UNITED BANK OF INDIA versus SATYAWATI TONDON AND OTHERS

Citation: [2010] 9 S.C.R. 1 · Decided: 26-07-2010 · Supreme Court of India · Bench: G.S. SINGHVI, A.K. GANGULY · Disposal: Appeal(s) allowed

Cited by 15 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[201 O] 9 S.C.R. 1 
UNITED BANK OF INDIA 
v. 
SATYAWATI TONDON AND OTHERS 
(Civil Appeal No. 5990 of 2010) 
JULY 26, 2010 
[G.S. SINGHVI AND ASOK KUMAR GANGULY, JJ.] 
A 
B 
Securitization and Reconstruction of Financial Assets and 
Enforcement of Security Interest Act, 2002 - ss.13(2), 13(4) 
and 14 - Entitlement of bank to recover outstanding dues from C 
the guarantor without proceeding against the borrower -
Appellant-bank issued notices to the guarantor u/s. 13(2) and 
13( 4) and filed application uls. 14 without first initiating action 
against the borrower for recovery of the outstanding dues -
Held: The action taken by the appellant cannot be faulted on D 
any legally permissible ground - The High Court completely 
misdirected itself in assuming that the appellant could not 
have initiated action against the guarantor without making 
efforts for recovery of its dues from the borrower- Banks/ 
Banking. 
E 
Constitution of India, 1950: 
Article 136 - Interference with interim order passed by 
High Court -
Scope - Appellant-bank initiated action for 
recovery of outstanding dues in terms of the provisions of the 
F 
SARFAESI Act - Interim order by High Court restraining the 
bank from proceeding under the Act - Challenge to - Held: 
Normally the Supreme Court does not interfere with the 
discretion exercised by High Court to pass an interim order 
in a pending matter - However, on facts, an exception is G 
required to be made out as the order under challenge had the . 
effect of defeating the very object of the said legislation to 
ensure that there were no unwarranted impediments in the 
recovery of tlle debts, etc. due to banks, other financial 
1 
H 
2 
SUPREME COURT REPORTS 
[2010] 9 S.C.R. 
A institutions and secured creditors -
Securitization and 
Reconstruction of Financial Assets and Enforcement of 
Security Interest Act, 2002. 
Article 226 - Cases relating to recovery of dues of banks, 
8 
financial institutions and secured creditors - Exercise of power 
under Article 226 - Rules of self-imposed restraint to be kept 
in mind by the High Courts - The High Courts should be 
extremely careful and circumspect in exercising its discretion 
to grant stay in such matters - The High Courts should not 
ignore the availability of statutory remedies under the ORT 
C Act and SARFAESI Act and exercise jurisdiction under Article 
226 for passing orders which have serious adverse impact on 
the right of banks and other financial institutions to recover 
their dues. 
D 
Article 226 - Writ petition bypassing alternative statutory 
remedy - Maintainability of - Appellant-bank initiated action 
for recovery of outstanding dues in terms of the provisions of 
the SARFAESI Act - Writ petition filed challenging the action 
initiated by bank - Held:. The writ petition was liable to be 
E dismissed because an effective alternative remedy was 
available to the writ petitioner uls. 17 of the SARFAESI Act, 
which contained a detailed mechanism for redressal of his 
grievance - Securitization and Reconstruction of Financial 
Assets and Enforcement of Security Interest Act, 2002 -
F 
Remedy - Alternative remedy. 
Words and Phrases- "any person" (used in s.17(1) of the 
Securitization and Reconstruction of Financial Assets and 
Enforcement of Security Interest Act, 2002) - Meaning of 
G 
Respondent no.2 obtained a term loan from 
appellant-bank for opening a colour lab. Respondent no.1 
gave guarantee for repayment of the loan; she mortgaged 
her property and executed an agreement of guarantee 
making herself liable for repayment of the loan amount 
H with interest. 
UNITED BANK OF INDIA v. SATYAWATI TONDON 
3 
AND ORS. 
Respondent no.1, however, failed to repay the loan A 
amount, whereupon thd appellant issued notice against 
respondent nos.1 and 2 under s.13(2) of the Securitization 
and Reconstruction of Financial Assets and Enforcement 
of Security Interest Act, 2002 (SARFAESI Act) asking them 
to pay the outstanding dues alongwith future interest and 
B 
incidental expenses. Upon receipt of the notice, 
respondent no.1 offered to settle the loan account, but the 
appellant did not accept the offer and filed an application 
under Section 14 of the SARFAESI Act, which was 
allowed by the District Magistrate/Collector. Thereafter the c 
appellant issued notice to respondent nos.1 and 2 under 
Section 13(4) of the SARFAESI Act. 
Respondent no.1 filed writ petition and prayed that 
the appellant be restrained from taking coercive act

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