Writ Petition Not Maintainable Against Private Asset Reconstruction Company Enforcing Security Interest Under SARFAESI Act

The petitioner, an ex-serviceman, availed a financial facility of ₹25,00,000 and allegedly repaid ₹38,02,609.

Claiming the secured creditor charged exorbitant interest, the petitioner filed a civil suit (EIOP No. 47/2025) under the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003, which is currently pending mediation.

During the pendency of the suit, the first respondent, a private Asset Reconstruction Company (ARC), issued a pre-sale auction notice dated 17.03.2026 under the SARFAESI Act.

The petitioner approached the High Court under Article 226 seeking a Writ of Mandamus to quash the auction notice and direct respondents to participate in the civil court proceedings.

1. Whether a writ petition under Article 226 is maintainable against a private Asset Reconstruction Company (ARC) enforcing a security interest.

2. Whether the petitioner can seek to quash an auction notice via a Writ of Mandamus instead of Certiorari.

3. Whether the pendency of proceedings under a State Act (Tamil Nadu Prohibition of Charging Exorbitant Interest Act) overrides the statutory mechanism of the SARFAESI Act.

Statement identifying Article 226 of the Constitution of India, noting that writs lie only against the "State" or entities performing public functions.

Reliance on Phoenix ARC (P) Ltd. v. Vishwa Bharati Vidya Mandir, which held that a private ARC enforcing a debt is not performing a public function.

Section 17, 34, and 35 of the SARFAESI Act, 2002; Section 17 provides an alternative remedy before the DRT, Section 34 bars civil court jurisdiction, and Section 35 mandates that the SARFAESI Act overrides inconsistent state laws.

Citation of PHR Invent Educational Society v. UCO Bank regarding the refusal of writ jurisdiction where alternative statutory remedies exist.

The Court reasoned that the first respondent is a private corporate entity and its enforcement of a security interest is a private contractual right, not a sovereign or public duty; thus, it is not "State" under Article 12, making the writ non-maintainable.

Procedurally, the Court found the prayer defective as the petitioner sought a 'Mandamus' to 'quash' records, which is the province of 'Certiorari'.

On merits, the Court observed that the SARFAESI Act is a self-contained code; since Section 17 provides a specific grievance redressal mechanism (DRT), the High Court should not exercise extraordinary jurisdiction.

The Court held that under Section 35 of the SARFAESI Act, the Central Act prevails over the Tamil Nadu State Act. Therefore, the pending civil suit cannot stall the statutory recovery process.

The Court dismissed the writ petition as not maintainable. The interim application was closed, and no costs were awarded.