Kerala High Court
Kuruvithadam Agencies Pvt Ltd vs The Authorized Officer on 28 May, 2021
Author: S. Manikumar
Bench: S.Manikumar, Shaji P.Chaly
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR
&
THE HONOURABLE MR. JUSTICE SHAJI P.CHALY
FRIDAY, THE 28TH DAY OF MAY 2021 / 7TH JYAISHTA, 1943
WA NO. 1584 OF 2020
(AGAINST THE JUDGMENT IN WP(C) NO.26045/2020 DATED 25.11.2020)
APPELLANTS/PETITIONERS:
1 KURUVITHADAM AGENCIES (PVT) LTD.,
12/34, KURUVITHADAM BUILDING, M. C. ROAD,
MUVATTUPUZHA, ERNAKULAM - 686661,
REPRESENTED BY ITS AUTHORITY SIGNATORY.
2 MATHEW GEORGE, AGED 67,
S/O. K. M. VARKEY, KURUVITHADAM HOUSE,
PERUMBALLOOR P.O, MUVATTUPUZHA,
ERNAKULAM - 686673.
BY ADVS. SRI. DENU JOSEPH
SRI. BIBIN BABU
RESPONDENT/S:
1 THE AUTHORIZED OFFICER,
STANDARD CHARTERED BANK, 19, RAJAJI SALAI,
CHENNAI - 600001.
2 STANDARED CHARTERED BANK,
19, RAJAJI SALAI, CHENNAI - 600001.
REPRESENTED BY ITS CHIEF MANAGER.
BY ADV. B.S. SURESHKUMAR
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 28.05.2021, THE COURT
ON THE SAME DAY DELIVERED THE FOLLOWING:
W.A. 1584/2020 2
JUDGMENT
Dated this the 28th day of May, 2021 S. Manikumar, CJ Instant writ appeal is filed against the judgment in W.P.(C) No.26045 of 2020 dated 25.11.2020, by which, a learned single Judge of this Court dismissed the writ petition, holding thus:
"The petitioners have approached this Court aggrieved by Ext.P12 notice issued to them under Section 13(2) of the Securitisation and Reconstructions of Financial Assets and Enforcement of Security Interest Act, 2002, hereinafter referred to as the 'SARFAESI Act'. Although various contentions are raised in the writ petition in its challenge against the said notice, I am of the view that inasmuch as the statutory scheme under the SARFAESI Act does not permit a borrower, who is served with a notice under Section 13(2) of the Act, to approach any forum against the said notice, but instead requires him to first file a representation in terms of Section 13 (3A) before the secured creditor pointing out his objections to the notice served on him, the present Writ Petition is premature and hence not maintainable. This court has to keep in mind the statutory scheme under the SARFAESI Act while deciding on whether or not a writ petition ought to be entertained under Article 226 of the Constitution of India. In the instant case, I do not find this to be a stage at which an interference by this Court is warranted. The writ petition, therefore, fails and is accordingly dismissed."W.A. 1584/2020 3
2. Facts leading to the filing of instant appeal are as follows:
Aggrieved by the conduct of Standard Chartered Bank, respondent No.2, declaring the account of the appellants as Non Performing Asset (NPA), ignoring the notifications/circulars issued by the Reserve Bank of India, including Exhibits-P15 and P17, in aftermath of COVID-19 pandemic, with respect to classification of a regular term loan account as on 29.02.2020 under moratorium, the writ petition has been filed seeking the following reliefs:
a) To issue a writ in the nature of certiorari calling for the records by virtue of which the respondent bank has proceedings to declare the account of the petitioner as NPA and proceeded to issue Exhibit-P12 notice to quash all the above proceedings being illegal.
b) To issue a writ in the nature of mandamus or any other appropriate writ, order or directing the respondent bank to forward the account of the petitioner to be considered by the committee constituted under paragraph 3.3 of Exhibit-
P18 notification dated 17.03.2016.
3. According to the appellants, the respondents are bound to strictly abide by the notifications/circulars and other directions issued by the Reserve Bank of India, and in violation of the same, they have declared the account as NPA. The illegality committed by the bank would disable them from proceeding under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (for short, the W.A. 1584/2020 4 'SARFAESI Act'). Therefore, the very process adopted by the bank itself was challenged through the writ petition.
4. Appellants have further contended that instead of appreciating the illegality committed by the respondent bank in declaring the account as NPA, which is a prerequisite to proceed under the SARFAESI Act, 2002, the learned single Judge has erroneously proceeded to decide the matter as if the challenge is merely against the demand notice issued under the SARFAESI Act.
5. Appellants have further stated that their account was declared as NPA on 1.4.2020, as evident from the disclosure made in Exhibit-P12 demand notice dated 13.04.2020. Earlier, moratorium was declared for three months between 01.03.2020 to 31.05.2020 by Reserve Bank of India through Exhibit-P15 notification/circular, repayment schedule for the loans was shifted across three months after the moratorium period, and asset classification was to be determined based on the revised due date and revised repayment schedule. Thereafter, Exhibit-P16 circular was issued by the RBI, wherein it is clarified that all the accounts classified as Standard as on 29.02.2020, even if overdue, the moratorium period wherever granted, shall be excluded by lending institutions from the number of past-due, for the purpose of asset classification under Income Recognition and Asset Classification (IRAC) norms. Thereafter, by virtue of Exhibit-P17 circular dated 23.05.2020, the moratorium period was extended upto 31.08.2020.
W.A. 1584/2020 5Thus, according to the appellant, it is clear that no banks and financial institutions were supposed to declare an account as NPA after 29.02.2020 upto 31.08.2020.
6. Appellants have further stated that the respondent bank has also committed violation of Exhibit-P18 notification of Reserve Bank of India, by not forwarding their account to a committee for corrective action plan before declaration of the account as NPA, when it is mandatory to do so. The learned single Judge failed to consider the aspect that the proceeding initiated by the bank is not maintainable since it was without any authority under law that the account of the appellants was declared as NPA and the same is violative of the fundamental rights. Learned single Judge merely emphasized on Exhibit-P12 notice dated 13.07.2019 issued under Section 13(2) of the SARFAESI Act and proceeded to arrive at a conclusion that the writ petition was not maintainable on account of alternative remedy available to the appellants upon initiation of the proceedings under the Act.
7. On the above pleadings, the appellants have filed this appeal raising the following grounds:
A. The learned Single Judge seriously erred to appreciate the facts and law involved in the present case in a right prospective and failed to consider the fact that in extraordinary circumstances High Court can exercise Writ jurisdiction when procedure required to be complied at the threshold has not been done. In the instant case in spite of Exhibit P15 to P18 notifications issued by Reserve W.A. 1584/2020 6 Bank of India, including such ones in the aftermath of COVID 19 pandemic regarding classification of accounts, the same was blatantly violated resulting serious procedural laps infringing their fundamental rights guaranteed under Articles 14 and 19 of the Constitution of India.
B. Relying on the decisions of the Hon'ble Supreme Court in Whirlpool Corporation v. Registrar of Trade Marks & others [(1998) 8 SCC 1) and Harbanslal Sahnia & another v. Indian Oil Corporation & others [(2003) 2 SCC 107] as regards the rule of exclusion, the appellants have contended that in appropriate cases in spite of availability of alternative remedy, the High Court may still exercise its Writ jurisdiction, in at least three contingencies, viz., (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; and, (iii) where order or proceedings are wholly without jurisdiction or the virus of the Act is challenged. In the instant case, there is a clear violation of fundamental rights of the appellants as well as it is a clear instance wherein the respondent Bank have declared their account as NPA, without authority, in view of express bar placed by RBI through its notifications, and in spite of compelling cause, writ court proceeded to dismiss the writ petition.
C. Section 2(o) of the SARFAESI Act defines a non performing asset to be such an account being classified so by the Bank or Financial Institutions as substandard or loss asset in accordance with the guidelines issued by regulatory bodies, including RBI. It is a prerequisite under Section 13(2) that only after an account is declared as W.A. 1584/2020 7 NPA to be proceeded against by issuance of demand notice. In the instant case, RBI, being the regulatory body, has issued guidelines through notifications by declaring moratorium after 29.02.2020 and the respondent bank, in violation, has proceeded to issue demand notice after declaring the account of the appellants as NPA on 01.04.2020. In spite of the above factual and legal position, writ court has dismissed the writ petition.
D. The proceedings initiated by the respondent bank to declare the account of the Appellants as NPA was without jurisdiction or authority which goes into the route of the matter warranting interference by this Court.
E. Writ court failed to appreciate the fact that in the instant case it is without any authority under law that the account of the appellants was declared as NPA. The arbitrary conduct of the respondents in declaring the account as NPA and thereafter proceedings under the SARFAESI Act is against Article 14 of the Constitution of India guaranteeing equal protection of law and Article 21 of the Constitution of India.
F. There is absolutely no logic, reason or justification in subjecting the appellants to a lengthy proceedings and unnecessary harassment by relegating them to the alternative remedy after the respondent bank proceeds to the next step of issuing possession notice under Section 13(4), including publication of the same, at the cost of the appellants, when the undisputedly, impugned actions to declare the account as NPA itself is per se illegal and goes into the root of the matter warranting interference at the very moment.
W.A. 1584/2020 8G. The respondent Bank had earlier illegally carried out paper publication, after issuance of Exhibit-P2 notice in spite of the fact that the said notice got served on the appellants and other borrowers. Said paper publication was done not only against the borrowers, but also against two other sons of the 2nd appellant, and the intention of the respondent bank in proceeding with paper publication was merely to harass and coarse the appellants. The respondents should not be given an opportunity to proceed with any further steps, including carrying out the paper publication of the possession notice, when there is inherent lack of jurisdiction or authority to do so, and the proceedings itself are an abuse of process of law.
H. The learned single Judge proceeded to pass impugned Judgment arbitrarily & unreasonable manner without even considering the above compelling factors. Relying on the decision in Authorized Officer, State Bank of Travancore and another v. Mathew K.C. [(2018) 3 SCC
85), the appellants contended that the Hon'ble Supreme Court have clearly observed and recognized well accepted exceptions to the rule of alternative remedy, which includes a case wherein the statutory authority has not acted in accordance with provisions of the enactment in question and when such authority have acted in defiance of fundamental principles of judicial procedure.
I. Section 2(o) of the SARFAESI Act clearly stipulates that declaration of NPA by the banks or financial institutions shall be based on the circulars/notifications issued by the regulators, including RBL. In the instant case, RBI is the regulator and Exhibit P15 to P18 were issued by RBL. When Exhibit P12 notice was served on the appellants, W.A. 1584/2020 9 an objection was issued clearly mentioning about the above circulars/notifications of the RBI, but in spite of the same, a reply was issued, without considering or giving any worth to the above notifications. The very process adopted by the respondent bank, in declaring the account of the appellants as NPA, was put to challenge. When evidently the pre-requisite of proceedings under the SARFAESI Act was not complied, the initiation by the Bank warrants interference and in spite of the same, the writ petition suffered dismissal upon patently wrong and erroneous appreciation of the matter."
8. Based on the above, learned counsel for the appellants has made submissions.
9. Heard the learned counsel for the parties and perused the material on record.
10. Notice dated 13.04.2019 (Exhibit-P12) issued under Section 13(2) of the SARFAESI Act by the 1st respondent bank reads thus:
"BY REGISTERED AD/COURIER.
Date: July 13, 2019 Addressee:
1. Kuruvithadam Agencies Pvt. Ltd. 2. Mr. Mathew George Rep. By its Managing Director S/o. Mathew Varkey Mr. Mathew George M.D of M/s. Kuruvithadam 12/334, Kuruvithadam Building Agencies Pvt Ltd., M.C. Road, Muvattupuzha, Kuruvithadam House, Ernakulam - 686661. Perumballoor P.O., Muvattupuzha, Ernakulam-686673.
xx xxx xxx Dear Sirs/Madam, Re.: 1. Loan Against Property No. 51765179 for an amount of Rs.
2,56,00,000/- (Rupees Two Crore Fifty Six Lakhs Only).
W.A. 1584/2020 102. Notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
1. You had approached us for a Loan Against Property for the purpose of business expansion Property No. URUVITHA H PULLEPPADY P.O., KRISHNASWAMY RO, ERNAKULAM VILLAGE, KANAYANNUR TALUK, ERNAKULAM - 682 035. You had submitted an application form furnishing various details as more particularly stated therein. Pursuant thereto a loan agreement dated 28.08.2018 for a sum of Rs.2,56,00,000/- was executed between you and our bank, wherein certain terms and conditions were recorded therein. Pursuant to execution of the said loan agreement executed between you and our bank, you had also executed with us certain other agreements/documents in favor of our bank to create mortgage thereof.
2. We hereby inform you that in terms of the said loan agreement, you had with an intention to create a mortgage in respect of the said flat/plot and inter alia deposited certain documents including title deeds in respect of the said property/Secured asset.
3. Further, in terms of the said loan Agreement, the bank had disbursed a total loan amount of Rs.2,56,00,000.00/- (Rupees Two Crore Fifty Six Lakhs only). As per the said loan agreement, you were required to pay equated monthly installments (subject to revision of installments on account of change in the rate of interest as you opted to pay interest at variable rate determined from time to time (on a case to case basis)]. It was agreed upon in the said loan agreement that timely payment of the equated monthly installments shall be the essence of the agreement.
4. We hereby inform you that you have committed breach of the terms and conditions of the said loan agreement by inter alia defaulting in payment of equated monthly installments due and payable by you to the bank, under the said agreements and as such the account has been declared as a Non- Performing asset on 01/04/2020 pursuance to the guidelines with respect to asset classification of the Reserve Bank of India.
5. We hereby inform you that we are the secured creditor, and the debt owing to us is a secured debt on the above said flat, which is a secured asset of our bank. You being borrowers of our bank, who are under a liability to our bank have made default in payment of the secured debt including installments in respect thereof. On account of the default you are liable to pay to us the entire current balance due to us. We hereby inform you that as per the statement of account maintained by us in ordinary course of banking business, a copy of which is annexed herewith for your reference, W.A. 1584/2020 11 there is total balance outstanding amount of Rs. 76,09,677.24/- (Rupees Seventy Six Lakh Nine Thousand Six Hundred Seventy Seven And Paisa Twenty Four Only) by way of outstanding principal, arrears (including accrued late charges) and interest till 09.07.2020. In addition to the said outstanding dues you are also liable to pay interest and penal interest due in future till the entire outstanding dues are paid.
6. As the interest and/or installment of principal has remained overdue for a period of more than 90 days your debt has been classified by our bank as a Non-Performing Asset (NPA) in accordance with the guidelines issued by the assets classification by the Reserve bank of India (RBI).
7. That, by means of present notice we hereby call upon you to repay the above said amount of Rs. 76,09,677.24/- within 60 (sixty) days from the date of receipt of this notice, together with any interest and penal interest, and/or other charges which may fall due thereupon, failing which the bank will exercise its power provided until the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
8. Please note that this notice is issued under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Please also note that upon failure on your part to comply with demand contained in this notice the bank shall be entitled to exercise all other rights as mentioned in the sub-Section 4 of the Section 13 of the said Act which will include one or more of the following measures to recover the bank's secured debt namely:-
a) take possession of the secure assets of the borrower Including the right to transfer by way of lease, assignment of sale for realizing the secured assets:
b) take over the management of all secured assets of the Borrower including the right to transfer by way of lease, assignment or sale and realize the secured asset:
c) appoint any person (hereinafter referred to as the manager to manage the secured assets the possession of which has been taken over by the secured creditor;
d) require at any time by notice in writing any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower to pay the secured creditor, so much of the money as is sufficient to pay the secured debt.
9. You are further requested to note that as per Section 13(13) of the said Act. you are restrained/prohibited from disposing of or W.A. 1584/2020 12 dealing with the above-secured assets or transferring by way of sale, lease or otherwise (other than in the ordinary course of business) any of the above secured assets, without our prior written consent we may add that non-compliance with the above provision contained in Section 13(13) of the said Act is an offence punishable under Section 29 of the said Act.
10. Your kind attention is further invited to the provisions of sub- Section (8) of Section 13 of the SARFAESI Act with respect to the time available to redeem the secured assets, where under it has been stated that you can redeem the secured asset by tendering the entire amount of outstanding dues together with all costs, charges and expenses incurred by the Bank till the date of publication of the notice for sale of the secure: asset(s) by public auction and/or e-auction, by inviting quotations, tender from public or by private party. Please also note that the entire amount of outstanding dues together with the costs. charges and expenses incurred by the Bank is not tendered before publication of notice for sale of the secure assets by public auction and/or e-auction, by inviting quotations, tender from public or by private party. you may not be entitled to redeem the secured asset(s).
11. Please also note that this notice is also sent to you without prejudice to bank's; right and remedies including the appropriate legal proceedings initiated before the appropriate courts and/or tribunal for recovery of the above said outstanding amount. This notice is also without prejudice to the bank's right for undertaking any other mode of litigation including prosecution of any complaint under Section 138 of the Negotiable Instrument Act, 1881, as amended.
You may contact the Authorised Officer Standard Chartered Bank at HDFC House PO BOX No.1700. Ravipuram junction, M.G.Road, Ernakulam - 682015 for any clarification and/or compliance of this notice at your end.
You are therefore advised to comply with the demand under this notice and to avoid further action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, which shall of course be at your costs consequences, OF WHICH PLEASE TAKE NOTICE.
Xx xxx xxxx"
11. Reply given by the appellant to the 1 st respondent dated 29.08.2020 (Exhibit-P13), in response to Exhibit-P12 notice reads thus:W.A. 1584/2020 13
"Date : 29.08.2020 To The Authorized Officer, Standard Chartered Bank, 19, Rajaji Salai, Chennai - 600 001.
Regisred AD Sir, Ref: Your notice dated 13.07.2020 under Section 13(2) of the SARFAESI Act received on 24.07.2020.
This reply is issued on behalf of the party company and parties 2 to 6 its Directors/Guarantors. The above notice is not maintainable either in law or on facts. The notice is dated 13.07.2019, whereas it is disclosed from the notice itself that the contents deals with subsequent deeds including the conduct of the account being allegedly declared as NPA on 01.04.2020 as disclosed in the above notice itself. At any rate a cause to initiate SARFAESI proceedings do arise only after declaration of the account as NPA and mere fact of issuance of a pre dated notice makes the process erroneous and illegal on the phase of it and the proceedings under SARFAESI Act would not lie based on the present notice.
Without prejudice to the above contentions it is brought to your notice that the initiation made to treat the subject account as NPA on 01.04.2020 itself is bad in law since being against the guidelines issued by the Reserve Bank of India including Dor.No.EP.Ec.47/21/04/048/2019-20 dated 27.03.2020, Dor. No.EP.Ec.47/21/63/21/2019-20 dated 17.04.2020 & Dor.No. EP.Ec.47/21/71/21/2019-20 dated 23.05.2020 wherein it is made clear that even in respect of the account classification of an account as on 29.02.2020 even if overdue, moratorium period wherever granted in respect of term loan shall be excluded by the lending institution from the number of dates past due for the purpose of W.A. 1584/2020 14 asset classification under IRAC Norms. In view of the above position it is made clear that declaration of account as NPA on 01.04.2020 is bad and you are dis-entitled/disable/unable to proceed under the SARFAESI Act against us by issuing the above referred notice.
Without prejudice to the above contentions it is respectfully stated that we had availed term loan from your Kochi, MG Road Branch in the year 2008. The above loan facility was periodically enhanced in the year 2010, 2013. 2016 & 2018. It appears that the Bank has created documents in such a manner that a fresh loan was being offered in the year 2018 and as reviled later even though the loan documentation was done for the entire Rs.2.56 Crores, the amount additionally advanced in the year 2018 was merely Rs.33,22,144.52 and the balance amount seems to have been utilized for the closure of above loan allegedly of the year 2016 which is purely on the internal arrangement of the bank. We had subsequently decided to reduce the loan burden since due to drop in business and had requested the bank to release one of the properties, so that it could be sold and amounts can be remitted to the bank and the loan liability, monthly EMI and interest burden would be reduced considerably.
Unfortunately the bank has taken a very unsupportive attitude and originally denied and subsequently delayed crediting the sale proceeds to the loan account, delayed release of title deeds causing mental agony stress and financial loss to us, unlawfully charged prepayment/preclosure charges without any reasoning and justification, against our request for reduction of EMI unilaterally reduced the term of the loan, and unlawfully charged penal interest and other charges in the account without any reasoning and justification. Aggrieved with these major lapses and deficiencies in services we had on multiple occasions made various W.A. 1584/2020 15 representations at the branch and the customer service department of the bank. The last of such detailed formal complaints was given at the branch on 07 March, 2020. As there was no response from the branch even after a reasonable time the detailed letter was emailed to the customer service department of the bank. The customer service department has not gone into the crux of the issues. In fact they just tried to cover up the various lapses on the part of the bank. The customer service department had just given a name sake reply wide email reference no.9395334/AST dated 30 th April, 2020. Being aggrieved with the actions of the bank causing mental agony and financial loss to the company and not satisfied with the grievance redressal mechanism within the bank and the namesake response given to the genuine complaints raised by us we had lodged a complaint before the Honourable banking Ombudsman for Kerala and Union Territory Lakshadweep and the same is pending consideration.
As a matter of fact we had suffered substantially due to the conduct of the Bank and are entitled to be compensated for the loss suffered. In addition, Bank has illegally levying interests, penal interest, other incidents charges and excessive amounts, we are not liable to remit the amounts illegally claimed as reflected in the above referred demand notice and for the said reason the demand notice is bad and liable to be withdrawn he conduct of not re-fixing the interest amount even after remittance of Rs 1,65,82,320 to the bank on 12.04.2019 Including demand to remit the same EMI of Rs.3,01,520 as earlier resulted in continuous strain in our cash flows. Even as per clause 6.2 of the loan agreement the Bank is having the clear option to reduce the EMI upon prepayment, the same was not done merely to strangle us defeating the whole exercise undertaken by us to take the pain of selling one of our valuable assets and making substantial payment to the loan W.A. 1584/2020 16 account. Contrary to our request the bank has even unilaterally reduced the tenor of the loan from the original 144 months to 34 months and retained the EMI as Rs. 301520 itself.
Because of the financial difficulties faced by us we could not in spite of our best efforts remit the EMI as per the original sanction and the account was classified as NPA by the bank on 01.04.2020. Though the bank itself had mentioned that we are an SME unit the bank did not before classifying our account as NPA on 01.04.2020 place our file before the committee for stressed MSME units a per RBI Cir No FIDD.MSME & NFS.BC.NO.21/06.02.31/2015-16 dated 17th March, 2016 and as such the conduct of the bank in declaring the account as NPA itself is illegal.
The classification of account as NPA has severely affected credit rating and credit score. It has also affected our reputation in the market as the bank had issued SARFAESI notice. The matter has proceeded in the above manner only on account of the illegal conduct of the bank, it appears that the intention of the bank is merely to gain through coercion & unlawful enrichment, at any rate such demands are not legally sustainable and for the said reason the present demand notice is bad in law and to be withdrawn.
For Kuruvithadam Agencies Pvt. Ltd.
Sd/-
Authorised signatory"
12. Circular issued by the Reserve Bank of India dated 27.03.2020 (Exhibit-P15) reads thus:
"RB/2019-20/186 DOR.No.BP.BC.47/21.04.048/2019-20 March 27, 2020 All Commercial Banks (including Small Finance Banks, Local Area Banks and Regional Rural Banks) W.A. 1584/2020 17 All Primary (Urban) Co-operative Banks/State Co-operative Banks/ District Central Co-operative Banks All All-India Financial Institutions All Non-Banking Financial Companies.(including Housing Finance Companies) Madam / Dear Sir, COVID -19 -- Regulatory Package Please refer to the Statement of Development and Regulatory Policies released on March 27, 2020 where inter alia certain regulatory measures were announced to mitigate the burden of debt Servicing brought about by disruptions on account of COVID-19 pandemic and to ensure the continuity of viable businesses. In this regard, the detailed instructions are as follows:
(i) Rescheduling of Payments -- Term Loans and Working Capital Facilities
2. In respect of all term loans (including agricultural term loans, retail and crop loans), all commercial banks (including regional rural banks, small finance banks and local area banks), co-
operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies) ("lending institutions") are permitted to grant a moratorium of three months on payment of all installments falling due between March 1, 2020 and May 31, 2020. The repayment schedule for such loans as also the residual tenor, will be shifted across the board by three months after the moratorium period. Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period.
3. In respect of working capital facilities sanctioned in the form of cash credit/overdraft (CC/OD"), lending institutions are permitted to defer the recovery of interest applied in respect of all such facilities during the period from March 1, 2020 upto W.A. 1584/2020 18 May 31, 2020 ("deferment"). The accumulated accrued interest shall be recovered immediately after the completion of this period.
(ii) Easing of Working Capital Financing:
4. In respect of working capital facilities sanctioned in the form of CC/OD to borrowers facing stress on account of the economic fallout of the pandemic, lending institutions may recalculate the 'drawing power' by reducing the margins and/or by reassessing the working capital cycle. This relief shall be available in respect of all such changes effected up to May 31, 2020 and shall be contingent on the lending institutions satisfying themselves that the same is necessitated on account of the economic fallout from COVID-19. Further, accounts provided relief under these instructions shall be subject to subsequent Supervisory review with regard to their justifiability on account of the economic fallout from COVID-19.
Classification as Special Mention Account (SMA) and Non-Performing Asset (NPA)
5. Since the moratorium/deferment/recalculation of the 'drawing power' is being provided specifically to enable the borrowers to tide Over economic fallout from COVID-19, the same will not be treated as concession or change in terms and conditions of loan agreements due to financial difficulty of the borrower under paragraph 2 of the Annex to the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019 dated June 7, 2019 ("Prudential Framework"). Consequently, such a measure, by itself shall not result in asset classification downgrade.
6. The asset classification of term loans which are granted relief as per paragraph 2 shall be determined on the basis of W.A. 1584/2020 19 revised due dates and the revised repayment schedule. Similarly, working capital facilities where reliefs provided as per paragraph 3 above, the SMA and the out of order status shall be evaluated considering the application of accumulated interest immediately after the completion of the deferment period as well as the revised terms, as permitted in terms of paragraph 4 above.
7. The rescheduling of payments, including interest, will not qualify as a default for the purposes of supervisory reporting and reporting to Credit Information Companies (CICs) by the lending institutions. CICs shall ensure that the actions taken by lending institutions pursuant to the above announcements do not adversely impact the credit history of the beneficiaries.
8. Lending institutions shall frame Board approved policies for providing the above mentioned reliefs to all eligible borrowers, inter alia, including the objective criteria for considering reliefs under paragraph 4 above and disclosed in public domain.
9. Wherever the exposure of a lending institution to a borrower is Rs.5 crore or above as on March 1, 2020, the bank shall develop an MIS on the reliefs provided to its borrowers. which shall inter alia include borrower-wise and credit-facility wise information regarding the nature and amount of relief granted.
10. The instructions in this circular come into force with immediate effect. The Board of Directors and the key management personnel of the lending institutions shall ensure that the above instructions are properly communicated down the line in their respective organisations, and clear instructions are issued to their staff regarding their implementation.
Yours faithfully, W.A. 1584/2020 20 (Saurav Sinha) Chief General Manager-in-Charge"
13. Circular issued by the Reserve Bank of India dated 17.04.2020 (Exhibit-P16) reads thus:
"RBI/2019-20/220 DOR.No.BP.BC.63/21.04.048/2019-90 April 17, 2020 All Commercial Banks (including Small Finance Banks, ropa Area Banks and Regional Rural Banks) All Primary ( Urban) Co-operative Banks/State Co-operative Banks/ District Central Co-operative Banks All All-India Financial Institutions All Non-Banking Financial Companies (including Housing Finance Companies) Madam/Dear Sir, COVID19 Regulatory Package - Asset Classification and Provisioning Please refer to the Governor's Statement of April 17, 2020 announcing certain additional regulatory measures aimed at alleviating the lingering impact of Covid19 Pandemic on the businesses and financial institutions in India, consistent with the globally coordinated action committed by the Basel Committee on Banking Supervision. In this regard, the detailed instructions with regard to asset classification and provisioning are as follows:
(i) Asset Classification under the Prudential norms on Income Recognition, Asset Classification (IRAC)
2. In terms of the circular DOR.No.BP,.BC.47/21.04.048/2019-
20 dated March 27, 2020 ('Regulatory Package'), the lending institutions were permitted to grant a moratorium of three months on payment of all term loan installments falling due W.A. 1584/2020 21 between March 1, 2020 and May 37, 2020 ('moratorium period'). As such, in line with the clarification provided by the Basel Committee on Banking Supervision, in respect of all account classified as standard as on February 29, 2020, even if overdue, the moratorium period, wherever granted, shall be excluded by the lending institutions from the number of days past-due for the purpose of asset classification under the IRAC norms.
3. Similarly in respect of working capital facilities sanctioned in the form of cash credit/overdraft ("CC/OD"), the Regulatory Package permitted the recovery of interest applied during the period from March 1, 2020 upto May 2020 to be deferred ('deferment period'). Such deferment period, wherever granted in respect of all facilities classified as standard, including SMA, as on February 29, 2020, shall be excluded for the determination of out of order status.
4. NBFCs which are required to comply with Indian Accounting Standards (IndAS) shall, as hitherto, continue to be guided by the guidelines duly approved by their Boards and as per ICAI Advisories for recognition of the impairments.
(ii) Provisioning
5. In respect of accounts in default but standard where provisions of paragraphs (2) and (3) above are applicable, and asset tan benefit is extended, lending institutions shall make general provisions of not less than 10 per cent of the total outstanding of such accounts, to be phased over two quarters as under:
(i) Quarter ended March 71 , 2020 -- not less than 5 per cent
(ii) Quarter ending June 30, 2020 -- not less than 9 per cent W.A. 1584/2020 22
6. The above provisions may be adjusted against the actual provisioning requirements for slippages from the accounts reckoned for such provisions. The residual provisions at the end of the financial year can be written back or adjusted against the provisions required for all other accounts.
7. The above provisions shall not be reckoned for arriving at net NPAs till they are adjusted against the actual provisioning requirements as under paragraph 6 above. Further, till such adjustments, these provisions shall not be netted from gross advances but shown separately in the balance sheet as appropriate.
8. All other provisions required to be maintained by lending institutions, including the provisions for accounts already classified as NPA as on February 29, 2020 as well as subsequent ageing in these accounts, shall continue to be made in the usual manner.
Other Conditions
9. The exclusions permitted in terms of para 2 and 3 above shall be duly reckoned by the lending institutions in their supervisory reporting as well as reporting to credit information companies (CICs); i.e., the days past due and SMA status, where applicable, as on March 1, 2020 will remain unchanged till May 31, 2020.
10. The lending institutions shall suitably disclose the following in the 'Notes to Accounts' while preparing their financial statements for the half year ending September 30, 2020 as well as the financial years 2019-20 and 2020-2021:
(i) Respective amounts in SMA/overdue categories, where the moratorium/deferment was extended, in terms of paragraph 2 and 3;W.A. 1584/2020 23
(ii) Respective amount where asset classification benefits is extended.
(iii) Provisions made during the Q4FY2020 and Q1FY2021 in terms of paragraph 5:
(iv) Provisions adjusted during the respective accounting periods against slippages and the residual provisions in terms of paragraph 6.
Yours faithfully, (Saurav Sinha) Chief General Manager-in-Charge"
14. Circular issued by the Reserve Bank of India dated 23.05.2020 (Exhibit-P17) reads thus:
"RBI/2019-20/244 DOR.No.BP.BC.71/21.04.048/2019-20 May 23, 2020 All-Commercial Banks (including Small Finance Banks, Local Area Banks and Regional Rural Banks) All Primary (Urban) Co-operative Banks/State Co-operative Banks/ District Central Co-operative Banks All All-India Financial Institutions All Non-Banking Financial Companies (including Housing Finance Companies) Madam/Dear Sir, COVID-19 -- Regulatory Package Please refer to the Circular DOR.No.BP.BE.47/21.04.048/ 2019-20 dated March 27, 2020 and Circular DOR.No.BP.BC. 63/21.04.048/2019-20 dated April 17, 2020 announcing certain regulatory measures in the wake of the disruptions on account of COVID-19 pandemic and the consequent asset Classification and provisioning norms. As announced in the Governor's Statement of May 22, 2020, the intensification of COVID-19 disruptions has imparted priority to relaxing repayment pressures bad improving access to working capital W.A. 1584/2020 24 by mitigating the burden of debt servicing, prevent the transmission of financial Stress to the real economy, and ensure the continuity of viable businesses and households. Consequently, the detailed instructions in this regard are as follows:
(i) Rescheduling of Payments-Term Loans and Working Capital Facilities;
2. In view of the extension of lockdown and continuing disruption on account of COVID-19, all commercial banks (including Regional rural banks, small finance banks and local area banks), co-operative banks, All-India Financial Institutions, and Non-banking Financial Companies (including housing finance companies) ("lending institutions") are permitted to extend the moratorium by another three months i.e. from June 1, 2020 to August 31, 2020 on payment of all installments in respect of term loans (including agricultural term loans, retail and crop loans). Accordingly, the repayment schedule for such loans as also the residual tenor, will be shifted across the board. Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period.
3. In respect of working capital facilities sanctioned in the form of cash credit/overdraft ("CC/OD"), lending institutions are permitted to allow a deferment of another three months, from June 1, 2020 to August 31, 2020, on recovery of interest applied in respect of all such facilities. Lending institutions are permitted, at their discretion, to convert the accumulated interest for the deferment period upto August 31, 2020, into a funded interest term loan (FITL) which shall be repayable not later than March 31, 2021.
(ii) Easing of Working Capital Financing
4. In respect of working capital facilities sanctioned in the form of CC/OD the borrowers facing stress on account of the economic fallout of the pandemic, lending institutions may, as a one-time measure,
(i) recalculate the 'drawing power' by reducing the margins till August 31, 2020. However, in all such cases where such a temporary enhancement in drawing power is considered, the margins shall be restored to the Original levels by March 31, 2021; and/or, W.A. 1584/2020 25
(ii) review the working capital sanctioned limits upto March 31, 2021, based on a reassessment of the working capital cycle.
5. The above measures shall be contingent on the lending institutions Satisfying themselves that the same is necessitated on account of the economic fallout from COVID-
19. Further, accounts provided relief under these instructions shall be subject to subsequent Supervisory review with regard to their justifiability on account of the economic fallout from COVID-19.
6. Lending institutions may, accordingly, put in place a Board approved policy to implement the above measures. "
Asset Classification
7. The conversion of accumulated interest into FITL, as permitted in terms of paragraph 3 above, and the changes in the credit terms permitted to the borrowers to specifically tide over economic fallout from COVID-19 in terms of paragraph 4 above, will not be treated as concessions granted due to financial difficulty of the borrower, under Paragraph 2 of the Annex to the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019 dated June 7, 2019 ('Prudential Framework'), and consequently, will not result in asset classification downgrade.
8. In respect of accounts classified as Standard as on February 29, 2020, even if overdue, the moratorium period, wherever granted in respect of term loans, shall be excluded by the lending institutions from the number of days past-due for the purpose of asset classification under the IRAC norms. The asset classification for such accounts shall be determined on the basis of revised due dates and the revised repayment schedule.
9, Similarly, in respect of working capital facilities sanctioned in the form of cash credit/overdraft ("CC/OD"), where the account is classified as standard, including SMA, as on February 29, 2020, the deferment period, wherever granted in terms of paragraph 3 above shall be excluded for the determination of out of order status.
10. All other provisions of circulars dated March 27, 2020 and April 17, 2020 shall remain applicable mutatis mutandis. Yours faithfully, (Saurav Sinha) Chief General Manager-in-Charge"
W.A. 1584/2020 2615. Notification dated 17.03.2016 of the Reserve Bank India (Exhibit-
P18) along with revised Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises (MSMEs) reads thus:
"RBI/2015-16/338 Pt FIDD.MSME & NFS.BC.No.21/06.02.31/2015-16 March 17, 2016 All Scheduled Commercial Banks (Excluding RRBs) Madam / Sir, Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises (MSMEs) In order to provide a simpler and faster mechanism to address the stress in the accounts of MSMEs and to facilitate the promotion and development of MSMEs, the Ministry of Micro, Small and Medium Enterprises, Government of India, vide their Gazette Notification dated May 29, 2015 had notified a 'Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises'. However, certain changes in the captioned framework have been carried out in consultation with the Government of India, Ministry of MSME in order to make it compatible with the existing regulatory guidelines on 'Income Recognition, Asset Classification and provisioning pertaining to Advances' issued to banks by RBI. Accordingly, a revised Framework along with operating instructions is furnished in the Annex. The Board approved policy to operationalize the Framework may be put in place by the banks not later than June 30, 2016.
2. While the prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances will continue to be as per the instructions consolidated in the Master Circular on IRAC Norms dated July 1, 2015 and as W.A. 1584/2020 27 updated from time to time, the revival and rehabilitation of MSMEs having loan limits up to Rs.25 crore will be in terms of these operating instructions. Restructuring of loan accounts with exposure of above Rs.25 crore will continue to be governed by the extant guidelines on Corporate Debt Restructuring (CDR) / Joint Lenders' Forum (JLF) mechanism.
3. The revised Framework supersedes our earlier Guidelines on Rehabilitation of Sick Micro and Small Enterprises issued vide our circular RPCD. CO. MSME & NES.BC.40/06.02.31/ 2012-2013 dated November 1, 2012, except those relating to Reliefs and Concessions for Rehabilitation of Potentially Viable Units and One Time Settlement, mentioned in the said circular.
4. Banks should continue to report credit information and SMA status of all accounts above the cut-off exposure of Rs.5 crore and above to the Central Repository for Information on Large Credit(CRILC), as per extant instructions.
5. Please acknowledge receipt and furnish Action Taken Report by July 31, 2016.
Yours faithfully (Uma Shankar) Chief General Manager Encl: As above"
16. Clause 2 of Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises states about identification of incipient stress.
Clause 2.1 states about identification by bank or creditors and it reads thus:
"2.1 Identification by banks or creditors - Before a loan account of a Micro, Small and Medium Enterprise turns into a Non-Performing Asset (NPA), banks or creditors should W.A. 1584/2020 28 identify incipient stress in the account by creating three sub- categories under the Special Mention Account (SMA) category as given in the Table below:
SMA Sub-categories Basis for classification SMA-0 Principal or interest payment not overdue for more than 30 days but account showing signs of incipient stress (Please see Annex - I) SMA-1 Principal or interest payment overdue between 31-60 days SMA-2 Principal or interest payment overdue between 61-90 days On the basis of the above early warning signals, the branch maintaining the account should consider forwarding the stressed accounts with aggregate loan limits above Rs.10 lakh to the Committee as referred in para 3.3 within five working days for a suitable corrective action plan (CAP). Forwarding the account to the Committee for CAP will be mandatory in cases of accounts reported as SMA-2."
17. The question which emerges for consideration is as to whether the learned single Judge has committed any jurisdictional error while dismissing the writ petition. It is true that contention was raised by the appellants in regard to the conduct on the part of the respondent bank in making the account of the appellants as Non Performing Asset. The grievance of the appellants is that the bank has not followed the guidelines and directives issued by the Reserve Bank of India in the matter of treating the account as Non Performing Asset. But, the fact remains that, consequent to the default on the part of the appellants to repay the loan amount to the bank, the bank proceeded against the appellants as per the provisions of the SARFAESI Act, 2002. Appellants were issued with notice under Section 13(2) of the Act, but instead of the representation to the W.A. 1584/2020 29 notice being adjudicated, the appellants have approached the writ court. In fact, the bank is at liberty to entertain a representation as is prescribed under Section 13(3A) of the SARFAESI Act, 2002 and consider the case of the appellants. When a statutory prescription is provided under law, to tackle a particular situation, the aggrieved person should have resorted to the remedy provided under the statute. In our view, the contentions put forth in the writ petition that the bank has not followed the circulars and guidelines issued by the Reserve Bank of India was a subject matter that should have been raised by the appellants in a suitable representation, as provided under the statute. Section 13 of the SARFAESI Act, 2002 reads thus:
"13. Enforcement of security interest.-(1) Notwithstanding anything contained in section 69 or section 69-A of the Transfer of Property Act, 1882 (4 of 1882), any security interest created in favour of any secured creditor may be enforced, without the intervention of the Court or tribunal, by such creditor in accordance with the provisions of this Act. (2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under sub-section (4).
[Provided that--
(i) the requirement of classification of secured debt as non-performing asset under this sub-section shall not apply to a borrower who has raised funds through issue of debt securities; and
(ii) in the event of default, the debenture trustee shall be entitled to enforce security interest in the same manner as W.A. 1584/2020 30 provided under this section with such modifications as may be necessary and in accordance with the terms and conditions of security documents executed in favour of the debenture trustee.] (3) The notice referred to in sub-section (2) shall give details of the amount payable by the borrower and the secured assets intended to be enforced by the secured creditor in the event of non-payment of secured debts by the borrower.
[(3-A) If, on receipt of the notice under sub-section (2), the borrower makes any representation or raises any objection, the secured creditor shall consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate [within fifteen days] of receipt of such representation or objection the reasons for nonacceptance of the representation or objection to the borrower:
Provided that the reasons so communicated or the likely action of the secured creditor at the stage of communication of reasons shall not confer any right upon the borrower to prefer an application to the Debts Recovery Tribunal under section 17 or the Court of District Judge under section 17-A.] (4) In case the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:-
(a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset;
[(b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset:
Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt:
Provided further that where the management of whole of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security for the debt;] W.A. 1584/2020 31
(c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor;
(d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt. (5) Any payment made by any person referred to in clause
(d) of sub-section (4) to the secured creditor shall give such person a valid discharge as if he has made payment to the borrower.
[(5-A) Where the sale of an immovable property, for which a reserve price has been specified, has been postponed for want of a bid of an amount not less than such reserve price, it shall be lawful for any officer of the secured creditor, if so authorised by the secured creditor in this behalf, to bid for the immovable property on behalf of the secured creditor at any subsequent sale.
(5-B) Where the secured creditor, referred to in sub- section (5-A), is declared to be the purchaser of the immovable property at any subsequent sale, the amount of the purchase price shall be adjusted towards the amount of the claim of the secured creditor for which the auction of enforcement of security interest is taken by the secured creditor, under sub-section (4) of section 13. (5-C) The provisions of section 9 of the Banking Regulation Act, 1949 (10 of 1949) shall, as far as may be, apply to the immovable property acquired by secured creditor under sub-section (5-A).] (6) Any transfer of secured asset after taking possession thereof or take over of management under sub-section (4), by the secured creditor or by the manager on behalf of the secured creditor shall vest in the transferee all rights in, or in relation to, the secured asset transferred as if the transfer had been made by the owner of such secured asset. (7) Where any action has been taken against a borrower under the provisions of sub-section (4), all costs, charges and expenses which, in the opinion of the secured creditor, have been properly incurred by him or any expenses incidental thereto, shall be recoverable from the borrower and the money which is received by the secured creditor W.A. 1584/2020 32 shall, in the absence of any contract to the contrary, be held by him in trust, to be applied, firstly, in payment of such costs, charges and expenses and secondly, in discharge of the dues of the secured creditor and the residue of the money so received shall be paid to the person entitled thereto in accordance with his rights and interests. [(8) Where the amount of dues of the secured creditor together with all costs, charges and expenses incurred by him is tendered to the secured creditor at any time before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty for transfer by way of lease, assignment or sale of the secured assets,-
(i) the secured assets shall not be transferred by way of lease assignment or sale by the secured creditor; and
(ii) in case, any step has been taken by the secured creditor for transfer by way of lease or assignment or sale of the assets before tendering of such amount under this sub- section, no further step shall be taken by such secured creditor for transfer by way of lease or assignment or sale of such secured assets.] (9) [Subject to the provisions of the Insolvency and Bankruptcy Code, 2016, in the case of] financing of a financial asset by more than one secured creditors or joint financing of a financial asset by secured creditors, no secured creditor shall be entitled to exercise any or all of the rights conferred on him under or pursuant to sub-section (4) unless exercise of such right is agreed upon by the secured creditors representing not less than [sixty per cent.] in value of the amount outstanding as on a record date and such action shall be binding on all the secured creditors:
Provided that in the case of a company in liquidation, the amount realised from the sale of secured assets shall be distributed in accordance with the provisions of section 529A of the Companies Act, 1956 (1 of 1956):
Provided further that in the case of a company being wound up on or after the commencement of this Act, the secured creditor of such company, who opts to realise his security instead of relinquishing his security and proving his debt under proviso to sub-section (1) of section 529 of the Companies Act, 1956 (1 of 1956), may retain the sale proceeds of his secured assets after depositing the workmen's dues with the liquidator in accordance with the provisions of section 529-A of that Act:W.A. 1584/2020 33
Provided also that liquidator referred to in the second proviso shall intimate the secured creditor the workmen's dues in accordance with the provisions of section 529-A of the Companies Act, 1956 (1 of 1956) and in case such workmen's dues cannot be ascertained, the liquidator shall intimate the estimated amount of workmen's dues under that section to the secured creditor and in such case the secured creditor may retain the sale proceeds of the secured assets after depositing the amount of such estimate dues with the liquidator:
Provided also that in case the secured creditor deposits the estimated amount of workmen's dues, such creditor shall be liable to pay the balance of the workmen's dues or entitled to receive the excess amount, if any, deposited by the secured creditor with the liquidator: Provided also that the secured creditor shall furnish an undertaking to the liquidator to pay the balance of the workmen's dues, if any. Explanation.- xx xxx xxxxx"
18. Reading of Section 13 of the Act, 2002 makes it categorically clear that the Parliament have provided a scheme thereunder, enabling an aggrieved person to ventilate his grievances by resorting to the procedure prescribed thereunder. Even assuming that a representation is submitted by the appellants to the respondent bank and the bank has not considered the same, in accordance with law, a remedy is provided under Section 17 of the act 2002 to the appellants to proceed against the bank by filing a suitable application before the Debt Recovery Tribunal.
19. Appellants did not care to resort to the remedy provided under law. When an amount due under a loan is not paid by a loanee, the bank is entitled to resort to the statutory remedy available to it as per the provisions of the SARFAESI Act, 2002.
20. Grievance of the appellants is that the respondent bank is not W.A. 1584/2020 34 entitled to proceed against them, since the conduct on the part of the bank in converting the account of the appellants as Non Performing Asset, is not in accordance with the RBI guidelines. According to us, as stated above, it was a subject matter ought to have been pointed out by the appellants before the bank itself, since the statute prescribes a modality enabling a party to make suitable representation. Therefore, the proceedings initiated by the bank squarely comes under the procedure contemplated under Section 13 of the SARFAESI Act, 2002 and we have doubt in our mind to say that the appellants have a clear remedy as is statutorily prescribed under the act 2002.
21. The question as regards the action initiated by the respondent bank illegally can be raised by the appellants before the Debt Recovery Tribunal at the appropriate time, as is prescribed under law, and the Tribunal is vested with ample powers to consider such aspects, regarding the loan account maintained by an aggrieved person with a bank, the conduct on the part of the bank in making the account a Non Performing Asset and the failure on the part of the bank to follow the Reserve Bank guidelines. That apart, there is a clear remedy of appeal provided under the SARFAESI Act, 2002, if aggrieved, on any order passed by the Debt Recovery Tribunal, which thus means, the statute has provided a clear mechanism to tackle all and any situations of an aggrieved person under law, and therefore, a writ court would be slow in interfering with the action W.A. 1584/2020 35 initiated by the bank, especially due to the fact that, the Act, 2002 was introduced with the avowed object of speedy recovery of amounts, without unnecessary interference of courts.
22. If that be so, we have no hesitation to hold that the appellants have not made out a case for interference with the impugned proceedings initiated by the bank against the appellants in a writ proceeding. So also, the position enumerated by us is well settled in law and bearing in mind the proposition of law laid down by the Hon'ble Apex Court in its various judgments, we do not think the facts and circumstances put forth by the appellants impress us to entertain the writ petition, as there is no legal infirmities persuading us to do so exercising the power of discretion conferred on us under Article 226 of the Constitution of India.
In the light of the above, we have no hesitation to hold that the appellants have not made out a case, justifying interference with the judgment of the learned single Judge in W.P.(C) No.26045 of 2020 dated 25.11.2020. Therefore, writ appeal fails and accordingly, dismissed.
Sd/-
S. MANIKUMAR CHIEF JUSTICE Sd/-
SHAJI P. CHALY JUDGE Krj //TRUE COPY// P.A. TO C.J.