THE HONOURABLE SRI JUSTICE GODA RAGHURAM AND THE HONOURABLE SRI JUSTICE NOUSHAD ALI WRIT PETITION No. 5717 of 2008 Dated: 04-03-2010 Between: M/s Hezen Pharmaceuticals Ltd., rep. by its Managing Director Sri K.Venkat Reddy …Petitioner And State Bank of Hyderabad,IDPL Branch, Hyderabad, rep. by its Authorised Official and another …Respondents. ORAL ORDER: (Per Hon’ble Sri Justice Goda Raghuram) The petitioner is a Pharmaceutical Enterprise and a company registered under the Companies Act, 1956. What is assailed is invocation of a process by the 1st respondent under Section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘the Act’) by issuance of a notice dated 9-1-2008 and thereafter without responding to the petitioner’s representations dated 31-1- 2008 and 28-2-2008 by communicating reasons for acceptance or non- acceptance of the representations (as required under Section 13 (3A) of the Act), issuing a possession notice dated 10-3-2008, invoking the powers under Section 13 (4) of the Act. In brief, the petitioner availed a loan from the 1st respondent-Bank comprising Cash credit and Term loan. The petitioner, on the insistence of the 1st respondent, had also obtained insurance coverage from the 2nd respondent for the stocks in its premises. According to the petitioner, in May, 2006 there was a fire accident in the business premises resulting in extensive damage. The petitioner claimed payment on the insurance policy from the 2nd respondent. The claim was rejected by the 2nd respondent. The petitioner’s representation to the hierarchy of the 2nd respondent is however stated to be pending. While so, by a letter dated 30-3-2007 addressed by the 1st respondent to the petitioner, capital credit facility and working capital term loan and medium term loan instalments availed by the petitioner were renewed and the fresh terms for repayment under the renewal scheme was communicated to the petitioner. On 9-1-2008 the 1st respondent issued a notice to the petitioner purporting to be one under Section 13 (2) of the Act intimating the outstanding liability in an amount of Rs.6,90,61,640-45 Ps., and calling upon the petitioner to pay the amount and not to transfer or otherwise deal with the secured assets set out in Schedule ‘C’ of the notice without the written consent of the 1st respondent. The petitioner addressed representations dated 31-1-2008 and 28-2-2008, in substance, requesting the 1st respondent to persuade the 2nd respondent to pay up on the insurance policy for the loss the petitioner suffered in the fire accident and requesting recall of the Section 13 (2) notice, until the insurance company settles the petitioner’s claim. It is the admitted factual scenario that the 1st respondent has not communicated its decision or the reasons for any decision pursuant to the representations of the petitioner dated 31-1-2008 and 28-2-2008, as mandated under Section 13 (3A) of the Act. However, a symbolic possession notice dated 10-3-2008, issued in purported exercise of powers under Section 13 (4) was issued by the 1st respondent, which is the cause for this writ petition. Section 13 (3A) of the Act clearly mandates the secured creditor to communicate reasons for acceptance or non-acceptance of any representation or objection by the borrower, lodged pursuant to a notice issued by the secured creditor under Section 13 (2) of the Act. In the scheme of the Act and on the phraseology employed in Section 13 (3A) of the Act, the conclusion is irresistible that the obligation to respond is mandatory. In delivering upon this mandatory obligation, the 1st respondent-Bank has failed and therefore ought not to proceed under Section 13 (4) of the Act. On the aforesaid analysis, the constructive possession notice dated 10- 3-2008 issued by the 1st respondent is unsustainable and is accordingly quashed. Having heard the learned counsel for the petitioner Sri C.Raghu and the learned standing counsel for the 1st respondent-Bank Sri Ch.Siva Reddy, we consider it appropriate to permit the 1st respondent to communicate its response to the petitioner’s representations dated 31-1-2008 and 28-2-2008, within a period of one week from the date of receipt of a copy of this order. The 1st respondent is at liberty to take further proceedings under the provisions of the Act, in accordance with law, only thereafter. The possession notice dated 10-3-2008 issued by the 1st respondent, is however quashed. The writ petition is disposed of as above. However, there shall be no order as to costs. ________________________ GODA RAGHURAM, J ________________________ NOUSHAD ALI, J 4th March, 2010. GRR