National

Don’t Encourage Attempts To Circumvent Statutory Remedies: SC To HCs Dealing With Commercial Matters

The Supreme Court recently stated that High Courts should only exercise their jurisdiction in commercial matters only in extraordinary circumstances.

A bench of Justice Sanjiv Khanna and Justice MM Sundresh stated that litigants cannot be allowed to avoid the route of approaching tribunals.

“Approaching the High Court for the consideration of an offer by the borrower is also frowned upon by this Court…More circumspection is required in a financial transaction, particularly when one of the parties would not come within the purview of Article 12 of the Constitution of India. When a statute prescribes a particular mode, an attempt to circumvent shall not be encouraged by a writ court,” the order reads.

The Supreme Court specifically stated that the Punjab and Haryana High Court was guilty of allowing writ petitions in this regard.

We are also constrained to take judicial notice of the fact that certain High Courts continue to interfere in such matters, leading to a regular supply of cases before this Court. One such High Court is that of Punjab & Haryana.

The Court made these remarks while deciding a case in which the question of whether High Courts can exercise writ jurisdiction when an alternative remedy under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act is available was raised.

The Bench issued notice on the current South Indian Bank petition in December 2022, challenging a Kerala High Court decision that allowed deferred payment schedules for bank borrowers even though the bank had initiated SARFAESI proceedings.

The appellant-bank claimed that a constitutional court’s intervention in private contractual disputes between lenders and borrowers seriously harmed Kerala’s banks.

It was pointed out that the case under consideration was not a one-off, but rather part of a long line of cases in which the High Court exercised its writ jurisdiction and permitted protracted payments.

The Court stated that the issue was well-established in the law. It explained that the powers of High Courts under Article 226 were broad but should be used with caution.

…we are conscious of the fact that the powers conferred under Article 226 of the Constitution of India are rather wide but are required to be exercised only in extraordinary circumstances in matters pertaining to proceedings and adjudicatory scheme qua a statute, more so in commercial matters involving a lender and a borrower, when the legislature has provided for a specific mechanism for appropriate redressal.

The order under challenge was not interfered with since counsel pointed out that the concerned Debts Recovery Tribunal (DRT) was not functional at the time.

 

Nunnem Gangte

Recent Posts

Centre Opposes Ex-Judges Panel To Monitor Stubble Burning In SC

The Centre on Friday opposed a proposal in the Supreme Court to form a committee…

12 hours ago

“It’s A Celebration For Us”: Delhi HC Bar Association Felicitates CJI Sanjiv Khanna

The Delhi High Court Bar Association on Friday honored Chief Justice of India Justice Sanjiv…

12 hours ago

International Criminal Court Issues Arrest Warrant For Israeli PM Netanyahu

The International Criminal Court has recently issued arrest warrants for Israeli Prime Minister Benjamin Netanyahu,…

13 hours ago

Cal HC Stays Demolition Of Illegal Constructions In WB’s Mandarmoni

The Calcutta High Court on Friday granted an interim stay on the demolition of alleged…

13 hours ago

SC To Pass Order On Pleas To Efface Words ‘Secular’, ‘Socialist’ From Preamble

The Supreme Court on Friday announced that it would deliver its order on November 25…

14 hours ago

Air Pollution: SC Questions Delhi Govt On Truck Entry Amid GRAP-4 Restrictions

The Supreme Court raised concerns on Friday about the "drastic" consequences of the GRAP Stage…

14 hours ago