Point of Law - Section 13 of the SARFAESI Act deals with enforcement of security interest. Sub-section (2) provides for issuance of notice by the secured creditor to the borrower for discharge of liabilities in the event of default.

ORDER:

Ujjal Bhuyan , J.

Heard Mrs.K.Annapurna Reddy, learned counsel for the petitioner.

2. By filing this petition under Article 226 of the Constitution of India, petitioner seeks a direction to respondent No.1/Canara Bank not to take any steps against her for recovery of dues from respondent Nos.2 and 3 under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (briefly ‘the SARFAESI Act’ hereinafter).

3. It appears that respondent No.2 had obtained a loan from respondent No.1/Canara Bank to which petitioner stood as guarantor. It further appears that respondent No.2 had defaulted in repayment of the loan.

4. Respondent No.1/Canara Bank invoked the provisions of the SARFAESI Act and thereafter issued notice to respondent No.2 as well as to the petitioner under Section 13(2) of the SARFAESI Act on 07.04.2021. Insofar the petitioner is concerned, the notice was addressed to her as the guarantor and she was called upon to repay to the secured creditor a sum of Rs.1,61,71,042.74, failing which it was mentioned that action under sub-section (4) of Section 13 would be taken.

5. Petitioner submitted her objection to the above notice on 31.05.2021. In the said objection, certain factual anomalies were also pointed out, such as loan sanction date and declaration of the loan account as Non-performing Asset (NPA).

6. It is seen that on 05.08.2021, respondent No.1 again issued a notice under Section 13(2) of the SARFAESI Act stating that it was in supercession of the earlier notice dated 07.04.2021. In this notice, it was mentioned that as per the books of account, the dues payable by the borrower to the secured creditor stood at Rs.1,70,58,724.74 as on 20.07.2021. Because of persistent default of respondent No.2, the loan account was classified as NPA on 16.01.2021.

7. According to the petitioner, a fraud was committed by respondent No.2 on the petitioner alluring her to stand as guarantor for the loan availed of. Respondent No.2 is in a position to repay the loan amount in full. In such circumstances, petitioner lodged first information before the Neredmet Police Station on 08.07.2021 which has been registered as F.I.R.No.440 of 2021 for the offences under Sections 406 and 420 of the Indian Penal Code. This has also been informed to respondent No.1.

7.1 It is in the above backdrop that the present writ petition has been filed seeking the reliefs as indicated above.

8. Section 13 of the SARFAESI Act deals with enforcement of security interest. Sub-section (1) starts with a non obstante clause having overriding effect over Section 69 or 69-A of the Transfer of Property Act, 1882. It says that notwithstanding anything contained in the aforesaid two provisions, any security interest created in favour of any secured creditor may be enforced, without the intervention of the court or the Tribunal, by such creditor in accordance with the provisions of the SARFAESI Act. As per sub-section (2), in the event of the borrower defaulting in repayment of the secured debt and his account in respect of such debt is classified by the secured creditor as NPA, then the secured creditor may require the borrower by notice in writing to discharge the liabilities in full to the secured creditor. Sub-section (3) clarifies that the notice issued under sub-section (2) shall give details of the amounts payable by the borrower and the secured assets intended to be enforced by the secured creditor in the event of non-payment of secured debts by the borrower.

9. Sub-Section (3-A) of Section 13 is relevant. For ready reference, the same is extracted hereunder:

“If, on receipt of the notice under sub-section (2), the borrower makes any representation or raises any objection, the secured creditor shall consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate within fifteen days of receipt of such repr