THE HON'BLE SRI JUSTICE GHULAM MOHAMMED & THE HON'BLE SRI JUSTICE K.G. SHANKAR WRIT PETITION No.5658 of 2011 ORDER:: ( per Hon’ble Sri Justice Ghulam Mohammed ) This writ petition is filed seeking to issue a writ of mandamus declaring the measures initiated by the respondent-bank under Section 13 (4) of the SARFAESI Act for taking possession of the petitioner no.1’s properties and putting the properties of petitioner nos.2 and 3 to sale on 26-3-2011 without issuing a fresh notice under Section 13 (2) of the SARFAESI Act as being null and void, arbitrary, unreasonable, harsh and contrary to the provisions of the SARFAESI Act and consequently set aside the same. 2. Heard the learned counsel for the petitioners and the learned counsel for the respondent-bank. 3. It is stated that the respondent-bank has granted various credit limits for an aggregate amount of Rs.15,27,91,00/- to the petitioner company against the security of plant and machinery, raw material, stocks etc., and the said properties hypothecated to the respondent-bank. The immovable properties of land and buildings pertaining to the guarantors were also secured by way of equitable mortgage for the said loans and out of which the petitioners 2 and 3 are the guarantors among others and for the said purpose the petitioners 2 and 3 executed letter of guarantee dated 10-4-2003 guaranteeing the due repayment of the said amount availed by the principal debtor. It is stated that as the petitioner defaulted in repayment of its liabilities, the respondent-bank has classified its dues as non-performing asset on 31-3-2002 and the amount due and payable according to the respondent-bank is Rs.16,02,70,174=96 and therefore the respondent-bank constrained to initiate proceedings against the borrowers and guarantors and issued notices under Section 13 (2) of the SARFAESI Act, 2002, on 13-12- 2004 demanding the repayment of its dues to discharge in full within 60 days from the date of notice, failing which it would initiate measures under Section 13 (4) of the Act. It is stated that the petitioners offered to make one time settlement and offered to pay Rs.3 crores as one time settlement of the entire outstanding amount. Thereafter, it is stated that the respondent-bank without taking any decision on the request of the petitioners initiated proceedings under Section 13 (4) of the Act. Aggrieved by the same, the petitioners preferred an appeal SA No.122 of 2005 before the DRT, Visakhapatnam, against the auction proceedings initiated by the bank. It is stated that as there was no regular Presiding Officer in the DRT, the petitioners filed writ petition being WP No.23550 of 2005. The said writ petition was disposed of by a learned single Judge of this Court by order dated 28-4-2006, the operative portion whereof reads thus:- “Having regard to the subsequent events that have taken place and since both the parties have mutually agreed for OTS of the loan account, the sale of the petitioners’ properties held on 3-11-2005 pursuant to sale notice dated 25-9-2005 is hereby set aside and the writ petition is disposed of granting liberty to both the parties to take necessary steps in terms of OTS arrived at between the parties. It is also made clear that this shall not preclude the petitioners to make an appropriate application before the respondent-bank for extension of time for payment of amounts under OTS in case necessity thereof arises, in which event the respondent, may consider the same in accordance with law. Writ Petition is accordingly disposed of. No costs.” 4. It is stated that the petitioners paid a sum of Rs.3.06 crores to the respondent-bank. Sri S. Ravi, learned senior counsel appearing for the petitioners submitted since the earlier notices issued under Section 13 (2) and 13 (4) of the Act are set aside by the learned single Judge of this Court in WP No.23550 of 2005, the respondent-bank cannot now seek to take possession under Section (4) of the Act, without giving an opportunity of notice under Section 13 (2) of the Act. On the other hand, learned counsel for the respondent-bank submitted that since the notice issued under Section 13 (2) and possession notice under Section 13 (4) of the Act remained unchallenged by the petitioners, there is no need to issue fresh notice under 13 (2) of the Act to the petitioners. 5. It is to be noticed that in the penultimate portion of the order passed in WP No.23550 of 2005, it was observed that the sale of the petitioners’ properties held on 3-11-2005 pursuant to the sale notice was set aside and in the light of this order, the petitioners are entitled to fresh notice under Section 13 (2) of the Act. There is no dispute with the proposition laid down in decision relied on by the learned counsel for the respondent-bank in G.GOPALAKRISHAN vs. DEBTS RECOVERY TRIBUNAL-II, CHENNAI (AIR 2010 MADRAS 91 DB), but in this case the matter was considered by the learned single judge and the proceedings initiated by the bank were set aside, and if the OTS scheme is not worked out between the parities, the only course open for the respondent-bank was to initiate fresh proceedings. In the circumstances, the writ petition is disposed of directing the respondent-bank to issue notice under Section 13 (2) of the Act afresh and take steps in accordance with law. No order as to costs. ___________________________ GHULAM MOHAMMED, J _____________________ KG SHANKAR,J Dated 29-6-2011 Nrg THE HON'BLE SRI JUSTICE GHULAM MOHAMMED & THE HON'BLE SRI JUSTICE KG SHANKAR WRIT PETITION No.5658 OF 2011 ORDER:: ( per Hon’ble Sri Justice Ghulam Mohammed ) Dated 29-6-2011