IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE EIGHTEENTH DAY OF JUNE TWO THOUSAND AND NINE PRESENT THE HON'BLE MR JUSTICE GHULAM MOHAMMED and THE HON'BLE MR JUSTICE VILAS V. AFZULPURKAR WRIT PETITION NO : 27417 of 2007 Between: 1 Kay Jay Exports Pvt. Ltd., Plot No.21 Fishing Harbour, Visakhapatnam, Rep. by its Managing Director Sri K. Jayan 2 K. Jayan S/o. Kunju Krishnan R/o. D.No. 24,27 & 62 , Kottaveedhi, Visakhapatnam, Presently R/o. Puthenpurayil House, Govindamuttom P.O. Kayamkulam, Aleppey District, Kerala. 3 Smt. K. Lakshmi W/o. K. Jayan R/o. D.No. 24,27 & 62 , Kottaveedhi, Visakhapatnam, Presently R/o. Puthenpurayil House, Govindamuttom P.O. Kayamkulam, Aleppey District, Kerala. ..... PETITIONER(S) AND 1 M/s Dena Bank Rep. by its Branch Manager, Dahba Gardens, Sarada Street, Visakhapatnam. 2 M/s Dena Bank Regional Officer, Rep. by its Authsorized Officer, Sona Towers, 1st Flooor, 71 Millers Road, Bangalore 3 M/s Dena Bank Rep. by its Authsorized Officer, M.G. Road Branch, Secunderabad. 4 Reserve Banka of India, Hyderabad. .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to to issue a writ of Mandamus or any other appropriate writ order or direction declaring the action of the Respondent in invoking Sec. 13(2) of the Securitization & Reconstruction of Financial Assets and Enforcement of security Interest Act 2002 vide Notice Dt. 28-3-2007 followed by Notice dt. 26- 9-2007 demanding possession of the property and possession Notice dt. 15-10-2007 under Rule 8 of Security Interest (Enforcement) Rules 2002 as illegal, arbitrary, contrary to the provisions of the Act and the Rules and without jurisdiction and consequentially set aside the same and pass such other order or orders. Counsel for the Petitioner:MR.C.RAGHU Counsel for the Respondent : MR.VAMARAJUSRIKRISHNUDU FOR RR3 The Court made the following : ORDER: (Per Sri Justice GHULAM MOHAMMED) This Writ Petition has been filed declaring the action of the respondent in issuing notice dated 28.3.2007 by invoking Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (for short “the SRFAESI Act”) followed by Notice dated 26.9.2007 demanding possession of the property and possession Notice dated 15.10.2007 under Rule 8 of Security Interest (Enforcement) Rules 2002 as illegal and arbitrary and consequently set aside the same. Brief facts of the case are that as the petitioner-company was doing the business successfully, the respondent-bank had enhanced the limits of packing Credit (Hypothecation) and negotiation limit of Export Bills to Rs. 200 lakhs each and a Term Loan for Rs. 14.50 lakhs was sanctioned against machinery on 14.7.1997. The respondent-Bank approached the Debts Recovery Tribunal by filing O.A. No. 1609 of 1999 and the Debts Recovery Tribunal passed an exparte order on 20.10.1999 and accordingly a Recovery Certificate under Section 19(22) of Act 51 of 1993 was issued and forwarded to the Recovery Officer and Recovery Officer initiated the proceedings vide RP No. 91/2002. It is stated that after taking possession of the property the respondent-Bank had managed the entire business and never intimated to the petitioner-Company about the conduct of the business and surprisingly the respondent-Bank had invoked Section 13(2) of the SARFAESI Act demanding to pay the amount due of Rs. 2,33,43,540/- within 60 days from the date of receipt of the said notice. It is stated that earlier vide letter dated 10.1.2007 petitioner-Company requested the Bank for One Time Settlement. In response to the same, the bank vide letter dated 25.6.2007 has offered to settle the amount under One Time Settlement, which shows that the demand made by the respondent-Bank under Section 13(2) has been dropped. Again respondent-Bank vide letter dated 26.9.2007 invoked Section 13(4) of the Act to deliver possession of the assets shown in the said letter on 15.10.2007 at about 11 AM at Visakhapatnm, and, therefore, it is stated that the action of the respondent-Bank is illegal. The learned counsel appearing for the petitioner-Company contended that the order passed by the Debts Recovery Tribunal does not come within the purview of ‘debt’ and it ought not to have asked the authorized officer to recover that amount. His second contention is that when once the petitioner applied for One Time Settlement, the proceedings under Section 13(2) of the Act does not hold good. Heard the learned counsel and perused the order impugned. As far as the first contention is concerned, we have to peruse the relevant provisions under Section 2(g) of the Recovery of Debts to Banks and Financial Institutions Act, 1993, which reads as under: “Debt” means any liability (inclusive of interest) which is alleged as due from any person by a bank or a financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force in cash or otherwise, whether secured or unsecured or whether payable under a decree or order or any Civil Court or otherwise and subsisting on and legally recoverable on the date of the application.” Debt as contemplated under Section 2(ha) of the SRFAESI Act reads as under: “2 (ha) ‘Debt’ shall have the meaning assigned to it in Clause (g) of Section 2 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993)” From the above, provisions, it is clear that the order passed by the Debts Recovery Tribunal do come within the purview of the debt. As regards the second contention, in the letter-dated 25.6.2007 the respondent-Bank has offered to settle the amount under One Time Settlement facility, provided to the petitioner is without prejudice to the Bank and it is in no way connected to the notice issued under Section 13(2) of the Act. Apart from that the petitioner-Company has not submitted any reply to the notice issued on 15.10.2007 under Rule 8 of the Security Interest (Enforcement) Rules 2002 , and therefore, there is no force in the contention of the petitioner counsel. Having regard to the peculiar facts and circumstances, we are not inclined to entertain the Writ Petition and the same is liable to be dismissed. Accordingly, the Writ Petition is dismissed. There shall be no order as to costs. ____________________________ GHULAM MOHAMMED, J ______________________________ VILAS V. AFZULPURKAR,J Dt. 18.06.2009 KA ..... REGISTRAR // TRUE COPY // SECTION OFFICER To 1. 2 CD Copies