IMPORTANT POINT
The SARFAESI Act provides an effective and efficacious alternate remedy under Section 17, and the court's jurisdiction under Article 226 of the Constitution of India should be exercised only in extraordinary circumstances.

ORDER :

1. The instant writ petition has been preferred under Article 226 of the Constitution of India with the following prayers:-

“1. The respondent No.1 may be directed to produce the entire documents executed in relation to the loan facility namely loan agreements; sanction letter; Mortgage deed; memorandum of deposition of title deeds; CERSAI Registration Certificate, appointment of authorised officer and entire statement of accounts since inception of the loan account.

2. Issue an appropriate writ, order or direction quashing and setting aside all the actions of the Respondent No.1 taken under SARFAESI Act since declaration of the account as NPA and thereafter, issuance of Demand Notice and Possession Notice.

3. The cost and charges for undertaking the present actions under SARFAESI Act which are declared illegal and quashed, be deleted from the account of the Petitioners and also the penalties imposed for the period may be set aside/deleted.

4. Cost may be imposed against the erring officials in favour of the Petitioners.”

2. The petitioner No.1-Prakash Agencies and the petitioner No.2-Jai Jhulelal Stores, both are separate legal entities having an independent registration and are also separate properties. Both the petitioners Nos.1 and 2 availed two loan facilities each on 20.09.2019 and thereafter, some additional facilities on 30.06.2020. The petitioners have been servicing their accounts regularly but had been classified as Non Performing Assets (in short ‘NPA’) erroneously on 04.07.2023 and 29.07.2023 respectively and a Demand Notice dated 11.08.2023 (Annexure-4) for both the accounts was issued against them under Section 13(2) of the SARFAESI Act, 2002. Thereafter, the respondent No.1-Bank proceeded to issue a Possession Notice dated 30.10.2023 (Annexure-8) under Section 13(4) of the SARFAESI Act and thus, being aggrieved thereof, the petitioners have preferred the present writ petition.

3. Learned counsel representing the respondents, at the outset, raises a preliminary objection that the present writ petition is not maintainable, as the statutory alternative remedy is available to the petitioners under the SARFAESI Act, 2002.

4. Learned counsel for the petitioners in his rebuttal, submits that:-

(a) The impugned Demand Notice was issued to the two separate borrowers, singly, in contravention of express mandate of SARFAESI Act and the classification of loan accounts as NPA has been done in contravention of the guidelines laid down by RBI. The defective Possession Notice dated 30.10.2023 (Annexure-8) under Section 13(4) of the SARFAESI Act, has not been issued in furtherance of the Demand Notice, upon which, it claims to have been issued. The entire action has been taken by the person who is not authroized to take the action under the SARFAESI Act and the secured assets have not been registered upon Central Registry of Securitisation Asset Reconstruction and Security Interest of India (in short ‘CERSAI’) and hence, are not liable to be enforced under the SARFAESI Act.

(b) As required under Section 13(2) of the SARFAESI Act, 2002, the bank was mandated to serve a demand notice upon all the borrowers and was also required to affix upon the properties of the borrowers/petitioners by publishing it in two leading newspapers having circulation in the locality, but in the present case, the respondent-bank failed to do so. The bank has inflated the liability of the petitioners by way of charging the interest at exorbitant rates and also by debiting various costs and expenses.

5. Learned counsel for the petitioners places reliance upon the judgments passed by Hon’ble the Apex Court in the cases of:-

(i) Radha Krishan Industries Vs. State of Himachal Pradesh reported in (2021) 6 SCC 771.

(ii) Godrej Sara Lee Ltd. Vs. Excise and Taxation Officer-cum- Assessing Authority & Ors. reported in 2023 SCC Online SC 1995.

6. Heard learned counsel for the parties as well as perused the material available on record.

7. This Court is of t