Auction Buyer’s ₹1.41-Crore Refund Bid Fails: Karnataka HC Says DRT’s Rejection Must Be Challenged On Appeal, Not By Writ

In brief

The question

1. Whether the appellant could maintain a writ petition seeking a refund after the DRT had rejected its refund application, without challenging that decision through the statutory appeal under Section 18 of the SARFAESI Act.

The court held

The Court held that the appellant could not pursue the refund claim through a writ petition without challenging the DRT’s adverse order by the statutory appellate route.

It also directed

Finding no infirmity in the Single Judge’s decision, it dismissed the writ appeal and disposed of the pending interlocutory application.

01Facts

Respondent No. 2 had mortgaged property to Punjab National Bank (PNB). After default, PNB issued a sale notice under the SARFAESI Act and auctioned the property on 16 August 2016. The appellant was the successful bidder, paid ₹1.33 crore, and received a registered sale certificate.

¶ 3-4

Respondent No. 2 had filed proceedings under Section 17 of the Act before the auction. The DRT initially set aside the challenged measures and directed PNB to refund the sale consideration, but that order was later set aside by the High Court and the matter remanded. On remand, the DRT dismissed respondent No. 2’s application, and subsequently rejected the appellant’s separate application for a refund.

¶ 5, 7, 10-13

The appellant did not appeal the DRT’s refund decision under Section 18; instead, it sought substantially the same relief by writ petition. The Single Judge dismissed the petition, and the appellant appealed.

¶ 14, 17-18

02Issues

i.1. Whether the appellant could maintain a writ petition seeking a refund after the DRT had rejected its refund application, without challenging that decision through the statutory appeal under Section 18 of the SARFAESI Act.

¶ 14, 16-17

ii.2. Whether the Single Judge’s dismissal of the writ petition warranted interference in the intra-court appeal.

¶ 18

03Law Applied

Section 17 of the SARFAESI Act provides a remedy before the DRT to challenge measures taken under the Act, and Section 18 provides a statutory appeal from a DRT order.

¶ 16-17

Where a party has obtained an adjudication from the competent Tribunal on its claim and received an adverse order, it cannot bypass the statutory appellate remedy by filing an independent writ petition seeking substantially the same relief.

¶ 16-17

Provisions in the judgment · 3 · Linked ones open on LawLens

KARNATAKA HIGH COURT ACT, 1961 Section 4

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 Section 17 Section 18

04Reasoning

The appellant’s original basis for seeking a refund—the DRT’s 2017 order—ceased to operate when that order was set aside. The DRT later dismissed the borrower’s challenge to the enforcement measures and, separately, rejected the appellant’s refund application; neither decision was displaced by a successful challenge.

¶ 10-15

Because the appellant did not appeal the refund decision under Section 18, its allegations that PNB knew of the pending Section 17 proceedings could not be examined independently in the writ proceeding as a means of obtaining the same refund. The High Court therefore found no error in the Single Judge’s refusal to entertain the petition.

¶ 16-18

05Holding

The Court held that the appellant could not pursue the refund claim through a writ petition without challenging the DRT’s adverse order by the statutory appellate route.

¶ 17-19

Finding no infirmity in the Single Judge’s decision, it dismissed the writ appeal and disposed of the pending interlocutory application.

¶ 17-19

LawLens.Karnataka High Court

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