2006 (9) TMI 295 - HC - Companies Law

Summary

Issues Involved:
1. Applicability of SARFAESI Act, 2002 to agricultural land.
2. Compliance with the requirement to deal with objections under section 13(2) of the SARFAESI Act.
3. Inclusion of interest in the demand notice.
4. Simultaneous proceedings under BPDR Act, 1913, and SARFAESI Act, 2002.

Detailed Analysis:

1. Applicability of SARFAESI Act, 2002 to Agricultural Land:
The petitioners argued that the SARFAESI Act does not apply as per section 31(i) of the Act, claiming the security interest was created in agricultural land. However, the court found that the security interest was in movable and immovable properties, including tea bushes and factory buildings, which do not fall under the category of agricultural land. Thus, section 31(i) of the Act does not debar the issuance of notice under section 13(2) of the SARFAESI Act.

2. Compliance with the Requirement to Deal with Objections under Section 13(2) of the SARFAESI Act:
The petitioners contended that their objections to the notice under section 13(2) were not addressed, as emphasized by the Supreme Court in Mardia Chemicals v. Union of India. The court reviewed the bank's response dated 28-8-2006 to the petitioners' objections and concluded that the bank had adequately dealt with and disposed of the objections, thus complying with the requirements of section 13(2) of the Act.

3. Inclusion of Interest in the Demand Notice:
The petitioners disputed the inclusion of interest in the demand notice, arguing that the Bakijai Officer had previously ruled the interest as not recoverable. The court noted that the Bakijai Officer's order had not conclusively settled the issue of interest but had left it open for future consideration. Therefore, the bank's inclusion of interest in the demand notice was deemed appropriate.

4. Simultaneous Proceedings under BPDR Act, 1913, and SARFAESI Act, 2002:
The petitioners argued that the bank could not initiate proceedings under the SARFAESI Act while a case was pending under the BPDR Act. The court referred to the bank's letter dated 22-6-2006, which indicated the bank's decision to pursue remedies under the SARFAESI Act and requested the Bakijai Officer to halt the BPDR proceedings. The court held that the simultaneous proceedings were not tenable, and the bank's decision to withdraw from the BPDR proceedings rendered the appeal against the Bakijai Officer's order redundant.

Conclusion:
The court concluded that the writ petition was premature, as the statutory remedy of appeal under section 17 of the SARFAESI Act was available to the petitioners. The court also found that the bank had complied with the necessary requirements of section 13(2) of the Act and had adequately addressed the petitioners' objections. Consequently, the writ petition was dismissed, and the court emphasized that judicial prudence demands refraining from exercising jurisdiction under articles 226 and 227 of the Constitution when an alternative remedy is available. The court cited the Supreme Court's decision in Punjab National Bank v. O.C. Krishnan to support this view. The writ petition was dismissed, with no order as to costs.