Legal heirs of a deceased guarantor must receive fresh notice under the SARFAESI Act before proceeding with enforcement actions.

1. This writ petition questions the proceedings initiated by the Respondent - Indian Bank under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, "the SARFAESI Act") against the legal heirs of the deceased - guarantor by name Mrs. A. Zoharalal. It is the case of the Petitioners that the Respondents 3 to 5 had availed credit facility to the tune of Rs. 75 lakhs from the Respondent - Bank by offering the subject property of the deceased - guarantor as security. As the borrowers defaulted in repayment, the Respondent - Bank initiated proceedings under the SARFAESI Act and issued the notice dated 20/09/2008 under S.13(2) to both the guarantors and the same were served. Subsequently, the mother of the Petitioners Mrs.A. Zoharalal died on 23/11/2008. As the demand was not complied with by her in a period of sixty days, the Respondent - Bank proceeded further by affixing the notice dated 05/02/2009 issued under S.13(4) in the property. That notice was issued showing the name of the deceased as the owner of the property and not in the name of the Petitioners herein. Thereafter, the Respondent - Bank also approached the Chief Metropolitan Magistrate, Egmore, Chennai by filing Crl.M.P. No. 1911 of 2009 under S.14(1) of the SARFAESI Act and the same was ordered on 26/08/2009 by appointing an Advocate Commissioner to take possession of the property.

2. The above proceedings are questioned in this writ petition by the legal heirs of Mrs.A. Zoharalal. Mr. K. Subramaniam, learned senior counsel for the Petitioners has submitted that though a notice under S.13(2) was issued to the guarantor, before the notice under S.13(4) was affixed in the property, the said guarantor - Mrs.A. Zoharalal died on 23/11/2008 and therefore, no further proceedings could be pursued without there being (i) a fresh notice to the Petitioners under S.13(2) giving sixty days time for compliance. (ii) The notice under S.13(4) has not been issued in their name and rather it was affixed only showing the name of Mrs. Zoharalal as the owner of the subject property. Hence, the learned senior counsel submitted that the SARFAESI proceedings initiated against the Petitioners in respect of the subject property are unsustainable.

3. On the above arguments, we have heard Mr. V. Lakshminarayanan, learned Counsel for the first Respondent - Bank and Mr. T. Karthikeyan, learned Counsel for the seventh Respondent, the purchaser of the property pursuant to the sale conducted by the Respondent - Bank.

4. Mr. V. Lakshminarayanan, learned Counsel for the first Respondent - Bank would submit that the notice under S.13(2) was issued in the name of the guarantor. Therefore, the said notice cannot be faulted. Thereafter, the first Respondent - Bank was not made aware of either the death of Mrs. Zoharalal, the guarantor or the names of her legal heirs. Hence, the Respondent - Bank proceeded further by issuing the possession notice under S.13(4). There is nothing wrong in proceeding further under the provisions of the SARFAESI Act. In fact, he would submit that the fourth Petitioner filed an application before the Debt Recovery Tribunal stating that he represented the other Petitioners as well and as he had the knowledge of the proceedings, he cannot, therefore, now question the proceedings on the ground that the possession notice was not served on the guarantor or the legal heirs. He would further submit that as the Respondent - Bank could not take possession pursuant to the notice under S.13(4), the Bank had rightly moved the learned Chief Metropolitan Magistrate by invoking the provisio