Ex-parte interim orders - In financial matters can have a deleterious effect - Supreme Court

Rohit Suri, Advocate

Er. Sandeep Suri, Advocate 
BE (Electronics), LLB, Chevening Scholar

Editors, Punjab Law Reporter

9216884502 /suri_chd@yahoo.co.uk
Chandigarh / Delhi

 

The Hon'ble apex court in a very recent ruling has been pleased to order that in financial matters grant of ex-parte interim orders can have a deleterious effect.

Loans by financial institutions are granted from public money generated at the tax payers expense. Such loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as entrustment by the public. Timely repayment also ensures liquidity to facilitate loan to another in need, by circulation of the money and cannot be permitted to be blocked by frivolous litigation by those who can afford the luxury of the same.           

Facts:

Interim order passed in a writ petition under Article 226 of the Constitution, staying further proceedings at the stage of Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred as the ‘SARFAESI Act’), on deposit of Rs.3,50,000/-within two weeks. The interim order was passed on the very first date, without an opportunity to the Appellant to file a reply. The writ petition ought to have been dismissed at the threshold on the ground of maintainability. The Division Bench erred in declining to interfere with the same. 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 apex court was further pleased to hold that discretionary jurisdiction under Article 226 Constitution of India, is not absolute but has to be exercised judiciously in the given facts of a case and in accordance with law. The normal rule is that a writ petition under Article 226 of the Constitution ought not to be entertained if alternate statutory remedies are available, under the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - ‘SARFAESI Act’, except in cases falling within the well defined exceptions

‘SARFAESI Act’ - Is a complete code by itself, providing for expeditious recovery of dues arising out of loans granted by financial institutions. High Court ought not to have entertained the writ petition in view of the adequate alternate statutory remedies available to the Respondent.

For full judgement please click here
SARFAESI ACT

 

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