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TMI Blog2024 (7) TMI 451X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of the petitioners remained less than the sanctioned limit and the credits were not enough to cover the interest debited during the previous 90 days period. After the lapse of the credit facility on December 31, 2022, the outstanding balance constantly remained below the credit facility. The notice under Section 13(2) of the SARFAESI Act dated September 11, 2023 clearly mentions the date of classification of the petitioners account as NPA to be June 30, 2023. Such a notice is not required to contain elaborate or detailed reasons for the classification of NPA, the same not being a judicial or quasi-judicial order - Since the NPA classification has been upheld above, the subsequent steps taken under Section 13, sub-sections (2) and (4) of the SARFAESI Act were also justified. The challenge to the NPA classification as well as the issuance of the notice under Section 13(2) of the SARFAESI Act and further consequential measures under Section 13 (4) fails. Petition dismissed. - The Hon ble Justice Sabyasachi Bhattacharyya For the Petitioners : Mr. Joy Saha, Sr. Adv. Mr. Tanish Ghaneriwala, Adv. Mr. Ramendu Agarwal, Adv For the Respondent no. 2: Ms. Soni Ojha, Adv. Ms. Sambrita B. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should not treat an advance as NPA merely due to existence of some deficiencies which are of temporary nature such as non-availability of adequate drawing power, balance outstanding exceeding the limit, non-submission of stock statements and the non-renewal of the limits on the due date. The amendment to the said Master Circular vide Circular dated April 1, 2023 also provides a similar premise in Clause 4.2.4 which stipulates that the classification of an asset as NPA should be based on the record of recovery and cannot be on the ground of balance outstanding exceeding the limit temporarily and non-renewal of the limits on the due date. 9. It is argued that the Bank acted in a mala fide manner and sought to frustrate the writ petition by initiating steps under Section 13(4) of the SARFAESI Act during pendency of the writ petition, merely to render the writ petition infructuous. 10. Learned counsel for the Bank contends that the RBI Circular dated April 1, 2023 has specifically granted liberty to the Banks to classify an account as NPA on grounds additional to the amount being outstanding for a period of more than 90 days. Clause 4.2.4(c) specifically provides that a cash credit ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the April 1, 2023 Master Circular was inapplicable. 18. Seen from a different perspective, the credit facility expired on December 31, 2022 when the last renewal spent its force. After waiting for 90 days thereafter, on March 28, 2023 the account was recalled. The same was declared NPA after a further period of 90 days thereafter on June 30, 2023. The Master Circular of the RBI dated November 12, 2021 was in force during the relevant period. As per Clause 6 of the same, under the heading C. Classification regarding definition of out of order‟ , a cash credit account is classified as NPA if it is out of order . In cases where the outstanding balance in the principal operating account is less than the sanctioned limit/drawing power, the extant Directions inter alia stipulate that the account should be treated as out of order if there are no credits continuously for 90 days as on the date of balance sheet or credits are not enough to cover the interest debited during the same period. 19. The said Clause provides further that, in order to avoid ambiguity regarding determination of out of order status of CC accounts on a continuous basis, it is clarified that under sub-Clause (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of the petitioners were favourable to them. 27. The petitioners have argued that in the absence of any change of circumstances, the findings in the interim order passed in connection with the writ petition hold good and should be made absolute. Such argument is inherently fallacious, since it is well-settled that findings rendered at the ad interim stage are merely tentative and not conclusive or binding at the stage of final hearing of the writ petition. In the interim order itself, the findings clearly indicated that those were of a prima facie nature, to ascertain whether an arguable and triable issue had been raised by the petitioners. Hence, the said findings cannot be held to be conclusive at the final hearing stage of the writ petition. 28. The notice under Section 13(2) of the SARFAESI Act dated September 11, 2023 clearly mentions the date of classification of the petitioners account as NPA to be June 30, 2023. Such a notice is not required to contain elaborate or detailed reasons for the classification of NPA, the same not being a judicial or quasi-judicial order. 29. During pendency of the writ petition, the Bank, in pursuance of the provisions of Section 13(4) of the S ..... 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