IN THE HIGH COURT OF CHHATTISGARH AT BILASPUR Writ Petition (C) No. . . . . . . . £1? {(5 ..... of 2009 Petitioner / M/s.K.G.N.Mineraland MetalPrivate Ltd., through its Managing Director Iqbal Farooqui, 404, Civil Lines, Raipur, C.G. VERSUS Resgondents z /1. United Bank of India, Raipur Branch, Budhapara, Bijlee Office Chowk, Raipur, C.G., 492001, through its Chief Manager. United Bank ofrlndia, Orissa — II Regional Office, Ainthapali, Sambalpur-768004, through its Chief Regional Manager-cum- Authorised Officer. nawUP'. (7», _ gg; Na. C. 5' ‘- Tah. Raiyuh “'0 India SME Reconstruction Company Ltd, SME Development Center, Plot NO—C-l l, G Block Bandra Kurla Complex, Bandra (East), Mumbai- 400051, through its Contact Person : Shri A.K. Srivastava, Asst. General Manager. /, 4. The Debts Recovery Tribunal, Jabalpur, M.P., through its Registrar. WRIT PETITION UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA The petitioner begs to submit as under : l. Particulars of the petitioner : That the petitioner is duly incorporated under the Companies Act, 1956 as per Certificate of Incorporation No.U 13204 CT of 2002 PTC . 14978, dated 13-02—2002 issued by the Registrar of Companies, Madhya Pradesh & Chhattisgarh. 9 1 i if MN HIGH COURT OF CI-H-IATTISGARH AT BILASPUR W.P.[c1 No.6046 of 2009 M N POST FOR ORDER ON é NOVEMBE 2009 r Sd/— J; _ Dhirendra Mishrag‘ ’ Judge f ‘ PETITIONER M/s KGN Mineral and Metal Pn'vate Ltd. Versus RESPONDENTS : United Bank of India and others «O J. HIGH COURT OF CHHATTISGARH AT BILASPUR W.P.(c) No.6046 of 2009 : M/s KGN Mineral and Metal Private Ltd. PETITIONER through its Managing Director, Iqbal Farooqui, 404, Civil Lines, Raipur (CG) Versus RESPONDENTS 1. United Bank of India, Raipur Branch, Budhapara, Bijlee Ofnce Chowk, Raipur, CG, 492001, through its Chief Manager. 2. United Bank of India, Oiissa—II, Regional Office, Ainthapali, Sambalpur—768004, through its Chief Regional Manager—cum— Authorized Officer. 3. India SME Reconstruction Company Ltd, SME Development Center, Plot NO—C-ll, G Block, Bandra Kurla Complex, Bandra (East), Mumbai—400051, through its Contact Person: Shri AK Srivastava, Asst. General Manager. 4. The Debts Recovery Tribunal, Jabalpur, MP, through its Registrar. Present: Mr. KM Agrawal, Sr. Advocate with Mr. Sudeep Agawal, Advocate for the petitioner. Mr. Yogesh Pandey, Advocate for respondent No. 1. O DER ' (Passed onoé ovember, 2009) Dhirendra Mishra, J 1. Heard on admission. 2. The petitioner was sanctioned a loan of Rs.600 lacs by respondent Nd. 1 / Bank. The overall credit limit was extended to Rs.767.62 lacs in the year 2006. The petitioner’s account became irregular as he failed to pay certain installments of the term loan. Respondent No.1 served the petitioner with a demand notice of Annexure P/ 3 on 25.9.2007th1eatening to c1aSsit§7 its loan account as Non Performing Asset (in short “NPA"), if the due arrears are not paid by 29.9.2007. The demanded sum could not be W F deposited before the stipulated time or thereafter, the petitioner’s account is being treated as NPA W.e.f. 30.9.2007 Without making any formal order. The petitioner was served with the impugned notice under Section 13(2) read with / Q5 g Section 13(13) of the Securitization and Reconstruction 0f Financial Assets and Enforcement of Security Interest Act, 2002 (in short “SARFAESI Act”) Vide Annexure P/4 on 15.11.2007. Thereafter, possession notice dated 23.12008 (Annexure P/S) under Section 13(4) of the SARFAESI Act was served upon the petitioner. The petitioner was, subsequently, informed on 19.9.2009 (Annexure P/6) that the petiooner’s facilities together with security interest etc. have been assigned and transferred in favour of respondent No.3. The petitioner’s writ petition was returned to the petitioner for presentation before the appropriate forum by the High Court of MP vide order dated 11.2.2009 (Annexuxe P110; Mr. KM Agrawal, learned“ Sr. Advocate with Mr. Sudeep Agrawal, Advocate appearing for the petitioner, submitted that the instant petition has been filed. on the ground that entire action of the respondent-Bank is illegal, arbitrary and against the principles of natural justice and, against the spirit ‘85 object of the SARFAESI Act as also against the norms of Reserve Bank of India (for brevity “RBI”). For initiating any action under Section 13(2), classifying a borrower’s loan account as NPA is a sine qua non Though the petitioner has defaulted in repayment of his secured debt or making payment in installments, however, the debt advanced to the petitioner has not been classined as NPA by the seemed creditor as defined in Section 2(1)(o)(a) of the Act. The petitioner’s account has been declared NPA w.e.f. 30.9.2007, which was Sunday. From perusal of the notice of Annexure P/3, it is apparent that there is no categorization of the petitioner’s NPA as sub—standard, doubtful or, loss asset after its alleged classiiication dated 30.9.2007, which is necessary as per Clause 4. 1 of the RBI norms. Therefore, classification of the petitioner’s account as NPA'is not in accordance with the norms prescribed by the RBI and accordingly, all consequential actions, notices and transfer and assignment of petitioner’s facilities and security interests are also void.‘ guy %% 5. The respondént—Bank has sua motu caused their appearance through their counsel Mr. Yogesh Pandey, _ (‘ Advocate. 6. Mr. Yogesh Pandey, learned counsel appearing for respondent Nod-Bank, argued that the petitioner has already nled an appeal under Section 17 of the SARFAESI Act before the Debt Recovery Tribunal (respondent No,4) and the appeal is pending. The secured assets and facilities extended to the petitioner have already been assigned to respondent No.3 in the meanwhile. The petitioner has not raised any objection after receiving notice under Section 13(2) before the respondent-Bank. The entire action against the petitioner under the SARFAESI Act have been taken in accordance with mandatory provisions of the Act and the instant petition is not main tainable as the petitioner has an alternative remedy for redressal of his grievances under Section 17 of the SARFAESI Act, which he has already availed. I have heard learned counsel for the parties. 8. The sum and substance of the arguments of learned counsel for the petitioner is that the petitioner’s account has not been classified as NPA, which is sine qua non to issue a notice under Section 13(2) of the SARF‘AESI Act. The petitioner, was called upon to deposit arrears of interest amount of installments up to August, 2005 before 29th September, 2007, failing which the‘account was to be declared as NPA as per Income Recognition and Asset Classification norms of RBI. The notice was issued on 25th September, 2007 and on failure of the petitioner to deposit the said amount by 29‘11 September, 2007, the loan account of the petitioner is being treated as NPA w.e.f. 30'11 September, 2007, which incidentally happens to be Sunday. 9. Even otherwise, as per norms of RBI to classify NPA, the account has to be categorized as sub-standard asset, doubtful asset or loss asset. However, without mentioning m g3 ,. as to in which of the camgories account of the petitionm‘ falls, his account 1's being treated as NPA. 10. Mr. Agrawal, learned Sr. Advocate appearing for the petitioner, fairly admits that the High Court, at this gate, and 1'11 these proceedings under Article 227 of Constitution of India, 1's not a proper forum to decide any dispute with reference to any of the terms and conditions of the loan agreement. However, he submits that the facts revealing h‘om the acts of the respondent-Bank are so glaring that interference in exercise of jurisdiction under Article 226 is warranted. 11. The SARFAESI Act, 2002 was enacted to enable the banks and nnancial institutions to realize Iongaterm assets, manage problems of liquidity, asset liability mis—match and improve recovery by exercising powers to take possession of secmities, sell them and reduce non-performing assets by adopting measures for recovery or reconstruction, as reveals from the Statement of Object and Reasons of the SARFAESI Act, 2002. 12, The Parliament considering the observations of the Hon’ble Supreme Court in the matters of Madia Chemicals Ltd. Vs. Union, of India, amended the SARFAESI Act, 2002 by Amendment Act of 2004 a'nd intruduced Section 13(3A), which reads as under: “13. Enforcemnt ofsecurlty interest. (3A) E’ on receipt of the notiw under sub-section (2), the borrower makes any representation or raises any objection, the secured creditor: shali consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shal? communicate within one week of receipt of such. representation or objection the reasons for non-aweptance of the representation or objection to the borrower. Provided that the reasons so communicated or the likely action of the secured creditor at the stage of communication of reasons shall not confer any right upon the borrower io prefer an application to the Debts Recovery Tribunal under section 17 or the Court of District Judge under section 1 7A. " q?) ,u 13. From pleadings in the wn't petition and documents annaxed therewith, it appears that the petitioner did not make any lepresentation after receipt of notice under sub-section (2) of Section 13 as contemplated under Section 13(3A). It was open to the petitioner to raise all those objections, which the petitioner has raised in, this petition, by way of representation under Section 13(3A). On such representation being made, it was incumbent upon the secured creditor to communicate its reasons for non- acceptance of the representation or objection to borrower within one Week of receipt 0f such representation. Indisputably, the possession notice under Section 13(4) has been issued to the petitioner on his failure to discharge his liability in full within the period specined in sub—section (2) and the petitioner has already challenged the notice under sub-section (4) by Way of hling appeal before respondent No.4] Debt Recovery Tribunal. 14. For the aforesaid reasons, I am of the considered opinion that the instant petition is not maintainable; the same is liable to be dismissed at the admission stage itself and is, J"~ i accordingly, dismissed. Sdl— Dhirendra Mishra’jt Judge \</