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HIGH COURT OF JUDICATURE AT ALLAHABAD
BHARATI SAPRU, VIVEK VARMA, JJ.
Sushma Yadav and Others - Appellant
Vs.
State of U.P. and others - Respondent
Writ - C No. 14645 of 2019
Decided on : 15-05-2019
Security Interest (Enforcement) Rules, 2002 (hereinafter referred as Rules, 2002) – Rule 8 (1) – Securitization and Reconstruction of Financial Assets and Enforcement of Security Act, 2002 – Section 17 and 13(4) – Constitution of India – Article 226 – Petitioners taken housing loan they failed to adhere terms and conditions of loan and made defaults and accordingly loan accounts were classified by Bank as ‘non performing asset’ (NPA) in accordance with prescribed norms issued by Reserve Bank of India – Due to illness of father and mother of petitioner -2, default in payment of loan amount was made after notice – Petitioners are ready to deposit entire amount due against them if Bank-respondent provides them actual statement of account he strongly stressed that Bank-respondent is adamant to auction properties mortgaged – Notice published in newspaper –Held, Duty of court to ensure that trust imposed by public in dealing with public money which is being lent by Financial Institutions not misutilized or misspent – It is not for Court to distribute largessee or to show misplaced sympathy with borrowers who had taken advantage of loan facility but are tardy in making repayments – Sometimes genuine reasons for borrowers for being late in payments but such issues can be addressed by appropriate forum provided for dealing with these matters – Extraordinary jurisdiction of Court not to be invoked in such cases – No justification for invoking extra ordinary jurisdiction under Article 226 of Constitution – On ground of availability of alternative remedy – Petition dismissed – (Paras: 20 to 22)
Facts of the case:
Petitioners taken housing loan they failed to adhere terms and conditions of loan and made defaults and accordingly loan accounts were classified by Bank as ‘non performing asset’ (NPA) in accordance with prescribed norms issued by Reserve Bank of India – Due to illness of father and mother of petitioner no. 2, default in payment of loan amount was made after notice – Petitioners are ready to deposit entire amount due against them if Bank-respondent provides them actual statement of account he strongly stressed that Bank-respondent is adamant to auction properties mortgaged – Notice published in newspaper.
Findings of the court:
Duty of court to ensure that trust imposed by public in dealing with public money which is being lent by Financial Institutions not misutilized or misspent – It is not for Court to distribute largessee or to show misplaced sympathy with borrowers who had taken advantage of loan facility but are tardy in making repayments – Sometimes genuine reasons for borrowers for being late in payments but such issues can be addressed by appropriate forum provided for dealing with these matters – Extraordinary jurisdiction of Court not to be invoked in such cases – No justification for invoking extra ordinary jurisdiction under Article 226 of Constitution – On ground of availability of alternative remedy.
Result: Petition dismissed
VIVEK VARMA, J.
1. The present writ petition has been filed against the notice dated 23.12.2018 (Annexure No. 6), issued under Rule 8 (1) of Security Interest (Enforcement) Rules, 2002 (hereinafter referred as Rules, 2002) published in the news paper Rashtriya Sahara, and notice dated 31.08.2018 (Annexure No. 4) issued under Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Act, 2002 (hereinafter referred as SARFAESI Act, 2002) read with Rules 8(1) of the Rules, 2002.
2. Briefly stated facts, as narrated in the writ petition, are that petitioner nos. 1 & 3 have taken a housing loan of Rs. 35 Lacs; Rs 18 Lacs as term loan and; Rs 33 Lacs against Cash Credit account from Bank of Maharashtra. Petitioner no. 2 along with one P.K. Yadav stood as guarantors. Petitioners No. 1 & 3 failed to adhere to the terms and conditions of loan and made defaults and accordingly the loan accounts were classified by the Bank as ‘non performing asset’ (NPA) on 9.1.2018 in accordance with the prescribed norms issued by the Reserve Bank of India.
3. Thereafter, the Bank-respondent issued a notice dated 19.2.2018 under Section 13(2) of the SARFAESI Act claiming total dues of Rs. 49,33,525/- plus unapplied interest w.e.f. 19.2.2018 and penal interest and other charges/expenses against Cash Credit of Rs. 33 Lacs and Term Loan of Rs. 18 Lacs. Further, by another notice dated 3.4.2018 under section 13(2) of the SARFAESI Act claimed Rs. 33,01,421/- plus unapplied interest thereon w.e.f 19.2.2018 and penal interest and other expenses/charges against Housing Loan was issued to the petitioners in the capacity of borrowers/guarantors. The borrower failed to make payment of the outstanding loan amount as demanded in the notice. Again a notice dated 31.08.2018 under Section 13(4) of the said Act read with Rule 8 (1) of the Rules 2002 was issued to the borrowers/guarantors. Thereafter a notice dated 21.12.2018 was published in newspaper Rashtriya Sahara informing the public in general, not to deal with the properties described therein as the respondent bank has taken possession of the property under the provisions of SARFAESI Act read with Rules. Hence, the present writ petition.
4. It is contended by learned counsel for the petitioners that due to illness of the father and mother of the petitioner no. 2, default in payment of loan amount was made after the notice dated 19.2.2018 and 3.4.2018. It is further submitted that petitioners are ready to deposit the entire amount due against them if the Bank-respondent provides them the actual statement of account. He strongly stressed that the Bank-respondent is adamant to auction the properties mortgaged. The notice dated 21.12.2018 published in the newspaper and the notice dated 31.8.2018 issued under Section 13(4) of the Act have been impugned in the present writ petition.
5. The said contention was refuted by the counsel for the respondent-bank by contending that the account was declared as non-performing asset on 09.01.2018 and demand notices under Section 13(2) of SARFAESI Act was issued on 19.2.2018 and 03.04.2018 respectively to the borrower as well as guarantors but the petitioners ignored the said notices and did not submit any representation and did not raise any objection and, therefore, proceedings under Section 13(4) of SARFAESI Act were initiated on 31.08.2018. It is further submitted that once measures under Section 13(4) have been taken, the petitioners ought to be relegated to avail the alternative remedy as provided under the SARFAESI Act and this Court may not entertain the petition under Article 226 of the Constitution of India.
6. Heard the learned counsel for the parties and perused the contents of the writ petition as well as the relevant provisions of the SARFAESI Act, 2002.
7. The issue that emerges for consideration of this Court in this writ petition is as to whether this writ petition is maintainable against possession notice issued und
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