The classification of loan accounts as non-performing assets must be borrower-wise, not facility-wise, and a guarantor cannot evade liability due to another borrower's defaults.

JUDGMENT

Mrs. Lisa Gill, J.

Prayer in this writ petition is for setting aside notice dated 01.04.2017 (Annexure P-l), notice dated 05.07.2018 (Annexure P-6) and notices dated 04.01.2019, 28.02.2019 and 01.03.2019 (Annexures P-8 to P-10) issued under the provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short SARFAESI Act) and further setting aside communication dated 13.06.2019 (Annexure P-16), issued by respondent no.2 vide which respondent-Bank has refused to upgrade home loan account of petitioner. There is a further prayer for setting aside Clause 4.2.7(i) of the Master Circular - "Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances" alleged to be illegal, unconstitutional and violative of Articles 14 and 16 of the Constitution of India and in the alternate to declare that this provision is not applicable to the facts and circumstances of the present case. Petitioner seeks a direction to respondent no.2, Punjab National Bank, to upgrade home loan account of petitioner to standard in terms of Clause 4.2.5 of the above said Master Circular.

2. Brief facts as pleaded in this writ petition are that petitioner is a co-owner of residential property as detailed in para 2 of writ petition alongwith his real brother namely Navdeep Singh. Housing loan of Rs. 90 lakhs was availed of by petitioner on 02.12.2011 in order to purchase the said property of which petitioner is a co-owner. It is stated that on account of certain professional difficulties there was financial indiscipline on the part of petitioner which led to account being declared Non-Performing Asset (for short NPA) on 31.03.2017. Notice dated 01.04.2017 (Annexure P-l) under Section 13(2) of SARFAESI Act was issued claiming outstanding amount to be Rs. 85, 81, 320/- as on 30.03.2017 with interest being charged upto 28.02.2017. It is stated that amount included the dues towards a car loan also which was availed of by petitioner. It is stated that overdue amount of Rs. 10.25 lakhs was deposited by petitioner after receipt of notice, therefore, account should have been regularized and it could not be termed NPA. However, notice dated 10.08.2017, dispatched on 17.10.2017 was received by petitioner through speed post on 20.10.2017. As petitioner felt that there was no occasion for issuance of such possession notice, e-mail dated 24.10.2017 (Annexure P-2) was sent by petitioner to respondent no.2 in this respect. Respondent no.2 is alleged to have issued a certificate dated 01.11.2017 (Annexure P-4) stating that loan account had been provisionally upgraded to standard category subject to finalization of accounts on quarter ending December, 2017. However, there was again default on the part of petitioner which led to issuance of notice dated 12.03.2018 (Annexure P-5) to petitioner and his brother Navdeep Singh seeking deposit of Rs. 5, 24, 093.29/- alongwith interest @ 9.15% per annum. Legal notice dated 05.07.2018 (Annexure P-6) was thereafter issued by respondent no.2 to petitioner and ultimately notice dated 16.07.2018 (Annexure P-7) under Section 13(2) of SARFAESI Act was issued indicating that account in question had become NPA on 30.06.2018 with outstanding amount being Rs. 72, 08, 286/-. Sale notices dated 04.01.2019, 28.02.2019 and 01.03.2019 (Annexure P-8 to P-10) were issued fixing reserve price of house in question to be Rs. 280.50/- lakhs.

3. It is further pleaded that petitioner on 29.04.2019 submitted a representation before Bank that overdue amount could earlier not be deposited but now petitioner was ready to clear overdue amount and that the Bank should not proceed with any coercive action. Sale notice dated 04.06.2019 (Annexure P-12) was, however, issued for auction of property on 02.07.2019. Petitioner yet again requested respondent-Bank on 11.06.2019 (Annexure P-13) to upgrade his account. Same was responded to by the Bank on 11.06.2019 (Annexur