UNITED BANK OF INDIA v. SATYAWATI TONDON & Ors.

Respondent no.1 filed writ petition and prayed that the appellant be restrained from taking coercive action in pursuance of the notices issued under Sections 13(2) D and 13(4) and the order passed by the District Magistrate/ Collector. Respondent no.1 contended that the notices issued by the appellant for recovery of the outstanding due were ex facie illegal and liable to be quashed because no action had been taken against the borrower i.e. E respondent no.2 for recovery of the outstanding dues. The appellant, on the other hand, pleaded that the action initiated against respondent no.1 was consistent with the provisions of SARFAESI Act; that respondent F no.1 was bound to discharge her obligations to pay the outstanding dues and that the writ petition was liable to be dismissed because an alternative remedy was available to respondent no.1 under Section 17 of the SARFAESI Act. G The High Court passed an interim order restraining the appellant from taking action in furtherance of the notice issued under Section 13(4) of the SARFAESI Act. H 4 SUPREME COURT REPORTS [2010] 9 S.C.R. A In the instant appeal, the question which arose for consideration was whether the appellant could have issued notices to respondent no.1 under Section 13(2) and (4) of the SARFAESI Act and filed an application under Section 14 without first initiating action against the B borrower i.e., respondent no.2, for recovery of the outstanding dues. Allowing the appeal, the Court C D E F HELD:

Normally, this Court does not interfere with the discretion exercised by the High Court to pass an interim order in a pending matter but, having carefully examined the matter, this Court feels persuaded to make an exception in this case because the order under challenge has the effect of defeating the very object of the legislation enacted by Parliament for ensuring that there are no unwarranted impediments in the recovery of the debts, etc. due to banks, other financial institutions and secured creditors. [Para 13] [21-D-E]

2.1. In the present case, the High Court completely misdirected itself in assuming that the appellant could not have initiated action against respondent no.1 without making efforts for recovery of its dues from the borrower respondent no.2. The High Court was not at all justified in injuncting the appellant from taking action in furtherance of notice issued under Section 13(4) of the Act. [Paras 15, 28] [22-G-H; 32-C]

2.

Even after receipt of notices under Section 13(2) and (4) and order passed under Section 14 of the G SARFAESI Act, respondent Nos.1 and 2 did not bother to pay the outstanding dues. Therefore, the action taken by the appellant for recovery of its dues by issuing notices under Section 13(2) and 13(4) and by filing an application under Section 14 cannot be faulted on any legally H UNITED BANK OF INDIA v. SATYAWATI TONDON AND ORS. 5 permissible ground and, the High Court committed A serious error by entertaining the writ petition of respondent No.1. [Para 16] [23-A-C]