IMPORTANT POINTS
(1) Writ petitions filed against proposed action under Section 13(4) of SARFAESI Act is not maintainable and/or entertainable at all.
(2) Recovery of debt – High Court should have been extremely careful and circumspect in exercising its discretion while granting stay in such matters.

JUDGMENT :

M.R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned order dated 27.03.2018 passed by the High Court of Karnataka at Bengaluru in Writ Petition Nos. 35564-35566 of 2015 by which the High Court has entertained the aforesaid writ petitions under Article 226 of the Constitution of India against the appellant, an Assets Reconstructing Company and has passed an interim order directing for maintaining status quo with regard to SARFAESI action (possession of the secured assets), the original respondent-the Assets Reconstructing Company (ARC) has preferred the present appeals.

2. That the respondent No. 1 herein Vishwa Bharati Vidya Mandir is running educational institutions and is a Society registered under the Karnataka Societies Registration Act, 1960 which had availed credit facilities to the tune of Rs. 105,60,84,000/- (Rupees One Hundred Five Crores Sixty Lacs and Eighty Four Thousand Only) from Saraswat Cooperative Bank Limited. That similarly, St. Ann's Education Society had also availed credit facilities to the tune of Rs. 20,05,00,000/- (Rupees Twenty Crores and Five Lacs Only) from the aforesaid Bank.

2.1 It appears that in order to secure the due repayment of the aforesaid credit facilities, various loans/security documents were executed by the respective respondents, including personal guarantees in favour of the bank. The respondents also created an equitable mortgage by way of deposit of title deeds over the immovable properties with respect to the mortgaged properties. It appears that on account of defaults committed by the borrowers/respondents in repayment of the outstanding dues, in the month of April, 2013, the account of the borrowers/respondents were classified as a “Nonperforming Asset” (NPA) by the Bank. As the borrowers/respondents failed and neglected to repay the outstanding dues of the Bank, the Bank issued a notice dated 01.06.2013 under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (hereinafter referred to as “SARFAESI Act”). It appears that in the month of March, 2014, the NPA account of the borrowers/respondents with respect to the credit facilities availed by them was assigned by the Bank in favour of the appellant-Phoenix ARC Private Limited vide registered Assignment Agreement dated 28.03.2014.

2.2 Pursuant to the assignment of the NPA account in favour of the appellant, the borrowers approached the appellant with a request for restructuring the repayment of outstanding dues. A Letter of Acceptance dated 27.02.2015 was executed between the parties, wherein the borrowers/respondents acknowledged and admitted the liability to repay the entire outstanding dues. However, the borrowers failed to repay the dues as per the Letter of Acceptance.

2.3 Since the borrowers again committed defaults in payment of the outstanding dues, the appellant-Phoenix ARC Private Limited issued a letter dated 13.08.2015 intimating the borrowers that since despite issuance of 13(2) notice dated 01.06.2013 and the subsequent execution of the Letter of Acceptance dated 27.02.2015, the borrowers had failed to repay the outstanding dues, therefore, the appellant would be proceeding to take possession of the mortgaged properties after expiry of 15 days from the date of the said letter.

2.4 Against the aforesaid communication/letter dated 13.08.2015, the borrowers/ respondents herein filed the writ petitions before the High Court on the ground that the communication/letter dated 13.08.2015 is a possession notice under Section 13(4) of the SARFAESI Act, which is against the Security Interest (Enforcement) Rules, 2002.

2.5 It was the case on behalf of the original writ petitioners that the said possession notice under Section 13(4) of the SARFAESI Act is in violation of Rule 8(1) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as “Rules 2002”) and without issuance of the possession notice under Rule 8(1) and wi