Rajasthan High Court - Jaipur
Kailash Chandra Sharma vs I C I C I Bank Ltd And Ors on 5 February, 2013
Author: Amitava Roy
Bench: Amitava Roy
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH, JAIPUR :: JUDGMENT :: D.B. CIVIL SPECIAL APPEAL (WRIT) NO.1475/2012 Kailash Chandra Sharma Vs. ICICI Bank Limited & Ors. 05.02.2013 HON'BLE THE CHIEF JUSTICE MR. AMITAVA ROY HON'BLE DR. JUSTICE SMT. MEENA V. GOMBER Mr.Rajendra Prasad, for the appellant. Mr.Ajeet Bhandari for the respondents. ***** BY THE COURT (PER HON'BLE THE CHIEF JUSTICE) :
Appalled by the rejection of his impugnment of the notice dated 10.1.2012 issued under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'the Act') thereby restraining him from transferring/assigning/surrendering/selling etc. the secured assets detailed in Annexure-A thereto, the appellant seeks panacean intervention of this Court in this appeal.
We have heard Mr.Rajendra Prasad, learned counsel for the appellant and Mr.Ajeet Bhandari, learned counsel for the respondents.
For the issues raised herein, elaboration of the textual facts is inessential. Suffice it to mention that the appellant had applied for home loan from the respondent-Bank to the tune of Rs.11,00,000/-, in response whereto, the latter had sanctioned a financial accommodation of Rs.9,50,000/-. Construing his account to be non-performing asset, notice under Section 13(2), as above, was caused to be served on him by the respondent-Bank through its advocate, the respondent No.4 herein. Questioning the validity thereof, he sought to invoke writ jurisdiction of this Court contending that the same being neither by the secured creditor nor its authorized officer, as envisaged in Section 13(2) read with Rule 2(b) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as 'the Rules') it was inoperative and null and void. The respondent-Bank in its affidavit, while questioning the maintainability of the writ proceedings on the ground of availability of alternative remedy to the appellant, endorsed the validity of the notice issued by its advocate on its instructions.
The learned Single Judge sustained the plea of the respondent-Bank on an interpretation of the relevant provisions of the Act and the Rules and placing reliance chiefly on the decision of the Calcutta High Court in Asset Reconstruction Company India Ltd. Vs. M/s.Amit Ventures Private Ltd. & Ors., AIR 2007 Calcutta 49.
Mr.Rajendra Prasad, learned counsel for the appellant, with particular reference to Section 13(2) & (12) of the Act, has urged that as admittedly the impugned notice had been issued not by the secured creditor but by the learned counsel for the respondent-Bank, it is not in compliance of the mandate of the provisions of the Act and ought to be adjudged as non est in law. Drawing the attention of this Court to Section 38 of the Act conferring the rule-making power on the Central Government as well as Rule 2(b) of the Rules defining demand notice to mean one to be issued in writing by a secured creditor or authorized officer to the borrower pursuant to Section 13(2) of the Act, the learned counsel has insisted that the impugned notice which constitutes an action by the respondent-Bank under Section 13(2), is apparently illegal and unauthorized and thus, the impugned judgment and order ought to be interfered with. According to him, reliance was wrongly placed by the learned Single Judge on the decision of the Calcutta High Court in Asset Reconstruction Company India Ltd.(supra). To reinforce his contentions, Mr.Rajendra Prasad has placed reliance on the decision of the Hon'ble Apex Court in M/s.Transcore Vs. Union of India & Anr., AIR 2007 SC 712.
In reply, Mr.Ajeet Bhandari, learned counsel for the respondents has argued that not only the notice under Section 13(2) of the Act issued by the learned counsel for the respondent-Bank on its instructions based on a decision to that effect, is valid being in sufficient conformance of the relevant prescriptions of the Act and the Rules, the special leave petition against the pronouncement in Asset Reconstruction Company India Ltd.(supra) having been dismissed by the Hon'ble Apex Court, the law laid down therein has become final.
We have cautiously considered the pleaded facts and also the competing arguments.
Admittedly, the notice impugned had been issued by the learned counsel for the respondent-Bank on its instructions, as is writ large on the face thereof. Noticeably, the appellant did not aver in the writ petition that no decision to issue such notice had been taken either by the secured creditor i.e.the respondent-Bank or its authorized officer. In that view of the matter, having regard to the categorical reference of its instructions in the impugned notice, we are unable to persuade ourselves that the notice had been issued by the learned counsel on her own, in absence of any conscious decision taken by the respondent-Bank to take such a step against the appellant.
Section 13(2) of the Act, for ready reference, is quoted hereinbelow:-
13. Enforcement of security interest.-
(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).
Rule 2(b) of the Rules of considerable significance is also extracted hereunder:-
(2) Definitions.-
(b) demand notice means the notice in writing issued by a secured creditor or authorised officer, as the case may be, to any borrower pursuant to sub-section(2) of section 13 of the Act.
Whereas it would be plainly apparent from Section 13(2) that a secured creditor in the event of default of a borrower may require him/her by notice in writing to discharge in full his/her liabilities within a time frame of sixty days, failing which its rights under sub-section (4) would become exercisable, Section 13(12) provides that the rights of a secured creditor may be exercised by one or more of its authorized officers in that behalf, in such manner as may be prescribed.
Demand notice in terms of Rule 2(b) means notice in writing issued by a secured creditor or authorized officer, as the case may be, to any borrower pursuant to sub-section (2) of Section 13 of the Act. Thus, on a conjoint reading of the above legal provisions, it is patent that the notice under Section 13(2) of the Act ought to be issued by the secured creditor or its authorized officer, to be valid and effective in law.
The Hon'ble Calcutta High Court in Asset Reconstruction Company India Ltd.(supra) being seized of a similar situation, had, on an elaborate scrutiny of the provisions of the Act, propounded that a notice of demand under Section 13 issued by a solicitor on the instructions of the secured creditor was valid. There is no cogent and convincing justification and/or reason, in our comprehension, to take a different view. If such a notice is issued by a counsel representing the respondent-Bank/secured creditor/authorized officer under Section 13(2) on instructions founded on a conscious decision approving such a step, in our understanding, the same cannot be repudiated to be in contravention of the letter and spirit of the provisions of the Act and the Rules. No such legislative mandate or intendment is decipherable in the scheme of the statute and/or the Rules framed in exercise of the powers conferred by Section 38 of the Act. The decision of the Apex Court in M/s.Transcore (supra), in the facts and circumstances of the case, does not advance the case of the appellant.
In the above view of the matter, we find ourselves in full agreement with the views expressed by the learned Single Judge and the findings recorded in the impugned judgment and order.
The appeal fails and is dismissed. No costs.
(Dr. MEENA V. GOMBER),J. (AMITAVA ROY),C.J. Skant/-
All the corrections made in the judgment/order have been incorporated in the judgment/order being emailed.
Shashi Kant Gaur, P