HILL TOP ESTATE v. UNION OF INDIA THR ITS SECRETARY AND ORS
Writ Maintainability Against DRT Orders - Jurisdictional Error in Granting Final Relief and Mortgage Redemption at Interim Stage Contrary to Section 13(8) of the SARFAESI Act.
Court: Bombay High Court
Citation: 2026:BHC-AS:13944-DB
Decision Date: 24-03-2026
List of Laws
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; Security Interest (Enforcement) Rules, 2002; Constitution of India, Articles 226 and 227; Insolvency and Bankruptcy Code, 2016; Transfer of Property Act, 1882
- Facts: The respondent borrower, Ritu Automobiles Private Limited (now in liquidation), and respondent guarantors defaulted on loan facilities from HDFC Bank. The bank initiated recovery under the Securitisation Act, issuing a Section 13(2) notice in 2020. After the borrower entered liquidation and the guarantors faced personal insolvency proceedings, the bank conducted an e-auction on June 21, 2025, where Hill Top Estate emerged as the successful bidder. The guarantors filed a Securitisation Application (SA) before the Debt Recovery Tribunal-III, Mumbai (DRT), challenging the sale notice. Despite the liquidator and the guarantors' resolution professional not objecting to the sale, the DRT passed an interim order on January 9, 2026, setting aside the auction sale. The DRT directed the bank to return the auction purchaser's deposit and allowed the guarantors to deposit the bid amount to stay fresh proceedings, effectively permitting redemption of the mortgage after the auction.
- Procedural Posture: The petitioner bank and the auction purchaser filed writ petitions under Article 226 of the Constitution of India directly before the Bombay High Court to challenge the DRT's interim order, bypassing the alternative remedy of an appeal to the Debt Recovery Appellate Tribunal (DRAT).
- Issue: Whether a writ petition is maintainable against a DRT order despite the availability of an alternative statutory remedy, and whether the DRT exceeded its jurisdiction by setting aside an auction sale and permitting redemption at an interim stage without specific prayers and in violation of Section 13(8) of the Securitisation Act.
- Holding: Yes, the writ petitions are maintainable due to jurisdictional errors. The High Court quashed the DRT's order, holding that the tribunal exceeded its jurisdiction.
- Reasoning: The Court reasoned that while High Courts should normally not entertain writ petitions when an alternative remedy exists, a "jurisdictional error" or an order in the "teeth of settled law" warrants interference. Under Section 13(8) of the Securitisation Act, as amended in 2016, the right of redemption is extinguished upon the publication of the auction notice. The DRT committed a manifest error by effectively granting redemption after the auction was concluded. Furthermore, the DRT granted final relief (setting aside the sale) at an interim stage, which is a recognized jurisdictional error. The Court also noted that the DRT granted reliefs that were not even prayed for in the interim application, constituting a grave procedural irregularity. Since the order was "without jurisdiction" as per the principles of "East India Commercial Company Limited", the petitioners were not required to be relegated to the DRAT.
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