IMPORTANT POINT
The judgment emphasizes the availability of statutory remedies under the SARFAESI Act, the duty of the High Court to consider alternative or effective remedies, and the discharge of the original contract by acceptance of a subsequent letter of arrangement.

JUDGMENT :

Hiranmay Bhattacharyya, J.

1. The judgment and order dated 03.11.2022 passed by a learned Single Judge in WPO 2366 of 2022 is under challenge in this intra court appeal at the instance of the State Bank of India.

2. The respondent no. 1 filed the writ petition being WPO 2366 of 2022 praying for specific performance of the letter of Arrangement dated June 28, 2021, refund of a sum of Rs. 92,56,733/-together with interest and for setting aside the notices dated April 7, 2022 and July 5, 2022 issued under Section 13(2) and 13(4) of the SARFAESI Act, 2002 respectively.

3. By the judgment and order impugned, the State Bank of India (for short “the Bank”) was directed to give effect to the letter of Arrangement dated 28.06.2021 and to give the benefit of the same to the writ petitioner/ respondent no. 1 herein. Any amount appropriated by the Bank from the account of the petitioner for the purpose of adjustment or otherwise was also directed to be returned to the respondent no. 1 within a specified time.

4. The facts leading to the filing of the writ petition and this appeal, in a nutshell, are as follows.

5. The respondent no. 1 had three separate transactions with the appellant Bank which consisted of a loan for the business, a housing loan and a vehicle loan. The credit facility for the business had an overall limit of Rs. 3.50 crores, of which the Cash Credit (for short ‘CC’) Limit was Rs. 75 lakhs and the Letters of Credit (for short “LC”) and Bank Guarantees (for short “BG”) had the limits of Rs. 75 lakhs and Rs. 2 crores respectively. The respondent no. 1 claims that on account of Covid 19 pandemic and repeated lockdowns he ran out of funds for which he could not repay the LCs for which 4 LCs amounting to Rs. 1.62 crores devolved. The respondent no. 1 applied for restructuring of his account on May 30, 2021. On September 27, 2021, the respondent no. 1, as per the instructions of the officials of the Bank, signed the letter dated 28th June, 2021 without putting any date. From the restructuring letter dated June 28, 2021, the respondent no. 1 came to know that the original LC limit had become Zero as the devolved LCs amounting to Rs. 1.62 crores had been converted into a Term Loan with a moratorium of one year and the first installment payment would start in June 2022. The respondent no. 1 by letters dated August 19, 2021 and August 27, 2021 requested the authorities of the Bank to open a LC for Rs. 50 lakhs after taking Rs. 92.56 lakhs from him but the Bank without opening the LC for Rs. 50 lakhs paid the sum of Rs. 92.56 lakhs to Working Capital Term Loan (WCTL) and Funded Interest Term Loan (FITL) which was not payable on August 27, 2021 but in June, 2022.

6. Mr. Om Narayan Rai, learned Advocate appearing in support of this appeal, at the outset, submitted that the writ petition was not maintainable in view of availability of efficacious remedies under the SAEFAESI Act, 2002. He submitted that the accounts of the respondent no. 1 had been classified as Non Performing Asset (for short “NPA”) and action under Section 13(4) of the SARFAESI Act, 2002 had been taken by the Bank after issuance of notice under Section 13(2) of the Act. In support of his contention on maintainability he placed reliance upon the decisions of the Hon’ble Supreme Court in the cases of Authorised Officer, State Bank of Travancore and Anr vs Mathew K.C. reported at (2018) 3 SCC 85, ICICI Bank Limited vs Umakanta Mohapatra and Ors reported at (2019) 13 SCC 497 and Phoenix ARC Private Limited vs. Vishwa Bharati Vidya Mandir and Ors. reported at (2022) 5 SCC 345.

7. He further submitted that after the loan accounts of the respondent no. 1 were classified as NPA, the appellants have filed recovery proceedings before the learned Debts Recovery Tribunal-1, Kolkata being O.A. No. 300 of 2022 inter alia praying for issuance of a recovery certificate against the respondent no. 1.

8. He contended that immediately after filing the writ petition, the respondent no.