CHIEF MANAGER-CUM-AUTHORIZED OFFICER, UNION BANK OF INDIA, JHARSUGUDA V. RAJESH KUMAR AGRAWAL & ANR., W.P.(C) NO. 41680 OF 2023
Date of Judgment: July 1, 2024
FACTS: The first opposite party was a mortgagor and guarantor for a company's credit facilities. Following the company's failure to repay the loan, the petitioner-bank recalled the loan and issued a demand notice. When repayment was not forthcoming, the bank issued a further notice under Section 13(4) of the SARFAESI Act, read with Rule 8 of the Security Interest (Enforcement) Rules, 2002, seeking possession of the property. The first opposite party filed an appeal under Section 17(1) of the SARFAESI Act. Subsequently, the bank published an e-auction sale notice, which led the first opposite party to approach the District Consumer Commission, Jharsuguda, under Section 35 of the Consumer Protection Act. The Commission issued an ex-parte stay on the auction. Aggrieved by this order, the petitioner-bank filed a writ petition in the High Court.
ISSUE: Whether Consumer Commissions have jurisdiction to entertain suits or proceedings that fall within the purview of the Debt Recovery Tribunal (DRT) or the Appellate Tribunal under the SARFAESI Act?
OBSERVATION: The Court examined Sections 34 (bar on jurisdiction of Civil Court), 35 (SARFAESI Act's overriding effect), and 37 (application of other laws not barred) of the SARFAESI Act. Section 34 bars any court or "other authority" from entertaining suits or proceedings related to matters under the SARFAESI Act. Section 37's reference to "other authority" must be interpreted broadly to include Consumer Commissions, thus upholding the legislative intent of the SARFAESI Act.
The Court noted that Section 35 of the SARFAESI Act, when read with Section 37 and in conjunction with Section 100 of the Consumer Protection Act, indicates that any actions taken under the SARFAESI Act or RDDB Act must be governed by these statutes alone. Consequently, other laws, including the Consumer Protection Act, must yield to the SARFAESI Act in such matters.
As a result, the Court imposed a fine of ₹1,00,000 on the first opposite party, directing the amount to be deposited with the Welfare Fund of the Jharsuguda District Bar Association.
