Advocates:
RAMESHWAR PRASAD GOYALSANJAY KAPUR

http://JUDIS.NIC.IN

SUPREME COURT OF INDIA

Page 1 of 11

CASE NO.:

Appeal (civil) 3827 of 2007

PETITIONER:

M/S PRESTIGE LIGHTS LTD

RESPONDENT:

STATE BANK OF INDIA

DATE OF JUDGMENT: 20/08/2007

BENCH:

C.K. THAKKER & ALTAMAS KABIR

JUDGMENT:

J U D G M E N T

CIVIL APPEAL NO. 3827 OF 2007

ARISING OUT OF

SPECIAL LEAVE PETITION (CIVIL) NO.9409 OF 2005

C.K. THAKKER, J.

1. Leave granted.

2. The present appeal is directed against the

judgment and order dated March 29, 2005 passed by the

High Court of Uttaranchal at Nainital in Writ Petition No.

293 of 2005 by which the petition filed by the petitioner

(present appellant) was dismissed in limine.

3. To appreciate the controversy, few relevant

facts may be noted.

4. Appellant herein is a Private Limited Company

engaged in manufacturing bulbs, chokes and fittings.

The factory of the appellant is situated at Dhalwala

Industrial Area, Rajpur Road, Dehradun, Uttranchal. In

1992, the appellant obtained a loan of Rs. 85 lakhs from

State Bank of India, Commercial Branch, Radha Palace,

Rajpur Road, Dehradun \026 respondent herein. The

Company mortgaged its land and building with the

respondent-Bank. According to the appellant, till 2001,

the business of the appellant was comparatively good and

it had no problem in depositing the interest accrued

towards credit facilities. In or about 2001-02, however,

because of heavy slump in the market due to arrival of

cheaper Chinese Products, the appellant suffered huge

losses and could not deposit the interest-amount with

the respondent-Bank. The respondent-Bank, therefore,

issued a notice on October 16, 2004 under sub-section

(2) of Section 13 of the Securitization, Reconstruction of

Financial Assets and Enforcement of Security Interest

Act, 2002 (hereinafter referred to "the Act") alleging

therein that the appellant failed to pay a sum of

Rs.87,64,549.42 P. It was stated that the appellant had

created security by equitable mortgage of land, bearing

Khasra No. 550/3 and 550/4 admeasuring 10,036 sq. ft.

situated at village Jagjitpur, Pargana Jwalapur, Tehsil

and District Haridwar. The notice also sought to invoke

personal guarantee given by M.P. Goel, Sudha Goel and

Abhinav Goel. The appellant was called upon to deposit

the amount mentioned in the notice with interest,

expenses and costs within sixty days failing which the

Bank would exercise power under sub-seciton (4) of

Section 13 of the Act. It was also stated that the

http://JUDIS.NIC.IN

SUPREME COURT OF INDIA

Page 2 of 11

appellant should not transfer by sale, lease or otherwise

the secured assets detailed in Schedule to the notice. The

notice was served on the appellant-Company on October

19, 2004. It is the case of the appellant that it submitted

a representation on October 20, 2004 wherein it was

stated that the appellant had proposed to pay dues of the

Bank after selling the land and building of the Factory. It

was further stated that the appellant had proposed to

regularize assets of the Company as per fixed plan. If the

respondent-Bank would continue working in a healthy

spirit, the appellant was confident that it would be able

to regularize the assets of the Company as per the

proposal. It was also stated that the Bank had a second

charge on the assets of the Company and the dues to be

paid to Uttar Pradesh Financial Corporation were very

small and the substantial sale proceeds of the assets of

the Company would automatically go to the Bank and the

Bank need not take any hasty action by invoking the

provisions of the Act.

5. It may be stated at this stage that it is the case

of the respondent-Bank that it had not received any such

representation said to have been sent by the appellant on

October 20, 2004. According to the appellant-Company,

without considering the representation of the appellant,

dated October 20, 2004, the respondent-Bank