Violation Of Section 14 SARFAESI Procedure Can Justify Exercise Of Writ Jurisdiction Despite Alternative Remedy: Kerala High Court
Court also clarifies that an intra-court appeal is maintainable against ex-parte interim orders that substantially affect a party’s right to pursue statutory remedies under the SARFAESI Act
The Kerala High Court has held that violation of the procedure prescribed under Section 14 of the SARFAESI Act, 2002 can justify the exercise of writ jurisdiction under Article 226 of the Constitution of India, even though an alternative remedy is available under Section 17 of the Act before the Debts Recovery Tribunal.
At the same time, the Court clarified the scope of intra-court appeals under Section 5 of the Kerala High Court Act, 1958. It reaffirmed that an intra-court appeal would be maintainable against an ex-parte ad interim order or any order passed in writ proceedings that substantially affects the rights of a party, including orders that impede a party from pursuing statutory remedies available under law.
Chief Justice Soumen Sen and Justice Syam Kumar V.M. observed, “The exercise of jurisdiction under Article 226 of the Constitution would depend on the facts of the case. If the Magistrate has not complied with the provisions of Section 14 of the SARFAESI Act, 2002 and passed an order without any affidavit filed by the Authorised Officer and it appears from record that such coercive measure was taken notwithstanding repayment of the loan amount, a writ petition can be entertained”.
“The order passed by the learned Single Judge in the writ petition must pass muster the tests laid down by the Hon’ble Supreme Court and the Division Bench required the learned Single Judge to reconsider the entertainability of the writ petition in the light of the principles laid down by the Apex Court. Writ remedy is an extraordinary remedy. Where it facie appears to the Court that the order is patently without jurisdiction or passed in violation of the principles of natural justice and the forum before which a litigant can approach for redressal of its grievances is not functional, it would be a travesty of justice if the Constitutional Court does not come to the aid of a litigant”, the Bench further observed.
Advocate E.B. Thajuddeen appeared for the petitioner and Advocate ASP. Kurup appeared for the respondent.
In the present case, M/s. Grids Engineers and Contractors and its managing partner filed a writ petition challenging an order passed by the Additional Chief Judicial Magistrate, Ernakulam under Section 14 of the SARFAESI Act, which authorised the bank to take possession of the secured asset for recovery of dues.
The Single Judge, at the admission stage, granted an interim stay restraining the bank from taking possession of the property and directed the bank to file a counter affidavit. Aggrieved by the unreasoned interim order that effectively stalled the recovery proceedings, Union Bank of India filed a writ appeal before the Division Bench.
During the pendency of the proceedings, however, the parties informed the Court that a settlement had been reached and the borrower had paid the outstanding dues, following which the bank closed the loan account.
Although the dispute had become infructuous due to the settlement, the Division Bench proceeded to examine the legal issues raised in the reference concerning the scope of writ jurisdiction in SARFAESI matters and the maintainability of intra-court appeals against interim orders affecting statutory remedies.
The Bench observed that while borrowers are ordinarily required to avail the statutory remedy under Section 17, the High Court may entertain a writ petition in exceptional circumstances where there is clear procedural illegality in the recovery process.
The Bench further explained that writ jurisdiction may also be invoked where coercive measures are taken despite repayment of the loan amount, or where the statutory safeguards under the SARFAESI framework are ignored. In such cases, the availability of an alternative remedy would not operate as an absolute bar to judicial review.
The Court also noted that writ courts often grant interim protection at the initial stage without examining the objection of alternative remedy, particularly when orders are passed ex parte. In such situations, an aggrieved party may approach the Division Bench through an intra-court appeal if the interim order causes serious prejudice or obstructs statutory recovery proceedings.
Cause Title: M/S. Grids Engineers And Contractors & Anr. v. Union Bank Of India & Anr. [Neutral Citation: 2026:KER:19606]
Appearances:
Petitioner: E.B. Thajuddeen, Arthur B. George, P.A. Mohammed Aslam, Ramshad K.R., Muhammed Riswan K.A., Midhun Mohan, Fidil V. John, Kiran Narayanan, P. Sanjay, Advocates.
Respondent: ASP. Kurup, Sadchith P. Kurup, C.P., Anil Raj, Siva Suresh, B. Sreedevi, Athira Vijayan, Raja Kannan, Amicus Curiae, Advocates.