Punjab-Haryana High Court
Deepika Garg vs State Of Punjab And Another on 31 January, 2024
Author: Lisa Gill
Bench: Lisa Gill
SUNIL CWP No.16553 of 2022 (O&M) -1- 2024:PHHC:013271-DB IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No.16553 of 2018 (O&M) Date of Decision: 31.01.2024 DEEPIKAGARG ee Petitioner(s) Versus STATE OF PUNJAB AND ANOTHER --EEL____......... Respondent(s) CORAM:- HON'BLE MRS. JUSTICE LISA GILL HON'BLE MRS. JUSTICE AMARJOT BHATTI Present: Mr. Naveen Batra, Advocate for petitioner. Ms. Shivani Sharma, DAG, Punjab. Mr. Kamal Satija, Advocate for respondent no.2. 36 2 2 LISA GILL, J.
1. Petitioner in this writ petition has challenged declaration of loan account in question as Non Performing Asset (NPA) being illegal and arbitrary besides subsequent proceedings initiated under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the SARFAESI Act) against M/s. Balaji Sales Corporation of whom petitioner is proprietor, to be in utter violation of applicable provisions of law.
2. It is claimed that the firm M/s. Balaji Sales Corporation is registered under Micro, Small and Medium Enterprises Development Act, 2006, therefore, declaration of its account NPA without referring matter to the Designated Committee for revival/restructuring, in terms of guidelines dated 17.03.2016 issued by Reserve Bank of India in respect to 'Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises', is illegal.
2024.02.05 10:42 | attest to the accuracy and authenticity of this document SUNIL CWP No.16553 of 2022 (O&M) -2-
3. Learned counsel for respondent no.2 while referring to registration certificate (Annexure P-1), submits that registration is of one Shri Balaji Sales Fastners whereas borrower in this case is Shri Balaji Sales Corporation alongwith the present petitioner. Furthermore, writ petition itself is not entertainable. It is submitted that action under SARFAESI Acct is being taken by respondent in strict compliance of provisions thereunder.
4. Heard learned counsel for parties and have gone through the petition with their able assistance.
5. Learned counsel for petitioner is unable to deny that matter is squarely covered against petitioner in view of decision dated 18.12.2023 by this Court in CWP-21657-2022 (M/s Technico Strips and Tubes Pvt. Ltd. and another vs. Deutsche Bank AG and another) and connected writ petitions. It has been held in the said decision as under:-
"28. Relationship between the respondent-Bank/Financial Institutions and petitioners is clearly governed by privity of contract between parties. Whether there has been any violation of contractual stipulation between the parties or of the RBI regulations as has been urged before us, is necessarily a mixed question of fact and law. We do not find any merit in the argument that learned DRT does not have power or jurisdiction at the appropriate time, hence this argument is also repelled. xxx xxx xxx
29. Division Bench of High Court of Himachal Pradesh while considering a similar controversy as the one at hand in case of Neelkanth Yarn Vs. Punjab National Bank (supra)held that judicial scrutiny of declaration of account of the petitioners therein as NPA (petitioners therein also claimed to be MSME) was not called for and it is open to learned DRT to go into all these aspects at the relevant time. In case of Neelkanth Yarn Vs. Punjab National Bank (supra), it was held as under:-
2024.02.05 10:42 | attest to the accuracy and authenticity of this document CWP No.16553 of 2022 (O&M) -3- "27. From the statutory scheme and decisions noted hereinabove, it is clear that this Court, in exercise of its jurisdiction, cannot go into the decision of respondent-
bank in classifying the petitioner's account as NPA. If the respondent-bank proceeds further and reaches Section 13(4) of the SARFAESI Act stage, the petitioner-firm can file application under Section 17 of the SARFAESI Act. The DRT can go into the aspect of classifying the account as NPA and also whether RBI guidelines have been violated on any aspect leading to declaring the account as NPA and taking recourse under the SARFAESI Act.
28. It has also been repeatedly held that the aspect of classifying an account as NPA is not justiciable in exercise of power of judicial review under Article 226 of the Constitution."
30. We are in agreement with the above view taken by High Court of Himachal Pradesh in abovesaid case. It is well within jurisdiction of learned DRT to adjudicate upon matters relating to validity or otherwise of proceedings undertaken by Banks/Financial Institutions under SARFAESI Act and examine whether necessary parameters have been observed and adhered to and applicable Rules and Regulations, including RBI circulars have been complied with. Any intervention by Courts at this stage would be against the avowed letter and spirit of SARFAESI Act. Issue as raked up in these writ petitions is necessarily within the realm of consideration by learned DRT, at the appropriate juncture. There cannot be a pre-emptory intervention. It was strenuously argued before us that non-intervention by this Court would lead to extremely harsh consequences for petitioners. However, the same cannot be a ground for interference as there is no escape from the provisions of law even if, harsh - 'Dura lex, sed lex'i.e. the law is harsh but it is the law.
31. Itisasettled position that provisions of SARFAESI Act prevail over MSME Act with SARFAESI Act being a complete code in itself. There is no scope for interference in the present matters at this stage. It is open to SUNIL 2024.02.05 10:42 | attest to the accuracy and authenticity of this document CWP No.16553 of 2022 (O&M) -4- petitioners to avail the remedy(ies) available to them under the statute in accordance with law and agitate all grievances before learned DRT including the question of incorrect classification or otherwise of their accounts NPA. DRT is well within its jurisdiction to consider this aspect."
6. Keeping in view the above, this writ petition is dismissed with liberty to petitioner to avail remedy(ies) available to him in accordance with law for redressal of his grievance(s).
7. As interim order granted to petitioner on 01.08.2022 has continued till date, same shall enure for a period of twenty (20) days from the date of receipt of certified copy of this order, in order to enable petitioner to avail appropriate remedy(ies) as may be available to him in accordance with law. In case appropriate application/petition is filed by petitioner accompanied with requisite application(s), question of continuance or otherwise of interim order in favour of petitioner is necessarily in the realm of consideration by appropriate forum in accordance with law without being influenced by any order(s), which may have been passed in this writ petition. It is clarified that interim order shall not enure after the period of aforesaid twenty (20) days in the absence of appropriate order by competent authority/Tribunal in accordance with law. There is no expression of opinion on merits of the matter.
(LISA GILL) JUDGE (AMARJOT BHATTI) JUDGE 31.01.2024 Sunil Whether speaking/reasoned: Yes/No Whether reportable: Yes/No SUNIL 2024.02.05 10:42 | attest to the accuracy and authenticity of this document