IMPORTANT POINT
A notice to be valid and effective in law, ought to be issued by secured creditor or authorised officer.

A.V. Ramakrishna Pillai, J. — The competency of Ex.Pl notice is under challenge in this writ petition.

2. The 1st and 2nd petitioners are the borrowers in a loan transaction. They got a housing loan of 1,00,00,000 from the respondent bank mortgaging an apartment owned by them. The petitioners allege that they have remitted nearly 76,00,000 in repayment and; even after the aforesaid payment, the respondent bank was threatening that huge amounts are due from them. Though the petitioners disputed the amount, the respondent bank caused Ex.Pl lawyer’s notice to be issued on the petitioners under the SRFAESI Act, hereinafter referred to as “the Act”. The petitioners allege that a lawyer is not competent to issue such a notice as he is not an authorized officer of the respondent bank. Thus, the petitioners have approached this Court.

3. Arguments have been heard.

4. While the learned Counsel for the petitioners would argue that the lawyer, who issued the notice on the petitioners, is not an authorized officer within the meaning of Section 2(a) of the Security Interest Rules, 2002, the learned Counsel for the respondent bank would contend that Ex.Pl notice is legally competent.

5. Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 deals with the enforcement of security interest. Sub-section (2) of Section 13 reads as follows:

“(2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as Non Performing Asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under sub-section (4).”

5. Rule 2(b) of the Security Interest (Enforcement) Rules, 2002 defines “demand notice” as follows:

“(b) demand notice means the notice in writing issued by a secured creditor or authorised officer, as the case may be, to any borrower pursuant to sub-section (2) of Section 13 of the Act.”

Therefore, a notice to be valid and effective in law ought to be issued by a secured creditor or an authorised officer.

6. In the instant case, the notice was issued by the Counsel representing the respondent bank. Now, the question is, if such a notice is issued by the Counsel representing the bank (secured creditor), can it be repudiated; branding it as one issued in contravention of the letter and spirit of the provisions of the Act and Rules?

7. The learned Counsel for the respondent bank would submit that the notice issued by the Counsel representing the bank is a notice of demand, which constitutes an action, thereby providing for an opportunity to the borrower to make a representation to the secured creditor and; therefore, it is legally competent.

8. The learned Counsel for the petitioner, per contra, would submit that as the statute and rules made thereunder specify a particular mode, the same has to be complied with, especially, because, it involves the taking away of the property belonging to the borrower. Section 13(2) of the Act makes it clear how the right of a secured creditor has to be enforced, which has to be by a notice. Rule 2(b) makes it clear that it has to be by the secured creditor or its authorised officer.

9. Section 2(zd) of the Act defines “secured creditor” as follows:

“(zd) ‘secured creditor” means any bank or financial institution or any consortium or group of banks or financial institutions and includes:

(i) debenture trustee appointed by any bank or financial institution; or

(ii) securitisation company or reconstruction company, whether acting as such or managing a trust set up by such securitisation company or reconstruction company for the securitisatio