IMPORTANT POINT
Notice demanding possession is construed as a measure under and in relation to Section 13(4) of SARFAESI Act.

N.V. Anjaria, J.—The first prayer in this petition is to set aside notice dated 08th July, 2016 given by the first respondent under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. By second prayer, Notice under Section 13(4) of the said Act issued on 08th September, 2016 is prayed to be set aside. It is further prayed to direct respondent-Bank to provide all the documents as asked for in the objections by the petitioners.

2. The petitioners pray that the action taken by the respondents under the Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) be declared as without authority in law.

3. The first petitioner company took financial assistance by way of Cash Credit and Term Loan from the respondents. The petitioner No.2 is Director of the company who guaranteed the loan of the borrower. Upon failure of repayment, the respondent Bank invoked the provisions of the SARFAESI Act, proceeding to issue notice dated 05th July, 2016 under Section 13(2) of the Act demanding the amount of Rs.18, 35, 32, 088.25 Ps. as due on the date of the notice with interest accrued. It appears that the petitioners filed objections to the said notice on 05th September, 2016. The Bank thereafter issued notice under Section 13(4) on 08th September, 2016.

4. Assailing the impugned notices and the impugned action of the Bank, learned senior advocate Mr.Kamal Trivedi with la Mr.Vishwas Shah for the petitioners submitted that the Bank proceeded to issue notice under Section 13(4) without complying with the mandatory requirement of sub-section (3A) of Section 13 of the Act. According to him, decision on the objections was not communicated. He submitted that under sub-section (2) of Section 13 it was incumbent upon the Bank to serve 60 days notice before proceeding to take measures under Section 13(4). He submitted that when there was no communication of the decision on the objections, the whole action was vitiated and that notice under Section 13(4) dated 08th September, 2016 was without dealing with the objections.

4.1 Learned senior counsel further submitted that the disputes regarding classification of entry should be considered by internal mechanism. He relied on the observations by the Supreme Court in paragraphs 44 and 45 of the decision in Mardia Chemicals Limited Vs Union of India [(2004) 4 SCC 311] and buttressed his point. He next relied on decision in Keshavlal Khemchand & Sons Private Limited Vs Union of India [(2015) 4 SCC 770] for the observations in its paragraphs 34 and 35 to submit that under the guidelines of Reserve Bank of India, financial assets were required to be sub-divided into categories and such assets are classified as Non-Performing Assets. He submitted that the action of the Bank in declaring the account in question as NPA was without application of mind. A decision of Jharkhand High Court in M/s.Stan Commodities Private Limited Vs Punjab and Scind Bank [AIR 2009 Jharkhand 14] was relied on to submit that classification of NPA was not proper and the petitioner was entitled to be informed before such action.

4.2 Learned senior counsel thereafter questioned the legality of action of the respondent Bank in acting through an advocate while rejecting the objections under Section 13(3A). He submitted that the rejection was not only mechanical, but the same was by advocate on the instructions of the Bank, for which the advocate was not competent person under the scheme of the Act and the Rules. It was submitted that the advocate did not act under the instructions of the authorised officer who was the statutory authority supposed to exercise his powers. It was submitted that the authorised officer could not have delegated his powers to the advocate and could not have appointed the advocate as the law require the authorised officer deal with the objections himself. It was therefore submitted that the action