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2015 Supreme(Ker) 718
IN THE HIGH COURT OF KERALA AT ERNAKULAM
ASHOK BHUSHAN & A.M.SHAFFIQUE, JJ.
SINDHU UNNIKRISHNAN & ORS. – Appellants
Vs.
STATE BANK OF INDIA & ORS. – Respondents
W.A.No.1309 of 2015
Decided On : 10-07-2015
For the Appellants : SRI. M.S. UNNIKRISHNAN
SRI. S.V. BALAKRISHNA IYER (SR.)
For the Respondents: SRI.GEORGE THOMAS (MEVADA) (SR), SC, SBI
The main legal point established in the judgment is that issues of fact should be addressed in the appropriate forum, and statutory remedies are available to the petitioners under the SARFAESI Act.
Headnote:
SARFAESI Act - Withdrawal of Credit Facility - Section 13(2) Notice - [BANKING] - [SARFAESI Act, 2002, Section 13(2)] - The court considered the withdrawal of the cash credit facility by the bank and the subsequent notice issued under Section 13(2) of the SARFAESI Act. The key legal provisions discussed were the power of the bank to withdraw credit facilities and the statutory remedies available to the petitioners under the SARFAESI Act.
Fact of the Case:
The appellants filed a writ petition challenging the bank's refusal to renew the cash credit facility and the notice issued under Section 13(2) of the SARFAESI Act. The bank had withdrawn the credit facility and demanded the outstanding amount, leading to the filing of the writ petition.
Finding of the Court:
The court found that the issues raised by the petitioners were essentially issues of fact which could not be addressed in writ proceedings under Article 226 of the Constitution of India. The court dismissed the writ petition, leaving the petitioners to avail their remedies before the appropriate forum.
Issues: The issues revolved around the withdrawal of the credit facility, the validity of the notice issued under Section 13(2) of the SARFAESI Act, and the appropriateness of addressing factual issues in a writ petition.
Ratio Decidendi: The court held that all issues of fact should be addressed in the appropriate forum, and the petitioners had statutory remedies under the SARFAESI Act in the event of any measures taken by the bank under Section 13(4) of the Act.
Final Decision: The writ appeal was dismissed, with the court observing that the issues raised may be decided in accordance with the materials on record in the appropriate forum.
Ashok Bhushan, J.
Heard the learned counsel for the appellants as well as the learned counsel appearing for the Bank.
2. This writ appeal has been filed against the judgment dated 3rd December, 2014 in WP(C) No.6784/2013. The writ petition was filed by the appellants challenging Exts.P11 and P16. By Ext.P11, Bank has refused to renew the cash credit facility of Rs.68,00,000/- and Bank called back the facility sanctioned to the appellants and requested the petitioners to liquidate the entire outstanding including accrued interest. It was further mentioned in Ext.P11 that failing the payment aforesaid, the Bank shall be constrained to initiate proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'the SARFAESI Act'). Subsequent to the issuance of Ext.P11, Bank issued notice under Section 13(2) dated 2nd April, 2013 calling upon them to discharge their full liability stated thereunder within 60 days from the date of the notice. Bank had filed OA No.220/2014 for recovery of amount of more than Rs.80,00,000/- on 22nd November, 2013.
3. The petitioner filed WP(C) No.6784/2013 in February 2014 praying for the following reliefs;
“(i) Declare that the Exhibit P-11, recalling the credit facilities extended to the 1st petitioner and the proposal for proceedings under SARFAESI Act are illegal and without jurisdiction.
(ii) issue a writ of certiorari or other appropriate writ, order or direction quashing Exhibit P16;
(iii) Issue a writ of certiorari or other appropriate writ, order or direction quashing Exhibit P-11;
(iv) Declare that the withdrawal of drawing power given to the 1st petitioner was withdrawn by the respondent bank without any justification and the default, if any, in repaying the amount having been deliberately created by the 1st respondent bank, it is not entitled to resort to the provisions of the SARFAESI act for realization of amounts covered by Exhibit P11 and P16.
(v) Declare that, as the facilities mentioned in Ext.P11 were recalled by the 1st respondent bank without any justification and the default, if any, having been deliberately created by the 1st respondent bank, it is not entitled to resort to the provisions of SARFAESI Act for realization of the amounts covered by Ext.P11”.
4. Learned counsel for the appellants has further contended that in fact the action was taken by the Bank on account of them having filed various complaints against the Punjab National Bank on which First Information Report was also registered and case is under investigation. He submits that there was a lot of pressure on the part of the petitioners to withdraw the complaint and since the petitioners did not yield to the said request, several actions were taken against the petitioners and the aforesaid action of the Bank is also sequel to the said complaint.
5. Counter affidavit has been filed in the writ petition by the Bank by which the Bank sought to justify its action for withdrawing the credit facility and for issuing notice under Section 13(2) of the SARFAESI Act. Petitioners in the meantime also filed a counter claim in OA No.220/14 in February, 2015 raising a claim of Rs.75,00,000/-. Learned Single Judge by the impugned judgment considered the various submissions raised by the petitioners on the fact and arguments challenging Ext.P11 and ultimately repelled the challenge to Ext.P11.
6. In so far as the notice issued under Section 13(2), it was observed that it was open for the petitioners to file an objection under Section 13 (3A) of the Act and if Bank takes any action under Sec.13(4), the petitioners can seek their remedy under SARFAESI Act, 2002. Learned counsel for the appellants in support of the appeal contends that there was no valid reason for withdrawal of the credit facility. It is submitted that vague reasons were given in Ext.P11 letter for withdrawal of the facility. Petitioners were not asked to show details of statement an
