2013 (5) TMI 507 - HC - Indian Laws

Correctness and sustainability of the proceedings pursued by the respondent Bank, particularly, by issuing Ext.P1 notice under Section 13(2) of the SARFAESI Act, is under challenge - The point to be considered is whether the writ petition is maintainable before this Court. The petitioner had availed a loan from the erstwhile Lord Krishna Bank Ltd, other similarly situated persons, including the partners of the firm had also availed some loans. It is brought on record that, in the course of the proceedings, Lord Krishna Bank was taken over by the Centurion Bank of Punjab Ltd. , which Bank itself was later got amalgamated with the present respondent Bank - HDFC Bank Ltd, by the passage of time. Held that - In view of the law declared by the Apex Court in Mardia Chemicals Limited v. Union of India 2004(4) TMI 294 , this Court observed that, no writ petition was maintainable and the party, if at all aggrieved, was to approach the DRT. In view of the law declared by the Apex Court as mentioned hereinbefore and so also in view of the verdicts passed by this Court by way of Exts.P4 and P5, both by Single Bench and the Division Bench, it is not open for this Court to have the alleged cause of action entertained on merits. In the above circumstances, this Court finds that no interference is warranted. Writ petition fails and it is dismissed accordingly.

Issues:
1. Correctness and sustainability of the proceedings pursued by the respondent Bank under Section 13(2) of the SARFAESI Act challenged.
2. Competency of the respondent Bank to pursue the proceedings questioned.
3. Challenge against the notice issued under Section 13(2) by the erstwhile Lord Krishna Bank which was later amalgamated with the present respondent Bank.
4. Appeal against the notice under Section 13(2) redirected to the concerned Tribunal.
5. Interference declined on the sale notice, appellants advised to pursue alternate remedy.
6. Petitioner's response to notices and applications filed during the proceedings.
7. Fresh course of action by the respondent Bank challenged, establishment's management in question.
8. Respondent Bank's compliance with statutory requirements and possession of properties discussed.
9. Maintainability of the writ petition before the High Court examined.
10. Statutory provisions under Section 13(3A) analyzed for representation and objection by the borrower.

Analysis:
1. The petitioner challenged the correctness and sustainability of the proceedings pursued by the respondent Bank under Section 13(2) of the SARFAESI Act, questioning the competency of the Bank itself. The petitioner contended that the proceedings were wrong and illegal, stemming from a loan availed from the erstwhile Lord Krishna Bank, which later merged with the present respondent Bank, HDFC Bank Ltd. The petitioner raised objections against the notice issued under Section 13(2) by the Bank.

2. The Court noted that similar challenges against the notice under Section 13(2) were redirected to the concerned Tribunal based on the law declared by the Apex Court. The petitioner's appeal against the notice was advised to be pursued through the statutory remedy available, emphasizing the need to approach the Debt Recovery Tribunal (DRT) for such matters.

3. The respondent Bank asserted compliance with statutory requirements and defended its actions, stating that the establishment in question was not a running concern but 'locked out'. The Court observed that only one property out of five was taken possession of, which was in an abandoned condition. The respondent Bank highlighted the efforts made to settle the issue and the lack of cooperation from the petitioner and other concerned parties.

4. The Court examined the maintainability of the writ petition before the High Court, emphasizing the need for aggrieved parties to approach the DRT for such matters. The Court referred to previous judgments where similar challenges were redirected to the DRT, reiterating the legal position that such disputes should be addressed through the appropriate forum.

5. The statutory provisions under Section 13(3A) were analyzed, highlighting the borrower's right to make representations or objections, and the secured creditor's obligation to consider and communicate the reasons for non-acceptance. The Court emphasized that the cause of action arises only on proceeding with steps under Section 13(4), indicating that the writ petition challenging the notice under Section 13(2) was premature.

6. The Court concluded that based on the legal precedents and judgments, it was not open for the High Court to entertain the alleged cause of action on merits. The petitioner's writ petition was dismissed, with the parties advised to agitate the matter before the Tribunal. The Court clarified that no interference was warranted, leaving all contentions open for further proceedings before the appropriate forum.

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