The court established that the broad definition of 'debt' under the 1993 Act and the additional remedies provided by the SARFAESI Act, 2002, allowed the Bank to initiate recovery proceedings under the latter Act, even after obtaining a Certificate of Recovery under the former Act.

V.RAMASUBRAMANIAN,J.

1. The writ petitioner challenges the notice issued by the Bank under Section 13(2) of the SARFAESI Act, 2002, on the short ground that after having obtained a Certificate of Recovery, in terms of the 1993 Act, the Bank was not entitled to switch over to the SARFAESI mode.

2. We have heard Mr.R.Gowthama Narayanan, learned counsel for the petitioner and Mr.Om Prakash, learned counsel for the respondent-Bank.

3. The petitioner was sanctioned a term loan facility by the respondent-Bank to the tune of Rs.13 lakhs, in terms of a Letter of Arrangement dated 17.9.2007. After the petitioner committed default and the account was classified as a non-performing asset, the Bank issued a legal notice dated 25.6.2010 and thereafter filed an application in O.A.No.155 of 2010 on the file of the Debts Recovery Tribunal III, Chennai, praying for the issue of a Recovery Certificate for a sum of Rs.12,87,903.37 together with interest at the contractual rate with monthly rests.

4. The petitioner remained ex parte before the Tribunal and the Tribunal passed an order on 23.9.2011, declaring the Bank to be entitled to a Certificate of Recovery. Accordingly, a Recovery Certificate in DRC No.61 of 2011 was issued on 28.10.2011.

5. In pursuance of the same, the Recovery Officer of the Debts Recovery Tribunal III also issued a demand notice on 1.11.2011, cautioning the petitioner that steps for recovery will be initiated in accordance with Section 25 of the 1993 Act. However, in the meantime, the respondent-Bank issued a notice dated 22.10.2011 under Section 13 (2) of the SARFAESI Act, 2002. In response to the notice, the petitioner filed a reply in terms of Section 13(3-A) taking a very curious stand that he never executed any security interest and calling upon the Bank to furnish details as to when the account was classified as a non-performing asset. After sending such a reply, on 7.12.2011, the petitioner filed the above writ petition seeking to quash the notice under Section 13(2) and also to forbear the respondent from proceeding under the SARFAESI Act, 2002.

6. The primary ground on which the learned counsel for the petitioner assails the impugned notice is that after having obtained a Certificate of Recovery in terms of the 1993 Act, the only option open to the Bank was to pursue further action in terms of the 1993 Act itself and that the Bank cannot now fall back upon the provisions of the SARFAESI Act, 2002. Incidentally Mr.R.Gowthama Narayanan, learned counsel for the petitioner also contended, without any pleading to the said effect, that his account had not become a non-performing asset, within the meaning of the SARFAESI Act, 2002 and that therefore, the initiation of the action under the Act was illegal.

7. We shall first deal with the incidental submission made by the learned counsel for the petitioner about the classification of his account as a non-performing asset by the respondent-Bank. The expression "non-performing asset" is defined under Section 2(1) (o) of the SARFAESI Act, 2002 as follows:-

"(o) "non-performing asset" means an asset or account of a borrower, which has been classified by a bank or financial institution as sub-standard, doubtful or loss asset, --

(a) in case such bank or financial institution is administered or regulated by any authority or body established, constituted or appointed by any law for the time being in force, in accordance with the directions or guidelines relating to assets classifications issued by such authority or body;

(b) in any other case, in accordance with the directions or guidelines relating to assets classifications issued by the Reserve Bank."

8. For initiating action under Section 13(2) of the Act, two conditions are required to be satisfied. They are (i) the borrower, who is under a liability to the secured creditor under a security arrangement should have committed default in repayment and (ii) his account in respect of such debt should have bee