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2008 DIGILAW 879 (ORI)

Krushna Chandra Sahoo v. Bank of India

2008-09-25

B.N.MAHAPATRA, B.S.CHAUHAN

body2008
Judgement Dr. B. S. CHAUHAN, C. J. :- This writ petition has been filed raising large number of issues including factual controversy pointing out that the documents with the bank are not genuine and signature of the petitioner purported to have been made on the same are forged. However, at the time of submission Mr. P. Acharya, learned counsel for the petitioner restricted the case that the notice under Section 13 (4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter called the "Act") has been issued without meeting the requirement of Section 13 (3-A) of the Act read with Rule 3-A of the Security Interest (Enforcement) Rules, 2002 (hereinafter called the "Rules"). 2. The facts necessary for determining the controversy invoked herein are that the notice under Section 13 (2) of the Act was served upon the petitioner on 13-2-2008 (Annex. 1). The petitioner submitted his objection through his counsel Shri N. Pati on 7-3-2008 taking several objections including factual controversies. In spite of raising the objection, the impugned notice dated 28-5-2008 under Section 13 (4) of the Act has been issued without deciding the said objections. Hence this writ petition. 3. Mr. P. Acharya, learned counsel for the petitioner has submitted that in view of the provisions contained in Section 13 (3-A) of the Act and Rule 3-A of the Rules it was mandatory on the part of the opposite party No. 1 - authority to first deal with the objection filed by the petitioner by a reasoned order and only then to issue notice under Section 13 (4) of the Act. Therefore, the impugned notice dated 28-5-2008 is liable to be quashed. 4. On the contrary, Mr. Tuna Sahu, learned counsel for opposite party No. 1 bank has submitted that the financial institution has received the objection of the petitioner. But, the bank did not think it proper to consider the same on the ground that the objection was filed by the petitioner's counsel and not by the petitioner himself. Thus, the impugned notice under Section 13 (4) has rightly been issued ignoring the said objection. The petition is liable to be dismissed. 5. We have considered the rival submissions made by the learned counsel for the parties and perused the record. 6. Thus, the impugned notice under Section 13 (4) has rightly been issued ignoring the said objection. The petition is liable to be dismissed. 5. We have considered the rival submissions made by the learned counsel for the parties and perused the record. 6. Admittedly, initially the Act did not contain any provision to consider the objections filed by the borrower or guarantor in reply to the notice under Section 13 (2). However, by amendment the provisions of sub-section (3-A) of Section 13 were inserted with effected from 11-11-2004 and the said provisions read as under : "(3-A) If, on receipt of the notice under sub-section (2), the borrower makes any representation or raises any objection, secured creditor shall consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate within one week of receipt of such representation or objection the reasons for non-acceptance of the representation or objection to the borrower. Provided that the reasons so communicated or the likely action of the secured creditor at the stage of communication of reasons shall not confer any right upon the borrower to prefer an application to the Debts Recovery Tribunal under Section 17 or the Court of District Judge under Section 17-A." Corresponding change was also brought into the Rules by inserting Rule 3-A to the Rules of 2002, which reads as under : "3-A. Reply to representation of the borrower. - (a) After issue of demand notice under sub-section (2) of Section 13, if the borrower makes any representation or raises any objection to the notice, the Authorized Officer shall consider such representation or objection and examine whether the same is acceptable or tenable. (b) If, on examining the representation made or objection raised by the borrower, the secured creditor is satisfied that there is a need to make any changes or modifications in the demand notice, he shall modify the notice accordingly and serve a revised notice or pass such other suitable orders as deemed necessary, within seven days from the date of receipt of the representation or objection. (c) If on examining the representation made or objection raised, the Authorized Officer comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate within one week of receipt of such representation or objection, the reasons for non-acceptance of the representation or objection, to the borrower." 7. A conjoint reading of both the provisions referred to hereinabove makes it clear that it is obligatory on the part of the authority first to consider and dispose of the objection by a speaking and reasoned order and communicate the order of the person aggrieved i.e., the borrower/guarantor. It is a condition precedent for issuance of notice under Section 13 (4) of the Act. The authority cannot ignore the statutory provisions treating them merely to be a decoration piece in the statutes rather they require strict adherence for the simple reason that the financial institutions have been conferred with certain privileges for making expeditious recovery from the borrowers by-passing the onerous and lengthy procedure of civil suits. 8. A Constitution Bench of the Hon'ble Supreme Court in Sukhdev Singh and Ors. v. Bhagatram Sardar Singh Raghuvanshi and Anr., AIR 1975 SC 1331 held that the statutori authorities cannot deviate from the statutory provisions and any deviation, if so made, is required to be enforced by legal sanction of declaration by the Courts invalidating such actions in violation of the statutory Rules and Regulations. A similar view had been reiterated by the Apex Court in Ambika Quarry Works etc. v. State of Gujarat and Ors., AIR 1987 SC 1073 ; Purushottam v. Chairman, Maharashtra State Electricity Board and Ann, (1999) 6 SCC 49 : 1999 AIR SCW 4747 and Sultan Sadik v. Sanjay Raj Subba and Ors., AIR 2004 SC 1377 . 9. Therefore, it is evident that when the action of the instrumentalities of the State is not as per the Rules and Regulations and supported by the statute, the Court must exercise its jurisdiction to declare such an act illegal and invalid. It becomes the duty of the Court to ensure compliance of such Rules and Regulations for the reason that they are binding on the authorities. Any order or action done by the authority in violation of the statutory provisions is constitutionally illegal and this cannot claim any sanctity in law. It becomes the duty of the Court to ensure compliance of such Rules and Regulations for the reason that they are binding on the authorities. Any order or action done by the authority in violation of the statutory provisions is constitutionally illegal and this cannot claim any sanctity in law. There can be no obligation on the part of the Court to sanctify such illegal act. 10. When the statute provides for a particular procedure, the authority has to follow the same and cannot be permitted to act in contravention of the same. It has been hither to uncontroverted legal position that where a statute requires to do a certain thing in a certain way, the thing must be done in that way or not at all. Other methods or mode of performance are impliedly and necessarily forbidden. The aforesaid settled legal proposition is based on a legal maxim "Expressio unius est exclusio alterius", meaning thereby that if a statute provides for a thing to be done in a particular, then it has to be done in that manner and in no other manner and following other course is not permissible, Vide State of Bihar v. J.A.C. Saldanna, AIR 1980 SC 3276; Haresh Dayaram Thakur v. State of Maharashtra and Ors., (2000) 6 SCC 179 : AIR 2000 SC 2281 ; Prabha Shankar Dubey v. State of Madhya Pradesh, AIR 2004 SC 486 , and Indian Banks' Association v. Devkala Consultancy Service, AIR 2004 SC 2615 . 11. The attitude adopted by the opposite party No. 1 that it was under no obligation to dispose of the objection filed by the petitioner merely on the ground that it had been submitted through his counsel shocks the conscience of the Court. The petitioner had approached his counsel for better drafting and understanding so that it may facilitate the work of opposite party No. 1 as the lawyer being a well equipped person can draft the objection precisely bearing in mind the statutory provisions. Mr. Tuna Sahu, learned counsel for the opposite party No. 1 could not point out any bar provided by the opposite parties issuing any notification/ guidelines/circular that reply cannot be sent through the lawyer. Therefore, it could not have been ignored on the ground referred to above. 12. Admittedly, notice under Section 13 (4) is in total violation of the statutory requirement. Therefore, it could not have been ignored on the ground referred to above. 12. Admittedly, notice under Section 13 (4) is in total violation of the statutory requirement. The Gujarat High Court in dealing with a similar issue in Tensile Steel Ltd. and Anr. v. Punjab and Sind Bank and Ors., AIR 2007 Guj 126 has held as under : ".....Sub-section (3-A) of Section 13 of the Act of 2002 enjoins the Bank to consider and decide such reply/objection and to communicate the decision thereof. Unless and until the said exercise is completed, the Bank is not authorised to proceed further and take any of the measures under subsection (4) of the said Section 13. In the present case, it is indisputable that the Bank, without complying the mandatory requirement under sub-section (3-A) of the said Section 13, proceeded further under sub-section (4) of the said Section 13, took the assistance of the District Magistrate under Section 14 of the Act of 2002; and took over the possession of the secured assets. The action of the Bank is certainly contrary to the statutory mandate........" Thus, disposal of objections by a speaking/reasoned order is a mandatory requirement under the statutory provisions itself. 13. Mr. Tuna Sahu, learned counsel for the opposite party-bank could not furnish any explanation as under what circumstance the impugned notice under Section 13 (4) could be issued without disposing of the objection as required under Section 13 (3-A) of the Act and Rule 3-A of the Rules of 2002. 14. In view of the above, the writ petition succeeds and is allowed and impugned notice dated 28-5-2008 (Annex. 1) is hereby quashed. The opposite party No. 1 - bank is directed to decide the aforesaid objection filed by the petitioner by a speaking and reasoned order and communicate the same to the petitioner. However, it shall be open for the bank to proceed further in accordance with law. 15. B. N. MAHAPATRA, J. :- I agree. Petition allowed.