The Andhra Pradesh High Court has reaffirmed that borrowers cannot bypass the specialized forum established under the SARFAESI Act by filing writ petitions while parallel proceedings remain pending before the Debt Recovery Tribunal. This ruling reinforces the statutory framework designed to channel financial disputes through expert tribunals, preventing forum shopping and ensuring procedural discipline.
Background & Facts
The Dispute
The petitioner, a 67-year-old borrower, defaulted on a loan availed from Shriram Finance Limited. In response, the lender initiated enforcement proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) to take possession of the secured property - a building in Srikakulam District. The petitioner challenged these actions by filing a securitization application (S.A. No. 29 of 2026) before the Debts Recovery Tribunal (DRT), Visakhapatnam, which is the statutorily mandated forum for such disputes.
Procedural History
- 2025: Lender issued possession notice under Section 13(4) of the SARFAESI Act.
- 2026: Petitioner filed S.A. No. 29 of 2026 before the DRT seeking to set aside the enforcement.
- Simultaneously: Petitioner filed I.A. No. 144 of 2026 seeking interim stay on possession proceedings.
- 06.01.2026: Advocate Commissioner, appointed by the lender, served notice for physical takeover of the property.
- 18.01.2026: Petitioner filed Writ Petition No. 1807/2026 before the High Court, alleging delay by the DRT in deciding the interim application and seeking restraint on possession.
Relief Sought
The petitioner sought a writ of mandamus directing the DRT to decide I.A. No. 144 of 2026 expeditiously and restraining the lender from taking physical possession until the DRT disposed of the stay application.
The Legal Issue
The central question was whether a borrower, who has already invoked the remedy under the SARFAESI Act by filing a securitization application before the DRT, can maintain a parallel writ petition under Article 226 of the Constitution challenging the same enforcement action, particularly when the DRT’s interim application remains undecided.
Arguments Presented
For the Petitioner
Counsel argued that the DRT’s inaction on I.A. No. 144 of 2026 amounted to a violation of natural justice and rendered the statutory remedy ineffective. He contended that the lender’s attempt to take possession while the stay application was pending was coercive and prejudicial, warranting immediate judicial intervention under Article 226. Reliance was placed on Mardia Chemicals Ltd. v. Union of India to argue that procedural fairness must prevail even within specialized forums.
For the Respondent
The Standing Counsel for Shriram Finance Limited submitted that the DRT is the exclusive forum under the SARFAESI Act for adjudicating disputes relating to enforcement of security interest. Citing Saraswati Industrial Syndicate Pvt. Ltd. v. C.I.T., the respondent emphasized that writ jurisdiction under Article 226 is not available when an effective alternative remedy exists. The lender further argued that the petitioner’s petition was an attempt to circumvent the statutory scheme and delay enforcement.
The Court's Analysis
The Court examined the legislative intent behind the SARFAESI Act, noting that Parliament deliberately created a specialized, time-bound mechanism to resolve financial disputes, excluding ordinary courts from interference. The Court observed that the DRT is not merely an administrative body but a quasi-judicial tribunal vested with powers equivalent to a civil court under the Code of Civil Procedure.
"The Act envisages a comprehensive and self-contained code for enforcement of security interest, and the DRT is the sole forum for adjudication of disputes arising thereunder. Parallel proceedings before the High Court would defeat the very purpose of the statutory framework."
The Court acknowledged the petitioner’s concern regarding delay in deciding I.A. No. 144 of 2026 but held that such delay, however regrettable, does not automatically render the statutory remedy inadequate. The remedy of approaching the DRT remains available and effective. The Court further noted that the petitioner had not demonstrated any mala fide or procedural illegality by the DRT beyond mere delay, which is not sufficient to invoke writ jurisdiction.
However, recognizing the urgency of the matter and the potential for irreparable harm to the petitioner if possession were taken before the stay application was heard, the Court exercised its inherent power under Article 226 to issue a specific direction to ensure timely adjudication.
The Verdict
The petitioner’s writ petition was dismissed as maintainable, but the Court directed the DRT to hear and decide I.A. No. 144 of 2026 expeditiously by 5:00 P.M. on 23.01.2026. The lender was restrained from taking physical possession of the property until the DRT rendered its order. No costs were awarded.
What This Means For Similar Cases
Exhaustion of DRT Remedy Is Mandatory
- Practitioners must advise borrowers to exhaust all remedies before the DRT before approaching High Courts under Article 226.
- Writ petitions filed solely to expedite DRT proceedings will be dismissed unless there is clear evidence of bias, mala fide, or total denial of hearing.
Judicial Intervention Limited to Gross Inaction
- Courts may intervene only when DRT inaction is prolonged, arbitrary, or amounts to a complete abdication of duty.
- A mere delay in hearing an interim application, without proof of prejudice or bad faith, does not justify writ jurisdiction.
Stay on Possession Requires DRT’s Sanction
- Lenders cannot proceed with physical possession while a stay application is pending before the DRT, even if the DRT has not yet ruled.
- Borrowers must file I.A. under Section 17(3) of the SARFAESI Act and await its adjudication; unilateral restraint by High Court is exceptional and conditional.
