IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE TWENTY FOURTH DAY OF MARCH TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE V.ESWARAIAH WRIT PETITION NO : 12229 of 2005 Between: Bathala Kotaiah S/o Adivaiah R/o.Ambedkar Nagar, Iskapalem Buchireddy Palem Mandal Nellore District. ..... PETITIONER AND 1 Authorised Officer under Securitization & Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, LIC Housing Finance Limited 304, 305, III Floor Mythrivanam, Huda Complex, Ameerpet, Hyderabad. 2 The LIC Housing Finance Limited, Tirupathi rep. by its Area Manager. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue a writ, order or direction one more particularly in the nature of writ of mandamus declaring the action of the 1st respondent in issuing demand notice dt.12.1.2005 purported to be under the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security interest Act 02 to auction the property of the petitioner at S.No.22, Ambedkar Nagar, Iskapalem, Buchireddy Palem Mandal, Nellore District, despite the fact that a suit for foreclosure has already been filed by the 2nd respondent in O.S.No.34/98 on the file of the Court of the Senior Civil Judge, Kovuru and a preliminary decree was obtained on 23.7.2002 for Rs.1,54,775/- and the debt mentioned in the said notice not being classified as a non performing asset within the meaning of Sec.13 (2) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 and taking steps clandestinely to bring the above said property for sale without considering the objections of the petitioner dt.21.2.2005 and passing an order under Sec 13(4) of the said Act 2002 as illegal, arbitrary and unjust and in violation of Art 14 and 21 of Constitution of India and Principles of Natural Justice and consequently to set aside the notice issued by the 1st respondent dt.12.1.2005 and pass such other orders and further reliefs. Counsel for the Petitioner: Mr.M.VENKATA NARAYANA Counsel for the Respondents: . The Court made the following : ORDER: Heard learned counsel appearing for the petitioner as well as the learned counsel appearing for the respondents. 2. Petitioner questions the demand notice, dated 12-01-2005, issued by the respondent calling upon the petitioner to pay an amount of Rs.3,28,331-26ps towards principal, interest, additional interest, legal and other charges within sixty days from the date of receipt of the said notice. It is stated that by the said notice it is further directed that the petitioner was prohibited from transferring the mortgaged property under Section 13(13) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ( for brevity, ‘the Act’) 3. Learned counsel appearing for the petitioner submits that pursuant to the said notice issued under Section 13(2) of the Act petitioner submitted an explanation on 21-02-2005 but no order has been passed under Section 13(4) of the Act and therefore, the prohibitory order prohibiting the transfer of the mortgaged property under Section 13 of the Act is illegal. It is stated that the tenure of the notice in threatening to take over the possession if the demanded amount is not paid within sixty days is also illegal and contrary to Section 13(4) of the Act. It is stated that unless the order is passed under Section 13(4) of the Act they cannot threaten to take over the possession. It is further stated that the same respondent earlier filed O.S.No.34 of 1998 on the file of the Senior Civil Judge, Kovuru and obtained a decree on 23-07-2002 for recovery of a sum of Rs.1,54,775/- along with 18% interest thereon and therefore having obtained a decree it is not open for the respondent to invoke the provisions of the Act. 4. I have heard the contentions of both the parties. The Act came into force from December, 2002, whereas respondent obtained the decree before the Act came into force. The Act provides for enforcement of the security interest without intervention of the Court, Tribunal etc., and therefore there cannot be any impedement for enforcement of the security under the Act even though a decree has been obtained earlier by the self-same respondent. With regard to the contention that pursuant to the show cause notice there cannot be any prohibitory order prohibiting the transfer of the mortgaged amount, I am of the opinion that under Section 13(3) of the Act respondents are entitled to prohibit the petitioner from transferring the mortgaged amount. 5. Under Section 13(13) of the Act no borrower shall, after receipt of notice referred to in sub-Section (2) transfer any of his secured assets referred to in the notice, without prior written consent of the secured creditor. Therefore, I am of the opinion that even before passing an order under Section 13(4) of the Act such a prohibitory order can be issued prohibiting the secured property. The other contention is that the respondents have threatened to take over the possession. 6. A perusal of the notice goes to show that if the petitioner fails to pay the demanded amount within sixty days the respondents will be empowered to take the secured assets including the right to transfer any lease. As it is only a show cause notice it cannot be assumed and presumed that it is an order under Section 13(4) of the Act. The impugned notice is only a show cause notice calling upon the petitioner and accordingly petitioner filed explanation on 21-05-2005 requesting to grant six months time for payment of the agreed amount. Nothing has been stated in the explanation that even before passing of the order under Section 13(4) of the Act respondents have threatened to take over the possession. For taking over possession and to proceed further, obviously an order has to be passed under Section 13(4) of the Act, but I am unable to accept the apprehension of the petitioner that even before passing orders under Section 13(4) of the Act they have determined to take over possession. As the Writ Petition is filed against the show cause notice I do not see any merits in any of the said contentions. 7. Accordingly, Writ petition is dismissed. There shall be no order as to costs. _________________ V.ESWARAIAH,J 24th March, 2008 Tsy To 1 The Authorised Officer under Securitization & Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, LIC Housing Finance Limited 304, 305, III Floor Mythrivanam, Huda Complex, Ameerpet, Hyderabad. 2 The LIC Housing Finance Limited, Tirupathi rep. by its Area Manager. 3 2CCs to 4 2CD copies Form-NIC-OGS/WP{MPL}