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(2024) ibclaw.in 109 SC

IN THE SUPREME COURT OF INDIA

PHR Invent Educational Society

v.
UCO Bank and Ors.

SLP(C) No. 8867 of 2022

Decided on 10-Apr-24

Coram: Mr. Justice Bhushan Ramkrishna Gavai, Mr. Justice Rajesh Bindal and Mr. Justice
Sandeep Mehta

Brief about the decision:

Facts of the case

Bank (Respondent) issued an Auction Sale Notice on 02.09.2017 for auctioning off the
scheduled properties. The auction was to be conducted on 14.12.2017.
Aggrieved by the Auction Sale Notice, the Borrower preferred a securitization
application (S.A. No.1476 of 2017) before DRT under Section 17 of the SARFAESI Act.
In the meanwhile, the auction was conducted on 14.12.2017 by the Bank.
The PHR Invent Educational Society, (auction purchaser/appellant herein) participated
in the said auction and emerged as the highest bidder.
The appellant deposited 25% of the bid amount including the EMD of the said amount.
On the same day i.e., 14.12.2017, DRT passed an interim order in S.A. No. 1476 of 2017,
thereby refusing to interfere with the sale of the scheduled properties which was to be
conducted on that very day.
The Borrower had also filed an interlocutory application being I.A. No. 3446 of 2017,
thereby praying for stay of further proceedings qua the auction of the scheduled
properties, wherein DRT directed the Bank not to confirm the sale of the scheduled
properties subject to the Borrower depositing 30% of the outstanding dues as claimed
for in the Auction Sale Notice in two equal installments.
The DRT further directed that, in the event that the Borrower failed to make the
aforesaid deposits, the interim stay would stand vacated and Bank would be at liberty
to confirm the sale in favor of the highest bidder, although the sale itself was made
subject to the final outcome in S.A. No. 1476 of 2017.
The Borrower did not comply with the said order of the learned DRT.
Subsequently, the appellant deposited the balance auction price on 28.12.2017.
In the meanwhile, the Borrower proposed One Time Settlement (OTS) for all the
outstanding loan accounts. However, the Respondent-Bank refused to accept the same
and requested the Borrower to settle all the outstanding loan accounts with interest
payable at the contractual rate, as applicable thereon vide letter dated 12.05.2020.
Following which, DRT passed an order dated 21.09.2020, whereby S.A. No. 1476 of 2017
was dismissed as withdrawn at the behest of the Borrower who submitted that the
matter had been settled out of court. On the other hand, the Respondent-Bank filed a
Memo of Non-Settlement before DRT thereby informing that no such out-of court
settlement had been reached.
Upon S.A. No. 1476 of 2017 being dismissed as withdrawn, the Respondent-Bank
confirmed the sale of the scheduled properties in favor of the appellant herein. A Sale
 Certificate was issued by the Respondent-Bank on 02.11.2020 and the possession of the
scheduled properties was accordingly delivered to the appellant. Subsequently, on
11.11.2020, the Sale Certificate came to be registered in favor of the appellant herein.
The Borrower filed writ petition before the High Court. The High Court, by the
impugned order, disposed of the said writ petition, thereby setting aside the order of
DRT, and further directing it to proceed with S.A. No. 1476 of 2017 in accordance with
law. The M.A. No. 97 of 2020 in S.A. No. 1476 of 2017 was thus allowed restoring S.A.
No. 1476 of 2017.

Decision of Supreme Court

A. Entertain a petition under Article 226 of the Constitution

The law with regard to entertaining a petition under Article 226 of the Constitution in
case of availability of alternative remedy is well settled.(p14)
United Bank of India Vs. Satyawati Tondon and others (2017) ibclaw.in 81 SC
Agarwal Tracom Private Limited v. Punjab National Bank and Others [2017]
ibclaw.in 15 SC
Authorized Officer, State Bank of Travancore and Another v. Mathew K.C. [2018]
ibclaw.in 58 SC
Phoenix ARC Private Limited v. Vishwa Bharati Vidya Mandir and Others (2022)
ibclaw.in 03 SC
Varimadugu OBI Reddy v. B. Sreenivasulu and Others (2022) ibclaw.in 128 SC
Celir LLP Vs. Bafna Motors (Mumbai) Pvt. Ltd. & Ors. (2023) ibclaw.in 105 SC
It could thus be seen that the Court has strongly deprecated the practice of
entertaining writ petitions in such matters.(p20)
It can thus be seen that it is more than a settled legal position of law that in such
matters, the High Court should not entertain a petition under Article 226 of the
Constitution particularly when an alternative statutory remedy is available.(p22)

Further, Hon’ble Court refers the following judgments:

Dwarika Prasad v. State of Uttar Pradesh and Others (2018) ibclaw.in 107 SC
State of U.P. v. Mohammad Nooh 1957 INSC 81
Commissioner of Income Tax and Others v. Chhabil Dass Agarwal (2014) 1 SCC 603
And held that it could thus clearly be seen that the Court has carved out certain
exceptions when a petition under Article 226 of the Constitution could be entertained
in spite of availability of an alternative remedy. Some of them are thus:
(i) where the statutory authority has not acted in accordance with the provisions
of the enactment in question;
(ii) it has acted in defiance of the fundamental principles of judicial procedure;
(iii) it has resorted to invoke the provisions which are repealed; and
(iv) when an order has been passed in total violation of the principles of natural
justice.(p29)
It has however been clarified that the High Court will not entertain a petition under
Article 226 of the Constitution if an effective alternative remedy is available to the
aggrieved person or the statute under which the action complained of has been taken
itself contains a mechanism for redressal of grievance.(p30)

B. Present case

The writ petition was not maintainable on account of availability of alternative

remedy, the High Court has interfered with the writ petition only on the ground that
the matter was pending for sometime before it and if the petition was not entertained,
the Borrower would be left remediless. We however find that the High Court has failed
to take into consideration the conduct of the Borrower. It is further to be noted that,
 though the High Court had been specifically informed that, on account of subsequent
developments, that is confirmation of sale and registration thereof, the position had
reached an irreversible stage, the High Court has failed to take into consideration
those aspects of the matter.(p24)
In our view, the High Court ought to have taken into consideration that the confirmed
auction sale could have been interfered with only when there was a fraud or collusion.
The present case was not a case of fraud or collusion. The effect of the order of the
High Court would be again reopening the issues which have achieved finality.(p26)
The High Court has grossly erred in entertaining and allowing the petition under
Article 226 of the Constitution. (i) The appeal is allowed; (ii) The impugned order is
quashed and set aside; and (iii) Writ Petition is dismissed with costs quantified at
Rs.1,00,000/- imposed upon the Borrower.(p32-34)

Judgment/Order:

JUDGMENT

B.R. GAVAI, J.

1. Leave granted.

2. This appeal challenges the order dated 4th February 2022, passed by the Division Bench
of the High Court for the State of Telangana at Hyderabad in Writ Petition No. 5275 of 2021,
whereby the High Court disposed of the writ petition filed by Dr. M.V. Ramana Rao,
respondent No. 3 herein (hereinafter referred to as ‘the Borrower’). The High Court set aside
the order dated 2nd February 2021, passed by the Debts Recovery Tribunal-II at Hyderabad
(hereinafter referred to as ‘DRT’) and allowed Miscellaneous Application (M.A.) No. 97 of
2020 in Securitization Application (S.A.) No. 1476 of 2017 filed by the Borrower for the
restoration of the said S.A. No. 1476 of 2017 filed by him under Section 17 of the
Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 (‘SARFAESI Act’ for short). The Borrower had filed S.A. No. 1476 of 2017 against the
Notice dated 2nd September 2017 issued by the UCO Bank (hereinafter referred to as the
‘Respondent-Bank’) for the sale of his mortgaged properties which was to be conducted by
the Authorized Officer (Respondent No.2) of the Respondent-Bank in light of the default in
repayment of loan by the Borrower. The DRT, in its aforementioned order dated 2nd
February 2021, had dismissed the M.A. No. 97 of 2020 for the restoration of S.A. No. 1476 of
2017, which had been previously dismissed as withdrawn vide DRT vide order dated 21st
September 2020. The Division Bench of the High Court, in the impugned order, while setting
aside the order of DRT dated 2nd February 2021, further directed DRT to proceed with S.A.
No. 1476 of 2017 in accordance with law.

3. The facts, in brief, giving rise to the present appeal are as under:

3.1 The Borrower had availed a loan from the Respondent-Bank and in order to secure the
said loan, the Borrower had mortgaged four properties (hereinafter referred to as
‘scheduled properties’) situated at Vijayawada, Andhra Pradesh as collateral security.
However, the Borrower defaulted in the repayment of the loan amount, which led the
Respondent-Bank to initiate proceedings against the borrower under the SARFAESI Act.

3.2 Thereafter, the Respondent-Bank issued an Auction Sale Notice on 2nd September 2017
for auctioning off the scheduled properties and published information about the same in
the Times of India and one other vernacular newspaper. According to the said Auction Sale
Notice, the auction was to be conducted on 14th December 2017.
3.3 Aggrieved by the Auction Sale Notice, the Borrower preferred a securitization
application being S.A. No.1476 of 2017 before DRT under Section 17 of the SARFAESI Act,
thereby inter alia praying for setting aside of the same.

3.4 In the meanwhile, the auction was conducted on 14th December 2017 by the
Respondent-Bank through Respondent No.2. The PHR Invent Educational Society,
(hereinafter referred to as the ‘auction purchaser’), i.e., the appellant herein participated in
the said auction and emerged as the highest bidder for a bid of Rs.5,72,22,200/-. The
appellant deposited 25% of the bid amount i.e. Rs. 1,38,05,550/- including the Earnest Money
Deposit of the said amount. The fact remains that the Borrower did not deposit the amount.

3.5 On the same day i.e., 14th December 2017, DRT passed an interim order in S.A. No. 1476
of 2017, thereby refusing to interfere with the sale of the scheduled properties which was to
be conducted on that very day. The Borrower had also filed an interlocutory application
being I.A. No. 3446 of 2017, thereby praying for stay of further proceedings qua the auction
of the scheduled properties, wherein DRT directed the Respondent-Bank not to confirm the
sale of the scheduled properties subject to the Borrower depositing 30% of the outstanding
dues as claimed for in the Auction Sale Notice in two equal installments. The first
installment of 15% amount was to be deposited within a week from the date of the said
order, and the second installment of 15% amount was to be deposited within two weeks
thereafter. The DRT further directed that, in the event that the Borrower failed to make the
aforesaid deposits, the interim stay would stand vacated and the Respondent-Bank would
be at liberty to confirm the sale in favor of the highest bidder, although the sale itself was
made subject to the final outcome in S.A. No. 1476 of 2017.

3.6 Subsequently, the appellant deposited Rs.4,29,16,650/- towards the payment of the
balance auction price on 28th December 2017.

3.7 In the meanwhile, the Borrower proposed One Time Settlement (‘OTS’ for short) for all
the outstanding loan accounts. However, the Respondent-Bank refused to accept the same
and requested the Borrower to settle all the outstanding loan accounts with interest payable
at the contractual rate, as applicable thereon vide letter dated 12th May 2020.

3.8 Following which, DRT passed an order dated 21st September 2020, whereby S.A. No.
1476 of 2017 was dismissed as withdrawn at the behest of the Borrower who submitted that
the matter had been settled out of court. On the other hand, the Respondent-Bank filed a
Memo of Non-Settlement before DRT thereby informing that no such out-of court settlement
had been reached.

3.9 Upon S.A. No. 1476 of 2017 being dismissed as withdrawn, the Respondent-Bank
confirmed the sale of the scheduled properties in favor of the appellant herein. A Sale
Certificate was issued by the Respondent-Bank on 2nd November 2020 and the possession of
the scheduled properties was accordingly delivered to the appellant. Subsequently, on 11th
November 2020, the Sale Certificate came to be registered in favor of the appellant herein.

3.10 In the meantime, the Borrower preferred M.A. No. 97 of 2020 in S.A. No. 1476 of 2017
before DRT, praying for the restoration of S.A. No. 1476 of 2017 to the file and setting aside
the aforesaid order of DRT dated 21st September 2020. However, on 2nd February 2021,
DRT passed an order thereby dismissing the said M.A. filed by the Borrower.

3.11 Aggrieved thereby, the Borrower filed writ petition before the High Court. The High
Court, by the impugned order, disposed of the said writ petition, thereby setting aside the
order of DRT, and further directing it to proceed with S.A. No. 1476 of 2017 in accordance
with law. The M.A. No. 97 of 2020 in S.A. No. 1476 of 2017 was thus allowed restoring S.A.
No. 1476 of 2017.
4. Being aggrieved thus, the auction purchaser has preferred the present appeal.

5. We have heard Shri R. Basant, learned Senior Counsel appearing on behalf of the
appellant-auction purchaser, Shri Partha Sil, learned counsel appearing on behalf of the
UCO Bank and Shri Jayant Bhushan, learned Senior Counsel appearing on behalf of the
respondent No.3-Borrower.

6. Shri Basant, learned Senior Counsel appearing for the appellant-auction purchaser
submitted that the High Court has grossly erred in entertaining the writ petition filed by the
Borrower when an efficacious alternative remedy of statutory appeal was available to the
Borrower under the SARFAESI Act. He relies on the judgments of this Court in the cases of
United Bank of India v. Satyawati Tondon and Others1, Celir LLP v. Bafna Motors
(Mumbai) Private Limited and Others2 and South Indian Bank Limited and Others v.
Naveen Mathew Philip and Another3.

7. Shri Basant further submitted that the conduct of the Borrower also disentitled him to an
equitable relief. It is submitted that the Borrower had filed the writ petition after the entire
payment was made by the appellant-auction purchaser and a Sale Certificate was also
issued in its favour. The learned Senior Counsel therefore submitted that the writ petition
filed by the Borrower deserves to be dismissed and the present appeal deserves to be
allowed.

8. Shri Partha Sil, learned counsel appearing on behalf of the UCO Bank, also advanced
similar arguments and prayed for dismissal of the writ petition filed by the Borrower.

9. Shri Bhushan, learned Senior Counsel, appearing on behalf of the Borrower, on the
contrary, submitted that non-exercising of the jurisdiction under Article 226/227 of the
Constitution of India on the ground of availability of an alternative remedy is a rule of self-
restraint. It is submitted that, in deserving cases, the High Court is not precluded from
entertaining a petition under Article 226 of the Constitution in order to do justice to the
parties. The learned Senior Counsel relies on the judgment of this Court in the case of State
of U.P. v. Mohammad Nooh4.

10. The facts in the present case are not disputed. It is not in dispute that in the auction held
on 14th December 2017, the appellant-auction purchaser was the highest bidder having
offered a bid for an amount of Rs.5,72,22,200/- and that the appellant-auction purchaser
deposited 25% of the bid amount i.e. Rs.1,38,05,550/- immediately. It is also not in dispute
that on 14th December 2017, the learned DRT, though refused to interfere with the sale but
directed the Respondent-Bank not to confirm the sale of the scheduled properties subject to
the Borrower depositing 30% of the outstanding dues in two equal installments within one
week and two weeks thereafter respectively. The learned DRT had also directed that, in case
of failure of compliance, the interim stay would stand automatically vacated and the
Respondent-Bank would be entitled to confirm the sale. It is also not in dispute that the
Borrower did not comply with the said order of the learned DRT. It is thus clear that, on
non-deposit of the amount as directed by the learned DRT vide order dated 14th December
2017, the interim direction passed on the said date stood automatically vacated. After the
aforesaid period was over, the appellant-auction purchaser deposited the balance amount
of Rs.4,29,16,650/-.

11. It appears that, during the pendency of the proceedings before the learned DRT, the
Borrower submitted an OTS proposal to the Respondent-Bank on 29th March 2019, thereby
offering to settle the accounts for an amount of Rs.3,75,00,000/-. It further appears that the
Borrower also deposited 10% upfront amount i.e. Rs.37,50,000/-. On 12th May 2020, the
Respondent-Bank, in reply to the OTS application, asked the Borrower to settle all the four
loan accounts with interest at the contractual rate.
12. On 20th August 2020, the Borrower filed an application being I.A. No. 1691 of 2020 in the
proceedings pending before DRT requesting for advancing the date of hearing stating that
there was urgency in the matter and also that the appellant-auction purchaser had
withdrawn from the auction. Thereafter, vide order dated 21st September 2020, the said S.A.
No. 1476 of 2017 came to be withdrawn on a statement made by the counsel for the
Borrower that the matter had been settled out of court. It is also relevant to mention that on
5th October 2020, the Respondent-Bank had filed a memo before DRT informing that there
was no settlement.

13. After the disposal of the S.A. No. 1476 of 2017 as withdrawn, the Respondent-Bank
confirmed the sale in favour of the appellant-auction purchaser on 2nd November 2020.
Thereafter, on 4th November 2020, the Borrower filed a miscellaneous application being
M.A. No. 97 of 2010 for restoration of the said S.A. No. 1476 of 2017 on the ground that the
said S.A. No. 1476 of 2017 had been withdrawn because the Chief Manager and AGM of the
Respondent-Bank had orally told the Borrower that unless the S.A. No. 1476 of 2017 was
withdrawn, they could not process the OTS proposal. It is further relevant to note that on
11th November 2020, the Sale Certificate was registered. Vide order dated 2nd February
2021, DRT dismissed the said M.A. No. 97 of 2010. Thereafter, the writ petition being No.
5275 of 2021 came to be filed by the Borrower on 25th February 2021 before the High Court.
Vide the impugned order, the High Court set aside the order passed by DRT and directed it
to proceed with S.A. No. 1476 of 2017.

14. The law with regard to entertaining a petition under Article 226 of the Constitution in
case of availability of alternative remedy is well settled. In the case of Satyawati Tondon
(supra), this Court observed thus:

“43. 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.

44. While expressing the aforesaid view, we are conscious that the powers conferred
upon the High Court under Article 226 of the Constitution to issue to any person or
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
by 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-
imposed 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 that the 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 redressal of his grievance.”
15. It could thus be seen that, this Court has clearly held 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. It has been held 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. The Court clearly observed that, 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.
It has been held that, though the powers of the High Court under Article 226 of the
Constitution are of widest amplitude, still the Courts cannot be oblivious of the rules of self-
imposed restraint evolved by this Court. The Court further held that though the rule of
exhaustion of alternative remedy is a rule of discretion and not one of compulsion, still it is
difficult to fathom any reason why the High Court should entertain a petition filed under
Article 226 of the Constitution.

16. The view taken by this Court has been followed in the case of Agarwal Tracom Private
Limited v. Punjab National Bank and Others5.

17. In the case of Authorized Officer, State Bank of Travancore and Another v. Mathew
K.C.6, this Court was considering an appeal against an interim order passed by the High
Court in a writ petition under Article 226 of the Constitution staying further proceedings at
the stage of Section 13(4) of the SARFAESI Act. After considering various judgments
rendered by this Court, the Court observed thus:

“16. The writ petition ought not to have been entertained and the interim order
granted for the mere asking without assigning special reasons, and that too without
even granting opportunity to the appellant to contest the maintainability of the writ
petition and failure to notice the subsequent developments in the interregnum. The
opinion of the Division Bench that the counter-affidavit having subsequently been
filed, stay/modification could be sought of the interim order cannot be considered
sufficient justification to have declined interference.”

18. The same position was again reiterated by this Court in the case of Phoenix ARC
Private Limited v. Vishwa Bharati Vidya Mandir and Others7.

19. Again, in the case of Varimadugu OBI Reddy v. B. Sreenivasulu and Others8, after
referring to earlier judgments, this Court observed thus:

“34. The order of the Tribunal dated 1-8-2019 was an appealable order under Section
18 of the SARFAESI Act, 2002 and in the ordinary course of business, the
borrowers/person aggrieved was supposed to avail the statutory remedy of appeal
which the law provides under Section 18 of the SARFAESI Act, 2002. In the absence of
efficacious alternative remedy being availed, there was no reasonable justification
tendered by the respondent borrowers in approaching the High Court and filing writ
application assailing order of the Tribunal dated 1-8-2019 under its jurisdiction under
Article 226 of the Constitution without exhausting the statutory right of appeal
available at its command.”

20. It could thus be seen that this Court has strongly deprecated the practice of entertaining
writ petitions in such matters.

21. Recently, in the case of Celir LLP (supra), after surveying various judgments of this
Court, the Court observed thus:
 “101. More than a decade back, this Court had expressed serious concern despite its
repeated pronouncements in regard to the High Courts ignoring the availability of
statutory remedies under the RDBFI Act and the SARFAESI Act and exercise of
jurisdiction under Article 226 of the Constitution. Even after, the decision of this Court
in Satyawati Tondon [United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110 :
(2010) 3 SCC (Civ) 260] , it appears that the High Courts have continued to exercise its
writ jurisdiction under Article 226 ignoring the statutory remedies under the RDBFI
Act and the SARFAESI Act.”

22. It can thus be seen that it is more than a settled legal position of law that in such
matters, the High Court should not entertain a petition under Article 226 of the Constitution
particularly when an alternative statutory remedy is available.

23. The only reasoning that could be seen from the impugned order given by the learned
Division Bench of the High Court is as under:

“11. It is true that under Section 18 of the SARFAESI Act, petitioner has the alternative
remedy against the impugned order by filing appeal before the appellate Tribunal.
However, having regard to the fact that the writ petition is pending before this Court
for quite some time and also considering the fact that if the impugned order is allowed
to stand, petitioner would be left without a remedy to ventilate his grievance, we deem
it fit and proper not to non-suit the petitioner on the ground of not availing the
alternative remedy.

12. Section 17 of the SARFAESI Act provides that any person including a borrower who
is aggrieved by the action of secured creditor under Section 13 (4) of the SARFAESI Act
may file an application thereunder. Supreme Court has held time and again that the
Tribunal exercises wide jurisdiction under Section 17 of the SARFAESI Act, even to the
extent of setting aside an auction sale. In the instant case, we are consciously not
referring to the merit of the case. All that we are concerned is whether for whatever
reason a person who is aggrieved in law should be left remediless. In the instant case,
petitioner had invoked his remedy by filing securitization application under sub-
section (1) of Section 17 of the SARFAESI Act. The application was pending for three
years before the Tribunal. From the docket order dated 21.09.2020, we find that a
junior counsel appearing on behalf of the petitioner had reported that the matter was
settled out of Court and therefore, leave was sought for withdrawing the securitization
application which was accordingly granted.

13. When the settlement did not materialize, petitioner went back to the Tribunal for
revival of the securitization application which was however dismissed on the ground
that version of the petition did not deserve acceptance.

14. On thorough consideration of the matter we are of the view that dismissal of the
miscellaneous application of the petitioner by the Tribunal dies not appear to be
justified.

15. Though subsequent developments may have a bearing on the grant of ultimate
relief to a litigant but the same by itself cannot denude the adjudicating authority of its
power to adjudicate the grievance raised by the aggrieved person which it otherwise
possess.”

24. It can thus clearly be seen that though it was specifically contended on behalf of the
appellant herein that the writ petition was not maintainable on account of availability of
alternative remedy, the High Court has interfered with the writ petition only on the ground
that the matter was pending for sometime before it and if the petition was not entertained,
the Borrower would be left remediless. We however find that the High Court has failed to
take into consideration the conduct of the Borrower. It is further to be noted that, though
the High Court had been specifically informed that, on account of subsequent
developments, that is confirmation of sale and registration thereof, the position had
reached an irreversible stage, the High Court has failed to take into consideration those
aspects of the matter.

25. This Court, in the case of Valji Khimji and Company v. Official Liquidator of
Hindustan Nitro Product (Gujarat) Limited and Others9, has observed thus:

“30. In the first case mentioned above i.e. where the auction is not subject to
confirmation by any authority, the auction is complete on the fall of the hammer, and
certain rights accrue in favour of the auction-purchaser. However, where the auction
is subject to subsequent confirmation by some authority (under a statute or terms of
the auction) the auction is not complete and no rights accrue until the sale is
confirmed by the said authority. Once, however, the sale is confirmed by that
authority, certain rights accrue in favour of the auction-purchaser, and these rights
cannot be extinguished except in exceptional cases such as fraud.

31. In the present case, the auction having been confirmed on 30-7-2003 by the Court it
cannot be set aside unless some fraud or collusion has been proved. We are satisfied
that no fraud or collusion has been established by anyone in this case.”

26. In our view, the High Court ought to have taken into consideration that the confirmed
auction sale could have been interfered with only when there was a fraud or collusion. The
present case was not a case of fraud or collusion. The effect of the order of the High Court
would be again reopening the issues which have achieved finality.

27. It is further to be noted that this Court, in the case of Dwarika Prasad v. State of Uttar
Pradesh and Others10, has clearly held that the right of redemption stands extinguished
on the execution of the registered sale deed. In the present case, the sale was confirmed on
2nd November 2020 and registered on 11th November 2020.

28. Insofar as the contention of the Borrower and its reliance on the judgment of this Court
in the case of Mohammad Nooh (supra) is concerned, no doubt that non-exercise of
jurisdiction under Article 226 of the Constitution on the ground of availability of an
alternative remedy is a rule of self-restraint. There cannot be any doubt with that
proposition. In this respect, it will be relevant to refer to the following observations of this
Court in the case of Commissioner of Income Tax and Others v. Chhabil Dass
Agarwal11:

“15. Thus, while it can be said that this Court has recognised some exceptions to the
rule of alternative remedy i.e. where the statutory authority has not acted in
accordance with the provisions of the enactment in question, or in defiance of the
fundamental principles of judicial procedure, or has resorted to invoke the provisions
which are repealed, or when an order has been passed in total violation of the
principles of natural justice, the proposition laid down in Thansingh Nathmal case [AIR
1964 SC 1419] , Titaghur Paper Mills case [Titaghur Paper Mills Co. Ltd. v. State of
Orissa, (1983) 2 SCC 433 : 1983 SCC (Tax) 131] and other similar judgments that the
High Court will not entertain a petition under Article 226 of the Constitution if an
effective alternative remedy is available to the aggrieved person or the statute under
which the action complained of has been taken itself contains a mechanism for
redressal of grievance still holds the field. Therefore, when a statutory forum is
created by law for redressal of grievances, a writ petition should not be entertained
ignoring the statutory dispensation.”
29. It could thus clearly be seen that the Court has carved out certain exceptions when a
petition under Article 226 of the Constitution could be entertained in spite of availability of
an alternative remedy. Some of them are thus:

(i) where the statutory authority has not acted in accordance with the provisions of the
enactment in question;

(ii) it has acted in defiance of the fundamental principles of judicial procedure;

(iii) it has resorted to invoke the provisions which are repealed; and

(iv) when an order has been passed in total violation of the principles of natural
justice.

30. It has however been clarified that the High Court will not entertain a petition under
Article 226 of the Constitution if an effective alternative remedy is available to the
aggrieved person or the statute under which the action complained of has been taken itself
contains a mechanism for redressal of grievance.

31. Undisputedly, the present case would not come under any of the exceptions as carved
out by this Court in the case of Chhabil Dass Agarwal (supra).

32. We are therefore of the considered view that the High Court has grossly erred in
entertaining and allowing the petition under Article 226 of the Constitution.

33. While dismissing the writ petition, we will have to remind the High Courts of the
following words of this Court in the case of Satyawati Tondon (supra) since we have come
across various matters wherein the High Courts have been entertaining petitions arising out
of the DRT Act and the SARFAESI Act in spite of availability of an effective alternative
remedy:

“55. It is a matter of serious concern that despite repeated pronouncement of this

Court, the High Courts continue to ignore the availability of statutory remedies under
the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for
passing orders which have serious adverse impact on the right of banks and other
financial institutions to recover their dues. We hope and trust that in future the High
Courts will exercise their discretion in such matters with greater caution, care and
circumspection.”

34. In the result, we pass the following order:

(i) The appeal is allowed;

(ii) The impugned order dated 4th February 2022 passed by the High Court in Writ
Petition No. 5275 of 2021 is quashed and set aside; and

(iii) Writ Petition No. 5275 of 2021 is dismissed with costs quantified at Rs.1,00,000/-
imposed upon the Borrower.

35. Pending application(s), if any, shall stand disposed of.

………………………….J.
[B.R. GAVAI]

………………………….J.
[RAJESH BINDAL]
 ………………………….J.
[SANDEEP MEHTA]

NEW DELHI;
APRIL 10, 2024.

References:

1. (2010) 8 SCC 110 : 2010 INSC 428

2. (2024) 2 SCC 1 : 2023 INSC 838
3. 2023 SCC OnLine SC 435 : 2023 INSC 379
4. AIR 1958 SC 86 : 1957 INSC 81
5. (2018) 1 SCC 626 : 2017 INSC 1146
6. (2018) 3 SCC 85 : 2018 INSC 71
7. (2022) 5 SCC 345 : 2022 INSC 44
8. (2023) 2 SCC 168 : 2022 INSC 1205
9. (2008) 9 SCC 299 : 2008 INSC 925
10. (2018) 5 SCC 491 : 2018 INSC 210
11. (2014) 1 SCC 603

Original judgment copy is available here.

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