IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE NINTH DAY OF FEBRUARY TWO THOUSAND AND TEN PRESENT THE HON'BLE MR JUSTICE A.GOPAL REDDY and THE HON'BLE MR JUSTICE NOUSHAD ALI WRIT PETITION NO : 29034 of 2008 Between: M/s. Rajesh and Company, Rep. by its Partner N.Mallikarjuna. ..... PETITIONER AND The Punjab National Bank, Rep. by its Chief Manager, R.P.Road Branch, Rashtrapathi Road, Secunderabad & 2 others. .....RESPONDENTS The Court made the following : HON’BLE SRI JUSTICE A. GOPAL REDDY AND HON'BLE SRI JUSTICE NOUSHAD ALI WRIT PETITION No. 29034 OF 2008 ORDER: (Per Hon’ble Sri Justice A. Gopal Reddy) The petitioner-Company, which availed the cash credit limit of Rs.85.00 lakhs from the respondent-Bank filed this writ petition questioning the action of the Bank in issuing the notice, dated 7.11.2008 contemplated under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘Act’) declaring the account of the petitioner as non-performing asset. Referring to the earlier notice issued by the respondent-Bank, dated 28.7.2008, petitioner stated to have submitted a representation to the Bank on 20.8.2008 raising several objections to the contents of the said notice. Therefore, it is contented that having regard to the filing of the said objections, the respondent-Bank is under obligation to consider the said objections and pass appropriate reasoned order as contemplated under Section 13(3-A) of the Act. The counter affidavit filed by the respondent-Bank does not indicate about the disposal of the representation made by the petitioner. But, however, it discloses that after availing the cash credit facility, the cash credit limit was not renewed by the petitioner after expiry of the period i.e. on 30.11.2007 and therefore, the account of the petitioner was declared as non-performing asset strictly as per the guidelines of the Reserve Bank of India issued in that regard. As seen from the record, this Court granted interim stay on 31.12.2008 in W.P.M.P.No.37948 of 2008 on condition of petitioner depositing Rs.30.00 lakhs within six weeks and as the petitioner had not complied with the said order, the Bank proceeded further and took constructive possession of the secured asset on 16.2.2009 as per Rule 8 of the Rules framed under the Act. When the publication was about to be published under Rule 8 of the Rules, the petitioner filed W.P.M.P.No.3528 of 2009 and by depositing a sum of Rs.10.00 lakhs through demand draft, got extension of time for the balance amount of Rs.20.00 lakhs as directed by this Court in W.P.M.P.No.37948 of 2008. Now, it is represented that the said conditional order has been complied with. Admittedly, in this case, no notice under Section 13(4) of the Act has been issued. The Apex Court in Mardia Chemicals Ltd. V. Union of India ((2004) 4 SCC 311) categorically held that at the stage of issuance of notice under Section 13(2) of the Act, a borrower is not entitled to challenge the reasons communicated or the likely action of the secured creditor at that point of time unless his right to approach the Debts Recovery Tribunal as provided under Section 17 of the Act matures on any measure having been taken under sub-section (4) of Section 13 of the Act. Having regard to the disputed questions of fact involved, the petitioner is at liberty to file fresh objections to the respondent-Bank pointing out that the cash credit account cannot be declared as non- performing asset in view of its continuous operation and the respondent- Bank shall consider the same and communicate the reasons for rejection of the representation, if any, to the petitioner. If the objections of the petitioner are rejected and the proceedings under Section 13(4) of the Act are initiated, petitioner is at liberty to avail the remedies available under law. With the above observations, the writ petition is dismissed. No order as to costs. _________________ (A. GOPAL REDDY, J.) _________________ (NOUSHAD ALI, J.) FEBRUARY 09, 2010 TSR