THE HON’BLE SRI JUSTICE GHULAM MOHAMMED AND THE HON’BLE SRI JUSTICE N.RAVI SHANKAR WRIT PETITION No.28506 of 2010 Dated:16.11.2010 Between: Y. Surendra Kumar Reddy .. Petitioner And State Bank of India, Stressed Assets Management Branch, 1-1-78, 1st Floor, Near Secunderabad H.P.O., R.P. Road, Secunderabad, represented by its Deputy General Manager and others .. Respondents THE HON’BLE SRI JUSTICE GHULAM MOHAMMED AND THE HON’BLE SRI JUSTICE N.RAVI SHANKAR WRIT PETITION No.28506 of 2010 ORDER: (Per Hon’ble Sri Justice Ghulam Mohammed) This Writ Petition is filed seeking a writ of mandamus declaring the action of respondent Nos.1 and 2 in taking steps with regard to taking possession of the property bearing H.No.8-2-293/82/J-111 on Plot No.443-A-16-III, admeasuring 666 square yards or 557.8 square metres forming part in Survey No.403 (old), 120 (New) of Shaikpet Village and 102/1 of Hakimpet Village, situated at Road No.86 of Jubilee Hills Co-operative House Building Society Limited, Jubilee Hills, Hyderabad, belonging to the petitioner, as illegal, void and also contrary to the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, ‘the SARFAESI Act’) and the Rules framed thereunder. The facts of the case, in brief, are that the 3rd respondent is a partnership firm consisting parents and two daughters as partners. They availed loan from the 1st respondent - Bank, for their business purpose for which the petitioner stood as guarantor. As the Managing Partner of the firm did not pay the loan outstanding amount to a tune of Rs.4,32,75,196/- as on 11.05.2010 with interest due from 01.01.2010, the 2nd respondent issued a demand notice on 15.05.2010 to the petitioner demanding him to pay the loan outstanding amount. After due process the 2nd respondent took symbolic possession of the property of the Managing Partner as well as the property of the petitioner, by issuing notice dated 01.09.2010. According to the petitioner, he came to know that actual possession of the property of the Managing Partner of the 3rd respondent was already taken over by the Bank and now respondent Nos.1 and 2 are proceeding to take physical possession of his property by invoking the provisions of SARFAESI Act, without first realizing the amount from the secured asset of the 3rd respondent. The petitioner relied on Section 13(11) of the SARFAESI Act, which provides for proceeding against the guarantors after exhausting the remedy of realization of amount from the secured asset of the borrower, and therefore, the action of the respondents Bank in proceeding against his properties, without exhausting the remedy of realization of the amount from the secured asset of the borrower, is arbitrary and illegal. Hence, the present writ petition. No counter affidavit is filed by the respondents. Heard the learned counsel. Today, when the matter is taken up for consideration, learned counsel for the petitioner submits that the 3rd respondent has already paid an amount of Rs.50,00,000/-. He further submits that the respondents Bank is proceeding against the properties of the borrower and the sale proceeds of the same would be sufficient to satisfy the outstanding loan amount. Since it is represented by learned counsel for the petitioner, who is a guarantor, that an amount of Rs.50,00,000/- (Rupees fifty lakhs only) is already paid by the borrower – the 3rd respondent herein and the respondents – Bank is proceeding against the properties of the 3rd respondent – borrower to realize the amounts in question. The respondents – Bank are directed to realize the amounts from out of the sale proceeds of the properties of the borrower. In case, still any amount is due and payable, then they can proceed against the properties of the guarantor i.e., the writ petitioner herein. With the above directions, the Writ Petition is disposed of at the stage of admission. There shall be no order as to costs. ___________________________ GHULAM MOHAMMED, J _______________________ N. RAVI SHANKAR, J 16.11.2010 KH