IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE TWENTY SIXTH DAY OF OCTOBER TWO THOUSAND AND NINE PRESENT HON'BLE SRI JUSTICE A.GOPAL REDDY AND HON'BLE SRI JUSTICE SAMUDRALA GOVINDARAJULU WRIT PETITION No.19359 of 2009 Between: 1. M/s.Kakatiya Bottlers Private limited, represented by Managing Director, M.Raji Reddy. 2. M.Raji Reddy. … Petitioners And 1. The Authorised Officer, Union Bank of India. 2. The Chief Manager, Union Bank of India. … Respondents This Court made the following: HON'BLE SRI JUSTICE A.GOPAL REDDY AND HON'BLE SRI JUSTICE SAMUDRALA GOVINDARAJULU WRIT PETITION No.19359 of 2009 ORDER: - (per the Hon’ble Sri Justice A.Gopal Reddy) This writ petition has been filed by the petitioner questioning the action of the respondent-Bank in proposing to sell the mortgaged property measuring 111.7 sq.yds., and office building and shed admeasuring 4000 sq. feet, situated in plot No.15 in S.No.63 of Fathulguda, Nagole Mandal, Rangareddy District, pursuant to auction notice dated 11.08.2009 published in Deccan Chronicle, Hyderabad edition, dated 12.08.2009, by declaring the action of the respondents in enforcing the security interest created in favour of the Bank even before the account became non-performing asset on 31.01.2009 is illegal and contrary to the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for brevity, “the SARFAESI Act”), made thereunder. The facts of the case are that 2nd petitioner is the Managing Director of 1st petitioner firm. The petitioners have availed cash credit facility of Rs.75,00,000/- and term loan of Rs.17,25,000/- for the purpose of their business from 2nd respondent-Bank by mortgaging the property measuring 111.7 sq.yds., and office building and shed admeasuring 4000 sq. feet, situated in plot No.15 in S.No.63 of Fathulguda, Nagole Mandal, Rangareddy District, on execution of the loan documents. However, the petitioners failed to repay the loan and thereby, the accounts were declared as non-performing assets, thereby, 2nd respondent-Bank has issued a demand notice under Section 13(2) of the SARFAESI Act, dated 29.01.2009 and published the same in the Indian Express daily on 31.01.2009, followed by a possessory notice under Section 13(4) of the SARFAESI Act dated 08.04.2009 and the auction notice dated 11.08.2009, published in the Deccan Chronicle daily newspaper on 11.04.2009 and 12.08.2009 respectively. Questioning the same, the present writ petition is filed. It is alleged by the petitioner that though the respondent-Bank has published the demand notice dated 29.01.2009 contemplated under Section 13(2) of the SARFAESI Act, the copies of the same were not served on the petitioners. The 1st petitioner and his wife obtained separate housing loans and mortgaged item No.2 of the property shown in the demand notice. The possession notice under Section 13(4) of the SRFAESI Act, dated 08.04.2009 whereby the possession of the property was sought to be taken on 15.04.2009, which was published on 11.04.2009 along with other accounts of the other borrowers was also not served on the petitioners and other guarantors. What is required under Section 13(4) of the SARFAESI Act is issuance of possession notice and publication of the same in two newspapers after the security interest created to the bank is actually taken possession or even symbolic possession. Therefore, publication of possession notice as per rule 8(1) is a publication of the authorised officer taking possession of the security interest created. The said notice is a nullity and it cannot be treated as a valid possession notice and the same is liable to be set aside. This Court while issuing notice before admission on 14.09.2009, stayed all further proceedings pursuant to the auction notice dated 11.08.2009, on condition of petitioners depositing Rs.10,00,000/- within a period of three weeks from the said date. Since petitioners have not complied with the conditional order dated 14.09.2009 but deposited only Rs.5,00,000/- on 05.10.2009, they filed W.P.M.P.No.28343 of 2009, for extension of time for complying the order passed on 14.09.2009. The same was allowed on 13.10.2009, granting extension of time by one week from that date. In response to the notice issued before admission, the 2nd respondent-Bank filed a counter stating that the possession notice was issued under Section 13(4) of the SARFESI Act on 02.04.2009. As the said notice was returned unserved, the same was published on 11.04.2009 in the Deccan Chronicle daily and the Bank has taken possession of the property on 20.04.2009 after conducting panchanama. Thereafter, 2nd respondent-Bank issued auction sale notice stating that the property will be put to auction on 21.07.2009. Pursuant to the said auction notice, petitioners approached the Bank with a request to stop the auction, stating that they have already paid entire balance of Rs.3,31,636/- towards the term loan, and Rs.3,00,000/- into Cash Credit Account; and acknowledged the balance of Rs.73,18,455.80ps.,; and along with the letter he issued a cheque for Rs.30,00,000/- drawn on ICICI Bank and promised to clear the entire loan outstanding amounts with interest on or before 27.07.2009, failing to do so, the bank can proceed to auction the secured property. The petitioners approached 2nd respondent-Bank on 28.07.2009 and issued a letter stating that they paid Rs.15,00,000/- to their cash credit account and promised to pay Rs.15,00,000/- on or before 05.08.2009 and the remaining balance on or before 28.08.2009 and in the letter the 2nd respondent-Bank also acknowledged the total ledger balance of Rs.58,23,156/-. Petitioners after paying Rs.15,00,000/- on 28.07.2009, failed to remit any amounts to their loan accounts and also failed to close the account as promised in their letters dated 30.11.2008, 20.07.2009 and 28.07.2009. Having no alternative remedy, 2nd respondent-Bank again issued auction sale notice on 11.08.2009, which is the subject matter of challenge in this writ petition. Since there is no reply filed by the petitioners contradicting the above facts pleaded, the same is deemed to have been admitted by them. When the petitioners have not objected the manner in which notices were issued under Section 13(2) & (4) of the SARFAESI Act and having accepted issuance of such notices, approached the Bank with a request to postpone the auction pursuant to the sale notice and paid the amounts as referred to above, undertaking to pay the balance of amount, by issuing a cheque which was not been fully honoured, whether can question the legality of the impugned notice having failed to comply their own undertaking given to the bank in the letters referred to above, is a matter required to be gone into by the tribunal at the time of appeal, if any, preferred by the petitioner. This Court is not inclined to give any finding about the truthfulness or otherwise on the conduct of the petitioner in view of the alternative remedy available to him, since any opinion expressed on the conduct of the petitioner may prejudice their case in the appeal. In view of the conclusions reached by us, it is suffice to say that the disputed questions of fact, which are canvassed by either side cannot be gone into in this writ petition and the writ petition is liable to be dismissed. In view of the alternative remedy available to the petitioner, it is open to the petitioner to raise all the contentions in the appeal, if any, filed by them. Accordingly, the writ petition is dismissed. There shall be no order as to costs. _____________________ (A.GOPAL REDDY, J) __________________________________ (SAMUDRALA GOVINDARAJULU, J) 26.10.2009. Lmv