SARFAESI Act. Loan granted by Financial Institutions retain its character of public money given in the fiduciary capacity. Writ Courts cannot interfere with recovery proceedings. Karnataka High Court. 13:11:2020

U.M. Ramesh Rao and others vs Union Bank of India. Writ Petition 12461/2020 decided on 13 November 2020.

Judgments: http://judgmenthck.kar.nic.in/judgmentsdsp/bitstream/123456789/348187/1/WP12461-20-13-11-2020.pdf

Relevant paragraphs: 12. In the case of, United Bank of India Vs. Satyawati Tandon and others it is held that when a particular Legislation contains a detailed mechanism for redressal of grievance, High Court should not interfere under Article 226 of the Constitution of India.

13.… it is the solemn duty of the Court to apply the correct law without waiting for an objection to be raised by a party when the law stands well settled. In financial matters, grant of ex parte interim orders can have deleterious effect. Loans from Financial Institution are granted by public money generated at tax payers’ expense. Such loan does not become the property of the person taking the loan but retains its character of public money given in the fiduciary capacity.

Admittedly, Bank has initiated proceedings under the SARFAESI Act. Petitioners’ remedy lies in an appeal under Section 17 of the SARFAESI Act. In view of this  settled position, this petition must fail and it is accordingly dismissed.

Compiled by S. Basavaraj, Advocate, Daksha Legal.