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UJJAL BHUYAN, C.SUMALATHA
Shalom Enterprises, Rep. by its Proprietor Mr. Joseph Gandepalli – Appellant
Versus
Union of India, rep. by its Secretary, Ministry of Finance, Dept. of Financial Services, 3rd Floor, Jeevan Deep Building, Sansad Marg, New Delhi – Respondent
ORDER :
Ujjal Bhuyan, J.
Heard Mr. Salvaji Raja Shekar Rao, learned counsel for the petitioner and Mr. Namavarapu Rajeshwara Rao, learned Assistant Solicitor General of India for respondent No.1.
2. Having regard to the subject matter of the Writ Petition and the order, which we propose to pass, issuance of formal notice to respondents No.2 and 3 is considered not necessary.
3. According to the petitioner, it is a Micro, Small and Medium Enterprise (MSME) engaged in the business of manufacturing import substitute defence related security equipments. Petitioner had availed loan from respondent No.3/Bank to the tune of Rs.1,52,00,000.00. However, the entire loan amount was not released to the petitioner. In the meanwhile, petitioner’s business suffered because of the lock down imposed on account of COVID-19 pandemic. Notwithstanding the same, respondent No.3/Bank classified the loan account of the petitioner as a Non Performing Asset (NPA) and initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘the SARFAESI Act’). In this connection, notice under Section 13(2) of the SARFAESI Act was issued to
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 lia....
The right of the borrower to make a representation or raise an objection under Section 13(3A) of the SARFAESI Act and the obligation of the secured creditor to consider such representation or objecti....
The right of the borrower to make a representation or raise an objection under Section 13(3A) of the SARFAESI Act and the obligation of the secured creditor to consider such representation or objecti....
The legislative intent to prevent judicial or quasi-judicial intervention at the stage of issuance of demand notice under Section 13(2) of the SARFAESI Act.
The court's decision highlighted the importance of considering representations for repayment within a specified time frame under the SARFAESI Act.
Prematurity of the petition seeking to quash a notice issued under Section 13 (2) of the SARFAESI Act.
The court emphasized the importance of providing detailed information on the amount payable by the borrowers in the notice under Section 13(2) of the SARFAESI Act, as required by Section 13(3).
SARFAESI Act provides a comprehensive mechanism for borrowers to address grievances, and High Courts should exercise restraint in intervention unless extraordinary circumstances arise.
A writ petition challenging loan classification as NPA under SARFAESI is premature if no prior objection is filed.
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