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2025 Supreme(AP) 59
IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
DHIRAJ SINGH THAKUR, CJ., RAVI CHEEMALAPATI, J.
Sri Sita Mahalakshmi Rice Traders and Others - Appellant
Vs.
Canara Bank and Others - Respondent
WRIT PETITION NO: 9835/2023 along with WRIT PETITION No.26900 of 2024
Decided On : 25-04-2025
Advocate Appeared:
For the Appellant : KIRTHI TEJA KONDAVEETI,
For the Respondent: BALAJI MEDAMALLI
Invocation of expired bank guarantees is valid if no restraint orders exist, and availability of alternative statutory remedies under SARFAESI Act precludes writ jurisdiction.
Headnote:
(A) SARFAESI Act, 2002 - Sections 13 and 14 - Invocation of bank guarantees - Petitioners challenged the invocation of expired bank guarantees by the bank, asserting it was illegal and arbitrary, leading to loss of livelihood for employees - The bank contended that the petitioners had alternative remedies under the SARFAESI Act and that invocation was valid as no restraint orders were in place. (Paras 2, 8, 12)
(B) Writ Jurisdiction - The court emphasized that the availability of alternative statutory remedies under the SARFAESI Act precludes the exercise of writ jurisdiction. (Paras 10, 12)
Facts of the case:
The petitioners, a partnership firm, sought relief against the invocation of bank guarantees by the respondent bank after the guarantees expired, claiming damages due to a cyclone and non-payment by a contracting party.
Findings of Court:
The court found no merit in the petitions, affirming that the invocation of bank guarantees was valid and that the petitioners had alternative remedies available.
Issues: The main issues included the legality of the bank's invocation of expired guarantees and the appropriateness of the writ jurisdiction given the existence of alternative remedies.
Ratio Decidendi: The court ruled that the invocation of bank guarantees was valid as no restraint orders were in place, and the petitioners were estopped from questioning the invocation due to their prior payments.
Result: Both writ petitions are dismissed.
COMMON ORDER :
Ravi Cheemalapati, J.
Inasmuch as the parties in these writ petitions are common and the reliefs sought are interrelated, both the writ petitions are heard together and are being disposed of by this common order.
2. The contents of the petitions can briefly be summarized as under:
(a) The petitioner no.1 is a partnership firm and petitioner nos.2 and 3 are its partners. The respondent bank sanctioned credit facilities including bank guarantees to the tune of Rs.3,10,00,000/- for running the business. The petitioner no.1 rice mill was mortgaged with the respondent bank as security for the liability. Pursuant to the sanction, the respondent bank issued four (04) Bank Guarantees (BGs) in favour of A.P.State Civil Supplies Corporation Limited (for short, ‘APSCSCL’) on behalf of petitioner no.1 to the tune of Rs.3,10,00,000/-, valid upto 20.12.2021.
In course of business, petitioner no.1 entered into a contract with APSCSCL for delivery of Custom Milled Rice (for short, ‘ CMR’) for the Rabi season 2021-22, as per which the CMR was to be delivered by 30.11.2021, however, the same could not be delivered, since rice and paddy kept in the premises got damaged on account of Gulab cyclone. Thereafter, as APSCSCL was trying to encash BGs without passing orders on the representation of the petitioner seeking extension of time, the petitioner no.1 filed writ petition vide W.P.No.25147 of 2021. This Court passed orders on 29.10.2021 recording the undertaking given by Standing Counsel that they would not invoke BGs till 02.11.2021, which was subsequently extended upto 12.12.2022 and subsequently petitioner no.1 did not get extension of the said orders. However, the BGs were expired on 20.12.2021 and the respondent Bank also did not issue any proceedings extending the said BGs.
While so, without any prior intimation to the petitioner, despite representation submitted by the petitioner on 24.3.2023 informing that writ petition stood posted to 28.3.2023 and further reminding that the BGs. stood expired by 20.12.2021, the respondent bank honoured invocation of BGs by APSCSCL on 31.03.2023. Pursuantly, the respondent bank issued letter in REF:13665/BG/CLAIM/SMLRT/2022-23, dated 31.03.2023 requesting the petitioner to refund the amount covered under the BGs. Invocation of BGs. which stood expired long prior to invocation is against the principles, therefore, the letter dated 31.03.2023 issued to the petitioner is illegal.
Fearing that the respondent bank may take coercive steps pursuant to the letter dated 31.03.2023, the petitioner filed writ petition vide W.P.No.9835 of 2023. Wherein, this Court granted interim orders directing the respondents not to take any coercive steps, which was extended from time to time and finally extended for a period of four (04) weeks on 06.10.2023 and thereafter the matter was not listed until 02.04.2024. The petitioners were under the impression that the interim orders were extended and were in force.
It is the further case of the petitioners that subsequent to issuance of the letter impugned in Writ Petition No.9835 of 2023, the APSCSCL permitted petitioner no.1 to deliver CMR and accordingly the same was delivered, however, payment was not made to petitioner no.1. While things stood thus, the respondent bank filed Crl.M.P.No.93 of 2024 in C.F.No.148 of 2024 before the Court of the Chief Judicial Magistrate at Machilipatnam under Section 14(1) of SARFAESI Act seeking physical possession of petitioner no.1 rice mill, without bringing to the notice of the Court about pendency of W.P.No.9835 of 2023. The said Court by order dated 14.05.2024 had appointed commissioner for taking physical possession of the property to hand it over to respondent bank and the Commissioner affixed notice on the property.
It is the further case of the petitioners that they are willing to refund the amount towards encashment of bank guarantee as and when they receive amounts from APSCSCL and the same also was intimated to the responden
