THE HON'BLE SRI JUSTICE A.GOPAL REDDY and THE HON'BLE SRI JUSTICE NOUSHAD ALI DATED: 22-12-2009 WRIT PETITION No. 21392 OF 2009 Between: Sri Vuyyuru Srinivasa Reddy. ..... PETITIONER AND 1 The State Bank of India (Retail Assets and Small Enterprises Credit Sale) Guntur, rep., by its Asst. General Manager, 2/14, Brodipet, Guntur, Guntur District and two others .....RESPONDENTS THE HON'BLE SRI JUSTICE A.GOPAL REDDY and THE HON'BLE SRI JUSTICE NOUSHAD ALI WRIT PETITION No. 21392 OF 2009 ORDER: (per Sri A. Gopal Reddy, J) This writ petition is filed by the petitioner borrower challenging the notices issued under Section 13 (2) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘the SARFAESI Act’) on 03-02-2009 and 15-06-2009 and subsequent notice under Section 13 (4) of the SARFAESI Act as arbitrary and illegal; further rejecting the application of the petitioner for One Time Settlement (OTS) under rejection order dated 22-09-2009 is against the principles of natural justice and to consequently direct the respondent – Bank to renew the credit limit of the petitioner with his account available in respondent No.2 branch or alternatively direct the respondents to accept the case of the petitioner under OTS Scheme dated 14-08-2009. The main contention of the petitioner is that by letter dated 21- 01-2009, the 1st respondent – Bank demanded him to pay an amount of Rs.48,617/- within a period of 15 days from the date of receipt of the said letter. In compliance with the said letter, an amount of Rs.31,800/- has been paid on 22-01-2009 and a further amount of Rs.18,229 has been paid by the petitioner on 27-01-2009. According to the petitioner, since the demand has been complied with, his account cannot be declared as non performing asset and notice under Section 13(2) followed by possessory notice cannot be issued. The petitioner also made an application to the Bank on 14-09-2009 requesting to provide an application form to enable him to apply for OTS by depositing the stipulated amount of 5%. The respondent – Bank by its letter dated 15-09-2009 informed the petitioner that his account is not eligible for OTS Scheme and simply rejected the request without assigning any reasons. The petitioner made a detailed representation to the 3rd respondent on 22-09-2009 to do the needful but on the same day the 2nd respondent sent a letter stating that his unit is not covered by OTS Scheme and for covering the OTS Scheme, the account should be either doubtful or loss asset. Under these circumstances, the petitioner approached this Court for the aforementioned relief. The respondent – Bank filed its counter affidavit opposing the writ petition stating that the petitioner after availing the loan facility of Rs.10,00,000/- under cash credit loan facility as working capital for his business in tobacco trading, committed irregularities in operating the loan account and violated the terms of the loan agreements. The sale proceeds are not routed through the account and the financial data is not furnished. The petitioner stopped the business activity and no stocks are available with him. Therefore, the 2nd respondent issued notice on 23-03-2009 calling upon the petitioner to repay the entire loan amount together with interest. Mere payment of Rs.48,617/-, as demanded by the respondent – Bank is not sufficient for continuation of the loan facility. Since the petitioner failed to repay the loan amount in spite of letter dated 23-02-2009, his loan account was classified as non performing asset of the Bank on 15-06-2009 and demand notice under Section13 (2) followed by notice under Section 13 (4) of the SARFAESI Act was issued. According to the respondent – bank, the petitioner is also not eligible for SBI, SME, OTS-2009 as the said loan account of the petitioner as on 31-03-2009 is not doubtful and that only doubtful accounts as on 3-03-2009 are eligible under the said OTS. The account of the petitioner was classified as substandard as on 31- 03-2009 and, therefore, his application for OTS has not been considered. This Court while issuing notice before admission on 07-10-2009 stayed all further proceedings on the petitioner depositing a sum of Rs.1,00,000/-. The learned counsel for the petitioner submits that the said conditional order has been complied with. Heard the learned counsel for the petitioner and the learned counsel appearing for the respondent – Bank. The only contention advanced by the learned counsel for the petitioner is that once the petitioner has complied with the demand notice dated 21-01-2009 and paid the amount, his account cannot be classified as non performing asset following issuance of notice under Section 13(2) of the Act. However, he has not disputed that the question whether the account of the petitioner can be declared as non performing asset or not can always be gone into by the appellate Tribunal in the event of an appeal being filed questioning the final notice issued under Section 13 (4) of the SARFAESI Act and the petitioner can raise all the objections with regard to declaring his account as non performing asset as arbitrary and illegal. The question whether the account of the petitioner can be classified as non performing asset or not can be decided by the appellate Tribunal basing upon the operation of the loan account as per the terms of the loan agreement and the transactions which were routed through the Bank and all these factual aspects can be gone into by the Tribunal basing upon the evidence to be adduced by the parties. In view of efficacious alternative remedy of appeal available to the petitioner against the impugned notices issued under the SARFAESI Act, we are not inclined to entertain this writ petition and decide the factual aspects. The writ petition is accordingly dismissed granting liberty to the petitioner to avail the alternative remedy within a period of four weeks from today. The stay granted by this Court shall continue for a period of four weeks. The petitioner can always seek waiver of the amount deposited by him pursuant to the interim order passed by this Court, for entertaining the appeal by the Tribunal. A. GOPAL REDDY, J NOUSHAD ALI, J 22-12-2009 ks Note: Furnish Copy in one week. B/O ks