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2017 (5) TMI 1701 - HC - Indian LawsRecovery of unpaid loan amount - bank account has been declared as a non-performing assets - SARFAESI Act - HELD THAT - Considering the fact that the property is to be auctioned on 08.05.2017, it is directed that for a period of one month, i.e. till 02.06.2017 the auction proceedings shall be kept in abeyance so that the petitioner may avail his remedy, provided the petitioner deposits the amount with the Bank towards advertisement cost/charges, already undergone for this auction on May 8, 2017, within seven days from today. It is further made clear that the petitioner shall approach the Manager of the concerned Bank/Branch within a period of three days from today, who shall provide the details as to the expenses incurred by the Bank for the advertisement, which shall be paid by the petitioner, failing which the auction shall go on. Petition disposed off.
Issues:
1. Petition against proceedings initiated by a bank under SARFAESI Act. 2. District Magistrate's order for possession of secured assets. 3. Petitioner's offer to settle with the bank. 4. Allegations of false affidavit by the bank under SARFAESI Act. 5. Compliance with procedures under SARFAESI Act. 6. Availability of alternative remedy before the Debts Recovery Tribunal. 7. Stay on auction proceedings and conditions imposed for availing remedy. Analysis: 1. The petitioner, a company registered under the Companies Act, 1956, had taken a loan from the State Bank of India for setting up a textile industry. Subsequently, the account turned into a non-performing asset (NPA), leading the bank to initiate proceedings under the SARFAESI Act. The petitioners challenged these proceedings before the High Court. 2. Following completion of proceedings under Section 13 of the SARFAESI Act, the bank sought possession of the secured assets from the District Magistrate, who granted the order for possession. The bank intended to auction the assets to recover the outstanding amount of around ?65 crore. The petitioners claimed the factory was operational until possession was taken and offered ?2.50 crore to settle, which the bank declined. 3. The petitioner alleged that the bank's affidavit under Section 14 of the SARFAESI Act contained false particulars, and the District Magistrate's order did not reflect proper application of mind as required by the Act. The petitioner contended that the bank did not adhere to the procedures outlined in Section 13 of the SARFAESI Act. 4. Despite the petitioner's arguments, the court noted the availability of an alternative remedy for the petitioner to appeal before the Debts Recovery Tribunal. However, considering the impending auction, the court directed a stay on the auction proceedings for a month, subject to the petitioner depositing the advertisement costs with the bank within seven days. 5. The court ordered the petitioner to approach the bank manager for details of expenses incurred for the auction advertisement, emphasizing that failure to pay would result in the auction proceeding as planned. With these directions, the writ petition was disposed of, and certified copies of the order were to be provided to the concerned parties promptly.
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