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2017 (1) TMI 825 - HC - Indian LawsValidity of action taken by the respondents under the Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI Act) - action without authority in law - Held that - The present petition is not accepted for its any of the prayers. The same is disposed of by observing that the respondent Bank may proceed to issue a fresh notice under Section 13(4) of the SARFAESI Act against the petitioner as it has withdrawn the earlier notice dated 08th September 2016 as stated in the affiavitin- reply mentioned hereinabove. While permitting the respondent Bank to issue fresh notice as above liberty is reserved for the petitioners to avail statutory alternative remedy of appeal before the Debt Recovery Tribunal challenging the action of the Bank on all available contentions including the above and those others raised in this petition.
Issues Involved:
1. Validity of the notice under Section 13(2) of the SARFAESI Act. 2. Validity of the notice under Section 13(4) of the SARFAESI Act. 3. Compliance with the mandatory requirement of sub-section (3A) of Section 13. 4. Legality of the Bank’s action in declaring the account as NPA. 5. Legality of the Bank acting through an advocate in rejecting objections under Section 13(3A). 6. Availability of alternative remedy under Section 17 of the SARFAESI Act. Detailed Analysis: 1. Validity of the notice under Section 13(2) of the SARFAESI Act: The petitioners challenged the notice dated 08th July 2016 issued under Section 13(2) of the SARFAESI Act, which demanded the repayment of ?18,35,32,088.25. The petitioners contended that the Bank did not communicate its decision on the objections filed on 05th September 2016, thereby violating the mandatory requirement of sub-section (3A) of Section 13. 2. Validity of the notice under Section 13(4) of the SARFAESI Act: The petitioners also challenged the notice under Section 13(4) dated 08th September 2016, arguing that it was issued without addressing their objections. The Bank, however, withdrew this notice, stating that it was issued before the objections were received and considered. 3. Compliance with the mandatory requirement of sub-section (3A) of Section 13: The petitioners argued that the Bank did not comply with sub-section (3A) of Section 13, which mandates the communication of the decision on objections before proceeding under Section 13(4). The Bank countered that it had replied to the objections through their advocate on 13th September 2016. 4. Legality of the Bank’s action in declaring the account as NPA: The petitioners questioned the Bank’s classification of their account as a Non-Performing Asset (NPA), arguing that it was done without proper application of mind. They cited various legal precedents to support their claim that the classification was improper and that they should have been informed before such action. 5. Legality of the Bank acting through an advocate in rejecting objections under Section 13(3A): The petitioners contended that the rejection of their objections by the Bank through an advocate was not permissible under the law. They argued that the authorized officer should have personally dealt with the objections, and delegating this task to an advocate was against the statutory provisions. The court referred to the Division Bench decision in Pareshbhai Parbatbhai Kothiya Vs Authorised Officer, HDFC Bank Limited, which held that such a contention could be examined in the remedy of appeal under Section 17 of the SARFAESI Act. 6. Availability of alternative remedy under Section 17 of the SARFAESI Act: The court emphasized that the petitioners have a statutory alternative remedy of preferring an appeal before the Debt Recovery Tribunal (DRT) under Section 17 of the SARFAESI Act. The court cited various precedents, including the Supreme Court’s decision in Union Bank of India Vs Satyavati Tondon, which underlined the principle that the remedy under Section 17 should be availed before approaching the High Court. Conclusion: The court dismissed the petition, stating that the respondent Bank may issue a fresh notice under Section 13(4) of the SARFAESI Act. The petitioners were granted the liberty to avail the statutory alternative remedy of appeal before the Debt Recovery Tribunal, challenging the Bank’s actions on all available grounds. The court did not delve into the merits of the petitioners' contentions, and the interim relief granted earlier was not continued. The petition was disposed of with the observation that the Bank could proceed with fresh measures under Section 13(4) after complying with the statutory requirements.
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