( 1 ) M/s. Hotel Rajahamsa international is a proprietary concern which is running a hotel in the city of Vijayawada. The proprietor approached Indian Overseas bank for a term loan and cash credit facility of Rs. 40,00,000/- (Rupees Forty lakhs only ). The same was sanctioned and is payable, as per the loan contract in instalments @ rs. 73,600/- (Rupees Seventy three thousand six hundred only) per month with effect from 31. 1. 2001 up to 2009. The proprietor created an equitable mortgage in respect of building bearing No. 27-43-8 along with land admeasuring 499. 87 square yards at govemorpet, Vijayawada. Petitioner Nos. 2 to 5 herein also mortgaged their property as guarantors. It is the case of the first petitioner that the instalments were paid up to december 2003, but in May 2004, the second respondent-Bank filed an application being o. A. No. 98 of 2004 before the Debts recovery Tribunal, Visakhapatnam (DRT) for recovery of the amount by sale of the properties mortgaged to the Bank. It appears, the Bank filed two Interlocutory Applications being I. A. Nos. 229 and 233 of 2004 and obtained order of attachment of movable as well as immovable properties. The said O. A. is still pending.

( 2 ) THE Bank initiated action under the provisions of Securitisation And Reconstruction of Financial Assets And Enforcement of security Interest Act, 2002 (hereafter called the SARFAESI Act ) calling upon the first petitioner to pay the entire amount of loan within a period of sixty (60) days. The first petitioner allegedly met the bank officials and requested them not to initiate any action in view of the pendency of the proceedings before the DRT, visakhapatnam. The first petitioner alleges that the Bank officials assured that no further action will be taken pursuant to notice issued under the SARFAESI Act. The second respondent-Bank, however, issued an auction notice, dated 24. 7. 2004, proposing to sell the property mortgaged by the proprietor of Hotel Rajahamsa international as well as the property belongs to Petitioner Nos. 2 to 5. The same was published in Eenadu Newspaper, assailing which the present writ petition is filed.

( 3 ) SRI V. Hari Haran, learned counsel for the petitioners submits that having invoked the recovery procedure as contemplated under the Recovery of debts Due to Banks and Financial Institutions act, 1993 (hereafter called the Recovery act ), it is not permissible for the second respondent-Bank to invoke the provisions of the SARFAESI Act. Learned Counsel for the petitioners placed reliance on the Full bench judgment of this Court in K. Subba reddy v. A. P. S. F. C. , AIR 1987 AP 119 (FB), in support of the submission that it would be illegal for the second respondent- bank to invoke the provisions of the sarfaesi Act having invoked the remedy before the DRT. No other submission is raised in challenge to the impugned orders.

( 4 ) AFTER due consideration of the submissions made before this Court, I am not able to accept the submission of the learned Counsel for the petitioners. The sarfaesi Act was enacted with a view to enforce security interest of the lending banks. The vires of certain provisions of the SARFAESI Act were challenged before the Supreme Court on the ground that the provisions vesting the financial institutions to recover the loan amounts by bringing the mortgage properties to sale as vesting arbitrary powers without any guidance for their exercise. The provisions were upheld by the Supreme Court in judgment reported in Marida Chemicals Ltd. v. Union of india, 2004 (3) ALD 50 (SC) = (2004) 4 scc 311. Dealing with Section 13 (2) of the sarfaesi Act, the Honourable Supreme court observed as under: it is also a fact that a large sum of amount remains unrecovered. Normal process of recovery of debts through Courts is lengthy and time taken is not suited for recovery of such dues. For financial liquidity is essential failing which there is a blockade of large sums of amounts creating