The bank's discretion in choosing properties for debt recovery under Section 13(4) of the SRFAESI Act must adhere to the principles of fairness, reasonableness, non-arbitrariness, and non-discrimination as per Article 14 of the Constitution.

Navaniti Prasad Singh, J.

1. The petitioners are the husband and the wife. They were Directors of a Public Limited Company respondent No. 4, which has other Directors as well. The Managing Director of the said Company is Sri Parmeshwar Prasad, through whom the Company has been sued in the present proceeding.

2. Company has appeared in the matter.

3. The grievances of the petitioners are as against the proceedings taken under Section 13 of the Securitisation and Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (hereinafter referred to as "SRFAESI ACT) by the respondent Nos. 1, 2 and 3 being Bank of Baroda and its officers.

4. Many contentions were raised but I will deal with only one which is necessary for the purpose of disposal of this case.

5. Bank of Baroda has appeared.

6. Heard the parties and with their consent this writ application is being disposed of at the stage of admission itself.

7. When the Company was incorporated, the petitioner and the said Parmeshwar Prasad were Directors. The Company sought financial accommodation in the shape of inter alia cash credit facility from Bank of Baroda. For securing the same, the petitioners gave personal guarantee and mortgaged some of their properties by submission of title deed. Sri Parmeshwar Prasad also along with his wife gave guarantee and mortgaged their property. The movable and immovable property of the Company, which was substantial, was also charged.

8. Here I may notice that prior to the said financial accommodation being given by the respondent-Bank of Baroda, the Company had taken financial assistance from the Bihar State Credit and Investment Corporation Limited. The said Corporation is the statutory Corporation constituted under the State Finance Corporation Act, 1951. The Corporation for the financial assistance given to the Company, had created first charge on the assets of the Company. Thus the charge of the Bank on the assets of the Company was initially second charge, second to the charge of BICICO. It appears, as time went the dues of the Company swelled. Amongst the Directors, there was a re-arrangement whereby the petitioners opted out the Company in furtherance to the agreement as between the Directors but the guarantee and the mortgage continued. Subsequently, the petitioners gave notice to the Bank in terms of Clause (1) of the letter of guarantee, withdrawing their guarantee on 19-11-2003. Bank in its turn required the existing Director to either get the guarantee renewed or substitute it with valid surety, which on not being done, they had no option but to move Debts Recovery Tribunal, Bihar, Patna for recovery of the due of the Bank. In those proceedings, the Company and the Director i.e. original Director and the present Director were made parties. Apparently, finding that the proceedings were likely to drag on, Bank decided to resort to the provision of the SRFAESI ACT. It accordingly issued notice to all the parties in terms of Section 13 (2) of the said Act. Replies were filed in terms of Section 13(3A). These notices were responded to by the petitioners and others and replied on behalf of the Bank by its lawyer. Bank not being satisfied with the reply, took up the proceedings in terms of Section 13(4) of the Act. At this stage, petitioners took an objection. They submitted that Bank has not chosen to move against the property of the Company nor has chosen to move against all the mortgaged property of the present working Director but has mala fide chosen to proceed only against all property mortgaged by the petitioners who had long since retired as Directors of the Company. The Bank not willing to drop the petitioners, this Writ application was filed.

9. The contentions of the petitioners are, (i) in terms of Clause (i) of the guarantee agreement, the petitioners having acted and noticed the Bank, the petitioners were relieved of their guarantee and as such Bank could not proceed against them, (ii) Bank hav