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IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
T.S. Sivagnanam, Supratim Bhattacharya, JJ.
The Authorised Officer, Stressed Assets Management Branch-1, State Bank Of India
Versus
M/s. Kavita Marketing Private Limited And Others – Respondents
A.P.O. NO. 182 OF 2023 (IA NO: GA/1/2023)
Decided On : 19-01-2024
SARFAESI Act - Liability Discharge - Section 13(2) - [STRESSED ASSETS MANAGEMENT BRANCH] - [M/s Duncans Industries Limited, Corporate Guarantee, One Time Settlement, Debt Recovery Tribunal] - The court discussed the liability discharge of the first respondent as a corporate guarantor towards the credit facilities, the issuance of multiple notices under Section 13(2) of the SARFAESI Act, and the maintainability of the writ petition. The court emphasized that the third notice under Section 13(2) was not maintainable as the liability had been fully settled, and the officer issuing the notice lacked jurisdiction. The court also referred to the South Indian Bank case and other legal principles to support its decision.
Fact of the Case:
The case involved a dispute between the Stressed Assets Management Branch of the State Bank of India and the respondent writ petitioners regarding the discharge of liability as a corporate guarantor, issuance of notices under Section 13(2) of the SARFAESI Act, and the maintainability of the writ petition.
Finding of the Court:
The court found that the third notice under Section 13(2) was not maintainable as the liability had been fully settled, and the officer issuing the notice lacked jurisdiction. The court dismissed the appeal and directed the appellant bank to comply with the direction issued by the learned Single Bench within 2 weeks from the date.
Issues: The issues included the discharge of liability as a corporate guarantor, the validity of multiple notices under Section 13(2) of the SARFAESI Act, and the maintainability of the writ petition.
Ratio Decidendi: The court held that the third notice under Section 13(2) was not maintainable as the liability had been fully settled, and the officer issuing the notice lacked jurisdiction. The court also referred to legal principles regarding the maintainability of writ petitions despite the availability of alternative remedies.
Final Decision: The appeal was dismissed, and the appellant bank was directed to comply with the direction issued by the learned Single Bench within 2 weeks from the date.
JUDGMENT :
T.S. Sivagnanam, J.
1. We have heard Mr. Jaidip Kar, Learned Senior Advocate assisted by Mr. Anirban Pramanick and Mr. Punarbasu Nath advocates for the appellant and Mr. Suddhasatva Banerjee, assisted by Mr. Ishaan Saha, Ms. Sananda Ganguly and Mr. Shubradip Roy, advocates for the respondent.
2. The Stressed Assets Management Branch of the State Bank of India, Kolkata is aggrieved by the order dated 27.09.2023 passed in WPO No. 1609 of 2023 filed by the respondents 1 and 2 herein.
3. The respondent writ petitioners prayed for issuance of a writ of certiorari to set aside the decision of the appellant in withholding the title deeds of the property owned by the writ petitioners and demand for a sum of Rs. 8,64,15,886.12 ps in respect of credit facilities including setting aside the notices dated 17.07.2023 and 28.07.2023 issued under Section 13(2) of the SARFAESI Act.
4. M/s Duncans Industries Limited (hereinafter referred to as the borrower) availed credit facilities from the third respondent herein. The credit facilities were renewed/ restructured during 2013. The third respondent bank called upon the borrower to provide additional/replacement of security and the borrower approached the writ petitioner to provide corporate guarantee/security which are to be provided against two credit facilities namely Working Capital Term Loan and Funded Interest Term Loan.
5. The first respondent writ petitioner agreed to mortgage one of its assets, a flat in Mumbai and accordingly a revised sanction dated 19.04.2014 was issued in favour of the borrower. The total credit exposure of the company/borrower in which the first respondent writ petitioner was a corporate guarantor was Rs. 36.305 crores. A deed of guarantee for a sum not exceeding Rs. 36.305 crores was executed between the first respondent writ petitioner and the third respondent herein. Thus, the corporate guarantee was to the extent of Rs. 36.305 crores only against the two aforesaid credit facilities. The borrower defaulted in repayment and notice under Section 13(2) was issued to the borrower wherein a sum of Rs. 36,32,98,392/-was stated to be payable and in respect of credit facilities, a sum of approximately Rs. 5.2 crores was alleged to be outstanding.
6. The first respondent/writ petitioner by a letter dated 30.12.2017 informed the bank that the corporate guarantee was limited to the outstanding amount in connection with the two credit facilities and subsequently made payment of sum of Rs. 1 crore towards the outstanding of the aforesaid two credit facilities. Though notice under Section 13(2) was issued during October 2017, no further proceedings were taken pursuant to such notice. Subsequently another notice dated 18.01.2018 was issued under Section 13(2) demanding a sum of Rs. 4.71 crores from the first respondent/writ petitioner. The writ petitioners were called upon to make the aforesaid payment within 60 days from the notice dated 18.01.2018 wherein it was admitted that the total liability in respect of the said credit facilities to the borrower company was limited to the extent of the aforesaid outstanding of Rs. 4.71 cores approximately. The writ petitioners complied with the demand and by letter dated 28.02.2018 requested the bank to release the security created by way of mortgage of the property executed in favour of the third respondent bank and also to return the corporate guarantee and all related documents that were executed/deposited. The outstanding debt payable by the borrower still remains outstanding and it appears that discussion were made between the borrower and the bank for One Time Settlement and ultimately the settlement was arrived at and terms of the settlement were recorded and filed before the Debt Recovery Tribunal No. 1, Kolkata in OA No. 42 of 2018 of 21.11.2019. The One Time Settlement proposal failed as the borrower did not comply with the conditions contained thereunder. The third respondent bank issued notice dated 17.07.2023 un
AI
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