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2024 DIGILAW 479 (RAJ)

Surbhi Kankaria W/o Sushil Kankaria v. UCO Bank

2024-03-20

NUPUR BHATI

body2024
JUDGMENT : 1. This writ petition under Article 226 of the Constitution of India has been preferred by the petitioner assailing the impugned notice dated 18.12.2023 (Annex.3) issued by respondent Bank and the proceedings initiated pursuant to the notice impugned. The petitioner has also sought relief to direct the respondent Bank to reschedule the loan. 2. Briefly stated, the facts of the case are that the petitioner’s mother Smt. Vidhya Bhandari, was the sole proprietor of M/s Kankaria Trading Company. The said proprietorship firm is indulged in the business of submersible motor pumps, cable etc. Earlier the said firm’s proprietor was Sh. Sunil Bhandari, father of the present petitioner) and after his death, the business affairs were conducted by petitioner’s mother Smt. Vidhya Bhandari. The firm M/s Kankaria Trading Company took cash-credit limit of Rs.19,00,000/-from the respondent Bank, for which approval was issued by the respondent Bank vide letter dated 08.12.2020 (Annex.1). For availing the said cash-credit facility, the petitioner stood as a guarantor and she gave collateral security of her commercial shop ad-measuring 108 square feet situated at 7, Jalte Deep Gali, Outside Jalori Gate, Jodhpur. Later on, the said cash-credit limit was increased to Rs.31,00,000/-in March-April 2022. 3. The said credit facility was insured by the firm through the respondent Bank and premium amount qua the insurance was paid on behalf of M/s Kankaria Trading Company. As per the averments made in the writ petition, the said insurance policy is in the custody of the respondent Bank and copy whereof was not provided to the firm. The said insurance policy was not even provided to the petitioner despite requests being made by the petitioner. The repayment of the credit facility was made regularly by petitioner’s mother. Petitioner’s mother Smt. Vidhya Bhandari expired on 21.09.2023. After death of Smt. Vidhya Bhandari, the business activities of the firm M/s Kankaria Trading Company were not done and thus the repayment could not be made on time. 4. It is further stated in the writ petition that on 18.12.2023, a notice (Annex.3) came to be issued by the respondent Bank to firm M/s Kankaria Trading Company, Smt. Vidhya Bhandari and the petitioner under Section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for brevity, hereinafter referred to as ‘Act of 2002’) for repayment of the amount within a period of sixty days. On receipt of the said notice, the petitioner approached the respondent Bank and requested for providing her relevant document with regard to cash-credit facility and also apprised the authorities of respondent Bank about the death of her mother Smt. Vidhya Bhandari and that the firm is not operational after death of the sole proprietor, i.e. Smt. Vidhya Bhandari. 5. Despite repeated requests, when nothing could be materialized, the petitioner through her counsel served a notice on 06.12.2023 (Annex.4). The petitioner thereafter sought information from the respondent Bank on 02.01.2024 (Annex.5) in relation to account of her mother and sought statement of claims, however, the petitioner was not provided the same. 6. The petitioner has questioned the legality of the notice dated 18.12.2023 (Annex.3) primarily on the ground that the petitioner has not been provided opportunity of hearing and that the notice has been issued against a dead person and thus if any proceedings are initiated, the same are nonest. The petitioner prays that she is ready and willing to deposit the amount in installments, to which the respondent Bank is not agreeable. 7. A preliminary reply to writ petition has been filed by respondent Bank while alleging that since disputed questions of facts are involved in the writ petition, which cannot be gone into by writ Court under Article 226 of the Constitution of India. In the reply, it has also been averred that in spite of availability of alternative and efficacious remedy under the Act of 2002, the writ petition is not maintainable. Allegation of concealment of material facts has also been made by the respondent Bank. The respondent Bank has further averred that the present writ petition is premature, inasmuch as the same has been preferred against a notice issued under Section 13 (2) of the Act of 2002, however, without first responding to the notice, the petitioner has invoked the writ jurisdiction of this Court. 8. In the reply, the respondent Bank has further apprised that cash-credit limit was increased to Rs.50,00,000/-and the petitioner being guarantor, submitted a declaration on 14.04.2023 (Annex.R/1). Prior to this, the petitioner also submitted a declaration on 25.03.2022 (Annex.R/2), wherein it has clearly been mentioned that in case the borrower fails to satisfy the liabilities, the Bank may enforce the payment and recover the full amount from the guarantor and the liabilities of the borrower as well as the guarantor was co-terminus. Prior to this, the petitioner also submitted a declaration on 25.03.2022 (Annex.R/2), wherein it has clearly been mentioned that in case the borrower fails to satisfy the liabilities, the Bank may enforce the payment and recover the full amount from the guarantor and the liabilities of the borrower as well as the guarantor was co-terminus. The respondent Bank has also denied that factum of death of the sole proprietor of firm i.e. Smt. Vidhya Bhandari, was not provided to the respondent Bank and when no payment towards cash-credit limit was made, a letter was issued by the respondent Bank on 26.10.2023 requesting to deposit the amount due to avoid the said loan to be class as NPA. 9. The respondent Bank thereafter issued notice on 06.11.2023 (Annex.R/3) calling upon the petitioner and the firm to make the payment good, however, the repayment was not made and therefore, the notice impugned dated 18.12.2023 (Annex.3) was rightly issued by the respondent Bank. The respondent Bank thus prayed that the writ petition deserves dismissal. 10. Learned counsel for the petitioner vehemently contended that the business activities were done by petitioner’s mother and the petitioner was not aware of the correct particulars of the cash-credit facility being availed by her mother. Counsel for the petitioner further contended that after death of petitioner’s mother, the business activities of the firm were completely at halt and, therefore, repayment could not be made. It is further submitted that the proceedings have been initiated in violation of principles of natural justice, inasmuch as the petitioner has not been provided sufficient opportunity of hearing. Counsel for the petitioner further contended that the notice has been issued to a dead person, original borrower, therefore, no proceedings could have been undertaken against a dead person. 11. Learned counsel for the petitioner relied upon a judgment of Hon’ble Madras High Court in the case of S. Suhanina Banu & Ors. vs. Indian Bank & Ors. : W.P. No.27230 of 2009, decided on 01.12.2010, wherein the Hon’ble Madras High Court held that the only course open to the respondent-Bank is to initiate proceedings by issuance of fresh notice to the legal heirs of the borrower/guarantor, as the case may be, as the legal heirs of the borrower/guarantor will have an opportunity to discharge the liabilities in sixty days. Only in the event of failure to discharge the liabilities in full by the legal heirs, the respondent-Bank could proceed further by issuance of notice under sub-section (4) of Section 13 and duly served or affixed in terms of that provision read with Rule 8 of the Security Interest (Enforcement) Rules. The first point is answered accordingly. 12. Learned counsel for the petitioner also relied upon order passed by Hon’ble Gujarat High Court in the case of Nileshkumar N Kotak & Ors. vs. Union of India : Special Civil Application No.9704/2013 decided on 22/29.09.2014, wherein notice under Section 13 (2) of the Act was issued against a dead person, the Hon’ble Gujarat High Court held that the Corporation cannot proceed further without a valid notice to his legal heirs/successor in title. It would be for the corporation to take further steps as may be adviced and available in the law. 13. Per contra, learned counsel appearing for respondent Bank contended that the petitioner has preferred the instant writ petition questioning the legality of a notice and further in view of availability of alternative and efficacious under the relevant Statute, the writ petition is not even maintainable. It is further submitted that the petitioner being guarantor is equally responsible for repayment of the cash-credit facility and the petitioner cannot plead ignorance, though she has signed various documents while submitting her guarantee for availing the cash-credit facility for the firm. Counsel for the respondent Bank also submitted that in fact the premium was charged on 16.12.2020 towards stock insurance and there was no insurance of the borrower herself. 14. Learned counsel appearing for the respondent bank relied upon judgment passed in Authorized Officer, State Bank of Travancore & Another v. Mathew K.C. : (2018) 3 Supreme Court Cases 85 and Shankar Finance and Investments v. State of Andhra Pradesh & Ors. : (2008) 8 Supreme Court Cases 536 and M/s South Indian Bank Vs. Naveen Mathew Philip : 2023 SCC OnLine SC 435. 15. I have considered the submissions made by counsel for the parties and have perused the material available on record. 16. : (2008) 8 Supreme Court Cases 536 and M/s South Indian Bank Vs. Naveen Mathew Philip : 2023 SCC OnLine SC 435. 15. I have considered the submissions made by counsel for the parties and have perused the material available on record. 16. In the present writ petition, the challenged has been laid by the petitioner to the impugned notice dated 18.12.2023 (Annex.3) while invoking writ jurisdiction of this Court under Article 226 of the Constitution of India, in spite of availability of alternative and efficacious remedy to approach the Debt Recovery Tribunal. The petitioner being the guarantor for the cash-credit facility being availed by her mother, cannot plead ignorance about the facility being availed by her mother and even cannot dispute her liability to satisfy the outstanding amount in case of original borrower fails to repay the outstanding amount towards cash-credit limit. In the writ petition, disputed questions of facts have been raised and to prove the same evidence is required to be led by the parties, which cannot be gone into in the writ jurisdiction. 17. So far as the judgment relied upon by learned counsel for the petitioner in the case of S. Suhania Banu (supra) is concerned, it was a case, wherein after death of original borrower, fresh notice was required to be issued to the legal heir of deceased borrower/guarantor, however, in the case at hand, copy of notice dated 18.12.2023 (Annex.3) was also provided to the petitioner and it is upon failure to discharge the liabilities in full by the legal heir, the respondent Bank could proceed further by issuance of notice under sub-Section (4) of Section 13 of the Act of 2002. In the opinion of this, Court the said judgment is of no avail to the petitioner as the petitioner has been provided the copy of the notice impugned. 18. This Court also finds that the Hon’ble Apex Court in Authorized Officer, State Bank of Travancore (supra), while considering the ratio decided in United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110 while considering the statutory scheme under the SARFAESI Act providing remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal and the object and purpose of the legislation, observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available. The relevant paragraph of the said judgment reads as infra: “10. In Satyawati Tondon the High Court had restrained further proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the SARFAESI Act, the availability of remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal, the object and purpose of the legislation, it was observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available holding: “43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this Rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.” 19. This Court is also conscious of the fact that the Hon’ble Apex Court in the case of M/s South Indian Bank Vs. Naveen Mathew Philip : 2023 SCC OnLine SC 435 has specifically observed that the High Court erred in ignoring the existence of alternate remedies under the Act and wrongly exercised its discretionary power under Article 226 of the Constitution of India to resolve commercial disputes between a lender and a borrower. It is also seen that the petitioner upon receipt of the notice under sub-Section (2) of Section 13 of the Act of 2002 could have filed representation raising objections, but instead of availing the said opportunity, the petitioner has preferred this writ petition before this Court and thus on this count also, the writ petition is not maintainable. 20. It is also seen that the petitioner upon receipt of the notice under sub-Section (2) of Section 13 of the Act of 2002 could have filed representation raising objections, but instead of availing the said opportunity, the petitioner has preferred this writ petition before this Court and thus on this count also, the writ petition is not maintainable. 20. In view of above discussion, no interference is called for the and, therefore, the instant writ petition is dismissed. Stay Petition also stands dismissed. 21. Even otherwise, if the petitioner is willing to repay the outstanding amount to the respondent Bank, she may approach the respondent Bank for the same pursuant to notice issued to her and no indulgence can be granted in the present writ petition. It is for the respondent Bank to consider the proposal, if any, made by the petitioner.