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IN THE HIGH COURT OF JHARKHAND AT RANCHI
SHREE CHANDRASHEKHAR, J.
J.G. Garments, through its Proprietor, Ranchi – Petitioner
Versus
Central Bank of India, Mumbai, through its Chairman-cum-Managing Director & Other – Respondent
W.P. (C) No. 4809 of 2014
Decided On : 4.12.2014
SARFAESI Act - Loan Recovery - Section 13(3A) - 2002 - Summary of Acts and Sections: SARFAESI Act, 2002, Section 13(3A) - The court discussed the powers of a secured creditor under the SARFAESI Act, the borrower's remedies under Section 17, and the validity of the Act as upheld by the Supreme Court in Mardia Chemicals Ltd. & Others vs. Union of India & Others (2004) 4 SCC 311. The court emphasized that the Act aims for speedier recovery of NPAs and better availability of capital liquidity and resources for the country's economic growth and public welfare.
Fact of the Case:
The petitioner sought quashing of a letter dismissing their objection under Section 13(3A) of the SARFAESI Act, 2002. The petitioner had defaulted on a cash credit loan, and the respondent-bank initiated recovery proceedings. The petitioner objected to the amount demanded and sought settlement, but their objections were rejected, leading to the present petition.
Finding of the Court:
The court found that the petitioner's writ petition challenging the rejection of their objection under Section 13(3A) was not maintainable. The court emphasized the powers of a secured creditor under the SARFAESI Act and the borrower's remedy under Section 17. It dismissed the writ petition, stating that the borrower's hardship cannot be a ground for entertaining the petition.
Issues: The issues revolved around the rejection of the petitioner's objection under Section 13(3A) of the SARFAESI Act, the calculation of the amount due, and the maintainability of the writ petition.
Ratio Decidendi: The court held that the writ petition challenging the rejection of the objection under Section 13(3A) was not maintainable. It emphasized the borrower's remedies under the Act and dismissed the petition, stating that the borrower's hardship cannot be a ground for entertaining the petition.
Final Decision: The writ petition was dismissed by the court.
SHREE CHANDRASHEKHAR, J.
1. Seeking quashing of letter dated 11.08.2014 whereby, the representation/objection of the petitioner under Section 13(3A) of the SARFAESI Act, 2002 has been dismissed, the petitioner has approached this Court by filing the present petition.
2. The brief facts of the case are that, in the year, 2002 a cash credit loan of Rs. 2,00,000/- was sanctioned to the petitioner, for which the petitioner provided liquid security in the form of fixed deposit of Rs. 25,000/- and it deposited original title deed of loan for equitable mortgage in favour of the respondent-bank. Subsequently, the cash credit limit was enhanced and finally on 24.11.2005, it was enhanced to Rs. 8,00,000/. The security given by the petitioner is to the tune of Rs. 1,90,000/- and in addition to the said security it submitted NSC for Rs. 50,000/- and LIC policy for Rs. 19,500/. In view of the growth in business, the petitioner required additional capital, for which it requested the respondent-bank to grant additional facilities however, it was not granted and thus, the loan account became irregular in December, 2010. Vide letter dated 19.07.2011, the petitioner's account became NPA. The petitioner was directed to deposit an amount of Rs. 8,82,446/- by 31.07.2011. The petitioner could not repay the entire outstanding dues and thus, vide letter dated 03.11.2011, a notice under Section 13(2) of the SARFAESI Act, 2002 was issued directing the petitioner to deposit an amount of Rs. 9,43,118/. The petitioner submitted its objection under Section 13(3A) of the SARFAESI Act vide representation dated 26.12.2011 however, the said representation was rejected by the respondent-bank on 03.01.2012. The petitioner again submitted representation dated 09.01.2012 and it offered to settle the loan amount vide letter dated 07.09.2012. In the settlement camp, it was agreed by the respondent-bank that the loan account of the petitioner would be settled for a sum of Rs. 7,00,000/- by adjusting the liquid security already lying with the bank. However, vide letter dated 10.09.2012, the respondent-bank informed that its compromise proposal is subject to approval by the higher authorities. Since, inspite of adjustment of Rs. 4,06,829/- the respondent-bank again directed the petitioner to make payment of Rs. 7,00,000/- the petitioner was constrained to approach this Court in W.P. (C) No. 5490 of 2013. In the meantime, the respondent-bank filed Certificate Case No. 17 (CBI)/1314 for recovery of a sum of Rs. 4,86,342/. The respondent-bank again issued notice under Section 13(2) of the SARFAESI Act, 2002 requiring the petitioner to pay Rs. 8,24,801/- as on 16.06.2014 and therefore, the notice dated 16.06.2014 under Section 13(2) of the SARFAESI Act, 2002 was challenged by the petitioner in I.A. No. 3330 of 2014 in the pending writ petition. Vide order dated 21.07.2014, the writ petition was disposed of with liberty to the petitioner to file a representation before the authorised officer within 15 days. The petitioner filed a representation on 31.07.2014 pointing out serious discrepancies in the loan account and the consequent demand issued by the respondent-bank however, vide letter dated 11.08.2014, the representation of the petitioner has been dismissed arbitrarily and therefore, the petitioner has once again approached this Court.
3. Heard the learned counsel appearing for the petitioner.
4. The learned counsel for the petitioner submits that though, after the loan account became N.P.A. on 20.05.2011, a notice under Section 13(2) of the SARFAESI Act, 2002 was issued on 03.11.2011 however, in the settlement camp it was agreed by the respondent-Bank that the loan amount would be settled and in this regard, a communication dated 11.09.2012 was issued to the petitioner by the respondent-Bank. Seeking quashing of communication dated 11.09.2012 whereby compromise proposal dated 07.09.2012 was accepted by the Bank and aggrieved by notice under Section 13(2) dated
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