2012 Supreme(Pat) 1401

IN THE HIGH COURT OF JUDICATURE AT PATNA
JAYANANDAN SINGH, J.
M/S Tirupati Storage And Allied Pvt. Ltd., Anandpur, Bihta, Patna A Company Incorporated Under The Companies Act 1956 Having Its Registered Office M-52/22a, Road No. 25, Sri Krishna Nagar, Patna-800001 Through Its Managing Director Smt. Vijaya Singh, W/O Dr. Yashwant Singh, R/O M-52/22a, Road No. 25, Sri Krishna Nagar, Patna-800001 & Anr. - Petitioners
Versus
The United Commercial Bank, Having Its Head Office At 10 B.T.M. Sarani Kolkata Through Its Chairman-Cum-Managing Director & Ors. - Respondents
Civil Writ Jurisdiction Case No. 15468 of 2012
Decided On : 19-10-2012

Headnote:Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002-Section 13-Writ application under Article 226 is not entertainable, raising a challenge to any action taken by a secured creditor in terms of any of the clauses of sub-section (4) of Section 13-Alternative remedy available under section 17 of the Act. (Para 8)

       Securitization and Re-construction of Financial Assets and Enforcement of Security Interest Act, 2002-Sections 13 and 17-Section 17 in clear terms refers to sub-section (4) of section 13 only-In view of the clear wordings of section 17 it is difficult to accept that a Debt Recovery Tribunal can, on its own go into and examine and entertain the allegations of violations of provisions of sub-sections (3) and (3-A) by the secured creditor in an appeal filed before it by any person including a borrower, in exercise of powers under section 17-A close examination of sub-sections (2), (3) and (3-A) together form one stage of action of the secured creditor where as sub-section (4) with all its clauses forms the second stage of action by heir for recovery of his secured debt.

       Securitization and Re-construction of Financial Assets and Enforcement of Security Interest Act, 2002-Section 13-Tribunal on initiation an action under sub-section (4) by secured creditor can not go into question if non-compliance of sub-sections (2), (3) and (3-A) in Appeal preferred by a borrower-Remedy under section 17 not available in such case-Writ application under Article 226 of the constitution is maintainable-The answer to the question nos. (vii) and (viii) has to be "yes".

       (2004)4 SCC 311-Referred to.

       Securitization and Re-construction of Financial Assets and Enforcement of Security Interest Act, 2002-Section 13-Requirement of notice before action under sub-section (4)-Sub-section (2) of section 13 of the Act calls for its strict compliance-Demand notice has to be served upon the borrower strictly in the manner prescribed in Rule 3-Sixty days period for the borrower to discharge in full his liability, starts running only from the date of service of such notice and not from any earlier date-Any action by secured creditor in terms of sub-section (4) in absence of strict compliance of sub-section (2) shall be impossible. (Para 15)

       (2008)1 SCC 125-Relied upon.

       Securitization and Rec-construction of Financial Assets and Enforcement of Security Interest Act, 2002-Section 13(2) and 13(2)-Scope of-Legislature has used the expression "shall give the details of the amount" and not" shall give the final amount payable "or" shall give total amount due "or the like-The word "detail" is very significant-Legislature clearly intended that in notice under sub-section (2) the details of the calculation of principal and interest with all debts and credits must be mentioned and no discretion is left to a secured creditor to withhold any information from the borrower in respect of steps taken by it to reach final figure of amount payable by him in sixty days from the date of service of notice under sub-section (2)-Mandate of the legislature for a secured creditor through sub-section (3) is to maintain complite transparency, at the time of issue of notice under sub section (2) and nothing less. (Paras 16 to 18)

       Securitization and Re-construction of Financial Assets and Enforcement of Security Interest Act, 2002-Section 13 (3-A)-Reasons which have to be communicated by a secured creditor, must be a speaking one and, as and when necessary, must also disclose the basis of reason assigned by him for not accepting the representation or objection of the borrower as not tenable. (Para 20)

       Securitization and Re-construction of Financial Assets and Enforcement of Security Interest Act, 2002-Section 13 (4) of-Failure of borrower to discharge his liability in full-If a borrower fails to discharge his liability in full within the period specified in sub-section (2), the moment sixty days period is over and the secured creditor finds that the liability has not been discharged by the borrower in full, he must decide whether he wants to imitiate action under sub-section (4) or would like to take recourse to other remedies available to it for getting his secured debt liquidated-In a given situation it may find any other remedy as more appropriate then initiating action under sub-section (4)-But this decision can not be deferred for months and years, while letting liability of the borrower getting inflated by addition of interest to it, all the time-This can not be termed as fair play by a secured creditor-After expiry of sixty days time, a secured creditor entertains and takes in to active consideration any proposal of the borrower, or offers any proposal to the borrower, the initial notice issued under sub-section (2) and non-discharge of his liability by the borrower in full within sixty days may not remain a valid ground for initiation of action by the secured creditor under sub-section (4)-But this can not be a hard and fast rule and shall depend upon particular facts and circumstances of each case. (Para 21)

       Securitization and Re-construction of Financial Assets and Enforcement of Security Interest Act, 2002-Sections 13(4) and 17 and Article 226 of the Constitution of India-No borrower can be allowed to take the matter to a court, as and when he desires and no court will be justified in entertaining such matters at the behest of a recalcitrant and defaulting applicant, coming to the court as per his convenience, particularly after the action is initiated by the secured creditor under sub-section (4) of section 13 of the Act by issue of possession notice, unless he approaches the court immediately after coming to know the intention of the secured creditor to take recourse to the provisions of the Act and on the basis of records, it is established that no occasion had arisen to him earlier to approach the court under Article 226-Writ application may be accepted only where glaring cases of infraction of law by a secured creditor is brought to the notice of the court at the earliest-The act of a borrower of entering into negotiation or making offers and proposal with a view to settle the matter even after initiation of action by the secured creditor in terms of sub-section (4) of section 13 of the Act, may in the circumstances, amount to acquiescence by the borrower to the actions of the secured creditors in terms of sections (2) (3) and (3-A). (Para 23)

       Constitution of India-Article 226-Powers of judicial review in exercise of powers under Article 226 of the Constitution against any action of State, its instrumentalities or statutory bodies, whether it be in the realm of a policy decision, if the same is found to be arbitrary, capricious, un reasonable, malafide, in violation of any constitutional mandate or in violation of statutory provision applicable in the matter or in violation of principles of natural justice.

       Constitution of India-Article 14-In the matter of policy decisions, the court does not examine the wisdom of policy maker, nor does it look in to the comparative merits and substitute its views for that of the decision maker-It is only the decision making process and its Vires on the touch stone of Article 14 of the Constitution, which the court, in exercise of limited scope of judicial review in the matters, can examine. (Para 24)

       Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002-Section 13-Judicial Review-A secured creditor has no discretion and has to follow R.B.I. Guidelines and 2002 Act to recover his secured debt-Judicial review is limited and confined to guidelines of RBI and provisions of 2002 Act. (Paras 25 to 27)

       Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002-Section 13-Initiation of action by Bank u/s 13 (4)-Writ application challenging on ground of non-service of notice and breach of the provisions of sub-section (3) and (3-A)-Notice sent by Bank per registered post which returned unserved-Bank does not take any further step to get the notice validily served on the borrower (petitioner) in the manner prescribed under rule (3) of the Rules, 2002-Petitioner not coming top Court immediately, but kept on insisting for start of disbursement and enhancement of limit of his loan only-Petitioner’s proposal was refused by the Bank by letter informing that a section 13(2) notice had been issued earlier-Only on account of delay and laches on its part in raising his grievance of breach of provisions of sub-sections (2), (3) and (3-A) in time, petitioner is entitled itself to get any relief from High Court in exercise of its extra ordinary jurisdiction under Article 226 of Constitution-Writ application dismissed. (Paras 30 to 32)