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2008 Supreme(Chh) 59
DHIRENDRA MISHRA, J.
Vijay Verma
Versus
Dena Bank and Ors.
W.P. (C) No. 1372 of 2008
Decided on : 19-3-2008.
B. P. Sharma, for Petitioner; Rajeev Shrivastava, for Respondents.
The NPA Act provides for the borrower's right to make representations and an alternative remedy under Section 17 to challenge the actions of the Bank authorities.
Headnote:
NPA Act - Enforcement of Security Interest - Section 13, Section 14 - Summary of Acts and Sections: The court discussed the provisions of Section 13 and Section 14 of the NPA Act, emphasizing the conditions for enforcement of security interest, the notice of demand, and the borrower's obligations. The court also highlighted the borrower's right to make representations and the alternative remedy under Section 17 of the NPA Act.
Fact of the Case:
The respondent/Bank issued a notice under Section 13 (2) of the NPA Act to the petitioner, demanding repayment of a loan. The petitioner challenged the actions of the Bank authorities, alleging non-compliance with the law and seeking relief from the court.
Finding of the Court:
The court found that the petitioner had an alternative remedy under Section 17 of the NPA Act to challenge the actions of the respondent-Bank. The court dismissed the petition, stating that the petitioner's claims lacked merit.
Issues: The issues revolved around the enforcement of security interest by the Bank authorities, the petitioner's objections, and the procedural compliance with the NPA Act.
Ratio Decidendi: The court emphasized that the NPA Act provides for the borrower's right to make representations and an alternative remedy under Section 17 to challenge the actions of the Bank authorities. The court also highlighted the conditions for enforcement of security interest and the borrower's obligations under the NPA Act.
Final Decision: The petition was dismissed by the court, concluding that the petitioner's claims lacked merit and that the petitioner had an alternative remedy under Section 17 of the NPA Act.
A. A writ and/or an order in the nature of writ of mandamus do issue commanding and directing the respondent Bank authorities to produce before this Hon'ble Court all the relevant records for perusal of this Hon'ble Court.
B. A writ and/or an order in the nature of writ of mandamus do issue commanding and directing the respondent Bank authorities to act in consonance with the law laid down in Para 45 of the Mardia Chemicals Ltd.'s case, (AIR 2004 SC 2371) and strictly in accordance with Section 13 (2) and (4) of the Act and the Rules 3-A and 4 of the Rules, 2002, as amended up-to-date, and prohibiting the respondent Bank authorities from taking possession of the said shops and movables since pre-conditions for exercise of those powers have not been followed by the authorities.
C. A writ and/or an order in the nature of writ of certiorari do issue quashing the decision of respondent No. 2 Committee dated 5-10-2007 and also the order of the respondent No. 3 Collector dated 11-2-2008 as illegal, arbitrary and not in accordance with law in the facts and circumstances of the case.
D. Cost of proceedings.
2. Briefly stated, facts necessary for decision of this petition are that the respondent/Bank issued a notice dated 4th January 2007 (Annexure P/2) under Section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the "NPA Act") calling upon the petitioner (guarantor to M/s Alankar, a unit of Verma Jewellers Group Pvt. Ltd.) to repay the loan advanced to him to the tune of rupees two crore ten lac twenty three thousand with further interest thereon, failing which the Bank as a secured creditor shall be entitled to enforce its security interest without intervention of the Court or Tribunal by taking recourse to one or more of the measures under Chapter-3 of the Act including taking over of the possession or management of the assets charged to the Bank for realizing the Bank's dues.
3. The petitioner in his reply had taken a preliminary objection that the Bank authorities have not constituted a committee as per law laid down by the Hon'ble Apex Court in the matter of Mardia Chemicals Ltd., (AIR 2004 SC 2371). However, the Bank authorities filed an application before the District Magistrate for exercising powers under Section 14 of the NPA Act. The petitioner challenged the above action of the Bank authorities by way of filing a writ petition being W.P.(C) No. 2215/07, which was dismissed by this Court vide order dated 17-4-2007 (Annexure P/4).
4. Against the above order of the High Court, a writ appeal No. 102/07 was preferred and in the said writ appeal the respondent/Bank gave an undertaking that they shall not take possession of the unit and shall be constituting a committee as per decision of the Hon'ble Apex Court in the case of Mardia Chemicals Ltd. and in these circumstances, the writ appeal was also dismissed vide order dated 11th October 2007 (Annexure P/6) with liberty to the petitioner to challenge the order passed by the Committee, if he so desires/advised.
5. Thereafter, the Committee constituted by the Bank authorities in their meeting dated 5th October 2007 vide Annexure P/5 considered the objections raised by the petitioner vide letter dated 8th March 2007 against the notice dated 4th January 2007 (Annexure P/2) and resolved as under :-
"5. After going through all the issues involved/objections raised by the borrower, the committee unanimously reached to the conclusion that :
a. The objection raised are baseless as such cannot be accepted for the reasons mentioned above.
b. The committee reached to the conclusion that borrower is a wilful defaulter and has been indulging in delaying tactics to avoid bank's recovery mechanism.
c. The committee hold that under no circumstances such a huge amount of public money can be a
