High Court declines writ against SARFAESI action by private ARC, directs aggrieved buyer to approach DRT

Jaipur/Jodhpur: The Rajasthan High Court has reiterated that writ jurisdiction under Article 226 of the Constitution cannot be invoked against recovery measures initiated by a private financial institution under the SARFAESI Act, where an effective statutory remedy before the Debt Recovery Tribunal is available.

Justice Sunil Beniwal, while dismissing a writ petition challenging a notice issued under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, held that a private asset reconstruction company does not fall within the definition of “State” under Article 12 and is therefore not amenable to writ jurisdiction.

The court further held that the expression “any person” under Section 17 of the SARFAESI Act is of wide import and includes not only borrowers and guarantors but also third parties whose rights are affected by recovery measures. Such aggrieved persons, the court said, must avail the statutory remedy before the Debt Recovery Tribunal rather than approaching the High Court.

Applying these principles to the facts of the case, the court examined a writ petition filed by Rajeev Bhandari, a resident of Jodhpur, who had purchased a flat in Parshvanath City in August 2018 and had been residing there with his family since then.

The petitioner challenged a notice dated September 24, 2025, issued by Edelweiss Asset Reconstruction under Section 13(4) of the SARFAESI Act, treating the flat as a secured asset. He contended that the proceedings were illegal as he was neither a borrower nor a guarantor and that mandatory steps under Sections 13(2) and 13(3) of the Act had not been followed.

The petitioner also argued that the remedy before the Debt Recovery Tribunal was not available to him and relied on a recent Supreme Court judgment to contend that writ jurisdiction could be invoked in cases involving title disputes.

The High Court, however, rejected these submissions, observing that the recovery action had been initiated by a private financial institution, which was not performing any public function. Relying on Supreme Court precedents, including Phoenix ARC Private Limited vs Vishwa Bharati Vidya Mandir and United Bank of India vs Satyawati Tondon, the court held that even third-party purchasers affected by SARFAESI measures qualify as “aggrieved persons” and can approach the Debt Recovery Tribunal under Section 17.

The court also noted that the impugned notice was not directly addressed to the petitioner, but since the flat owned by him was treated as a secured asset allegedly mortgaged by the developer, his grievance could be adequately examined by the Tribunal.

Holding that no title dispute was involved in the present case and that an efficacious alternative remedy was available, the High Court dismissed the writ petition as not maintainable, while granting liberty to the petitioner to pursue appropriate proceedings before the competent forum in accordance with law.

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Case Title
Rajeev Bhandari vs Jodhpur Development Authority & Others
S.B. Civil Writ Petition No. 20117/2025
High Court of Judicature for Rajasthan at Jodhpur

Advocates
For the petitioner: Mr. Manish Patel, Ms. Nandipna Gehlot
For the respondents: None appeared