The validity of a show cause notice under Section 13 (2) of the Act is determined by jurisdiction and compliance, and non-compliance with court orders and involvement of disputed facts can impact the court's decision.

JUDGMENT :

BISWAJIT MOHANTY, J.

The petitioner, who happens to be a Private Ltd. Company, has filed the present writ petition with a prayer to quash the notice dated 09.01.2013 (Annexure-11) issued by the opp. parties under Section 13 (2) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, for short, “the Act”.

2. The case of the petitioner is that it deals with production and sale of L.P.G. Cylinders and its ancillary products for the purpose of running its business. It maintains a cash credit account for raising financial assistance from opp. party No.1. In the year, 2010, petitioner submitted an application before opp. party No.1 for sanction of Working Capital Term Loans of about Rupees Three Crores for its business. In reply to the above request, the opp. party No.1 by its letter dated 16.06.2010 called for submission of certain documents. According to the petitioner, it complied with above noted directions of the Bank. The opp. party No.1 again vide letter dated 21.12.2010 sought for certain information for processing the proposal. The petitioner again complied with the above noted directions. On 11.07.2011, the opp. party No.1 issued a letter sanctioning Working Capital Term Loans of Rs.3.50 crores with certain terms and conditions while renewing working capital limits. However, the petitioner vide its letter dated 10.08.2011 expressed its inability to accept the WCTL limits with high rate of interest and requested the opp. party No.1 to sanction F.C.N.R.B. facility to petitioner. According to the petitioner, F.C.N.R.B. facility is a short term loan provided to certain loanees at the time of necessities with lower rate of interest. In spite of the above request made by the petitioner on 10.8.2011, the opp. party No.1 remained silent. After expiry of one year, opp. party No.1 on 3.9.2012 issued a letter to the petitioner indicating the irregularities in the cash credit account. An outstanding figure of Rs.16.18 crores was shown vide Annexuere-8 dated 3.9.2012 and the opp. party No.1 sought for payment of dues immediately. According to the petitioner, the transaction of petitioner with the opp. party No.1 is more than 30 years old and it was never a defaulter earlier but for the present one on account of a sharp hike in the rate of interest from 14.25% up to 16.75% for the last year. The petitioner again vide its letter dated 4.1.2013 requested the opp. party No.1 to restructure the account so that there can be smooth payment of outstanding dues. However, vide letter under Annexure-10, it was intimated to the petitioner that its cash credit account has become highly irregular and there was no transaction in the cash credit account since 02.10.2012 and the total dues payable including the interest as on 8.1.2013 came to more than Rs.17 crores and accordingly the Bank demanded repayment of entire outstanding dues. Immediately thereafter, on 9.1.2013, the Bank issued a notice under Section 13 (2) of “the Act” asking the petitioner to pay more than Rs.17 crores within 60 days from the date of notice. It was also made clear that the petitioner was also liable to pay future interest at the contractual rate to give with incidental expenses, cost, charges etc. Further, it was made clear that if the petitioner failed to repay the amount noted in the notice, the Bank would exercise all or any of the rights detailed under sub-section (4) of Section 13 of “the Act”. This notice dated 9.1.2013 issued under sub-section (2) of section 13 of “the Act” has been filed as Annexure-11 to the writ petition. As would be clear from the prayer quoted earlier, the present petitioner only challenges the said notice under Annexure11 in the present writ petition.

3. In this matter, notice was issued to the opp. parties on 26.03.2013. Further, on the said date, as an interim measure, this Court directed that operation of the notice dated 9.1.2013 under Annexure-11 should remain in abeyance till the nex