High Court Refuses Relief for Release of Title Deeds Pending Statutory Remedy and Factual Disputes Under SARFAESI Act

The petitioners (a partnership firm and its partners) availed a financial facility of ₹70 Lacs from Canara Bank, securing it with an original title deed for a property in Meerut.

Upon default, the bank initiated recovery under the SARFAESI Act, 2002.

During pendency of proceedings before the Debts Recovery Tribunal (DRT), Lucknow, the property was auctioned, but the DRT permitted the petitioners to settle the dues for ₹70 Lacs plus interest.

The petitioners claimed to have deposited the entire settled amount and costs by 11.10.2023, following which possession was restored.

The Bank refused to return the original title deeds, contending that liability persisted for three other loan accounts.

The petitioners approached the High Court under Article 226 seeking a direction for the return of deeds, a No Dues Certificate, and compensation as per RBI Circulars.

1. Whether a writ petition under Article 226 of the Constitution of India is maintainable when a statutory remedy is available under the SARFAESI Act, 2002 and the RDB Act, 1993.

2. Whether the DRT/DRAT possesses the requisite power to direct the release of title documents and adjudicate disputes regarding the settlement of accounts.

High Courts should not entertain Article 226 petitions if effective statutory remedies exist, especially in recovery matters, as per United Bank of India v. Satyawati Tondon.

Judicial restraint should be exercised in SARFAESI matters as held in South Indian Bank Ltd. v. Naveen Mathew Philip and Celir LLP v. Bafna Motors (Mumbai) (P) Ltd.

Section 17(7) of the SARFAESI Act, 2002, read with Section 19(25) of the Recovery of Debts and Bankruptcy (RDB) Act, 1993, empowers the Tribunal to pass orders necessary to secure the ends of justice.

The Bank disputed the scope of the settlement, claiming it covered only one of four loan accounts, creating a "disputed question of fact" regarding the quantum of interest and the legality of the DRT’s extension of time.

The DRT is "well equipped and sufficiently empowered" under the residuary powers of Section 19(25) of the RDB Act to direct the return of documents, and the petitioners should have sought relief there instead of rushing to the High Court.

Article 226 is a rule of discretion, and in the presence of a detailed statutory mechanism under the SARFAESI Act, the High Court must exercise self-imposed restraint.

The Court dismissed the writ petition and granted liberty to the petitioners to file appropriate applications before the DRT, directing the Tribunal to decide the matter on its own merits without influence from the High Court's observations.