Calcutta High Court (Appellete Side)
Mr. Ayanabha Raha .....For The vs Central Bank Of India on 27 April, 2012
Author: Dipankar Datta
Bench: Dipankar Datta
1
27.04.2012
kc. 35
W.P.5696(W) of 2012
Mr. Kallol Basu
Mr. Ayanabha Raha .....for the petitioners.
Mr. Debangshu Basak
Mr. P. Garai
Mr. P. K. Mishra ....for the SBI
I had the occasion to consider the writ petition on 11.4.2012. An order was dictated in
open Court whereby the writ petition was dismissed, liberty was granted to the petitioners to
approach the Debts Recovery Tribunal having jurisdiction under Section 17(1) of the
Securitisation and Reconstruction of Financial Assets and Enforcement Security Interest Act,
2002 (hereafter the Act) and the Tribunal was requested to consider the question of limitation
keeping in mind Section 14 of the Limitation Act. When the draft order was placed before me for
signature, I noticed that the liberty that was granted should not have been granted in view of the
fact that the bank was yet to take over possession of the secured assets in exercise of power
conferred by Section 13(4) of the Act and, therefore, was premature.
The writ petition was placed in the list to re-hear Mr. Bose, learned advocate for the
petitioners, on the point of deletion of liberty to move the Tribunal at this stage and the
observation relating to Section 14 of the Limitation Act.
Today, I have heard Mr. Bose afresh on the merits of the writ petition. Needless to
observe, the order dictated on 11.4.2012 shall be of no effect. It is recorded that the bank has
not taken any further step after the order dated 11.4.2012 was dictated.
The petitioners availed of credit facilities extended by the respondent/bank. Having failed
to repay the dues of the bank, the account of the petitioners was classified as non-performing asset. A notice dated 10th June, 2011 followed under Section 13(2) of the Securitization of the Financial Assets and Enforcement of Security Interest Act, 2002 calling upon the petitioners to discharge their liability within sixty days. By a representation dated 19th July, 2011, the petitioners prayed for an opportunity to clear the dues and in regard thereto prayed for restructuring of the loan. Such representation was followed by another representation dated 8th 2 December, 2011. The bank did not consider the representations. Finally, the authorised officer issued a notice dated 14th February, 2012, purporting to be one under Section 13(4)(a) of the Act. It was conveyed to the petitioners that since they had not discharged their liability as specified in the demand notice issued under Section 13(2) of the Act, the bank was entitled to take in its possession the secured assets in respect whereof security interest had been created in their favour. The notice further called upon the petitioners to hand over peaceful possession of the secured immovable assets as detailed in the schedule appended thereto within 15 days, failing which assistance of the District Magistrate in taking possession of the secured assets under Section 14 of the Act would be sought for.
The notice dated 14th February, 2012 is under challenge in this writ petition dated 20th March, 2012.
Mr. Bose, learned advocate appearing for the petitioners contends that the bank acted illegally in the exercise of its jurisdiction in not disposing of the representations submitted by the petitioners after receipt of the demand notice under Section 13(2) of the Act and in proceeding to issue the impugned notice. It is further contended by him that the petitioners are entitled to know the reasons as to why the contentions raised by them in the said representations did not appeal to the bank to be worthy of consideration.
Next, Mr. Bose contends that no notice of possession having been issued in terms of Appendix IV of the Security Interest (Enforcement) Rules, 2002, the notice dated 14th February, 2012 cannot be considered to be one issued in terms of Section 13(4) of the Act read with Rule 8(1) of the Rules and, therefore, the situation has not matured for the petitioners to approach the Debts Recovery Tribunal having jurisdiction in terms of Section 17(1) of the Act. According to the petitioners, since the bank has proceeded to convey its decision to take possession of the secured assets without following the provisions of the Act, it amounts to a jurisdictional error and, therefore, a writ petition would be maintainable. The decision of a learned Single Judge of this Court reported in 2011(2) Bank CLR 396 (Cal) (Adya Pipes Pvt. Limited Vs. Central Bank of India & Anr.) has been cited for the proposition that unless possession of the secured assets has been 3 taken in accordance with the provisions of the Act, no application under Section 17(1) thereof would be maintainable.
An apprehension is voiced by Mr. Bose that if the petitioners do not hand over possession of the secured assets within the time stipulated in the impugned notice, the bank would approach the District Magistrate under Section 14 of the Act and since it is not the law that before taking possession under that section the borrower is to be put on notice or heard, the petitioners would be left without remedy and placed in a virtually irretrievable position if possession is taken over by the District Magistrate despite the flaws in the process adopted by the bank.
Referring to the decision reported in (1999) 4 SCC 526 (K. Venkatachalam v. A. Swamickan), Mr. Bose contends that even in respect of an election dispute, the Court of Writ had interfered without relegating the aggrieved party to the forum competent to try an election petition in terms of the Representation of the People Act, 1951 and the Supreme Court upheld such order. According to him, availability of a statutory remedy is thus no bar for the Writ Court to entertain the writ petition.
He, accordingly, prays for stay of operation of the impugned notice. I have not considered it necessary to call upon the learned advocate for the bank to answer.
I now propose to deal with the contentions of Mr. Bose.
In terms of Section 13(4) of the Act, a secured creditor acquires the right to take recourse to any of the measures provided in clauses (a) to (d) thereof once the borrower fails to discharge his liability in full within 60 days from date of receipt of the demand notice under Section 13(2). In the present case, there is no dispute that the petitioners did not discharge their liability. It also does not appear from the representations submitted by the petitioners in response to the demand notice under Section 13(2) of the Act that any objection was raised to the effect that their account was erroneously classified as a non-performing asset or that they are not liable to pay the amount demanded. Expressing their difficulty in making regular payment, the petitioners had sought for restructuring of the loan for their survival and also at the same time to clear their dues. The representations were not considered and disposed of. It is not necessary for me at this 4 stage to examine the merits of the said representations or to ascertain why the same were not disposed of. Fact remains that the liability was not discharged by the petitioners, resulting in the authorized officer considering it necessary to issue the notice dated 14th February, 2012, whereby the intention of the bank was conveyed that failure to discharge the liability in terms of the demand notice under Section 13(2) of the Act had exposed the petitioners to measures permitted to be taken in terms of Section 13(4) thereof and they were called upon to hand over possession within 15 days. The Act does not require any prior notice being given to the borrower by the secured creditor before possession is taken over. Possession notice is required to be issued in Appendix IV once the secured creditor takes over possession of the secured assets. The impugned notice appears to have been issued by the bank in furtherance of its intention to take possession of the secured assets for recovery of the secured debt. Even if such notice had not been issued and possession not taken over, no cause of action would have arisen for the petitioners to move the Tribunal under Section 17(1) of the Act. Merely because the bank has issued the impugned notice does not result in accrual of any right in favour of the petitioners to urge the Writ Court to examine at this stage as to whether the process adopted by the bank till date adheres to the provisions of the Act or not. Once possession is taken, it would be open to the petitioners to apply under Section 17(1) of the Act and if the Tribunal is satisfied that in taking measures under Section 13(4) the provisions of the Act have not been duly followed, the Tribunal is competent to direct restoration of possession. Non-disposal of the representations filed in response to the demand notice under Section 13(2) of the Act may amount to an error within jurisdiction but certainly cannot be equated with any act that is inherently lacking in jurisdiction. The petitioners, therefore, are not without a remedy and I hold that the Tribunal may be approached if possession is taken.
In so far as the decision in Adya Pipes Pvt. Limited (supra) is concerned, the learned Judge was considering the propriety of the decision of the Debts Recovery Appellate Tribunal in holding that since possession had not been taken, the situation had not matured for the aggrieved person to approach the Tribunal under Section 17(1) of the Act. The learned Judge was right and I find no reason to disagree.
5
The decision in K. Venkatachalam (supra) does not advance the cause of the petitioners. There, fraud on the Constitution was alleged and established. Even otherwise, it was held that a Court of writ may interfere when recourse cannot be had to the provisions of the statute in question for appropriate relief.
Entertainment of a writ petition arising out of proceedings initiated under the Act must be preceded by due consideration of the decisions of the Supreme Court reported in (2010) 8 SCC 110 (United Bank of India Vs. Satjawati Tondon & Ors.) and (2011) 2 SCC 782 (Kanaiyalal Lalchand Sachdev Vs. State of Mahaashtra & Ors). Unless exceptional circumstances exist, the High Court must insist that the remedies available under the Act are exhausted. No exceptional circumstance exists so as to warrant interference.
For the reasons aforesaid, I decline to entertain the writ petition. The same stands dismissed, without order for costs.
It is made clear that in the event the bank takes measures in terms of Section 13(4) of the Act to take possession of the secured assets, it would be open to the petitioners to approach the Tribunal in accordance with law.
Urgent photostat certified copy of this order, if applied for, be supplied to the parties as early as possible (DIPANKAR DATTA,J.)