Per the Honble Sri Justice Nooty Ramamohana Rao

1. This writ petition has been instituted questioning the validity of the action taken by the respondent – State Bank of India, in putting a commercial complex owned by the writ petitioner to auction. The case of the writ petitioner is that he availed certain credit facilities from the respondent – Bank, one is term loan and the other cash credit loan during the year 2004. He has created collateral security over his commercial complex building bearing Old Door No. 20-85, New Door No. 301/3, Block No. 7, T.S. Ward – 3, Chirala town. Though he has paid certain instalments, it is admitted by the petitioner that there was default committed in the matter of repayment of the instalments regularly to the bank. The bank therefore invoked the provision under sub-section (2) of Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, for short `the Act’ henceforth. He was called upon to liquidate the liability of Rs.26,23,999.10 ps outstanding as of 31.3.2005 within 60 days from the date of the said notice. However, by 18.8.2006, the writ petitioner has paid in all a sum of Rs.27,96,000/- to the respondent – Bank. He was still found due as of 18.8.2006, in a sum of little more than Rs.2.27 lakhs. The case of the petitioner is that he has approached the bank to liquidate this reminder of the liability also, but, however, the bank insisted for payment of another Rs.2 lakhs towards the securitisation expenses incurred by it. While the matter stood thus, the impugned notice has been got published on 21.10.2007 inviting sealed bids for the sale of the secured asset through tender notice No. 1 of 2007. It is this notice which is called in question in this writ petition.

2. It is contended by Sri G.Vidya Sagar, learned counsel for the writ petitioner that the tender notice which has been published as of 21.10.2007 inviting bids has not bothered to verify as to whether the account has become a non performing asset or not in terms of Section 2(o) of the Act. Secondly, the power has been improperly and unjustly invoked indicating the liability of Rs.26,23,999.10 ps as of 1.4.2005 whereas the petitioner has paid of as much as Rs.27.96 lakhs by 18.8.2007 and hence the proposed auction is the result of non application of mind to the relevant factors. It was also contended that the bank has no authority to reject to receive the balance outstanding amount from a borrower until and unless the securitisation expenses are also paid up simultaneously. It is contended that the securitisation expenses have got to be rationally worked out taking into account, the expenses already booked to his account and any irrational demand of securitisation expenses is an unjust act warranting interference by this court.

3. Respondent – Bank has resisted the above writ petition by filing a counter affidavit sworn to by the Manager of Chirala Branch of the Bank. It is stated in paragraph (4) of the affidavit that the petitioner as the Proprietrix of M/s. Vishnupriya Bar and Restaurant had availed cash credit facility of Rs.5 lakhs and a term loan facility of Rs.19,64,000/-and executed the security documents in that regard on 28.6.2004. She has also created equitable mortgage over her immoveable property, the one that is described by the writ petitioner and that the petitioner has committed default in repaying the debts and hence notice under Section 13(2) of the Act was issued as on 5.10.2005 calling upon the petitioner to pay sum of Rs.26,23,999.10 ps and though the writ petitioner has paid substantial amounts thereafter, his liability was outstanding as of 20.11.2007 was Rs.2,96,684/- together with costs of Rs.1,90,000/- towards securitisation expenses, as claimed by M/s. Sisir and Ravi Associates, Visakhapatnam, the Recovery agent.

4. Sri Narender Reddy, learned counsel for the respondent Bank was fair enough in stating that the impugned tender notice