THE HON’BLE SRI JUSTICE P.S.NARAYANA WRIT PETITION NO.19142 OF 2007 Date: 12-02-2008 Between: M/s Penual Print & Pack. Guntur, rep.by its Partner Smt.Adapa Usha Rani … Petitioner And 1.The Central Bank of India, rep.by its General Manager, Central Bank of India, Mumbai. And others … Respondents THE HON’BLE SRI JUSTICE P.S.NARAYANA WRIT PETITION NO.19142 OF 2006 O R D E R: This court ordered notice before admission on 10.9.2007 and granted status quo for a limited period which is being extended from time to time. 2. Heard Sri D.V.Chalapati Rao, counsel representing the writ petitioner and Sri Ch.Siva Reddy, counsel representing the respondents. The learned counsel representing the writ petitioner had taken this court through the contents of the affidavit filed in support of the writ petition and would submit that in the facts and circumstances of the case, since the procedure had not been followed, the writ petition is to be allowed. 3. On the contrary, the counsel representing respondents had taken this court through the contents of the counter-affidavit and would submit that the writ petition is liable to be dismissed. 4. Heard the counsel on record and perused the material available on record. 5. This writ petition is filed for a writ of mandamus declaring the action of the 2nd respondent as illegal, arbitrary and against the settled principles of law in initiating the proceedings under Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘the Act) during the pendency of petitioner representation, dated 05.12.2006, for clubbing and reschedule of the loan account, and consequently set aside the notice, dated 05.09.2007, issued by the 2nd respondent under Section 13(4) of the Act and to direct the 2nd respondent to dispose of the representation, dated 05.12.2006, made to the 2nd respondent. 6. It is averred that the respondent-bank had provided cash credit loan under cash Credit A/c.No.136 and term Loan Account No.TLSSI 620002 for the purpose of the business of the petitioner partnership concern upon providing certain sureties and guarantees and mortgage of the immovable properties mentioned in the 13(2) notice issued by the 2nd respondent. It is stated that the petitioner had been paying regularly the installments due to the respondents regularly except in few occasions due to slump in the partnership business and held up of funds with the debtors of the partnership concern it could not repay the loan amount in time. It is stated that the petitioner partnership firm is due an amount of Rs.35,87,506.13 in total as per the 2nd respondent’s notice under Section 13(2) of the Act. 7. It is further averred that after 2nd respondent had issued notice under Section 13(2) of the Act for recovery of the loan amounts due in the said cash credit account and the term loan account, the managing partner of the petitioner partnership firm Sri Patibandla Lakshmana Raju had approached the 2nd respondent and made a representation to the 2nd respondent and also filed a copy of the said representation to the 3rd respondent requesting to club the cash credit loan account and the term loan account and to reschedule the payment of amounts in installment and also informed the 2nd respondent about the discrepancies in the charging of interest and willingness to provide for any further guarantees for the purpose of reschedule of loan accounts as such the partnership business had just improved its performance and in the interest of the business. 8. It is further averred that the 2nd respondent without disposing of his representation pursuant to the notice issued under Section 13(2) of the Act had initiated proceedings under Section 13(4) of the Act and issued the impugned notice dated 05.092007. It is further stated that the 2nd respondent had proceeded with issue of notice under Section 13(4) of the Act pending disposal of his representation requesting the 2nd respondent for clubbing and reschedule of the loan accounts is against the provisions of the Act and against the procedure of the Apex Court and settled principles of law, illegal, arbitrary and against the principles of natural justice. 9. Counter-affidavit is filed by the respondent-bank, wherein it is stated with regard to paras 2 to 5 of the affidavit that the petitioner had approached the Central Bank of India, Guntur Branch for the financial assistance for their business activities. At the request of the petitioner and its partners, the respondent Bank sanctioned cash credit limit of Rs.20 lakhs and term Loan of Rs.15 Lakhs on 04.11.204. The petitioner along with its partners had executed the loan documents and 1. Mr. A. Rama Krishna, 2. Mr. Konda Dhana Lakshmi, 3. Mr. Gudipati Basava Koteswara Rao and 4. Mr. K. Adi Seshu had executed the deed of guarantee undertaking to pay the amount of loans availed by the petitioner firm represented by its partners Smt A. Usha Rani, w/o. Rama Krishna and Mr. P. Lakshmana Raju. The above said Mr. G. Basava Koteswara Rao and Smt Konda Dhana Lakshmi and Smt Adapa Usha Rani had mortgaged the immovable properties belonging to the firm towards the security for repayment the above said loans apart from hypothecation of movable properties belonging to the firm. 10. It is further averred that from the beginning, the petitioner firm was irregular in operation of the bank accounts and failed to repay the loans availed by the firm as agreed upon. In the result, the accounts of the petitioner firm were classified as non-performing assets as per the Reserve Bank of India guidelines and the respondent bank initiated the proceedings under the Act. This respondent Bank issued the notice under Section 13(2) of the Act dated 01.11.2006 and the same was published in two daily newspapers ‘The Hindu’ and ‘Eenadu’ demanding the borrowers and the guarantors to pay the amount of Rs.35,87,506.13 which is due within 60 days. As the borrower as well as guarantors failed to pay the amount within the stipulated time of 60 days, this respondent Bank issued the notice under Section 13(4) of the Act dated 05.09.2007 and taken possession of the properties charged to the bank. 11. It is further stated that after receiving the notice under Section 13(2) of the Act neither the petitioner nor its partners or guarantors had given any representation/objections under Section 13(3A) of the Act and hence this respondent bank had not given any reply to the petitioner herein. The allegations that the Manging Partner of the firm Sri Patibanda Laxmana Raju had approached the 2nd respondent and made representation requesting to club the cash credit loan account and term loan account and to reschedule the payments of amounts in instalments etc., are all false and baseless. The said Patibanda Laxmana Raju had not given any representation to the 2nd respondent nor sent the copy of the same to the 3rd respondent. This allegation is made to mislead the Court and to obtain the interim orders from the Court. 12. It is further averred that the Act is a special enactment for recovery of the bank dues giving powers to the banks and financial institutions to sell the secured assets without intervention of the Courts or Tribunals. However, if the borrower or any person is aggrieved by the measures of the Secured Creditor under Section 13(4) of the Act, such person may approach the Debt Recovery Tribunal under Section 17 of the Act by way of an application. As there is an alternative and efficacious remedy available to the petitioners under Section 17 of the Act by way of an application, the writ petition filed by the petitioner is not maintainable. 13. Specific stand had been taken that after receiving notice under Section 13(2) of the Act, the petitioner had given neither any representation nor objection under Section 13(3)(A) of the Act. Further, it is stated that under Section 17 of the Act, the petitioner is having an alternative remedy. 14. In the light of the same, this Court is of the considered opinion that no positive relief is granted in the present writ petition and accordingly, liberty is given to the petitioner either to avail the alternative remedy or to make appropriate representation, if the petitioner is so advised. 15. With the above observation, the writ petition is dismissed. No order as to costs. _________________ P.S.NARAYANA,J 12th February, 2008. PNV THE HON’BLE SRI JUSTICE P.S.NARAYANA WRIT PETITION NO.19142 OF 2007 Date:12-2-2008