2010 Supreme(SC) 621

Supreme Court of India
THE HONOURABLE MR. JUSTICE G.S. SINGHVI & THE HONOURABLE MR. JUSTICE ASOK KUMAR GANGULY
United Bank of India
Versus
Satyawati Tondon & Others
CIVIL APPEAL NO. OF 2010 (Arising out of SLP(C) No.10145 of 2010)
Decided on : 26-07-2010

Headnote:(a) Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – Validity – Validity of the SARFAESI Act already upheld in (2004) 4 SCC 311 except the condition of deposit of 75% amount enshrined in Section 17(2). (Para 6)

       (2004) 4 SCC 311 – Relied upon

       (b) Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – Section 13(2) and (4) and section 14 – The Bank could have issued notices to the surety/ guarantor well as file application u/s 14 – Without first giving notice to the borrower – Liability of the guarantor and principal debtor is coextensive and not in alternative – Creditor/decree-holder has the right to proceed against either for recovery of dues or realization of the decretal amount. (Para 14, 15)

       (1969) 1 SCR 620; (1992) 3 SCC 159; (2009) 9 SCC 478 – Relied upon

       (c) Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – Sections 13 and 14 – Even after receiving notice the borrower and the surety bothering to repay the loan amount except paying a paltry sum of 50000 – Borrower undertaking to oay in installments – Not keeping the undertaking – Bank issuing notices u/s 13(2) and 13(40 and filing application u/s 14 – Cannot be faulted. (Para 16)

       (d) Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – Sections 17 and 18 – Remedies available to borrowers – Remedies u/s 17 and 18 are expeditious and effective – Instead of approaching the High Court, respondent no. 2 ought to have availed these statutory remedies – Petition under Article 226 of the Constitution without exhausting statutory remedies was not maintainable. (Para 17)

       (1964) 6 SCR 654; (1983) 2 SCC 433; (1985) 1 SCC 260; (2001) 6 SCC 569; (2008) 3 SCC 688; (2009) 1 SCC 168; (2010) 4 SCC 772; (2010) 5 SCC 44 – Relied upon

       AIR 1969 SC 556; (1998) 8 SCC 1; (2003) 2 SCC 107 – Referred

       Facts of the case:

       The appellant Bank sanctioned a term loan of Rs.22,50,000/- in favour of M/s. Pawan Color Lab [through its proprietor Pawan Singh (respondent No.2)] some time in November, 2004. Respondent No.1 gave guarantee for repayment of the loan and mortgaged her property bearing House No. 752/062, Bakshi Khurd, Daraganj, Pargana and Tehsil Sadar, District Allahabad by deposit of title deeds. She also submitted an affidavit dated 28.12.2004 and executed agreement of guarantee dated 29.12.2004 making herself liable for repayment of the loan amount with interest.

       After one year and six months, the appellant sent letter dated 6.5.2006 to respondent Nos.1 and 2 pointing out that repayment of loan was highly irregular. After another one year, the account of respondent No.2 was classified as Non-Performing Asset. On 19.7.2007, the appellant sent separate letters to respondent Nos. 1 and 2 requiring them to deposit the outstanding dues amounting to Rs.23,78,478/-. Thereupon, respondent No.1 deposited a sum of Rs.50,000/-and gave written undertaking to pay the balance amount in instalments. However, she did not fulfil her promise to repay the remaining amount.

       This compelled the appellant to issue notice to respondent Nos.1 and 2 under Section 13(2) requiring them to pay Rs.23,22,972/- along with future interest and incidental expenses within 60 days. Upon receipt of the notice, respondent No.1 offered to pay a sum of Rs.18 lakhs for settlement of the loan account, but the appellant did not accept the offer and filed an application under Section 14 of the SARFAESI Act, which was allowed by District Magistrate/Collector, Allahabad vide his order dated 25.8.2008. Thereafter, the appellant issued notice dated 21.1.2009 to respondent Nos.1 and 2 under Section 13(4) of the SARFAESI Act.

       Faced with the imminent threat of losing the mortgaged property, respondent No.1 filed C.M.W.P. No.55375 of 2009 and prayed that the appellant herein may be restrained from taking coercive action in pursuance of the notices issued under Section 13(2) and (4) and order dated 25.8.2008 passed by District Magistrate/Collector, Allahabad.

       The Division Bench of the High Court did not even advert to the appellant’s plea that the writ petition should not be entertained because an effective alternative remedy was available to the writ petitioner under Section 17 of the SARFAESI Act and passed the impugned order restraining the appellant from taking action in furtherance of notice issued under Section 13(4) of the SARFAESI Act.

       Finding of the Court:

       High Court was not at all justified in injuncting the appellant from taking action in furtherance of notice issued under Section 13(4) of the Act.

       Result:

       Appeal allowed.