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2010 Supreme(Mad) 5458
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE D. MURUGESAN & THE HONOURABLE MR. JUSTICE VINOD K. SHARMA
G. Karunanidhi
Versus
The Chief Manager/Authorised Officer & Another
Writ Petition No.25367 of 2010 & M.P.No.1 of 2010
Decided On : 16-12-2010
For the Petitioner:K. Sakthivel, Advocate.
For the Respondents:Jayesh Dolia, Advocate.
Staff housing loans granted to employees by the bank against security fall within the definition of debt and can be recovered under the SARFAESI Act.
Headnote:
SARFAESI Act - Staff Housing Loan - Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Sec.13(2) - Sec.2(g) - Sec.2(2e) - Sec.2(2f - The court discussed the applicability of the SARFAESI Act to staff housing loans, the definition of 'debt' under the Act, and the interpretation of 'security interest' and 'secured debt'. The judgment highlighted the legal provisions and their interpretations, ultimately ruling that staff housing loans granted to employees by the bank against security fall within the definition of debt and can be recovered under the SARFAESI Act.
Fact of the Case:
The petitioner, a former bank employee, sought to prohibit the bank from invoking the SARFAESI Act for the recovery of a staff housing loan. The petitioner's compulsory retirement was set aside by the court, and the bank sought to recover the outstanding loan amount under the SARFAESI Act. The petitioner contested the applicability of the SARFAESI Act to staff housing loans, citing the terms of the loan and the circumstances of his retirement.
Finding of the Court:
The court dismissed the writ petition, ruling that staff housing loans granted to employees by the bank against security fall within the definition of debt and can be recovered under the SARFAESI Act. The court held that the petitioner's claim could not be adjudicated in writ jurisdiction and should be addressed by the authorities or the tribunal.
Issues: The issues involved the applicability of the SARFAESI Act to staff housing loans, the interpretation of the terms of the loan, and the petitioner's challenge to the recovery proceedings initiated by the bank.
Ratio Decidendi: The court's decision was based on the interpretation of the legal provisions defining 'debt' and 'security interest' under the SARFAESI Act, as well as the precedent set by previous judgments. The court emphasized that the petitioner's claim could not be adjudicated in writ jurisdiction.
Final Decision: The writ petition was dismissed, and the court ruled that staff housing loans granted to employees by the bank against security fall within the definition of debt and can be recovered under the SARFAESI Act.
VINOD K.SHARMA, J.
1. The petitioner by invoking the extraordinary supervisory jurisdiction of this Court has prayed for issuance of a writ of prohibition prohibiting the Chief Manager/Authorised Officer, Indian Bank Circle Office, the first respondent herein from invoking the provisions of the SARFAESI Act, 2002 in respect of the petitioners staff housing loan in pursuance of the notice dated 20.8.2010 of the first respondent under Section 13(2) of the SARFAESI Act.
2 The pleaded case in the affidavit read as under: The petitioner joined the services of the Indian Bank in the year 1974 and was posted as Branch Manager of the Kotturpuram branch from 8.7.1993 to 31.3.1996. The petitioner thereafter joined as Senior Manager, Marketing Department at the head office of the respondent bank.
3 The petitioner availed staff housing loan of sum of Rs.60,000/- (Rupees sixty thousand only) in Sanction Ticket No.2347 dated 27.11.1981, sum of Rs.65,000/- (Rupees sixty five thousand only) in Sanction Ticket No.428 dated 14.6.1988 and Rs.70,000/- (Rupees seventy thousand only) in Sanction Ticket No.1496 dated 3.7.1992. The petitioner claims that out of this amount, a sum of Rs.67,531/-(Rupees sixty seven thousand five hundred and thirty one only) is outstanding due as on 21.01.1999 on the principal amount with accrued interest of Rs.88,047/- (Rupees eighty eight thousand and forty seven only). The petitioner in addition, availed staff housing loan of Rs.3,05,000/- (Rupees three lakhs and five thousand only) vide SHL No.2347/99.
4 The petitioner was issued show cause notice for initiating departmental enquiry on 15.4.1996 for alleged irregularities in respect of appraisal, disbursal and follow up of credit limits sanctioned to the international Womens Football Tournament to be held at Chennai. The explanation submitted by the petitioner was not accepted and departmental enquiry was ordered on 17.5.1997.
5 The case of the petitioner is that the petitioner was denied the opportunity to scrutinize the files and documents in the Zonal office and head office. The protest of the petitioner against continuing departmental enquiry was not accepted and enquiry officer proceeded with the enquiry and submitted his report holding that the petitioner guilty of some of the charges. The petitioner submitted objection to the findings of the enquiry officer. The disciplinary authority concurred with the enquiry officer and by order dated 21.12.1999 imposed a punishment of compulsory retirement. The appeal filed against the order of punishment was also dismissed on 29.02.2000.
6 The petitioner challenged the order of compulsory retirement by invoking the writ jurisdiction of this Court in W.P.No.54 of 2001 which was allowed by this Court and while setting aside the order of compulsory retirement, the case was remitted back to the departmental authorities for further consideration by providing documents and files on which reliance was placed by the petitioner.
7 The respondent Bank being aggrieved by the order passed in the writ petition, preferred a Writ Appeal No.425 of 2008 in which order passed by the Honble Single Judge was ordered to be stayed. The writ appeal is pending on the file of this Court.
8 The case of the petitioner is that the Branch Manager, the second respondent herein had approached the petitioner to sign acknowledgment of debt on 30.01.2009 which showed the balance outstanding payable by the petitioner as Rs.4,36,807/- (Rupees four lakhs thirty six thousand eight hundred and seven only) inclusive of all accrued interest. The balance debt reflected in the statement of accounts as on 5.8.2009 is Rs.4,38,100/-(Rupees four lakhs thirty eight thousand and one hundred only). The petitioner sent a cheque for Rs.2,50,000/- with an instruction to keep the said amount in the no lien account by stating as follows:
"I have been a regular employee from 1974. This staff Housing loan, as per the original sanctioned terms and conditions, was to
