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2012 DIGILAW 2190 (ALL)

Raj Narayan Singh v. State of U. P. and Others

2012-09-19

ABHINAVA UPADHYA, ASHOK BHUSHAN

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Abhinava Upadhya, J.— Heard Sri M.M.Sahai, learned counsel for the petitioner and Sri G.P.Srivastava, learned counsel appearing for respondents No. 2 to 4. Learned Standing Counsel appeared for respondent No.1. 2. By this writ petition, the petitioner has prayed for quashing the letter dated 31.8.2012 by which letter, the petitioner was communicated that his representation is not acceptable. 3. A notice under section 13(2) of the SARFAESI Act, 2002 was issued in the name of respondent No.5 in which in property particulars, the name of the petitioner was also mentioned as owner of plot No.871. The petitioner filed a writ petition in this Court being writ petition No.44876 of 2012 stating that the petitioner had filed an objection under section 13(3-A) of the SARFAESI Act, which has not yet been decided. When the case was taken up on 5.9.2012, learned counsel for the Bank informed the Court that the objection has already been decided on 31.8.2012. In view of the aforesaid, the writ petition was dismissed as infructuous. 4. Now, this writ petition has been filed challenging the letter dated 31.8.2012. By the letter dated 31.8.2012, the petitioner was informed that the property has been mortgaged in the Bank and in the documents of mortgage, the petitioner has also signed. Learned counsel for the respondent Bank informs that the petitioner's signatures were as guarantor and due to this reason, the representation was rejected. 5. Learned counsel for the petitioner Sri M.M.Sahai challenging the letter dated 31.8.2012 submitted that under section 13 (3-A), it was incumbent upon the Bank to decide the objection of the petitioner. He has also placed reliance on a decision in the case of Mardia Chemicals Ltd. etc. etc. Vs. Union of India and others etc. etc. (2004)3 UPLBEC 2191, para 77 and 80 and he submits that it was incumbent upon the Bank to apply its mind on the objection and then decide the objection. He submitted that the Bank has not considered the objection. 6. On the other hand, learned counsel for the Bank submitted that the Bank has applied its mind on the objection of the petitioner and after perusing the evidence of mortgage document etc. has rightly rejected the objection. He submitted that the Bank has not considered the objection. 6. On the other hand, learned counsel for the Bank submitted that the Bank has applied its mind on the objection of the petitioner and after perusing the evidence of mortgage document etc. has rightly rejected the objection. He further submitted that till date, the Bank has not invoked the power under section 13 (4), however, the Bank is intending to take action under section 13 (4) of the SARFAESI Act, 2002. 7. The objections which were submitted by the petitioner dated 5.6.2012 after notice under section 13(2) have been replied by the letter dated 31.8.2012. Section 13(3-A) provides as follows: "If, on receipt of the notice under sub-section (2), the borrower makes any representation or raises any objection, the 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 17A" Section 13(3-A) requires the Bank to communicate the reasons for non-acceptance of the representation or the objection of the borrower, in event, any objection is submitted by the borrower after the receipt of the notice under section 13 (2). 8. The Apex Court in the case of Mardia Chemicals Ltd. (Supra) in paras 77 and 80-I has laid down the following: "77. It is also true that till the stage of making of the demand and notice under section 13(2) of the Act, no hearing can be claimed for by the borrower. But looking to the stringent nature of measures to be taken without intervention of court with a bar to approach the court or any other forum at that stage, it becomes only reasonable that the secured creditor must bear in mind the say of the borrower before such a process of recovery is initiated. But looking to the stringent nature of measures to be taken without intervention of court with a bar to approach the court or any other forum at that stage, it becomes only reasonable that the secured creditor must bear in mind the say of the borrower before such a process of recovery is initiated. So as to demonstrate that the reply of the borrower to the notice under section 13(2) of the Act has been considered applying mind to it. The reasons howsoever brief that may be for not accepting the objections, if raised in the reply, must be communicated to the borrower. True, presumption is in favour of validity of an enactment and a legislation may not be declared unconstitutional lightly more so, in the matters relating to fiscal and economic policies resorted to in the public interest, but while resorting to such legislation it would be necessary to see that the persons aggrieved get a fair deal at the hands of those who have been vested with the powers to enforce drastic steps to make recovery. 80. Under the Act in consideration, we find that before taking action a notice of 60 days is required to be given and after the measures under section 13(4) of the Act have been taken, a mechanism has been provided under section 17 of the Act to approach the Debt Recovery Tribunal. The above noted provisions are for the purposes of giving some reasonable protection to the borrower. Viewing the matter in the above perspective, we find what emerges from different provisions of the Act, is as follows : 1. Under sub-section (2) of section 13 it is incumbent upon the secured creditor to serve 60 days notice before proceeding to take any of the measures as provided under sub-section (4) of section 13 of the Act. After service of notice, if the borrower raises any objection or places facts for consideration of the secured creditor, such reply to the notice must be considered with due application of mind and the reasons for not accepting the objections, howsoever brief they may be, must be communicated to the borrower. In connection with this conclusion we have already held a discussion in the earlier part of the judgment. In connection with this conclusion we have already held a discussion in the earlier part of the judgment. The reasons so communicated shall only be for the purposes of the information/knowledge of the borrower without giving rise to any right to approach the Debt Recovery Tribunal under section 17 of the Act, at that stage." 9. The Apex Court in the aforesaid judgment has laid down that it is incumbent upon the secured creditor before taking any measure under section 13(4), to reply the objection, if any, after due application of mind and reasons for not accepting the objection must be communicated to the borrower. It has further been observed in the judgment that the reasons so communicated shall only be for the purpose of information or knowledge of the borrower without giving any right to approach the Debt Recovery Tribunal under section 17 at that stage. The object and purpose of section 13 (3A) is to inform the borrower the reasons for not accepting the objection and that does not give any cause of action for the borrower to approach the Debt Recovery Tribunal at that stage. The intention of the Legislature is clear that the rejection of the objection of a borrower under section 13(3-A) of the SARFAESI Act is not to be made an issue nor a forum is contemplated for deciding the said objection on merit at that stage. As soon as the action is taken by the Bank under section 13(4), opportunity and forum is provided under section 17 to all to raise the issue. 10. Learned counsel for the petitioner is right in his submission that in view of the judgment of the Apex Court, the Bank has to apply its mind. 11. A perusal of the order dated 31.8.2012 clearly indicates that the objections raised by the petitioner have been adverted to by the Bank and the Bank has communicated the decision for not accepting the objection. Thus, it cannot be said that the Bank has not applied its mind to the objection of the petitioner. The remedy of the petitioner is to invoke section 17 of the Act, if recourse is taken by the Bank under section 13(4) of the Act. Thus, it cannot be said that the Bank has not applied its mind to the objection of the petitioner. The remedy of the petitioner is to invoke section 17 of the Act, if recourse is taken by the Bank under section 13(4) of the Act. The petitioner cannot be said to be remedyless as the Statute itself has provided the remedy under section 17 of the SARFAESI Act, if the Bank has taken measures under section 13(4) of the Act. 12. In view of the aforesaid, we are of the view that reply to the objection having already been communicated to the petitioner after due application of mind, there is no occasion to entertain the writ petition. However, it shall always be open for the petitioner to invoke section 17 after the measures are taken by the Bank under Section 13(4) of the SARFAESI Act, 2002. 13. Subject to above observation, the writ petition is dismissed. _____________