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JC - Legal Updates - Writ jurisdiction cannot be invoked to challenge notice under section 13(2) of the SARFAESI Act, 2002 - High Court of Gujarat

Legal Updates

05 Sep 2022

Writ jurisdiction cannot be invoked to challenge notice under section 13(2) of the SARFAESI Act, 2002 - High Court of Gujarat

The Hon’ble High Court of Gujarat (“High Court”) in the matter of Rajesh Sukumaran Nambiar v. The Central Bank of India through the Chief Manager (Gujarat High Court: Special Civil Application No. 11149 of 2021; dated 25.08.2022) declined to extend its writ jurisdiction to quash a notice under section 13(2) of the Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (“SARFAESI Act”) given the statutory remedy of filing appeal under section 17 of the SARAFESI Act after adjudication under section 13(4) of the SARFAESI Act.

The petitioners filed a writ petition seeking to quash the notice under section 13(2) of the SARFAESI Act. It was contended by the petitioners that they were neither the directors nor guarantors, and further that the respondent-bank had already issued No Due Certificate releasing the petitioners from all the liabilities. It was further contended that the notice issued by the respondent-bank under Section 13(2) of the SARFAESI Act, 2002 is an action undertaken by the respondent-bank without jurisdiction, and therefore, the only remedy with the present petitioners was to approach the High Court under Article 226 of the Constitution of India, 1950.

The High Court relied upon the decision of the Hon’ble Supreme Court in S.V. Developers v. State bank of India and others (Writ Petition No. 23067 of 2019; dated 07.06.2022) wherein it has been held that “30. …the statute does not contemplate any intervention at this preliminary stage. Only when the process ripens into a definitive action taken by the secured creditor under Sub-Section (4) of Section 13 of the SARFAESI Act, the aggrieved person can avail the statutory remedy under Section 17 of the SARFAESI Act by filing securitization application before the jurisdictional Debts Recovery Tribunal.”

The High Court inter alia relying upon the aforesaid decision opined that “no interference is called for at the stage of issuance of notice under Section 13(2) of the SARFAESI act. Consequently, the question of examining legality and validity of such demand notice would not arise. The adjudication would have to wait till the stage of Section 13(4) is reached.” The High Court observed thatit was open for the petitioners to avail statutory remedy by preferring an appeal/application under Section 17 of the SARFAESI Act.


For any further information, please contact Mr. Shubhabrata Chakraborti (shubhabrata.chakraborti@jclex.com) or Ms. Smriti Jha (smriti.jha@jclex.com).