A writ petition is maintainable against a scheduled bank under Article 226 of the Constitution of India, as the bank is performing public functions and is governed by the provisions of the Banking Regulation Act, 1949.

ORDER :

C. PRAVEEN KUMAR, J.

1. The present Writ Petition came to be filed, seeking to declare the action of the respondent in issuing notice dated 28.12.2021 and trying to take physical possession of the property bearing Door No.40-25-11/15, present Door No.40-25-42, situated at Koneru Chenna Kesava Rao Street, Patamata Lanka, Vijayawada without following the procedure contemplated under the provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 [for short, “SARFAESI Act”] and Rules and without extending time for compliance of OTS Scheme issued on 21.02.2022 as illegal, improper and incorrect.

2. The facts, in issue, are as under:-

a) The petitioners herein obtained two Agri Term Loans from the respondent bank in the year 2015 for the purpose of agricultural activities. In January, 2018 the respondent bank declared the loan accounts of the petitioners as Non- Performing Assets [NPA] and accordingly initiated proceedings under SARFAESI Act by issuing the notice under Section 13(2) of the Act on 22.01.2018, to the Guarantor. The notice was served on the two petitioners, but not on the Guarantor. On coming to know about initiation of proceedings, the Guarantor paid an amount of Rs.19,00,000/- to regularize the loan account from NPA status. But, however, the respondent bank initiated further proceedings to obtain physical possession of the secured assets. Hence, the Guarantor approached the Debt Recovery Tribunal at Visakhapatnam vide S.A.No.249/2018 challenging the illegal acts committed by the respondent bank.

b) Before the DRT, Visakhapatnam, the respondent bank filed a Memo stating that the bank is withdrawing the Possession Notice dated 10.05.2018 in respect of the two loan accounts and accordingly the said S.A. was dismissed as infructuous. Meanwhile, the respondent bank again issued a fresh Possession Notice under Section 8(1) of SARFAESI Act to the petitioners and thereafter, issued a Paper Publication on 28.12.2021.

c) While so, the respondent bank has come up an OTS proposal. To close the pending two Agri loan accounts, the petitioners agreed for OTS and submitted an application for OTS by making payment of Rs.25,00,000/- i.e. Rs.12,50,000/- to each of the loan account. It is said that the bank accepted the proposal and accepted the part payment and granting time till 28.02.2022 to clear the balance agreed amount i.e. about Rs.37,50,000/- for each loan account. It is said that thereafter both the petitioners were infected with the COVID and as such, sought time, for payment of the amount. At that point of time, the respondent bank moved an application before the Chief Metropolitan Magistrate to take the Physical Possession of the asset without following the mandatory provisions under Section 13(2) and 13(4) of the Act. An Order came to be passed by the Chief Metropolitan Magistrate to that effect, which lead to filing of present Writ Petition.

3. (i) A counter came to be filed on behalf of the respondent disputing the averments made in the affidavit filed in support of the writ petition. One of the main objections taken is as to the maintainability of writ petition when there is an alternative remedy of appeal under Section 17 of the SARFAESI Act to the DRT, Visakhapatnam. It is further stated that no Writ Petition is maintainable against private bank, as it does not fall under Article 12 of the Constitution of India. Learned counsel for the Respondent relied upon a Judgment of Hon’ble Supreme Court in Phoenix ARC Private Limited V. Vishwa Bharati Vidya Mandir & Ors, 2022 SCC Online SC 44, in support of the said plea.

(ii) It is further stated that when the owner of the property does not challenge the action of the bank under the provisions of SARFAESI Act, guarantor, who has nothing to do with the property is not entitled to challenge the same. On merits, it is stated that issuance of single notice in respect of two loans taken by two different persons, who are non