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Madhya Pradesh High Court · body

2015 DIGILAW 1235 (MP)

Jagdish and Company v. IDBI Bank

2015-12-10

SUJOY PAUL

body2015
ORDER 1. This petition filed under Article 226 of the Constitution assails the notice dated 18.2.2015 (Annexure P-1) with the further prayer that petitioner be not dispossessed from the premises in question. 2. Shri Bhagwat, learned counsel for the petitioner submits that petitioner is a proprietorship firm who availed cash/credit loan facilities to the tune of Rs.2 Crore from the respondent No.2 in the year 2008. The petitioner No.2 is the guarantor to the said loan. The said loan was taken from the branch of respondent No.2 Bank. The petitioner is involved into business of trading cotton bales and raw cotton. The loan was availed for the said business. In the year 2012-2013, the petitioner No.1 suffered huge losses due to heavy recession and therefore his account became irregular. It is urged that despite all efforts the account could not be regularized and loan could not be paid in time. The respondent bank on 4.12.2014 issued a 60 days statutory notice under section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “SARFAESAI Act”). The petitioner after receiving the said notice dated 4.12.2014 (Annexure P-2) submitted a reply through his counsel on 25.1.2015 (Annexure P-3). The petitioner gave a proposal to the Bank for repayment through said reply. It is urged that the respondents have not taken any decision on the said reply which is bad in law. 3. Shri Bhagwat advanced three fold submissions. Firstly, it is urged that non acceptance of proposal (Annexure P-3) is bad in law and runs contrary to section 13(3A) of SARFAESAI Act. Secondly, it is contended that after issuance of notice (Annexure P-2) and even after issuing notice dated 18.2.2015 (Annexure P-1), the petitioner has repaid certain loan amount which was accepted by the respondents. This shows that a new contract came into being. Reliance is placed on section 62 of the Contract Act. Thirdly, Shri Bhagwat relied on rule 8(1) and (2) of the Security Interest (Enforcement) Rules, 2002, to contend that before issuing the impugned notice (Annexure P-1), the aforesaid Rules were not followed. To elaborate, it is contended that if section 13(3A) of SARFAESAI Act and rule 8(1) and (2) provide to do a thing in a particular manner, it has to be done in the same manner or not at all. To elaborate, it is contended that if section 13(3A) of SARFAESAI Act and rule 8(1) and (2) provide to do a thing in a particular manner, it has to be done in the same manner or not at all. He relied on a judgment of Calcutta High Court passed in Writ Petition No.13388(W) of 2014, Ali Hossain v. Paschimbanga Gramin Bank and others. In the alternatively, Shri Bhagwat contended that if this Court comes to the conclusion that petitioners have an alternative remedy before the Tribunal, four weeks' time be granted to him to avail the said remedy. 4. Prayer is opposed by Shri Vinay Saraf, learned counsel for the respondent Bank. Shri Saraf by taking this Court to various paragraphs of the reply contended that the petitioner failed to repay the loan along with interest despite giving him several opportunities. On 21.2.2014 the Bank officials visited at the site of borrower and found that only 25 cotton bales were there, whereas the borrower has shown stock possession of 297.06 lacs in stock statement filed in the Bank at the end of January 2014. Various notices were issued but the petitioner did not regularize his account. It is submitted that if any amount is deposited even subsequent to issuance of notices Annexures P-1 and P-2, it will not amount to novation of earlier contract or creation of a new contract. He submits that there is no violation of any provision of the Act and Rules. The notices were issued in consonance with the said provisions and the Act. He submits that the present petition is not maintainable and petitioner has a remedy under section 17 of SARFAESAI Act. 5. No other point is pressed by learned counsel for the parties. 6. I have heard learned counsel for the parties and perused the record. 7. The notices were issued in consonance with the said provisions and the Act. He submits that the present petition is not maintainable and petitioner has a remedy under section 17 of SARFAESAI Act. 5. No other point is pressed by learned counsel for the parties. 6. I have heard learned counsel for the parties and perused the record. 7. Before dealing with the rival contentions of the parties, I deem it apposite to reproduce section 13(3A) of the SARFAESAI Act, which reads as under :- “If, on receipt of the notice under subsection (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 fifteen days] 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 Debt Recovery Tribunal under section 17 or the Court of District Judge under section 17A.” Rule 8(1) and (2) on which reliance is placed by the petitioner read as under:- “(1) Where the secured asset is an immovable property, the authorised officer shall take or cause to be taken possession, by delivering a possession notice prepared as nearly as possible in Appendix IV to these rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the property. (2) [The possession notice as referred to in sub-rule (1), shall also be published, as soon as possible but in any case not later than seven days from the date of taking possession, in two leading newspapers]', one in vernacular language having sufficient circulation in that locality, by the authorised officer.” 8. Shri Bhagwat has relied on a single Bench Judgment of Calcutta High Court in the case of Ali Hossain (supra). However, it is seen that a Division Bench of this Court examined the issue relating to section 13(3A) of SARFAESAI Act. Shri Bhagwat has relied on a single Bench Judgment of Calcutta High Court in the case of Ali Hossain (supra). However, it is seen that a Division Bench of this Court examined the issue relating to section 13(3A) of SARFAESAI Act. In Writ Appeal No.296/2010 (M/s. Velocity Ltd. v. State Bank of India), this Court opined that keeping in view the scheme of the Act of 2002 the object behind making amendment by way of introducing section 13(3A) and the observations made by the Supreme Court in the case of Mardia Chemicals Limited in our considered view the communication of reasons is only for the purpose of information/knowledge of the borrower, and the same being not an action to cause harm to the borrower, at that stage it cannot be assailed. Having regard to the scope of provisions of section 17 of the Act of 2002, the reasons so communicated can be well assailed in case measures referred to in sub-section (4) of section 13 are taken by the secured creditor. This being the scheme of the Act of 2002, any interference by this Court in a writ petition under Article 226 of the Constitution of India at the stage of notice under section 13(2) and at the stage of communication of rejection of representation/objection under section 13(3A) of the Act of 2002 would hamper the process of recovery, defeating the very purpose of enactment of the Act of 2002 and the purpose of introducing section 13(3A) in the Act of 2002. 9. A plain reading of this judgment makes it clear that at the stage of issuance of notice under section 13(2) of SARFAESAI Act, no interference is warranted under Article 226 of the Constitution. The Division Bench in explicit terms defined the ambit and scope of section 13(3A) of SARFAESAI Act. In the light of aforesaid, I am unable to hold that the writ petition is entertainable against the impugned notice dated 18.2.2015 (Annexure P-1). If respondents take further action under section 13(4) of SARFAESAI Act, the petitioner is at liberty to assail it in appropriate proceedings. 10. As analyzed above, if no decision is taken on the proposal of petitioner as per section 13(3A) of SARFAESAI Act, it will not give any cause of action to the petitioner to file a writ petition. If respondents take further action under section 13(4) of SARFAESAI Act, the petitioner is at liberty to assail it in appropriate proceedings. 10. As analyzed above, if no decision is taken on the proposal of petitioner as per section 13(3A) of SARFAESAI Act, it will not give any cause of action to the petitioner to file a writ petition. In view of Division Bench judgment of this Court in M/s. Velocity Ltd. (supra), which is binding on this Court, the judgment of Calcutta High Court is of no assistance to the petitioners. 11. So far alleged violation of rule 8 is concerned, a plain reading of sub-rule (1) shows that the authorized officer is required to deliver a possession notice prepared as merely as possible in the prescribed form. This notice can be served on the borrower and may be affixed at the outer door of the property or at any such conspicuous place of the property. A simple reading of this provision shows that this possession notice is required to be delivered at the time of taking the possession. This event had not taken place till date. Compliance of rule 8(1) was not condition precedent for issuance of notice dated 18.2.2015 (Annexure P-1). Similarly, sub-rule (2) shows that possession notice is required to be published within seven days from the date of taking possession. Naturally this eventuality has not arisen. The possession has not been taken. Thus, rule 8(2) has no application so far validity of Annexure P-1 dated 18.2.2015 is concerned. I am also unable to agree with the contention of Shri Bhagwat that with the help of police authorities, the respondents are trying to get possession. The notice dated 18.2.2015 shows that an information is given to police authorities so that they may depute their personnel in order to avoid any untoward incident at the time of taking possession. There is no illegality in making such request. 12. Shri Bhagwat contended that since respondent bank has accepted certain loan amount after issuance of Annexures P-1 and P-2, it amounts to renewal or creation of new contract. 13. I do not see any merits in the said contention. The petitioner was obliged to repay the loan. The respondent bank is free to accept repayment of loan even after issuance of said notice. 13. I do not see any merits in the said contention. The petitioner was obliged to repay the loan. The respondent bank is free to accept repayment of loan even after issuance of said notice. If any such amount of loan is accepted after issuance of notices (Annexures P-1 and P-2), this cannot and does not amount to creation of new contract. 14. In nutshell, the notice dated 18.2.2015 does not suffer from any illegality or irregularity and this cannot be assailed at this stage (See) M/s. Velocity Ltd. (supra). 15. Thus, I find no reason to interfere in this matter. Petitioner is at liberty to avail the alternative remedy available to him at appropriate stage. Writ petition is dismissed and interim order is vacated.