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IN THE HIGH COURT FOR THE STATE OF TELANGANA, HYDERABAD
UJJAL BHUYAN, CHILLAKUR SUMALATHA, JJ.
Jadala Traders - Petitioners
Vs.
Andhra Bank, Rep. by its Authorised Officer Warangal Branch, NRR Building Hanumakonda, Warangal & Another. - Respondents
W.P.No.24960 of 2019
Decided On : 24-11-2021
Constitution of India, 1950 - Article 226 - Writ petition - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 13 (2), 17 - Security Interest (Enforcement) Rules, 2002 - Rule 8 (6), 9(1) – Right of redemption - Petitioner availed financial assistance as Secured Over Draft Loan (SOD) from State Bank of India and from respondent - Because of unavoidable circumstances, there was default by petitioner in repayment of loan amount - Respondent while issuing demand notice under Section 13 (2) of SARFAESI Act, had not taken into consideration Circular issued by Reserve Bank of India which stated respondent had no authority to classify loan account of petitioner as Non-Performing Asset (NPA) – Respondent contended that petitioner is having an adequate and efficacious alternative remedy under Section 17 of SARFAESI Act and without exhausting remedy, petitioner has straightaway filed writ petition - Respondent had issued Rule 8 (6) notice giving 30 days notice - When notice sent to petitioner was returned by postal authority with endorsement “no such addressee”, respondent also published Rule 8 (6) notice providing for 30 days period - There was no response from petitioner to Rule 8(6) notice issued by respondent - Petitioner had also failed to exercise right of redemption under Section 13 (8) of SARFAESI Act.
Finding of the Court:
30 days time gap is to be provided for effecting any sale of immovable secured asset and right of redemption remains available to borrower till date and time of auction sale - As per sale notice date of auction was fixed and clear 30 days time was provided - That being position, contention advanced on behalf of petitioner that there was violation of procedure laid down in Rule 8 (6) and Rule 9 (1) of SARFAESI Rules, cannot be sustained - Respondent had failed to consider Circular of Reserve Bank of India regarding restructuring of financial assistance advanced to MSME sector - In this connection court may mention that respondent had considered claim of petitioner in its meeting held - After threadbare discussion Frame Work Committee opined that petitioner was mainly doing gold business and purpose for which open cash credit limit was sanctioned to petitioner which is MSME activity was not being carried out by petitioner - Also petitioner had taken on lease which was a NPA with Andhra Pradesh State Financial Corporation - Welfare Committee resolved that relaxation terms applicable to MSME units for restructuring would not be available to petitioner.
Result: Writ petition dismissed
Order:
Ujjal Bhuyan, J.
Heard Mr. P.Vishnu Vardhan Reddy, learned counsel for the petitioner and Smt. V.Dyumani, learned counsel for the respondent.
2. By filing this writ petition under Article 226 of the Constitution of India, petitioner seeks quashing of sale notice dated 07.10.2019.
3. Case of the petitioner is that it had availed financial assistance to the tune of Rs.6,00,00,000/- as Secured Over Draft Loan (SOD) from the State Bank of India and thereafter from the respondent – Andhra Bank from its KMC Campus branch, Warangal. Because of unavoidable circumstances, there was default by the petitioner in repayment of the loan amount.
4. Respondent-Andhra Bank issued demand notice dated 01.02.2019 under Section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (briefly referred to hereinafter as the ‘SARFAESI Act’), calling upon the petitioner to make payment of the entire amount, which was quantified at Rs.6,28,28,555-00. Petitioner submitted representation (objection) on 03.4.2019, further seeking some time for repayment of the installments. Respondent-Andhra Bank replied, vide letter dated 12.4.2019 stating that the loan account could not be rescheduled.
5. According to the petitioner, respondent-Andhra Bank while issuing the demand notice under Section 13 (2) of the SARFAESI Act, had not taken into consideration the Circular dated 01.01.2019 issued by the Reserve Bank of India. It is stated that as per the said Circular respondent-Andhra Bank had no authority to classify the loan account of the petitioner as Non-Performing Asset (NPA) as on 22.01.2019.
6. Notwithstanding the same, respondent-Andhra Bank, all of a sudden and without issuing any possession notice, directly issued sale notice dated 07.10.2019 fixing e-auction on 15.11.2019.
7. Petitioner has contended that the said sale notice was issued without following any procedure. Respondent-Andhra Bank had not issued possession notice under Section 13 (4) of the SARFAESI Act as well as sale notice under Rule 8 (6) of the Security Interest (Enforcement) Rules, 2002 (briefly, the ‘SARFAESI Rules’ hereinafter), but directly issued the sale notice dated 07.10.2019.
8. As per the sale notice dated 07.10.2019, the amount due from the petitioner has been shown as Rs.6,28,28,555-00 with interest and expenses.
9. Primary contention of the petitioner is that respondent-Andhra Bank had failed to give sale notices under Rule 8 (6) and Rule 9(1) of the SARFAESI Rules. According to the petitioner a separate 30 days notice has to be given under Rule 8 (6) calling for payment of the entire amount within the aforesaid period, failing which, a separate sale notice under Rule 9 (1) has to be issued fixing the date of auction by giving 30 days gap period and publish the same in two leading newspapers. Impugned notice issued under Rule 8 (6) did not provide 30 days time to the petitioner to pay the entire amount. Without giving such a notice and waiting for 30 days, respondent-Andhra Bank published the sale notice on 07.10.2019 fixing auction sale on 15.11.2019.
10. It is in the above backdrop, the present writ petition has been filed seeking the relief as indicated above.
11. Respondent-Andhra Bank has filed counter affidavit through Sri Nampally Srinivas, Chief Manager of Andhra Bank, Warangal main branch and the authorised officer of the said bank for the KMC Campus branch.
12. At the outset, it is contended that petitioner is having an adequate and efficacious alternative remedy under Section 17 of the SARFAESI Act and without exhausting the aforesaid remedy, petitioner has straightaway filed the writ petition. On this ground itself, the writ petition is liable to be dismissed.
13. On merit it is contended that petitioner had availed cash credit limit of Rs.4,00,00,000/- from the State Bank of Hyderabad, Kasibugga branch, Warangal. Petitioner had coopted M/s. Siddardha Cotton Ginning and Pressing Industry located at Warangal, belong
The demand notice issued under Section 13(2) of the SARFAESI Act must comply with the requirements of Rule 3(5) and Section 13(8) of the Act, which includes inviting the attention of the borrower to ....
Though existence of an alternative remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution, but a writ petition can be entertained in exceptional....
The validity of the sale/e-auction notice under the SARFAESI Act and the Security Interest (Enforcement) Rules, 2002.
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