High Court Civil Writ Petitions (CWP) under Article 226 in Banking & NPA Matters of Gross Injustice

1. Invoking Article 226 Extraordinary Constitutional Jurisdiction

While Section 17 of the SARFAESI Act 2002 provides an alternative statutory remedy before Debt Recovery Tribunals (DRT), the extraordinary constitutional jurisdiction of the High Court under Article 226 of the Constitution of India can be validly invoked in cases involving gross bank neglect, patent illegality, arbitrary NPA classification, or flagrant violation of fundamental principles of natural justice.

2. Key Grounds for High Court Civil Writ Petitions (CWP) in NPA Matters

• Violation of Article 14 Non-Arbitrariness Mandate: Where a Public Sector Bank or Financial Institution acts arbitrarily, selectively target borrowers, or violates its own mandatory non-discretionary recovery policies.
• Breach of Natural Justice in Section 13(3A) Rejection: Where the bank fails to provide a reasoned, non-stereotypical reply to borrower objections prior to taking coercive physical possession under Section 13(4) / Section 14.
• Enforcement of Statutory Exemptions (Section 31(i)): Where a bank illegally initiates SARFAESI action against agricultural land in direct defiance of the absolute statutory bar under Section 31(i).
• Arbitrary SMA/NPA Date Manipulation: Where the lender miscalculates the 90-day overdue period or fails to credit payments made before the cutoff date, leading to premature account classification.

3. Landmark Supreme Court Rulings on High Court Writ Maintenance

Although the Supreme Court in United Bank of India v. Satyawati Tondon (2010) emphasized exhaustion of statutory remedies before DRT, subsequent Constitution Bench and Division Bench judgments have affirmed that High Courts retain full jurisdiction to entertain CWPs under Article 226 where:
1. The bank's action is fundamentally without jurisdiction or unconstitutional.
2. There is a complete violation of natural justice (audi alteram partem).
3. The statutory tribunal (DRT) is non-functional or lacks quorum in the relevant state jurisdiction.