Hon’ble Alok Singh, J (Oral).

Undisputedly, petitioner was granted cash credit limit of Rs. 74 lakhs; petitioner mortgaged 14 bigha 8 biswa (9630 sq. mts.) land of Khasra Nos. 40, 41, 42/2 and 43/3 of village Beghampur, Pargana Roorkee, District Haridwar; impugned notice under Section 13 (12) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 was issued on 31.12.2008, wherein no outstanding amount was shown; feeling aggrieved, petitioner has approached this Court by way of present writ petition.

2. Mr. Sharad Sharma, learned Senior Counsel appearing for the petitioner, while taking me to paragraph no. 6 of the writ petition, submits that as on 31.12.2008 only Rs. 3,61,812.28/- were outstanding against the petitioner. He further contends that valuation of the mortgaged property as assessed by approved valuer of the bank was 1.74 crores as on 31.12.2008.

3. Mr. D.S. Patni, learned counsel appearing for the bank, submits that as on 31.12.2008, Rs. 5,10,584.28/- were outstanding against the petitioner, which the petitioner failed to repay, therefore, impugned notice was rightly issued against the petitioner.

4. Section 31 of the Act, 2002 reads as under :

“31. Provisions of this Act not to apply in certain cases. – The provisions of this Act shall not apply to –

(a) a lien on any goods, money or security given by or under the Indian Contract Act, 1872 (9 of 1872) or the Sale of Goods Act, 1930 (3 of 1930) or any other law for the time being in force;

(b) a pledge of movables within the meaning of section 172 of the Indian Contract Act, 1872 (9 of 1872);

(c) creation of any security in any aircraft as defined in clause (1) of section 2 of the Aircraft Act, 1934 (24 of 1934);

(d) creation of security interest in any vessel as defined in clause (55) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958);

(e) any conditional sale, hire-purchase or tease or any other contract in which no security interest has been created;

(f) any rights of unpaid seller under section 47 of the Sale of Goods Act, 1930 (3 of 1930);

(g) [any properties not liable to attachment (excluding the properties specifically charged with the debt recoverable under this Act)] or sale under the first proviso to sub-section (1) of section 60 of the Code of Civil Procedure, 1908 (5 of 1908); 3

(h) any security interest for securing repayment of any financial asset not exceeding one lakh rupees;

(i) any security interest created in agricultural land;

(j) any case in which the amount due is less than twenty per cent of the principal amount and interest thereon.”

5. As per clause (j) of Section 31, if amount due is less than twenty per cent of the principal amount and interest thereon, then provisions of this Act shall not be applicable. Since, cash credit limit was of Rs. 74 lakhs and as per the bank outstanding amount was odd five lakhs, therefore, it was not open to the bank to invoke the provisions of the Act of 2002. Therefore, impugned notice does not sustain in the eyes of law.

6. Consequently, writ petition is allowed. Impugned notice dated 31.12.2008 is hereby quashed. However, it would be open to the bank to take appropriate steps for recovery of the amount before the appropriate Forum, wherein the petitioner shall be at liberty to dispute the actual outstanding amount. Bank guarantee furnished by the petitioner pursuant to interim order dated 18.2.2009 shall remain in force only for thirty days from today. Bank shall be at liberty to obtain interim order pertaining to the bank guarantee from the appropriate Forum to be approached for recovery of the loan amount.

7. CLMA No. 6308 of 2009 and CLMA No. 6657 of 2009 also stand disposed of accordingly.