The main legal point established in the judgment is that the bank's actions under the Act of 2002 must comply with the mandatory requirements of the statute, including considering and deciding objections raised by the borrower, and communicating the decision to the borrower before proceeding with measures under the Act.

( 1 ) HEARD the learned advocates.

( 2 ) RULE. Learned advocates mr. Gandhi and Mr. Mengdey waive service of rule on behalf of the concerned respondent. With the consent of the learned advocates, petition is taken up for final hearing.

( 3 ) THE petitioners before this Court are a company incorporated under the companies Act, 1956 and one another (hereinafter referred to as, "the Company"), the borrowers in default. The respondent no. 1 is the Punjab and Sind Bank Limited (hereinafter referred to as, "the Bank" ). The bank had extended financial assistance, to the company. The Company challenges the action of the Bank in initiating the recovery proceeding under the Securitization and reconstruction of Financial Assets and enforcement of Security Interest Act, 2002 (hereinafter referred to as, "the Act of 2002")and the order of the District Magistrate, vadodara made on 4th January, 2005 under section 14 of the Act of 2002.

( 4 ) MRS. Mehta has submitted that the action of the Bank in invoking the provisions contained in the Act of 2002 is illegal, made without the authority of law. She has submitted that the Company s account has not been declared to be the non-performing asset. The Bank, therefore, has no authority in law to invoke the provisions contained in the Act of 2002 for recovery of its dues. She has submitted that the Bank has instituted recovery proceeding before the debt Recovery Tribunal (hereinafter referred to as, "the Tribunal") on 1st October, 2002. The Bank having invoked the jurisdiction of the Tribunal for recovery of its dues under the Recovery of Debts Due to Banks and financial Institutions Act, 1993 (hereinafter referred to as, "the Act of 1993"), the Bank is debarred from taking measures for recovery of its dues against the secured assets under the Act of 2002. She has submitted that the Bank does have a remedy of recovery by sale of secured assets under the Act of 2002. However, the Bank does have equally efficacious remedy for recovery of its dues under the Act of 1993. As the bank has two separate and distinct remedies available the doctrine of election of remedy shall come into play. The Bank must decide whether it wants its recovery to be made through the process of adjudication under the Act of 1993 or by the measures taken against the secured assets under the Act of 2002. She has further submitted that the company has offered to settle its account under one Time Settlement scheme introduced by the Reserve Bank of India. So long as the Company s application for settlement of account is pending, its assets cannot be recovered by the Bank. She has further submitted that on receipt of the notice under Section 13 (2) of the Act of 2002 the Company has lodged its objections. The said objections have not yet been considered and decided. Unless the said objections are considered, decided and the decision is communicated to the petitioners, the Bank has no authority to take measures under section 13 (4) of the Act of 2002. She has further submitted that against the loan of rs. 40 lakhs advanced by the Bank, the Bank has sought to recover a sum of Rs. 25 crores. The Bank has failed to submit its accounts and to justify the recovery sought to be made by it. On receipt of the notice under Section 13 (2) of the Act of 2002, the petitioners had lodged objections. The Bank was under an obligation to consider and decide the said objections and to communicate the decision thereof. In absence of such consideration or communication the Bank had no authority to proceed further with taking over the possession of the secured assets. She has submitted that the impugned notice does disclose that the Bank has charged penal interest and has also claimed interest over such interest i. e. the Bank has capitalized on the penal interest. She has submitted that the Bank is not empowered to capitalize on penal interest. She has submitted that the matter had once been settled with the bank. The Bank had agreed t