IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Civil Writ Petition No.5226 of 2011 (O&M) Date of decision:11.08.2011 M/s Ram Dass and Sons, through the proprietor Shri Ashwani Mahajan, resident of House No.364, Mohalla Gopal Nagar, Gurdaspur. ...Petitioner versus Authorised Officer, Canara Bank, near Bus Stand, Gurdaspur. ....Respondent CORAM: HON’BLE MR. JUSTICE K. KANNAN ---- Present: Mr. Rohit Suri, Advocate, for the petitioner. Mr. Shammi Khan, Advocate, for the respondent. ---- 1. Whether reporters of local papers may be allowed to see the judgment ? No. 2. To be referred to the reporters or not ? No. 3. Whether the judgment should be reported in the digest ? No. ---- K.Kannan, J. (Oral) 1. The petitioner filed the writ petition challenging the action taken by the Bank under the provisions of the SARFAESI Act. The petitioner's loan was OCC (Open Cash Credit) limit of Rs.4 lakhs which, according to the Bank, was not regular and there had been overdrawals and the repayment had not been done properly. The business itself had been closed and it was treated as NPA in August, 2008. 2. At the time when the writ petition was filed, the petitioner has given an undertaking through counsel in Court on 23.03.2011 that, out of total liability of Rs.4 lakhs, the petitioner had already discharged Rs.2 lakhs and what was payable was only Rs.2 lakhs. He had stated that Civil Writ Petition No.5226 of 2011 (O&M) - 2 - he was willing to discharge the liability within 6 months in equated installments. The Court had stayed further proceedings subject to deposit of the 1st installment before 31.03.2011. It appears that the petitioner had paid over a period of time an amount of about Rs.1.30 lakhs and at the forefront of the argument, the counsel for the Bank would state that even the undertaking as given by the petitioner in Court has not been complied with. 3. The counsel for the petitioner would argue that the petitioner owns a small residential house and a shop and the OCC limit was obtained for running a small shop. The business is still being run and even as per the statement of account produced before Court as on 30.07.2011, there was only a debit of Rs.1,61,435.14 without interest and other charges and, therefore, it is still within the sanctioned limits that had been granted to him and the Bank was bound to regularize the account and not resort to an action under the SARFAESI Act. The learned counsel would refer to Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances as laid down by the Reserve Bank of India to all its constituent Banks and reads in particular to the following clauses:- “A working capital borrowal account will become NPA if such irregular drawings are permitted in the account for a continuous period of 90 days even though the unit may be working or the borrower's financial position is satisfactory. xxx xxxx xxxx If arrears of interest and principal are paid by the borrower Civil Writ Petition No.5226 of 2011 (O&M) - 3 - in the case of loan accounts classified as NPA's, the account should no longer be treated as non-performing and may be classified as 'standard' accounts. With regard to upgradation of a restructured/rescheduled account which is classified as NPA contents of paragraphs 4.2.15 and 4.2.16 will be applicable.” 4. According to him, if the arrears of interest in principal are paid by the borrower in case of a loan classified as NPA, the Banker shall regularize the account and will no longer treat the account as NPA and may be classified as 'standard' account. 5. To a specific query as to why the Bank shall not regularize the account in view of the fact that the debit is less than the OCC limit, the learned counsel for the Bank states that there are no stocks in the shop and the petitioner had ceased to do business. This assertion is, however, refuted by the petitioner and states that the business is still being run. The counsel for the respondent would also state that all these contentions were taken by the petitioner before the Debt Recovery Tribunal (DRT) and these contentions of the petitioner have been rejected. The petitioner has filed a writ petition suppressing the fact of institution of the proceedings and the result of such decision by the DRT. It is further contended on behalf of the Bank that it is not possible to regularize his account by virtue of the fact that they have chosen to close the operation with the petitioner and has filed also a suit before the Civil Court and they had taken a decree of the Civil Court for Rs.4 lakhs and odd. Any of these amounts which have been paid could only be credited Civil Writ Petition No.5226 of 2011 (O&M) - 4 - as amount due towards the decreed amount and the Bank's rights cannot be fettered to enforce the security for the amount that is admittedly payable and which stands fructified through a Civil Court decree. Even apart from the breach of undertaking given to the Court, the petitioner's conduct in approaching the Court without adverting to the proceedings in DRT is not appropriate. The petitioner, however, contends that after the conclusion of proceedings before DRT, a fresh action was initiated by the Bank under Section 13(4) of the SARFAESI Act and hence, there was no need to make reference to the proceedings before DRT. I do not think it makes any difference, for, when it was approaching the Court with an offer to make the payment, he ought to have declared the previous proceedings between parties and his failed attempt before yet another forum seeking for regularization of account. It is not again possible to direct the Bank to regularize his account when they have chosen to close the dealing of the petitioner of extending the credit limits when they have approached the Civil Court and obtained a decree. The case ought to take its course for the enforcement in the manner that the Bank desires in accordance with law and intervention sought for by the petitioner cannot avail to him. The writ petition is dismissed. (K. KANNAN) JUDGE 11.08.2011 sanjeev