    “(a) it is a NBFC whose financial assets in the business of providing finance for housing constitute at least 60% of its total assets (netted off by intangible assets). Housing finance for this purpose shall mean providing finance as stated at clauses (a) to (k) of Paragraph 4.1.16.”

19. The aforestated Master Circular of the Reserve Bank of India dated January 5, 2022, specifies in Clause 1.1(a):

                    “a. NBFCs means the Non-Banking Financial Companies registered with the Reserve Bank of India, which shall also include Housing Finance Company (HFC) registered under Section 29A of the National Housing Bank Act, 1987.”

This Master Circular, read with the Master Direction of 2021, provides an inclusive definition and creates a subset within the set of NBFCs; the subset being housing finance companies.

20. The RBI, which is the nodal agency for all NBFCs which now include HFCs, has through the Master Direction of 2021 and Master Circular of 2022 clarified that all HFCs registered under Section 29(A) of the Act of 1987 will now be classified as NBFCs registered with the RBI.

21. The Reserve Bank of India, in a further clarification, has by name included 15 NBFCs in different categories in its release on September 14, 2023, wherein the name of the respondent No. 1 appears at serial no. 6 as an NBFC - UL and as a NBFC in the category of a non-deposit taking HFC.

22. Based on the classification in the Master Circulars, notifications, and press releases of the Reserve Bank of India, read with the definition under Section 45-I of the RBI Act, Respondent No. 1 is clearly a NBFC.

23. Section 45-I(c) of the Reserve Bank of India Act, 1934 (hereinafter referred to as the Act of 1934) defines a financial institution and lists certain categories of business which fall within the nomenclature of a nonbanking institution.

24. Section 45-I(e) creates another class of non-banking institution as compared to a non-banking financial company.

25. Section 45-I(f) defines a non-banking financial company as “(i) a financial institution which is a company;”. Thus, any financial institution which is a company qualifies as a NBFC.

26. The notification issued by the Central Government on June 17, 2021 specifies that a housing finance company registered under Sub-section (5) of Section 29(A) of the Act of 1987 is a financial institution for the purpose of the said Act. (The said Act being the SARFAESI Act, 2002.) Clearly, a housing finance company was brought within the fold of a NBFC as a financial institution by the notification of the Ministry of Finance dated June 17, 2021.

27. It is also relevant to note that under Section 2(1)(m)(iv) of the said Act, a financial institution has been defined as:

                    “any other institution or non-banking financial company as defined in clause (f) of section 45-I of the Reserve Bank of India Act, 1934 (2 of 1934), which the Central Government may, by notification, specify as financial institution for the purposes of this Act;”.

28. This notification has been issued by the Central Government on June 17, 2021, specifying that housing finance companies are to be included in the nomenclature of financial institutions. Thus, Section 2(1)(m)(iv) of the said Act, read with Section 45-I(f) and the notification dated June 17, 2021, clearly indicate that housing finance companies have been brought within the fold of NBFCs.

29. The amendment of August 29, 2023, which was relied upon by Ms. Ojha for the respondent, has since been repealed and replaced by the Master Direction of October 19, 2023—the Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023. Regulation 2 provides for the regulatory structure of non-banking financial companies in four layers based on their size. Regulation 2.3 clearly specifies that the Middle Layer includes Housing Finance Companies as NBFCs. Regulation 4, which relates to the applicability of the Directions, also specifically pertains to Housing Finance Companies, as stipulated in Regulation 4.3.6, directing that all such Housing Finance Companies are bound by the Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021, as amended from time to time. Thus, it is clear that Housing Finance Companies are now within the domain of NBFCs.

30. Housing finance companies within the category of NBFC have also been further classified.

31. It is this classification to which the Hon’ble Division Bench of the Madhya Pradesh High Court had referred while dealing with the matter of Virendra Rathore and Ors. v. Tehsildar, District Mandsaur (supra). The Court specifically held that the respondent financial corporation in that matter was not included in the table constituting a notification issued from time to time. In fact, the Court held that there was no notification on record to show that the housing finance company in that matter had been specifically brought within the fold of NBFC and that the notifications of February 24, 2020, and February 12, 2021, did not apply. In the instant case, the petitioners have brought on record the notification of September 14, 2023, by which the respondent housing finance company has been specifically brought within the fold of NBFC. The name of the respondent company appears at serial no. 6 in such notification of September 14, 2023. Thus, the decision of the Hon’ble Madhya Pradesh High Court, on the facts of that case, is not applicable herein.

32. Once HFCs have been notified as financial institutions (on June 17, 2021) and brought within the purview of the said Act and having been placed within the regulatory domain of the Central Government, there is no reason to hold that a HFC, and particularly the respondent herein, would not be bound by the notification of February 24, 2020, as modified by the notification dated February 12, 2021. The respondent has been specifically classified as a NBFC as will appear from the notification of September 14, 2023.

33. In view of the aforestated, it is clear that the respondent has been specifically notified as a NBFC and is thus squarely covered by the aforesaid notification and is bound by the threshold limit set therein.

34. Since the claim of the respondent financial institution is below Rupees 20 lakh as stated in the notice under Section 13(2) of the said Act, the respondent cannot undertake any action under the said Act, being hit by the threshold limit set forth in the notification dated February 12, 2021.

35. Since the respondent cannot invoke the provisions of the Act of 2002, any action taken by them thereunder is without jurisdiction and is accordingly set aside.

36. This will, however, not preclude the respondent from undertaking necessary steps, as available to them under the law, to recover the outstanding amount from the petitioners as may be advised.

37. There shall, however, be no order as to costs.

38. Urgent Photostat Certified Copy of this order, if applied for, be given to the petitioners on usual undertaking.