IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE TWENTY SECOND 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 : 7278 of 2008 Between: 1 Rayan Pharma Limited, Anaparthi ,East Godavari District rep.by its Managing Director Sri P.Ranganayaka Murthy S/o.Sri Rama Brahmanandam 2 P.Ranganayaka Murthy S/o.Sri Rama Brahmanandam R/o.Anaparti,East Godavari District ..... PETITIONER(S) AND 1 STate Bank of India.,Anaparti Branch rep.by its Chief Manager/Authorisex officer Ananaprti, East Godavari District 2 The Collector & District Magistrate, East Godavari District at Kakinada 3 The Tahsildar, Anaparti,East Godavari District .....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 first respondent Bank in trying to execute the order passed by the second respondent vide Proceedings L.Dis.C1(M)41/2007 dated 25.1.2008 through the third respondent as illegal, arbitrary, and without jurisdiction and pass Counsel for the Petitioner:MR.C.RAGHU Counsel for the Respondent No.: GP FOR REVENUE The Court made the following : ORDER: (Per Sri Justice GHULAM MOHAMMED) This Writ Petition has been filed seeking Writ of Mandamus declaring the action of the first respondent- Bank in trying to execute the order passed by the second respondent vide proceedings dated 25.1.2008 through the third respondent as illegal, arbitrary and without jurisdiction. The petitioner, a company registered under the Companies Act had obtained working capital from the second respondent in the year 1992. Since then, the petitioner-Company is regular in payment of the amounts to the Bank and never allowed the limits to exceed. The petitioner-Company can draw up to Rs. 33 lakhs for the purpose of working capital and the Bank would be charging interest on the amount drawn from the account. It is stated that in the month of March 2007 the Director of Drugs had issued Stop Production Orders vide orders dated 23.3.2007 and because of that, the petitioner- Company had committed default in payment of interest amounts for a period of three months amounting to Rs. 91,174.64. It is also stated that the respondent-Bank without any application of mind had issued a notice dated 17.9.2007 under Section 13(2) of the SRFAESI Act, 2002 (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (for short ‘the Act’) to the petitioner-Company recalling the entire working capital amount of Rs. 33 lakhs plus the interest part of Rs. 91,174.64 applied up to 31.8.2007, which is illegal. It is also stated that the Government has revoked the Stop Production Order on 12.12.2007 after being satisfied that the norms are being followed. In response to the Notice dated 17.9.2007 issued under Section 13(2) of the Act, the petitioner-Company submitted a representation on 17.11.2007, and the respondent-Bank without passing any order on the representation under Section 13(3A) of the Act, issued another notice under Rule 8(1) of the Security Interest (Enforcement) Rules 2002 (for short “the Rules”) stating that the symbolic possession of the property mortgaged to the Bank was taken on 1.12.2007. Aggrieved by the same, petitioner-Company preferred Writ Petition No. 27019 of 2007 before this Court and this Court was pleased to grant interim stay on 18.12.2007 on condition that the petitioner-Company should deposit Rs. 1 lakh within eight weeks from that date. It is stated that the said amount was deposited on 15.2.2008 and the same was accepted by the respondent-Bank. After that this Court disposed of the Writ Petition by an order-dated 28.2.2008, the relevant portion at paragraph 10 reads as under: “It is no doubt true that the petitioners are having a remedy as averred in the counter-affidavit. But in the light of the facts and circumstances and also the specific averment made in relation to revocation of stop production order on 12.12.2007 and the specific stand taken that as on today sufficient stocks are available, let the respondent inspect and verify whether the stand taken by the writ petitioners in this regard is a bona fine one or not and consider the case of the writ petitioners in this regard and take appropriate decision.” It is stated that the first respondent-Bank had approached the second respondent and made a requisition under Section 15 of the Act to issue necessary orders for taking physical possession of the properties and the second respondent had passed orders dated 25.1.2008 but the same was not brought to the notice of this Court while disposing of the matter on 28.2.2008, and, therefore, the action of the respondents is illegal and the proceedings initiated under the Act pursuant to the earlier notices are deemed to have been nullified and without taking appropriate decision the first respondent cannot have any right to pursue the order dated 25.1.2008. In the counter affidavit filed by the Chief Manager of the Bank, it is stated that the Bank officials made personal visits and surprised that the stocks are not sufficient and the production activity was also too low and the petitioners in W.P. No. 27019 of 2007 have falsely represented that they have sufficient stocks available and the production activity was going on to get the directions from the Court, and, therefore, the action of the Bank in issuing notice under Section 13(2) is legal and valid. It is also submitted that the petitioners have alternative remedy of appeal under Section 17 of the Act and without availing the same they straight away approached this Court. The learned counsel appearing for the petitioners contended that merely because there is a default in payment of interest for a period of three months, the account of the petitioner-Company cannot be termed as a ‘Non-Performing Asset’ within the meaning of Section 13(1) of the Act. It is further contended that the respondent-bank is bound to follow the procedure prescribed under Rule 8 of the Rules strictly. Heard the learned counsel appearing for the petitioners. This Court while ordering notice before admission on 3.4.2008 granted interim stay on condition of the petitioners paying a sum of Rs. 2,00,000/- on or before 10th June, 2008. It is stated that the said conditional order has been complied with. This Writ Petition is misconceived inasmuch as the earlier Writ Petition was filed and the same was disposed of and apart from that, we are not inclined to exercise our equitable jurisdiction inasmuch as the petitioner has an effective alternative remedy of appeal under Section 17 of the Act. Hence, we do not see any reason to interfere with the order impugned under Article 226 of the Constitution of India. Accordingly, the Writ Petition is dismissed. However, we permit the petitioner to avail the remedy of appeal available under Section 17 of the Act within a period of six weeks from today. Till such time, status quo obtaining as on today shall be maintained. There shall be no order as to costs. _____________________________ GHULAM MOHAMMED, J ______________________________ VILAS V. AFZULPURKAR , J Dt. 22.06.2009 KA // TRUE COPY // ..... REGISTRAR SECTION OFFICER To 1) 2 CD copies