IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE TWENTY FIRST DAY OF JANUARY TWO THOUSAND AND TEN PRESENT THE HON'BLE MR JUSTICE A.GOPAL REDDY and THE HON'BLE MR JUSTICE NOUSHAD ALI WRIT PETITION NOs : 498 of 2008 AND 500 of 2008 WRIT PETITION NO : 498 of 2008 Between: M/s.Peace Engineering Works Pvt. Ltd. Road No.14, Banjara Hills, Hyderabad Rep. by its Director R.B.Srinivasulu Reddy & Another. ..... PETITIONERS AND The Asset Reconstruction Company India Ltd., Rep. by its Director, Nariman Point, Mumbai & Others. .....RESPONDENTS WRIT PETITION NO : 500 of 2008 Between: M/s.Kohinoor Granites (P) Ltd., Punjagutta, Hyderabad, rep. by its Director M.Srinivasa Babji & Another. ..... PETITIONERS AND The Asset Reconstruction Company India Ltd., Rep. by its Director, Nariman Point, Mumbai & Others. .....RESPONDENTS The Court made the following : HON’BLE SRI JUSTICE A. GOPAL REDDY AND HON'BLE SRI JUSTICE NOUSHAD ALI WRIT PETITION Nos.498 AND 500 OF 2008 COMMON ORDER: (Per Hon’ble Sri Justice A. Gopal Reddy) As these two writ petitions are arising out of the very same proceedings, they are heard together and being disposed of by this common order. These writ petitions are filed by the guarantors challenging the notice, dated 6.8.2009 issued by the second respondent-Bank under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘Act’) arising out of the proceedings in O.A.No.1834 of 1999 (old O.A.No.1034 of 1998) on the file of Debts Recovery Tribunal, Hyderabad. The above O.A. was compromised by the parties in terms of compromise deed, dated 11.9.2003 signed by the principal borrower as well as the guarantors-petitioners herein. Pursuant to the said compromise, the principal debtor-4th respondent herein who is the Director of M/s.Charminar Steels Limited-3rd respondent herein paid an amount of Rs.20.00 lakhs. Later, as the parties did not abide by the terms of the compromise, the second respondent-Bank initiated the proceedings for sale of ‘A’ and ‘B’ schedule properties to recover the loan amount and accordingly, sold schedule ‘A’ property comprising of 3 plots and executed a registered sale deed in favour of the purchaser on 31.3.2004. Similarly, schedule ‘B’ property i.e. Flat No.18, admeasuring 1320 sq.ft. on 5th Floor, Block ‘C’ Shanthi Sikhara Complex, Punjagutta, Hyderabad was sold on 12.5.2004. In all, the Bank recovered a sum of Rs.1,40,70,000/- out of the sale proceeds of the above two schedule properties. Thereafter, the principal borrower paid another sum of Rs.20.00 lakhs and according to the principal borrower, still an amount of Rs.39,30,000/- is due. In view of the same, the Bank issued the above notice under Section 13(2) of the Act against the petitioners- guarantors calling upon them for payment of Rs.5,83,49,000/- as per the details set out therein. Questioning the same, these writ petitions are filed. The Apex Court in TRANSCORE v. Union of India[1] held that notice issued under Section 13(2) of the Act is in effect operates as an attachment against non-performing assets, and injunction restraining the borrower, guarantors from disposing of the secured assets. In another decision in Mardia Chemicals Ltd. v. Union of India[2], the Apex Court held that on issuance of notice under Section 13(2) of the Act, parties are not entitled to challenge the reasons communicated or likely action of the secured creditor at that point of time unless his right to approach the Debts Recovery Tribunal as provided under Section 17 of the Act matures on any measure having been taken under sub-section (4) of Section 13 of the Act. In effect, only on the measures being taken under Section 13(4) of the Act, the parties aggrieved can file an appeal under Section 17 of the Act challenging the action of the Bank in taking such measures. In that view of the matter, the present writ petitions filed by the petitioners cannot be entertained at this stage. They are accordingly dismissed granting liberty to the petitioners to avail the remedies available to them by filing objections under Section 13(3- A) of the Act, if they dispute the liability mentioned under the 13 (2) notice and on disposal of such objections and any measures are initiated by the Bank by issuing notice under Section 13(4) of the Act, it is needless to say that the petitioners are at liberty to challenge the same before the appropriate forum. No costs. _________________ (A. GOPAL REDDY, J.) _________________ (NOUSHAD ALI, J.) JANUARY 21, 2010 TSR [1] (2008) 1 SCC 125 [2] AIR 2004 SC 2371