The decision of the bank to classify the loan account as NPA under the SARFAESI Act was not a jurisdictional fact, and the remedy of judicial review was not available at the stage of Section 13(3A). The court emphasized the need to exhaust remedies available under the statute before seeking judicial review.

RAJIV SAHAI ENDLAW, J.

1. This intra court appeal impugns the judgment dated 23rd April, 2015 of the learned Single Judge of this Court of dismissal of W.P. (C) No. 4021/2015 filed by the two appellants.

2. The writ petition from which this appeal arises was filed impugning inter alia the decision of the respondent No.1 Bank (respondent No.2 is the authorized officer of the said Bank) under Section 13(3A) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) dismissing/ rejecting the representation filed by the appellants against the notice under Section 13(2) of the SARFAESI Act. It was the contention of the appellants that the respondent Bank has taken recourse to the provisions of the SARFAESI Act, without ‘jurisdictional facts’ obtaining in the matter. It was the argument of the counsel for the appellants before the learned Single Judge that the mechanism under Section 13 of the SARFAESI Act could not be triggered till such time as the loan account of the appellants with the respondent Bank was classified as a Non-Performing Asset (NPA) and which, in the facts and circumstances of the case it could not have been classified.

3. The learned Single Judge, giving detailed reasons and analysing the loan account of the appellants with the respondent Bank, has not accepted the contention that the classification by the respondent Bank of the said loan account as NPA was faulty. It has further been held that the said pleas could be taken before the Debts Recovery Tribunal (DRT) in a proceeding under Section 17 of the SARFAESI Act.

4. When the appeal came up before us on 1st May, 2015, it was the contention of the counsel for the appellants that the High Courts of Andhra Pradesh and Jharkhand had held that a writ petition at the stage of Section 13(3A) of the SARFAESI Act was maintainable, though a contrary view had been taken by the High Courts of Orissa, Madhya Pradesh and Chennai and that this Court needs to take a view on the matter. We however drew the attention of the counsel for the appellants to the judgment of this Bench in Sigma Generators Pvt. Ltd. vs. Oriental Bank of Commerce, 2015 (217) DLT 622 and on the request of the counsel for the appellants, the matter was adjourned.

5. We further heard the counsel for the appellants on 7th May, 2015 and reserved judgment.

6. We, in Sigma Generators Pvt. Ltd supra were concerned with a challenge to the notice under Section 13(2) of the SARFAESI Act. The learned Single Judge, in that case, relying on Mardia Chemicals Ltd. Vs. Union of India (2004) 4 SCC 311, had dismissed the writ petition holding that the notice under Section 13(2) is a pre-condition to an action under Section 13(4) of the Act and the remedy available to a borrower can be availed only after the measures under Section 13(4) of the Act had been taken. The writ petitioner/appellant before us in that case pegged its case on Sravan Dall Mill Pvt. Ltd vs. Central Bank of India, AIR 2010 Andhra Pradesh 35 where a Division Bench of the High Court of Andhra Pradesh has held that the remedy of judicial review under Article 226 of the Constitution of India is available with respect to a decision of a creditor declaring the debtor’s account as an NPA by issuing a notice under Section 13(2) of the Act. We however held –

(i) That the High Court of Andhra Pradesh in Sravan Dall Mill Pvt. Ltd. supra held the remedy of Article 226 of the Constitution of India to be available as the creditor in that case, after issuing notice under Section 13(2) and in spite of the debtor representing/ objecting under Section 13(3A) there against, neither passed any order on the said representation/objection nor took any measure under Section 13(4) of the Act; it was in view thereof that it was held that declaring an account as NPA by itself leads to serious consequences and when measures under Section 13(4) are not taken by the creditor, the debtor is also deprived of seeking