IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.342 of 2011 M/S Trisole India Pharmaceuticals a proprietorship firm having its place of business at Industrial Area, Hajipur, District Vaishali through its Proprietor Abu Mohammad son of Late Abdur Rab, Resident of Mohalla Labagh, P.S. Pirbahore, Town and District-Patna. ………Petitioner. Versus 1. The United Commercial Bank through its Chairman-cum-Managing Director, 2. The Assistant General Manager, United Commercial Bank, Zonal Office, Mauryalok Complex, Dak Bungalow Road, Patna. 3. The Chief Manager, United Commercial Bank, Patna Main Branch, Exhibition Road, Patna. 4. The Authorised Officer, United Commercial Bank, Patna Main Branch, Exhibition Road, Patna. 5. The Principle Secretary-cum-Commissioner, Department of Industry, Government of Bihar, Patna. 6. The Director of Industries, Bihar, Patna. ……Respondents. ----------- For the petitioner : Mr. Gautam Kejriwal, Advocate. Mr. Akash Chaturvedi, Advocate. For UCO Bank : Mr. Ranjeet Kumar Pandey, Advocate. ----------- P R E S E N T HON’BLE MR. JUSTICE S. N. HUSSAIN ---------- O R D E R 07/ 14 .03.2011 This writ petition has been filed by the petitioner challenging letter dated 23.12.2010 (Annexure-13) issued by the Chief Manager, United Commercial Bank, Main Branch, Patna (respondent no.3) by which the petitioner’s objection under Section 13(3) (A) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the SARFAESI Act’ for the sake of brevity) was disposed of and also challenging notice dated 04.11.2010 (Annexure-11) issued by the authorities to the petitioner-firm under Section 13(2) of the SARFAESI Act and further for - 2 - directing the authorities of the Bank to allow the petitioner and the Department of Industries (respondent no.6) to carve out a scheme of rehabilitation of the entire industry and for restraining the respondents, especially the respondent-Bank, from taking any further action of recovery of outstanding loan due from the petitioner-firm during the pendency of the rehabilitation endeavours and for other ancillary reliefs. 2. The claim of the petitioner is that it is a proprietorship firm established in the year 2006 for manufacturing of Ethical Pharma Products and Branded Generic Products having its factory unit located at Plot No. D-42/43 Phase-II, Industrial Area, Hajipur (Vaishali) for which he applied for loan before the respondent-United Commercial Bank which sanctioned cash credit of Rs.13,00,000/- and term loan of Rs.45,00,000/- against securities furnished by the proprietor. It is also stated that industrial unit of the petitioner functioned properly, but subsequently due to some unavoidable market factors, the capital infrastructure of the petitioner firm got disturbed due to which it required further financial inputs. 3. It is also claimed by the petitioner that in the above mentioned circumstances it approached the respondent-Bank in the year 2007 for providing financial and policy aids in order to assist the industrial unit to maintain its pace of production activity, but the respondent-Bank did not respond and sent a letter dated 16.06.2008 to the petitioner directing him to regularize the existing cash credit and term loan account. It is also submitted that thereafter in the year 2008 and 2009 the petitioner reiterated its requests before the authorities of the - 3 - Bank for survival of the industry, but when there was no response, the petitioner sent letter dated 12.05.2010 to the General Manager, Reserve Bank of India for providing necessary revival doses to the petitioner-unit bringing to its notice the attitude of the respondent-United Commercial Bank and only thereafter the respondent-Bank vide letter dated 18.09.2010 (Annexure-6) denied the possibility of rehabilitation of the petitioner-firm. 4. It is claimed that thereafter the petitioner had no remedy left, but to avail the incentive provided by the State Government under the Industrial Incentive Policy, 2006 in which provisions were made for rehabilitation of the sick industrial units and, accordingly, the petitioner approached the Apex Committee as per clause 3.2 (iii) and (v) of the Industrial Incentives Policy, 2006 giving a comprehensive proposal for rehabilitation of petitioner-unit on 13.10.2010, a copy of which was served upon the authority of the United Commercial Bank on 03.11.2010 (Annexure-9). 5. Learned counsel for the petitioner argued that inspite of receiving copy of the rehabilitation proposal filed before the Apex Committee, the respondent-Bank sent notice dated 04.11.2010 (Annexure-10) to the petitioner under Section 13(2) of the SARFAESI Act for discharging in full of loan account to the secured creditor within the time prescribed. To the said notice the petitioner filed his objection under Section 13(3) (A) of the SARFAESI Act on 20.12.2010 (Annexure-12) which was rejected by the said authority on 23.12.2010 (Annexure-13) on the ground that the petitioner was willful and chronic - 4 - defaulter. This is under challenge in the instant writ case. 6. Learned counsel for the petitioner submitted that Industrial Incentive Policy of 2006 was framed by the Government for rehabilitation of sick industrial units and prescribed procedure for the same. He further submitted that the petitioner unit, being admittedly a sick industrial unit, had approached the Apex Committee in the light of clause 3.2 (iii) & (v) of the said policy for its revival and rehabilitation by the Reserve Bank of India and filed a comprehensive proposal for rehabilitation of industrial unit on 13.10.2010, a copy of which was served upon the authorities of the United Commercial Bank on 03.11.2010 and hence the matter of rehabilitation being pending before the appropriate authority there was no occasion for them to take steps under Section 13(2) of the SARFAESI Act thereafter on 04.11.2010. 7. Learned counsel for the petitioner also claimed that Reserve Bank of India had also revised the draft guidelines for rehabilitation of sick SSI Units in clause 1 of which it was provided that the Banks- Financial Institutions will have to identify the units showing symptoms of sickness by effective monitoring and provide additional finance, if warranted, so as to bring back the units to a healthy track, but inspite of the said provision the respondent Bank did not take any such step, hence, the petitioner was constrained to approach the Apex Committee which also contains experts who can appropriately decide such matters, but before the Apex Committee could decide the matter, the respondent-Bank hurriedly took steps under Section 13 of the SARFAESI Act which is bound to vitiate the entire Industrial Incentive Policy of 2006. - 5 - 8. Learned counsel for the petitioner further averred that Section 37 of the SARFAESI Act provides that application of other laws were not barred to the matters in issue, hence the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 would be applicable as in Section 22 of the said Act it is provided that where in respect of an industrial company, an inquiry under section 16 is pending or any scheme referred to under section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956 or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority. Hence, he claimed that steps taken by the respondents under Section 13 of the SARFAESI Act were not legal and valid. 9. Learned counsel for the petitioner relied upon a decision of the Apex Court in case of State of U.P. v. Mohammad Nooh, reported in AIR 1958 Supreme Court 86 which provided that if an inferior court or tribunal of first instance acts wholly without jurisdiction or patently in excess of jurisdiction or manifestly conducts the proceedings before it in a manner which is contrary to the rules of natural justice and all accepted - 6 - rules of procedure and which offends the superior court’s sense of fair play the superior court may quite properly exercise its power to issue the prerogative writ of certiorari to correct the error of the court or tribunal of first instance, even if an appeal to another inferior court or tribunal was available and recourse was not had to it. In this regard, the petitioner’s counsel also relied upon another decision of the Apex Court in case of Durgah Committee, Ajmer and another v. Syed Hussain Ali and others, reported in AIR 1961 Supreme Court 1402. 10. Learned counsel for the petitioner relied upon a decision of the Apex Court in case of Harbanslal Sahnia & anr. Vs. Indian Oil Corporation Ltd. and others, reported in (2003) 2 SCC 107 in which it was held that rule of exclusion of writ jurisdiction by availability of alternative remedy is a rule of discretion and not one of compulsion and in appropriate cases, in spite of availability of alternative remedy, the High court may still exercise its writ jurisdiction. In this regard, learned counsel for the petitioner also relied upon another decision of the Apex Court in case of State of U.P. and others Vs. Gujarat Ambuja Cement Ltd. and another, reported in (2005) 6 SCC 499 and a decision of the Division Bench of this court in case of M/s Indian Oil Corporation ltd. Vs. The State of Bihar & Ors., reported in 2006(3) PLJR 146. 11. Learned counsel for the petitioner further relied upon another decision of the Supreme court in case of Central Bank of India Vs. State of Kerala and Ors., reported in (2009)4 SCC 94 in which it was held that while interpreting non-obstante clause, the court is required to find out the extent to which the legislature intended to do so and the - 7 - context in which the non-obstante clause is used. Raising the aforesaid facts and circumstances as well as the provisions of law and the case laws, learned counsel for the petitioner submitted that this court, in spite of there being the provisions of Section 13(4) and 17 of the Act, is required to entertain this writ petition and pass appropriate order of quashing the impugned order and notice, as during the pendency of the matter of rehabilitation before the Apex Committee there was no occasion for the authority of the Bank to take any step under Section 13 of the SARFAESI Act. 12. On the other hand, learned counsel for the respondents submitted that admittedly loan was taken by the petitioner in the year 2005, whereafter he willfully and continuously defaulted and hence its loan account was declared as non performing assets (NPA), but on the request of the petitioner it was restructured, but again due to non- payment his account was declared as non performing assets (NPA) under Section 13 of the SARFAESI Act. He further submitted that this aspect of the matter has been considered in detail in the impugned order dated 23.12.2010 (Annexure-13), as the petitioner did not take any step against the aforesaid declaration and only after delay of several years, he claims to have filed an application in the office of Micro, Small and Medium Enterprises Development Research Institute, Patna for rehabilitation, but neither the said Institute is the forum before which such proposal could be made nor it has even been made party to the writ petition. 13. Learned counsel for the respondents further averred that the said frivolous step taken by the petitioner was merely with a view to - 8 - stall the legal proceeding under the SARFAESI Act as the petitioner is a willful and chronic defaulter with respect to public money. He also stated that as and when any step is taken under Section 13(4) of the SARFAESI Act the petitioner has a remedy of filing an appeal under Section 17 of the SARFAESI Act and before the appellate authority the petitioner will have full liberty to raise all the points available to him, thus, he submits that there is no occasion for this court to interfere in this matter. In this regard, he relied upon a decision of the Supreme court in case of United Bank of India Vs. Satyawati Tondon & Ors., reported in (2010) 8 SCC 110. 14. From the arguments raised by learned counsel for the parties as well as from the materials on record it is not in dispute that the petitioner is an industrial unit which was established in the year 2006 and it approached the respondent-United Commercial Bank, whereafter the Bank sanctioned cash credit of Rs.13,00,000.00 and term loan of Rs.45,00,000.00 against securities furnished by the petitioner- proprietor firm. It is also not in dispute that due to non-payment of instalment of loan, the petitioner’s account was declared non performing assets, but on the request of the petitioner, the loan was subsequently restructured. However, again the petitioner defaulted in payment and his account was declared non performing assets once again under the provision of Section 13 of the SARFAESI Act. In the said circumstances, there was no occasion for the respondent-Bank to allow petitioner’s application filed in the years 2007, 2008 and 2009 for providing financial and policy aids. However, vide letter dated 18.09.2010 (Annexure-6), the respondent- - 9 - Bank rejected the request of the petitioner and denied the possibility of rehabilitation of the petitioner-firm due to its willful and continuous default. This letter of the respondent-Bank has not been challenged. 15. The Industrial Incentive Policy was framed in the year 2006 and as per the claim of the petitioner it became a sick industrial unit in the year 2006-07, i.e. immediately after the loan was sanctioned by the respondent-Bank in the year 2006. Furthermore, admittedly the loan was not returned and even after restructure of the loan by the authorities of the Bank at the instance of the petitioner, he remained a continuous defaulter due to which the securities were declared as non-performing assets (NPA) and letter was sent by the Bank to the petitioner on 16.06.2008 (Annexure-1 series) for regularizing his existing cash credit and term loan. Even the said direction was not complied for several years and only when the petitioner realised that further action under Section 13 of the SARFAESI Act would be taken against him he sent a letter dated 12.05.2010 to the General Manager, Reserve Bank of India for providing necessary revival doses to the petitioner unit which was absolutely frivolous and there was no occasion for any revival doses to the petitioner, which might have been a sick industrial unit in the year 2006- 07, but gradually it had become a dead unit which had never cared to refund the loan of the Bank. In these circumstances, the respondent-Bank rightly informed the petitioner vide its letter dated 18.09.2010 (Annexure-6) that there was no possibility of rehabilitation of the petitioner-firm or to give any revival dose to it. 16. So far the application of the petitioner dated 13.10.2010 - 10 - under clause 3.2.(iii) & (v) of the Industrial Policy, 2006 is concerned, admittedly it was not sent by the petitioner to the respondent Bank, rather even as per the claim of the petitioner it was sent to Micro, Small & Medium Enterprises Development Institute under the Ministry of Micro, Small & Medium Enterprises, Govt. of India, Patna, although clause 3.2. of the Industrial Policy, 2006 specifically provides that for small sectors, a State Level Committee under the Chairmanship of Director of Industries was constituted for the rehabilitation of small industries and its members included representative from the Banks, financial institutions, Reserve Bank of India, industries associations, experts and Government. It is also provided that the guidelines of the Reserve Bank of India/ IDBI/SIDBI would be relied upon to identify sickness in sick and small units and thereafter industry declared sick by the State Level Committee would be eligible to receive reliefs and concession from Banks and financial institutions as per the instruction of the Reserve Bank of India. It is quite strange that the said application with proposal for rehabilitation of the petitioner unit under clause 3.2 of the Industrial Incentive Policy, 2006 dated 13.10.2010 was not sent by the petitioner to the Director of Industries who was the Chairman of the State Level Committee specifically constituted by the Government for rehabilitation as is apparent from the aforesaid clause of rehabilitation. Furthermore, a bare perusal of the letter sent by the Micro, Small & Medium Enterprises Development Institute to the respondent Bank shows that the date of the said letter was given as 03.11.2010, but there is nothing to show that when it was sent by the Institute or when it was received by the - 11 - respondent-Bank. Hence, it cannot be legally presumed that the impugned notice under Section 13(2) of the SARFAESI Act dated 04.11.2010 (Annexure-11) was issued only in retaliation to the application of the petitioner for rehabilitation under the Industrial Incentive Policy, 2006. 17. No doubt Section 37 of the SARFAESI Act does not provide any bar to the application of other laws, but SARFAESI Act being a self contained enactment pendency of any other matter under any other law would not legally bar any proceeding under this Act. Furthermore there is no proceeding pending for winding up or receivership or distress in the instant matter and thus there is no occasion for taking consent of any Board or Appellate authority. Such pleas are being raised by the petitioner only to give some semblance of justification to their much belated and frivolous proposal for rehabilitation of a dead unit. 18. From the aforesaid facts and circumstances of this case, it is quite apparent that such a belated filing of a proposal for rehabilitation in October, 2010 under the Industrial Incentive Policy, 2006 by the petitioner, much after the petitioner’s non payment of loan since 2006-07 and declaration of its securities as non-performing assets in the year 2007-08 and also after rejection of the petitioner’s petition for rehabilitation by the respondent-Bank vide letter dated 18.09.2010 (Annexure-6), was absolutely frivolous and misconceived and was meant only to circumvent the appropriate legal proceedings under the provision of Section 13 of the SARFAESI Act. Learned counsel for the petitioner - 12 - has wrongly assumed that for the reliefs claimed in the writ petition any appeal is provided and hence this writ petition has to be considered in view of principles of law settled by various decisions of the Supreme Court as well as by the High Court. 19. The petitioner has challenged letter dated 23.12.2010 (Annexure-13) by which the Chief Manager of the respondent-Bank rejected the objection of the petitioner under Section 13(3) (A) of the SARFAESI Act. The petitioner has also challenged notice dated 04.11.2010 (Annexure-11) which was issued by the authority under Section 13(2) of the SARFAESI Act. Another relief sought by the petitioner is a direction to the authorities of the respondent-Bank to carve out a scheme of rehabilitation of the entire industry and for restraining them from taking any action for recovery of outstanding loan dues from the petitioner-firm during the pendency of rehabilitation endeavours. For none of the aforesaid reliefs sought by the petitioner any appeal is provided in law, hence there is no question of any other alternative remedy being available to the petitioner. In the said circumstances, the case laws relied upon by the petitioner in case of Durgah Committee, Ajmer (supra); in case of Harbanslal Sahnia (supra); in case of State of U.P. & Ors (supra); in case of M/s Indian Oil Corporation Ltd. (supra); and in case of Central Bank of India (supra) are not at all applicable to the facts of this case. 20. Considering the entire facts and circumstances of this case, it is quite apparent that the authorities of the respondent-Bank have tried their best to help the petitioner by restructuring the loan but inspite - 13 - of that the petitioner remained a willful and continuous defaulter and did not even challenge the declaration of the respondent-Bank about the securities becoming non-performing assets, nor even letter dated 18.09.2010 (Annexure-6) sent by the respondent-Bank rejecting the request of the petitioner for providing financial aid has been challenged. In these facts it transpires that the respondents have throughout acted in accordance with the rules of natural justice, fair play and equity and had taken steps as per the rules of procedure. Hence, neither any impugned action/step taken by the respondents requires to be interfered with nor they can be legally restrained from proceeding with the matter under the provision of Section 13 of the SARFAESI Act. 21. Accordingly, this writ petition is dismissed. Sunil (S. N. Hussain, J. )