THE HON’BLE SRI JUSTICE B PRAKASH RAO AND THE HON’BLE SRI JUSTICE B N RAO NALLA WRIT PETITION NO. 23898 OF 2010 ORDERS : (Per BPR,J) Heard Sri P.R.Prasad, learned counsel for petitioner and Sri N Subba Reddy, learned senior counsel appearing on behalf of respondent bank and at their request the main writ petition is taken up for disposal at the admission stage. The petitioner herein, which is a private limited company registered under the Indian Companies Act invokes Article 226 of the Constitution of India, interalia seeking writ of certiorari assailing the validity of sale notice dated 18.9.2010 issued by the third respondent purported to have been under Section 13 (4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the sale notice which is published in English daily newspaper –Deccan Chronicle, on 19.9.2010 for the purpose of conducting sale of the property in survey No. 13, 21 and 411 , IDA, Patancheru, Medak district and commercial building property consisting of cellar, ground, first, second and third floors admeasuring 432 square yards situate at Door NO. 16-2-705/2, Near Rice Mills, Malakpet, Hyderabad, on the ground that the entire action is illegal, arbitrary and without jurisdiction, apart from being contrary to the provisions of the afore said Act and the Rules made thereunder. The case of the petitioner in brief is to the effect that the property in question which belongs to A.P. Scooters Limited, a State Government undertaking was purchased in an auction conducted by this Court by the Official Liquidator and in the process of liquidation payment of substantial consideration of Rs.31.25 crores has been paid and accordingly registered sale deed had been executed by the Official Liquidator in favour of the petitioner company on 20.4.2007. For the purpose of providing amounts towards the said consideration the petitioner approached the respondent bank for a loan of Rs.25 crores and though the same was sanctioned only an amount of Rs.21.75 crores was released. The petitioner had to incur substantial amounts towards the registration charges etc and has to furnish third party security on the aforesaid premised along with its constructed building which belongs to one Mr P Indrasen Reddy. With the purchase of the said property the petitioner wanted to develop the land as an Industrial Guild and planned to construct industrial sheds based upon the project report already submitted to the bank. Meanwhile the petitioner has paid Rs.1 crore by June, 2009 , therefore the balance outstanding is only Rs.20.75 crores. The said loan is a term loan and that even the petitioner is regularly paying the instalments, but due to the fact that there was no progress in the sale of the units constructed by the company which resulted in not paying the interest till March, 2010, the respondent bank has treated it as non performing asset, yet the petitioner has paid a further more sum of Rs.1 crore and sought for extension of time apart from re-scheduling the loan. Instead of considering the petitioner’s case in a proper perspective, the respondent bank has issued notice under section 32 of the said Act and also a notice for taking possession under Section 13 (4) of the Act. The petitioner has raised several objections on 4.3.2010 and filed a detailed representation on 13.5.2010 for rescheduling the loan and for grant of some time, however, without considering the same and without passing any orders to the notice of the petitioner, the respondent bank high-handedly issued sale notice for sale of entire property pointing out balance to the bank at RS.22,67,96,884/-, whereas the property which is now sought to be proceeded against is in fact can fetch market value of Rs.87 crores excluding the value of the third party security of Rs.4.75 crores. The petitioner had in fact paid a total sum of Rs.10,43,16,417/- as against the availed loan of Rs.21.75 crores. Therefore in nut-shell the attack of the petitioner is that the entire process as adopted by the respondents in straight-away invoking section 13 (4) of the Act, without considering the objections and the representation submitted by the petitioner is totally bad and illegal. That apart, the facility being a term loan and still the instalments are due and the period of instalments which are due are not yet over, the entire action of the respondents is premature and unsustainable. Hence, the writ petition. In support of the prayer sought for, learned counsel for the petitioner, mainly pointed out that having regard to the hurried process to which the bank has taken recourse and especially when the petitioner is prepared to pay and clear the entire dues, provided some reasonable time is granted as requested in the objections and the representation filed before the bank, necessarily the impugned action is liable to be set aside. Rebutting the same Sri N Subba Reddy, learned senior counsel appearing for the respondent bank apart from the submissions which are already made by the learned Standing Counsel Mr A. Krishnam Raju, who filed a caveat, it is their case that having regard to the provisions of the aforesaid Act, where there is ample remedies are provided alternatively and efficacious and as reiterated by the Apex Court, not to entertain any writs under Article 226 of the Constitution of India and thus, the writ petition is liable to be dismissed. Even otherwise, having regard to the substantial amounts due, there is no justification nor the petitioner is entitled to any indulgence. Having considered the submissions and on perusal of the material the only short point for consideration is as to whether on the facts and circumstances, prima facie, the petitioner has made out any case to warrant interference under Article 226 of the Constitution of India.? During the course of the arguments and especially when the matter was heard on 25.10.2010, learned counsel for petitioner requested time for filing an affidavit and accordingly the matter was taken upon 26.10.2010, on which day, the learned counsel for petitioner has filed an affidavit of undertaking, sworn to by Sri K Srinivas Rao, Managing Director of petitioner firm, the relevant portion of which reads as under; “I submit that, the petitioner is willing to deposit a sum of Rs.5 crores by 31.12.2010 and entire balance amount in two (2) equal instalments ending with February 2011 and April 2011 respectively. The petitioner prays that the respondent may be directed to release such portion of the mortgaged property on payment of each instalment to enable the petitioner to make arrangement raising funds and to repay the instalments as undertaken. The respondents may be directed to release an extent of Ac.4.20 guntas on payment of first instalment and an extent of Ac.5.00 guntas on payment of second instalment and the balance extent of land together with house property on payment of final instalment. Hence, the affidavit.” In view of the aforesaid undertaking what all sought is some time for clearing the entire liability, even though there is an attempt on the part of the petitioner to assail the very nature of proceedings as undertaken by the respondent bank in a very hurried manner even before the liability as such could arise. Opposing the petitioner’s request, Sri N Subba Reddy, learned senior counsel for the respondents referred to a decision of the Supreme Court in UNITD BANK OF INDIA Vs. SATYAWATI TONDON AND OTHERS[1], wherein after considering the provisions of the aforesaid Act and also various other questions involved which are not necessary to refer to at present, it has been held as under; “It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act, and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection. The objects and reasons behind the enactment of the aforesaid Act are quite evident, apart from the deprecation of the methods adopted by the banks in the process, other than known to the law, for recovery of the amounts, yet , the mandate as provided under these provisions cannot be given a go-bye. For every step as provided, there is contemplation of a given warranting circumstances, without which, any step nor only amount to a premature exercise but would be a clear violation of the mandate. Apart from providing an opportunity, as per the very provision, it contemplates consideration of objections and any bonafide representation on merits and pass orders, with intimation to the defendants. This case is a clear story of an extended version of a Shakespearian demand for a pound of flesh. Admittedly, as on the date of initiation of the proceedings, it is not a case to warrant call even as a non performing asset. In the aforesaid decision of the Apex Court, the questions which centered around mainly are as to the power of the creditor bank to proceed against the guarantor directly and the procedure as contemplated under sections 13 (4), 14, 17 and 18 of the Act vis a vis the scope of interference by the High Courts under Article 136 and 226 of the constitution of India. In this context and also referring to the checkered background which lead to the enactment of the legislation the deprecation was in regard to the direct invocation of the jurisdiction of this Court under Article 136 of the constitution of India. Further in a situation where a term loan was sanctioned and the guarantor who stood for repayment of the loan and mortgaged property by deposit of title deeds and also other necessary documents and since there was default committed by the principal debtor inspite of the demand sent by the bank, he was declared as non performing asset. Even though, certain payments were made and undertaking was given, but same was not honoured and therefore the application filed under Section 14 of the SARFAESI Act, was allowed by the District Magistrate by notice under Section 13 (4) of the said Act. Whereas, in the present case the notices are issued under section 13 (2) and 13 (4) of the Act, which virtually issued one after the other, even before contemplated instalments of the term loan could come to an end and the drastic action under section 13 (4) of the Act is taken, without giving an ear to the objections of the petitioner and also the representation submitted by it. In the circumstances, taking the totality of facts and circumstances and especially the law as laid down by the Apex Court, it is amply clear that the question of invoking extraordinary jurisdiction of this Court under Article 226 of the Constitution of India, does not arise, more so, when alternative remedies are provided. There is no serious dispute on the part of the petitioner that the petitioner has ample remedy under Section 17 of the Act, but, however, the fact remains that as against the notice which has been issued to the petitioner, the petitioner submitted its objections on 4.3.2010 and that apart it has also filed a representation dated 13.5.2010, wherein a specific request was made to reschedule the payments and also pointed out that it is prepared to discharge the entire liability. Admittedly, no orders have been passed on the said objections, either rejecting or considering the same. There is no explanation forthcoming on behalf of the respondents as to why either the objections or the representation could possibly considered and appropriate orders are passed either rejecting or otherwise in favour of the petitioner. Nor any other reason is pointed out on behalf of the respondent to show as to how the objections raised by the petitioner or even the time reschedule as sought for could not possibly be granted nor can be considered from a proper perspective. In these circumstances, when the respondents have fixed the auction of the property on this day i.e., 27.10.2010, the respondent bank should have passed appropriate orders and thus proceeded with and thus there is no justification on their part to insist for proceeding with the matter in such an hurried manner, which is contrary to the basic cannons of law and principles of natural justice and fair play as well. In the interest of justice, taking into consideration the undertaking given on oath which can prima facie be accepted and since it has not pointed out as to why there are no bonafides, the writ petition is disposed of directing the respondents to postpone the sale and petitioner is permitted to pay the amounts as hereafter directed. · The petitioner is permitted to deposit a sum of Rs.5 crore by 31.12.2010 and pay the entire balance due amount in two equal bi-monthly instalments by the end of February and April, 2011 respectively. · It is made clear that in case of non compliance of any of these conditions, the respondent bank is at liberty to proceed with the sale and take such other steps for recovery of the due amounts, as provided under the law. · It is further made clear that as long as the above referred terms are complied with, the respondent bank shall not proceed with the auction of the subject property scheduled on 27.10.2010. Accordingly, the writ petition is disposed of. No costs. _______________ B PRAKASH RAO,J _______________ B.N. RAO NALLA,J DATE: 27 -10-2010 TVK THE HON’BLE SRI JUSTICE B PRAKASH RAO AND THE HON’BLE SRI JUSTICE B N RAO NALLA WRIT PETITION NO. 23898 OF 2010 Date: 27.10.2010 [1] (2010) 8 SCC 110