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TMI Blog2016 (6) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... s the matter and refuses to entertain the writ petition on the ground that there is nothing on record wherefrom one can come to a definite conclusion that the accounts of the writ petitioner were not NPAs as on the date of issuance of the notice under Section 13(2) of the Act. - Writ Petition No. 578 of 2016 (M/S) - - - Dated:- 21-3-2016 - U. C. Dhyani, J. For the Petitioner : Atul Kumar Bansal For the Respondent : V. K. Kohli, I. P. Kohli JUDGMENT U. C. Dhyani, J. 1. By means of present writ petition, the petitioner seeks following relief, among others: (i) Issue a writ, order or direction in the nature of certiorari to quash the notice dated 2.1.2016 6.1.2016 (annexure no.1 2) issued u/s 13(2) of the SARFAESI Act , 2002 and further quashing the action of the respondent bank dated 2.1.2016 6.1.2016 classifying the account of the petitioner Company as NPA. (ii) To issue a writ, order or direction in the nature of mandamus commanding the respondent Bank not to proceed under the SARFAESI Act of 2002 against the petitioner. 2. The petitioner is a private limited company and is engaged in the business of marketing of Allopathic and Ayurv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention of learned counsel for the petitioner that as per the statement of account of the borrower company, the interest of the quarter, i.e., October, 2015 to December, 2015, was due towards the borrower company and the borrower company had 90 days time from the end of the quarter to service the interest fully. According to the guidelines and directives of the Reserve Bank of India (hereinafter referred to as the RBI), the respondent-bank has violated the guidelines and directives of the RBI and has wrongly classified the accounts of the company as NPA. The account of the borrower company was under limit and did not exceed the sanctioned amount of ₹ 80 lakhs. It is further contended that the respondent-bank has wrongly classified the petitioner company as Non-Performing Asset (NPA) in violation of clause 2.1.3 of the RBI guidelines, which speaks as below: 2.1.3 In case of interest payments, banks should, classify an account as NPA only if the interest due and charged during any quarter is not serviced fully within 90 days from the end of the quarter. 8. Respondent-bank should classify an account as NPA only if the interest due and charged during any quarter is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance is required so that the petitioners could run their business. If the loan or the cash credit limit is withdrawn abruptly it becomes difficult for the borrower to repay the amount since the amount sanctioned by the Bank is invested in the business. We find that the business of the petitioners is running and, it is not a case where the business has stopped running or where the business is running in a loss. No doubt the respondent-Bank is required to protect the loan which it had sanctioned but, at the same time, the respondent-Bank should adopt a practical and pragmatic approach for which the RBI has framed guidelines which are binding upon them and which are required to be followed meticulously. In the instant case, we find the respondent-Bank has failed to adhere to the terms indicated in the guidelines. Consequently, the action of the respondent-Bank in declaring the petitioners account as NPA by its order dated 31.12.2014 as well as the notice dated 1.1.2015 issued under Section 13(2) of the Act and the notice dated 17.3.2015 issued under Section 13(4) of the Act are quashed. The writ petition is allowed. (emphasis supplied) 11. The Division Bench of this Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r basically a preliminary issue, is that whether this court is justified in entertaining this writ petition to examine validity of the sale conducted under the SARFAESI Act. Respondents 1 2 had raised a contention that this writ petition is not maintainable since the petitioners have not exhausted the effective, expeditious and alternate remedy available under Section 17 of the SARFAESI Act. It is contended that the petitioners have not stated any reason for not availing such remedy and that having slept over the matter for quite long period, the petitioner could not be allowed to invoke the extraordinary jurisdiction. On the other hand, averments in the writ petition is to the effect that since the petitioners have not filed any appeal within 45 days of the date of taking the measures under Section 13 (4) of the SARFAESI Act, no appeal can be filed challenging the action of sale. Contention of the learned counsel for the petitioner is that if there is violation of statutory provisions such actions are liable to be quashed in a writ petition. When statutory power conferred on an authority is exercised in an illegal and arbitrary manner, in an improper way, which is not as conferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent bank that as per the credit account dated 30.06.2015 (Annexure 3 to the petition), the petitioner has sold off the entire stock leaving a balance of only ₹ 3.5 lacs. It is incumbent upon the borrower company to have deposited the money in its account after sale of hypothecated goods and, therefore, Clause 2.1.3 of the RBI has not been flouted. The respondent bank has given well explained reasons while giving its reply to the borrower company on 07.01.2016, which is on record as Annexure 6 to the petition. 17. It has been held by Hon ble Apex court in Mardia Chemicals Ltd. (supra) that the borrower may not be entitled to challenge the reasons communicated or the likely action of the secured creditor at that point of time unless his right to approach the Debts Recovery Tribunal as provided under Section 17 of the Act matures on any measure having been taken under sub-section (4) of Section 13 of the Act. Relevant portion of para 45 of the aforesaid decision is being reproduced here-in-below for convenience: At the same time, more importantly, we must make it clear unequivocally that communication of the reasons for not accepting the objections taken by the secured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , account of the company become NPA, hence all the willing customers are advised to visit BO:B.T. Gang Roorkee for the sale purchase of the property. Chief Manager . 21. There is stipulation in the hypothecation agreement that there should be a margin of 25 per cent in hypothecation of future stocks, raw materials, work in progress, finished goods, consumables stores and spares and all other items acceptable to the bank required for manufacturing, but in the instant case, there is a stock of ₹ 3.5 lacs as against the dues of ₹ 73,50,060/-, although learned counsel for the petitioner objected that his unit is not a manufacturing unit. 22. The respondent bank, no doubt, is required to protect the loan, which it had sanctioned but, at the same time, the respondent bank should adopt a practical and pragmatic approach for which the RBI has framed guidelines which are binding upon them and which are required to be followed meticulously. The bank has not acted against the petitioner contrary to the guidelines issue by RBI. 23. This Court, accordingly, concludes the matter and refuses to entertain the writ petition on the ground that there is nothing on record wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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