Do not encourage attempts to circumvent statutory remedies: Supreme Court to High Courts dealing with commercial matters

The Supreme Court on Monday made it clear that High Courts are to exercise their jurisdiction in commercial matters only in extraordinary circumstances. [South Indian Bank Ltd and ors v Naveen Mathew Phillip and anr etc etc]..A Bench of Justices Sanjiv Khanna and Justice MM Sundresh stated that litigants cannot be allowed to avoid the route of approaching tribunals in such matters."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 stated..Pertinently, the top court observed that the Punjab & 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 observations while disposing of a case that posed the question whether High Courts can exercise their writ jurisdiction when an alternative remedy under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act is available.The Bench had in December 2022 issued notice on the present plea by South Indian Bank, challenging a judgment of the Kerala High Court that had allowed deferred payment schedules for bank borrowers even as the bank had initiated SARFAESI proceedings.The appellant-bank claimed that interference by a constitutional court to decide on private contractual disputes between lenders and borrowers seriously prejudiced the banks in Kerala.It was pointed out that the judgment under challenge was not a one-off case, but forms part of a long line of cases in which the High Court has used its writ jurisdiction and allowed protracted payments..The Court noted that the issue was well-settled in law. It explained that the powers of High Courts under Article 226 were wide-ranging, but needed to be exercised cautiously. "...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. A copy of the judgment was directed to be sent to the High Courts of Kerala and Punjab & Haryana.Senior Advocate KV Viswanathan along with advocates A Karthik and Arsh Khan appeared for the appellants. Senior Advocate Shyam Divan appeared for the respondents..[Read judgment]