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2011 DIGILAW 802 (JHR)

Satyam Associates v. Canara Bank

2011-08-23

JAYA ROY, PRAKASH TATIA

body2011
JUDGMENT: Heard learned counsel for the appellant. 2. The appellant is aggrieved against the dismissal of its writ petition bearing No. W.P. (C) No. 5184 of 2009 by the order dated 29.03.2011. 3.The petitioner-appellant's contention is that the respondent-Bank has initiated action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (hereinafter referred to as “Act of 2002”), has not determined the liability of the writ petitioner-appellant and nor has followed the procedure under Section 14 thereof and, therefore, the respondent-Bank's taking over possession of petitioner's unit cannot be recognized in view of the violation of the procedure under Section 14 of the Act of 2002. It has also been submitted that at the time of filing of writ petition, the respondent-Bank even did not apply before Debt Recovery Tribunal much less to determination of liability of the petitioner by DRT and subsequent application of the Bank before the Debt Recovery Tribunal is of no relevance. It is also contended that the petitioner also submitted objection to the declaration of his account as N.P.A but that has not been considered and rejected by the Bank. Therefore, the Bank could not have proceeded under the Act of 2002 under Section 13 and 14 to take possession of the petitioner's property. 4. Learned counsel for the appellant relied upon a judgment of a Division Bench of this Court delivered in the case of Panjab & Sind Bank & Ors. Vs. M/s Stan Commodities Pvt. Ltd. reported in 2009 (3) JLJR 448 and submitted in the said judgment, Division Bench of this Court has held that, unless the liability is determined by the Debt Recovery Tribunal, proceedings under the Act of 2002 cannot be initiated. 5. We considered the submissions of the learned counsel for the appellant and perused the facts of the case. 6. It is the admitted case of the petitioner-appellant that the Bank straightway proceeded under the Act of 2002 and at the time of filing of writ petition, no matter was pending before the Debt Recovery Tribunal. The Act of 2002 is a separate and independent Act and not dependent upon the Recovery of Debts Due to Banks and Financial Institution Act, 1993 and the Bank could have proceeded, without approaching the Debt Recovery Tribunal, under the Act of 2002. The Act of 2002 is a separate and independent Act and not dependent upon the Recovery of Debts Due to Banks and Financial Institution Act, 1993 and the Bank could have proceeded, without approaching the Debt Recovery Tribunal, under the Act of 2002. Section 13 of the Act of 2002 is in Chapter III, providing for enforcement of security interest and Sub-Section (1) thereof provides that notwithstanding anything contained in Section 69 or Section 69-A of the Transfer of Property Act, 1882, any security interest created in favour of any secured creditor may be enforced, without the intervention of the Court or Tribunal, by such creditor in accordance with the provisions of this Act. Therefore, it is clear from this Section 13 (1) starting with non obstante clause, that the financial institutions without intervention of the Court or Tribunal enforce for recovery of secured amount even by by-passing the provisions of Section 69 and 69-A of the Transfer of Property Act, 1882. Sub-section (2) of Section 13 of the Act of 2002 provides that where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any installment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under Sub-Section (4 ) of Section 13. Clause (a) of Section 13 (4) empowers the creditor to take possession of the secured assets of the borrower. As we already noticed sub Section (1) of Section 13, for taking possession of assets of debtor, the financial institution is not required to obtain decree or order from any Court or Tribunal. For taking possession by financial institution, procedure has been given in Section 14 of the Act of 2002. 7. As we already noticed sub Section (1) of Section 13, for taking possession of assets of debtor, the financial institution is not required to obtain decree or order from any Court or Tribunal. For taking possession by financial institution, procedure has been given in Section 14 of the Act of 2002. 7. Learned counsel for the appellant could not draw our attention to any of the provisions which provides that for taking action under Section 13 (3), there is a pre-requisite condition of obtaining the order form the Debt Recovery Tribunal and argument of the learned counsel for the appellant is just opposite to the provisions of Section 13 (1), which clearly provides that secured creditors may enforce their right without intervention of the Tribunal and without intervention of the Court. The judgment relied upon by the learned counsel for the appellant delivered in the Case of Panjan & Sind Bank & Ors (Supra) also nowhere says that determination of the amount by the Debt Recovery Tribunal is a pre-condition for proceeding under the Securitization Act and the decision is a brief one, wherein even the direction of the learned Single Judge quashing and setting aside the action of the appellant-Bank taken under Act of 2002 was stayed and after relying upon the judgment of the Hon'ble Supreme Court delivered in the case of Trascore Vs. Union of India & Anr. Reported in (2008)1SCC 125, it has been noticed that the Hon'ble Supreme Court in the said case has clearly held that the proceeding under the Debt Recovery Tribunal Act is not a pre-condition for taking recourse to the NPA Act and from the Section 13 of the Securitization Act, 2002, also it is clear that no order of Tribunal is required for proceeding under Section 13 of the Act of 2002. 8. At this juncture, it would be relevant to mention here that the appellant-petitioner was duly served notice under Section 13(2), for which the writ petitioner-appellant submitted his representation and it has been contended that the petitioner's representation has not been considered and if so, then that may be a ground to challenge the action of the respondent-Bank in accordance with law only as per the provisions of Section 17(1) of the Act of 2002. It has been specifically provided that any person referred to in Section 13 (2) can prefer any appeal before the Debt Recovery Tribunal against the action of the financial institution in such situation. 9. In view of the above reasons also, the learned Single Judge was justified in holding that, if the petitioner was aggrieved against the action of the respondent-Bank, he could have preferred an appeal under Section 17 of the Act of 2002. 10. Keeping in view the above reasons, we are of the considered opinion that there is no merit in this appeal. This appeal accordingly is dismissed. 11. At this juncture, learned counsel for the appellant submitted that the appellant may be permitted to avail the remedy of appeal before the Debt Recovery Tribunal under Section 17 of Act of 2002. If the appellant wants to take that recourse, he is free to do so. In case, the appellant files an appeal under Section 17 of the Act of 2002 along with limitation application, the Debt Recovery Tribunal may pass appropriate order after taking into account all the circumstances.