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Andhra High Court · body

2020 DIGILAW 8 (AP)

K. Mahalakshmi v. Canara Bank

2020-01-08

M.GANGA RAO, RAKESH KUMAR

body2020
JUDGMENT : RAKESH KUMAR, J. 1. The petitioner, proprietrix of M/s. Radiant Enterprises, which is in the business of Textiles, in course of business, had obtained loan from the respondent-Canara Bank. Loan amount of Rs. 15,00,000/- was sanctioned on 20.11.2014. While getting loan facility, the petitioner had offered collateral security. Since the petitioner failed to repay the loan amount, the respondent-bank initiated proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the SARFAESI Act’). After non-payment within the prescribed period under Section 13(2) of the SARFAESI Act, possession notice under Section 13(4) of the SARFAESI Act was also issued on 17.04.2019. Finally, the petitioner entered into One Time Settlement (OTS) agreement with the respondent-bank on 25.06.2019. As on the date of entering into the settlement, total outstanding amount was Rs. 14,97,280/-. The petitioner by her letter, dated 25.06.2019, requested the respondent-bank to allow her to opt for OTS facility to close the account i.e. Account No. 1620256010181. She further requested through her letter that she would be able to pay only Rs. 8,50,000/- and against the said amount, on the same day, she deposited Rs. 1,00,000/- and undertook to pay the remaining amount of Rs. 7,50,000/- within a period of one month. Thereafter, the petitioner instead of making the payment, as per the agreement, and clearing the dues within one month, approached the respondent-bank for settlement of her account as per the Circular, dated 18.06.2019. 2. The petitioner, in the instant Writ Petition, filed under Article 226 of the Constitution of India, has prayed for declaring the action of the respondent-bank in not revising the OTS, dated 25.06.2019, in accordance with their Circular, dated 18.06.2019, and canceling the OTS dated 25.06.2019 and also for declaring the recovery steps taken by the respondent-bank under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘the SARFAESI Act’) as illegal, arbitrary and contrary to it's own circular. 3. Learned counsel for the petitioner emphatically argued that as per the aforesaid Circular, dated 18.06.2019, which was available for Sub-Standard NPAs under Micro and Small Enterprises (MSE) Sector: (NPAs under MSE categorized as "SICK/NON-VIABLE" for restructuring or rehabilitation), respondent-bank instead of settling the account of the petitioner, as per it's own Circular, had compelled the petitioner to enter into the agreement for OTS after payment of Rs. 8,50,000/-. He further submits that instead of revising the settlement, the bank has illegally initiated the proceedings under the SARFAESI Act and as such he has also assailed the SARFAESI proceedings, vide possession notice under Section 13(4) of the SARFAESI Act. 4. Learned standing counsel, appearing on behalf of the respondent-bank, opposing the Writ Petition, has argued that as on the date of OTS the total liability on the part of the petitioner was to the tune of Rs. 14,97,000/-. However, the respondent-bank had acceded to the request of the petitioner to close the account after receiving only Rs. 8,50,000/- and the petitioner had agreed for the same. While depositing Rs. 1,00,000/- the petitioner in categorical terms undertook to make the remaining payment of Rs. 7,50,000/- within one month. Since the petitioner herself had agreed for settlement, she may not be allowed to repudiate the OTS agreement. He further submits that the conduct of the petitioner shows that she was not interested to repay the amount, as agreed by her under the OTS, and one way or the other she wants to delay the matter. He further submits that since the possession notice, under Section 13(4) of the SARFAESI Act, had already been issued, the petitioner may not be allowed to invoke the writ jurisdiction of this Court. 5. Besides hearing learned counsel for the parties, we have perused the material on record. On perusal of Ex.P1 at Page No. 14, it is evident that the petitioner had approached the bank for settlement of her account and she herself had offered for payment of Rs. 8,50,000/- only and also paid Rs. 1,00,000/- with an undertaking that the balance amount would be paid within one month: Thereafter, the settlement was made. On perusal of Ex.P3 running page 18, it is evidence that “there was a specific condition that the concession extended as above stands automatically withdrawn in case the party fails to remit the compromise amount within the stipulated time and the Bank reserves the right to proceed legally for recovery of the entire dues.” 6. On examination of the aforesaid condition, the facility for OTS was accepted considering the fact that the party had incurred losses in her business and recommendation was made to accept Rs. 8,50,000/- for settlement of her account. On examination of the aforesaid condition, the facility for OTS was accepted considering the fact that the party had incurred losses in her business and recommendation was made to accept Rs. 8,50,000/- for settlement of her account. The request letter of the petitioner (borrower) is at page No. 20, which shows that the petitioner's loan account vide No. 1620256010181 was having liability as on 20.11.2014 for an amount of Rs. 15,70,195/-. The petitioner in the said request letter had desired to settle the dues with the bank and offered Rs. 8,50,000/- in full and final settlement with further request to extend the concession to enable her to pay the settled dues within 30 days. It is evident from Ex.P5 at Page No. 29 that prior to the offer, issued by the petitioner for OTS under the SARFAESI Act, possession notice under Section 13(4) of the SARFAESI Act was already issued on 17.04.2019. As per the said notice, it is evident that the petitioner was given notice under Section 13(2) of the SARFAESI Act R/w. Rule 3 of the Security Interest (Enforcement) Rules, 2002 on 04.11.2016 calling upon her to repay the amount mentioned in the notice being Rs. 15,98,295/- within 60 days from the date of receipt of the said notice. This reflects that the petitioner even after issuance of notice under Section 13(2) of the SARFAESI Act, had not come forward either for payment of the loan amount or even for the OTS. Thereafter, under the SARFAESI proceedings, possession notice was issued on 17.04.2019. It appears that only thereafter the petitioner approached the respondent-bank and finally on 25.06.2019 she requested for OTS on payment of Rs. 8,50,000/- within one month. In the aforesaid background, the plea of the petitioner for declaring as if the respondent-bank is illegal in not accepting her request for canceling OTS and settle the dispute as per the Circular, dated 18.06.2019, may be inferred that one way or the other the petitioner is not interested to clear the loan amount. Moreover, since the SARFAESI proceedings were already initiated against the petitioner and she had already entered into the agreement for OTS, this Court is of the opinion that while exercising power under Article 226 of the Constitution of India, we may not interfere with the matter. Even if the petitioner feels aggrieved, she may avail the statutory remedy as available under the SARFAESI Act. 7. Even if the petitioner feels aggrieved, she may avail the statutory remedy as available under the SARFAESI Act. 7. Accordingly, we do not find any ground to interfere with the matter. The Writ Petition stands dismissed. No order as to costs. 8. As a sequel, miscellaneous petitions pending, if any, in this Writ Petition shall stand closed.