IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD PRESENT : : THE HON’BLE SRI JUSTICE ASHUTOSH MOHUNTA AND THE HON’BLE SRI JUSTICE P. DURGA PRASAD W.P.No.22485 of 2011 Dated:09-09-2011 Between: M/S Kiranmayee Engineering Works. ….Petitioner And Development Credit Bank Limited. ….Respondent. The Court made the following: THE HON’BLE SRI JUSTICE ASHUTOSH MOHUNTA AND THE HON’BLE SRI JUSTICE P. DURGA PRASAD WRIT PETITION No. 22485 of 2011 ORDER: (per the Hon’ble Sri Justice P.Durga Prasad) This Writ Petition is filed seeking a Writ of Mandamus to declare the impugned notice issued by the respondent bank dated 11.06.2011 under Section 13 (2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘the SARFAESI Act’) demanding for payment of the total outstanding amount aggregating to Rs.29,61,739/- as illegal, arbitrary and consequently to set aside the same. The writ petitioner, who is the Kiranmayee Engineering Works, through its Managing Director applied for Overdraft facility of Rs.28,50,000/- to the respondent by creating equitable mortgage of the property bearing plot No.236, in Sy.Nos. 180 to 183 and 322, BHFL, MIG Colony, Tellapur village, Medak District standing in the name of wife of the Managing Director, Ch.Vijay Kumari as collateral security along with other documents. Apart from that the said Managing Director, his wife and his brother stood as guarantors for the said loan amount. The respondent bank has sanctioned the said amount on 27.12.2006 vide loan account No.08541800000037. According to the petitioner, he is regularly paying the interest on the Overdraft as per terms and conditions of the loan agreement. According to him, the respondent bank without his consent converted portion of the loan amount from Overdraft facility to Term loan and started demanding for payment of the entire loan amount in lumpsum. The respondent bank got issued the impugned notice dated 11.06.2011 under Section 13 (2) of the SARFAESI Act, 2002 demanding for payment of the total outstanding amount aggregating to Rs.29,61,739/- within 60 days from the date receipt of the notice otherwise they would dispose off the movable and immovable properties of the petitioner, which were mortgaged with the bank. According to the petitioner, on receipt of the impugned notice, he approached the bank and brought to their notice about the payment of amount regularly without any default, but the respondents demanding for payment of the entire amount in lumpsum. Hence the writ petition. The respondent bank has filed counter pleading that the writ petition is not maintainable in view of the Rule 3A of Securities Interest (Enforcement) Rules 2002. According to them, the petitioner has not submitted any representation or objection to the notice issued under Section 13 (2) of the SARFAESI Act as required under above said Rule 3A, as such the respondent bank has issued notice under Section 13 (4) of the SARFAESI Act for possession of the mortgaged property. They have issued the said notice before knowing about the filing of the writ petition. The petitioner has got alternative remedy under Section 17 of the SARFAESI Act after issuance of the notice under Section 13 (4) the SARFAESI Act. According to them, an Overdraft facility and Term loan of Rs.28,50,000/- was sanctioned to the petitioner and the same was disbursed, as such the petitioner is not entitled to say that without notice to him, the Overdraft account was converted into term loan. Learned counsel for writ petitioner has pleaded that the respondent bank has granted only Overdraft facility and he is paying interest regularly as per the terms and conditions of the agreement and without his consent, the said Overdraft was converted into term loan and even without any default the respondent bank has issued notice under Section 13 (2) of the SARFAESI Act, as such the said notice is liable to be set aside. Learned counsel for the respondent bank on the other hand has pleaded that even though they have issued notice under Section 13 (2) of the SARFAESI Act, the petitioner has got every right to submit his objections for the same and after consideration of the said objections; if necessary they would issue revised notice by intimating the same to the petitioner, but the petitioner has not made any objection to the notice under Section 13 (2) of the SARFAESI Act, thereby they have issued notice under Section 13 (4) of the SARFAESI Act. As such the present writ petition has become infructuous. He further pleaded that the writ petitioner has got alternative remedy under Section 17 of the Act to prefer an appeal before the Debts Recovery Tribunal questioning the notice under Section 13 (4) of the SARFAESI Act. There is no dispute between the parties with regard to the petitioner obtaining loan from the respondent bank and also respondent bank issued notice under Section 13 (2) of the SARFAESI Act. As per Section 13 (3A) of the SARFAESI Act “on receipt of the notice under sub-section (3), the borrower makes any representation or raises any objection, the secured creditor shall consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate within one week of receipt of such representation or objection the reasons for non-acceptance of the representation or objection to the borrower.” Therefore, in view of the said rule, the petitioner is at liberty to make representation or objection with regard to the notice issued under Section 13 (2) of the SARFAESI Act. Admittedly, the petitioner has not made any such representation with regard to the payment of the amount regularly to the bank; as such the respondent bank has issued subsequent notice under Section 13 (4) of the SARFAESI Act. Since the petitioner questioning the issuance of notice under Section 13 (2) of the SARFAESI Act only in the present writ petition and as the respondent bank has issued notice under Section 13 (4) of the SARFAESI Act, the relief sought for in the writ petition has become infructuous. Moreover, after issuance of notice under Section 13 (4) of the SARFAESI Act, the petitioner is at liberty to prefer an appeal before the Debts Recovery Tribunal under Section 17 of the SARFAESI Act. Therefore, the petitioner is not entitled for the issuance of writ of Mandamus as prayed for. In the result, the writ petition is dismissed at the stage of admission. There is no Order as to costs. ________________________________ JUSTICE ASHUTOSH MOHUNTA _____________________________ JUSTICE P. DURGA PRASAD Dated:09-09-2011 Ksp