Gauhati High Court
Barak Valley Tea Co. And Anr. vs Union Of India (Uoi) And Ors. on 13 September, 2006
Equivalent citations: II(2007)BC548, [2006]133COMPCAS937(GAUHATI)
JUDGMENT B.K. Sharma, J.
1. The challenge made in this writ petition is in respect of annexure 3 notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, proceeded by annexure 4 notice dated August 25, 2004, under same provision. While in the first notice, the demand was made for Rs. 16,92,271.61 in the second notice the demand made was for Rs. 202,49,726.87 payable as on September 30, 2005. As per the impugned notice issued under Section 13(2) of the Act, the petitioners are liable for the outstanding dues amounting to Rs. 202,49,726.87 as on September 30, 2005. The amount along with interest has accrued due to non refund of the loan by the petitioner guaranteed by the persons indicated in the notice itself.
2. On perusal of annexure 4 notice dated August 25, 2004, it appears that the repayment of the loan was personally guaranteed by executing an agreement of guarantee dated January 2, 1999, and the indebtedness was also acknowledged from time to time. Despite repeated requests calling upon the petitioners and the guarantors, the outstanding dues have not been paid and thereby the petitioners and the guarantors have been made jointly and severally liable.
3. Annexure I is the sanction ticket in reference to the terms and conditions of which it is the case of the petitioner that the land involved being an agricultural land, is excluded from the purview of the Act. In this connection, Mr. S. P. Roy, learned Counsel has referred to Section 31(i) of the Act which provides that the provisions of the Act shall not apply to any security interest created in agricultural land. Another ground urged by Mr. Roy, learned Counsel for the petitioners is that the bank having already initiated proceedings before the Debts Recovery Tribunal, the impugned notices under the Act are uncalled for. Mr. Roy has also placed reliance on the following decisions of the apex court:
(1) Corporation Bank v. D.S. Gowda ;
(2) Central Bank of India v. Ravindra [2001] 107 Comp Cas 416 : AIR 2001 SCW 4468 ;
(3) Mardia Chemicals Ltd. v. Union of India [2004] 120 Comp Cas 373 : AIR 2004 SCW 2541 ;
(4) Indian Banks' Association v. Devkala Consultancy Service [2004] 120 Comp Cas 612 : AIR 2004 SCW 2491 ;
4. Mr. B. R. Dey, learned Counsel for the bank on the other hand submits that the writ petition is premature and even otherwise also there being provision for appeal under Section 17 of the Act in the event of the petitioners being aggrieved by any action of the bank under the provision of the Act, they would be entitled to invoke the statutory remedy of the appeal. He further submits that as per the provisions of Section 37 of the Act, there is no bar, in issuing the notice under Section 13(2) of the Act. As regards the plea of the bar of the provision of the Act in respect of any agricultural land, Mr. Dey submits that loan does not involve agricultural land as is understood in the common parlance.
5. Mr. Dey, learned Counsel for the bank has placed reliance on the decision of the High Court of Madras dated February 2, 2006, rendered in W. P. (C) No. 250 of 2006 Ravichandran (D.) v. Manager, Indian Overseas Bank [2006] 132 Comp Cas 803 in which under similar circumstances the writ petition filed by the petitioner was dismissed both on the merits as well as on the ground of being premature and also there being alternative statutory remedy.
6. I have considered the submissions made by learned Counsel for the parties. There is no dispute that the petitioners have obtained the loan and that the persons named in the impugned notice stood guarantors for repayment of the same. On perusal of the notices, it appears that the petitioners from time to time admitted indebtedness to the bank. However, the same dispute has been raised regarding the methodology adopted towards calculation of interest. Although Mr. Roy, learned Counsel for the petitioners placing reliance on the decision of the apex court in Mardia Chemicals Ltd. v. Union of India [2004] 120 Comp Cas 373 : AIR 2004 SCW 2541, submits that the respondent-bank ought to have considered the objections raised by the petitioner, on perusal of the documents annexed to the writ petition, I find that such consideration has been given by the bank. After issuance of annexure 3 notice dated October 31, 2005, proceeded by annexure 4 notice dated October 25, 2004, the petitioners submitted annexure 5 objection dated November 11, 2005, preceded by annexure 6 objection dated September 15, 2004, to which the bank duly furnished its reply by annexures 7 and 8 communications dated January 27, 2006 and February 11, 2005. Thus, the requirement to deal with the objection as envisaged in the aforesaid decision of Mardia Chemicals Ltd. v. Union of India [2004] 120 Comp Cas 373 : AIR 2004 SCW 2541 has been complied with by the bank. Be it stated here that in this decision of the apex court has upheld the provisions of the Act.
7. In Indian Banks' Association v. Devkala Consultancy Service [2004] 120 Comp Cas 612 (SC) : AIR 2004 SCW 2491, the apex court is concerned with higher amount of interest for no fault of the party concerned. The same is not the case in hand. Thus, this case has no application. In the case of Corporation Bank v. D.S. Gowda , the apex court was concerned with the distinction between commercial loan and agricultural loan and the interest payable on the said loan. Although it is the case of the petitioners that interest has been charged at a higher rate by the bank, nothing could be shown as to on what ground the petitioners feel the charge to be in the higher side.
8. The case of Central Bank of India v. Ravindra [2001] 107 Comp Cas 416 : AIR 2001 SCW 4468 is also a case relating to payment of interest. The whole emphasis of the petitioners being on the purported wrong calculation of interest, I find that this is totally misplaced.
9. The impugned notices have been issued under Section 13(2) of the Act in terms of which any borrower which 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).
10. The bank has complied with the necessary requirements of Section 13(2) of the Act. It has also dealt with the objection raised by the petitioners. Now upon failure to discharge their liability in full within the period specified in the notice, it will be open for the bank to take recourse to one or more of the measures as indicated in Section 13(4) of the Act to recover the secured debt. In the event of being dissatisfied with the action taken under Section 13(4), it will be open for the petitioners to prefer an appeal under Section 17 of the Act. This statutory remedy cannot be bypassed invoking the writ jurisdiction. Moreover, the stage has not yet ripened for initiating any proceeding. It is only at the notice stage and it will be open for the bank to take action as per the provision of the Act upon failure of the petitioners to comply with the requirement under Section 13(2) of the Act.
11. As regards the plea of the petitioners that the bank has already approached the Debts Recovery Tribunal and thus is not entitle to proceed simultaneously under the provision of the Act, the same is not at all sustainable in view of the express provision under Section 37 of the Act. As per Section 37, the provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of the provisions of other Acts as indicated therein which includes the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, under which Debts Recovery Tribunal has been established.
12. This now leads us to the plea of the petitioners that the impugned notices are barred by Section 31(i) of the Act. Section 31(i) provides that the provisions of this Act shall not apply to any security interest created in agricultural land. According to the petitioners the loan has been obtained in respect of agricultural land.
13. I have perused the documents annexed to the writ petition including the sanctioned ticket at annexure I. There is nothing to indicate that the loan is on account of agricultural land. As per the impugned notice, the petitioners and the guarantors have mortgaged their assets as security to the loan availed of by the petitioners. In annexure 3 notice dated October 31, 2004, it has been indicated as to how the repayment of the loan has been personally guaranteed by the incumbents named in the notice. It has also been indicated that the repayment of the loan is collaterally secured by mortgage/hypothecation of the properties as mentioned in the notice. The description of the properties available in the impugned notice itself does not indicate creation of any security interest in agricultural land.
14. Apart from the above, the decision on which Mr. Dey, learned Counsel for the respondent-bank has placed reliance also supports the case of the respondent-bank. The said decision has been rendered in somewhat similar circumstances holding the writ petition to be not maintainable being premature. The decision has been rendered placing reliance on the earlier Division Bench judgment of the same court. However, independent of the said decision, the facts and circumstances involved in the present case do not support the case of the petitioners warranting interference by exercising writ jurisdiction of this Court. In this connection, the observations made by the apex court in the case of Punjab National Bank v. O.C. Krishnan [2001] 107 Comp Cas 20 : AIR 2001 SCW 2993 are quoted below (page 21):
5. In our opinion, the order which was passed by the Tribunal directing sale of the mortgaged property was appealable under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short 'the Act'). The High Court ought not to have exercised its jurisdiction under Article 227 in view of the provision for alternative remedy contained in the Act. We do not propose to go into the correctness of the decision of the High Court and whether the order passed by the Tribunal was correct or not has to be decided before an appropriate forum.
6. The Act has been enacted with a view to provide a special procedure for recovery of debts due to the banks and the financial institutions. There is a hierarchy of appeal provided in the Act, namely, filing of an appeal under Section 20 and this fast track procedure cannot be allowed to be derailed either by taking recourse to proceedings under Articles 226 and 227 of the Constitution or by filing a civil suit, which is expressly barred. Even though a provision under an Act cannot expressly oust the jurisdiction of the court under Articles 226 and 227 of the Constitution, nevertheless when there is an alternative remedy available judicial prudence demands that the court refrain from exercising its jurisdiction under the said constitutional provisions. This was a case where the High Court should not have entertained the petition under Article 227 of the Constitution and should have directed the respondent to take recourse to the appeal mechanism provided by the Act.
15. For all the aforesaid reasons and discussions, I do not find any merit in the writ petition and accordingly it is dismissed. Before parting with the case records, I feel it my duty to make a mention of the submission made by learned Counsel for the petitioner to the query made as to whether the petitioner is agreeable to pay at least 50 per cent. of the liability. Mr. Roy, learned Counsel for the petitioner submits that the petitioners are not in a position to make payment to the tune of 50 per cent. of the agreed liability, but they may consider the payment of 25 per cent. of the liability at this stage. This aspect of the matter is left open to the bank while deciding the matter in accordance with the provisions of the Act.