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IN THE HIGH COURT OF ORISSA AT CUTTACK
Jaswant Singh, M.S. Sahoo, JJ.
M/s. Shree Balaji International, Bhubaneswar & Anr. – Appellants
Versus
Union Bank of India, Hyderabad & Ors. – Respondents
Writ Petition (C) No. 25483 of 2022
Decided On : 05-12-2022
SARFAESI Act - Loan Recovery - The court dismissed the writ petition after the petitioners sought unconditional withdrawal following a challenge to a memo from the bank requesting payment of the outstanding loan balance.
Fact of the Case:
The partnership firm availed a loan from the bank, which was classified as NPA, leading to the initiation of the recovery process under the SARFAESI Act. The petitioners challenged a memo from the bank requesting payment of the balance amount within the stipulated period of the settlement.
Finding of the Court:
The court dismissed the writ petition after the petitioners sought unconditional withdrawal, which was filed during the hearing.
Issues: Challenge to the memo from the bank requesting payment of the outstanding loan balance.
Ratio Decidendi: The court's decision was influenced by the petitioners' unconditional withdrawal of the writ petition.
Final Decision: The court dismissed the writ petition as withdrawn.
JUDGMENT
1. Petitioner No.1 is a partnership firm and Petitioner No.2 is the working partner. The firm is stated to have availed a loan to the tune of Rs.4 Crores on 28th September, 2008 from Union Bank of India, Baramunda Branch, Bhubaneswar/Opposite Party No.3. The loan account due to financial indiscipline was classified as NPA in the year 2017 resulting into initiation of recovery process under the SARFAESI Act, 2002 by issuance of a Demand Notice dated 28th July, 2017 recalling the outstanding liability of Rs.2,60,51,876/- plus future interest and incidental expenses.
2. The challenge is laid in the instant Writ Petition to a memo dated 12th July, 2022 issued by the Bank requesting the petitioners to pay the balance amount within the stipulated period of the settlement sanctioned under the non-discriminatory scheme dated 8th June, 2022.
3. At the time of hearing, learned counsel for the petitioners has filed a memo in Court today seeking an unconditional withdrawal of the present Writ Petition. The same is kept on record.
4. In view of the aforesaid memo, the present Writ Petition stands dismissed as withdrawn.
The court's decision was influenced by the petitioners' unconditional withdrawal of the writ petition.
Challenge to demand notice under SARFAESI Act not maintainable at initial stage
Dismissal of writ petition as infructuous due to closure of loan account
Failure to comply with court orders and failure to clear outstanding liabilities can lead to dismissal of a writ petition.
The SARFAESI Act, 2002 provides for the recovery process and issuance of demand notices for defaults in payment, and the court's decision was based on the petitioner's withdrawal of the Writ Petition....
The SARFAESI Act, 2002 does not allow a simplicitor challenge to the demand notice for outstanding liabilities.
The court's decision was based on the petitioner's request to withdraw the writ petition and pursue available remedies before the finance company.
Compliance with court orders and instructions is crucial in legal proceedings, and failure to do so can result in dismissal of petitions.
The SARFAESI Act prevails over the MSME Act, and the classification of accounts as NPA is not justiciable at the stage of objection rejection under Section 13(3A).
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