IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM WEDNESDAY, THE 25TH NOVEMBER 2009 / 4TH AGRAHAYANA 1931 WP(C).No. 14818 of 2009(V) -------------------------- PETITIONER(S): --------------- 1. M/S. MASTER INTERIOR & FURNISHING REP. BY REJI ALEX, W/O. CHANDY ANTHRAPER, AGED 46, R/AT NO.9, KUNNEL(H), PALACE GARDEN, MANIMALA ROAD, EDAPPALLY P.O., KOCHI-24. 2. CHANDY ANTHRAPER, S/O. V.J.ANTHRAPER, AGED 54, AUTHORIZED SIGNATORY, M/S. MASTER INTERIOR & FURNISHING, R/AT NO.9, KUNNEL(H), PALACE GARDEN, MANIMALA ROAD, EDAPPALLY P.O., KOCHI-24. BY ADVS. SRI.TOM JOSE SMT.GEETHA JOB(OZHUKAYIL) RESPONDENT(S): --------------- 1. THE FEDERAL BANK LTD., REP. BY THE GENERAL MANAGER, REGD. OFFICE, ALUVA. 2. THE DIVISIONAL GENERAL MANAGER, THE FEDERAL BANK LTD., THE FEDERAL TOWER, MARINE DRIVE, ERNAKULAM. 3. THE CHIEF MANAGER, THE FEDERAL BANK LTD., PANAMPILLY NAGAR BRANCH, ERNAKULAM. 4. THE FEDERAL BANK, BOARD OF DIRECTORS REP.BY EXECUTIVE DIRECTOR, MR. THARIYAN, REGD. OFFICE, ALUVA, ERNAKULAM. BY ADV. SRI.GEORGE VARGHESE (MANACHIRACKEL), STANDING COUNSEL THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 25/11/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 14818 of 2009(V) APPENDIX PETITIONERS' EXHIBITS: P1. COPY OF THE TENDER NOTICE DATED 25.08.03 ISSUED BY THE KOVALAM HOTELS LTD IN FAVOUR OF MASTER INTERIOR & FURNISHING P2. COPY OF THE TENDER ISSUED BY THE KERALA GOVT. FOR MAKING MEDIA CONFERENCE HALL DATED 30.06.04 IN FAVOUR OF THE PETITIONERS P3. COPY OF THE WORK ORDER DATED 08.02.08 ISSUED BY THE DISTRICT TOURISM PROMOTION COUNCIL, ERNAKULAM IN FAVOUR OF THE PETITIONERS. P4. COPY OF THE LETTER ISSUED BY THE ASSISTANT GENERAL MANAGER, STATE BANK OF INDIA DATED 03.05.04 WITH REGARD TO SANCTIONED BILL ANNOUNCED. P5. COPY OF THE WORK ORDER OF THE KOLLAM ROYAL PARK HOTEL & RESORTS PVT. LTD DATED 19.10.06 IN FAVOUR OF THE PETITIONERS. P6. COPY OF THE REQUEST FOR EXTENTION OF THE LOAN BY THE PETITIONERS BEFORE THE 3RD RESPONDENT. P7. COPY OF THE LAWYER NOTICE SENT BY THE RESPONDENTS TO THE PETITIONERS DATED 18.08.08. P8. COPY OF THE NOTICE ISSUED UNDER SECTION 13 (2) OF SECURITIZATION ACT 2002 BY THE RESPONDENTS AGAINST THE PETITIONERS. P9. COPY OF THE REPRESENTATION PREFERRED BY THE PETITIONERS BEFORE THE RESPONDENTS DATED 04.02.09. P10. COPY OF THE NOTICE ISSUED BY THE ASSET RECOVERY DEPARTMENT OF THE RESPONDENTS TO THE PETITIONERS FOR SETTLEMENT DATED 06.02.09. P11. COPY OF THE REPLY NOTICE DATED 07.02.09 BY THE 3RD RESPONDENT TO THE REPLY OF THE PETITIONER. P12. COPY OF THE RECEIPT DATED 31.03.09 PAID BY THE PETITIONER TO THE RESPONDENT BANK AS PART PAYMENT FOR ONE TIME SETTLEMENT. P13. COPY OF THE TERMS AND CONDITIONS FOR SETTLEMENT ISSUED BY THE RESPONDENTS TO THE PETITIONERS. P14. COPY OF THE RESERVE BANK DIRECTION TO THE BANKS DATED 27.04.07. P15. COPY OF THE REPRESENTATION PREFERRED BY THE PETITIONERS TO THE RESPONDENTS DATED 29.04.09. WP(C).No. 14818 of 2009(V) ..2.. P16. COPY OF THE PAPER REPORT PUBLISHED IN THE MALAYALA MANORAMA DATED 23.05.09 IN PAGE 6 INFORMING THE HUGE INCREASE IN THE PROFITS OF THE RESPONDENT BANK. P17. COPY OF THE PATHETIC COMMUNICATION SHOWN TO BE DATED 11.05.09 AND WHICH WAS COMMUNICATED TO THE PETITIONERS ON 21.05.09. RESPONDENTS' EXHIBITS: R3 (a). COPY OF THE STATEMENT OF ACCOUNT SHOWING THE BALANCE AS ON 31.07.09. //TRUE COPY// P.A. TO JUDGE shg/ C.K. ABDUL REHIM, J. - - - - - - - - - - - - - - - - - - - - - - - W.P.(C)No. 14818 of 2009 - - - - - - - - - - - - - - - - - - - - - - - Dated this the 25th day of November, 2009 J U D G M E N T 1. The challenge in this writ petition is against the proceedings initiated under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). According to the petitioners, with respect to arrears in the loan account, the petitioners submitted a proposal for 'One Time Settlement' and they were invited for a negotiation, on 16.02.2009. It is further contended that in the negotiation settlement, the petitioners participated along with their counsel and a compromise was arrived with the officials of the respondent Bank, to make payment of a total amount of Rs.32.5 lakhs within a specified period. As per the settlement the petitioners had undertaken to make payment of Rs.30 lakhs on 31.03.2009. According to the petitioners the Bank had unilaterally withdrawn from the agreement and after the petitioners effected payment of Rs.20 lakhs, W.P.(C)No. 14818 of 2009 -2- Ext.P13 notice was issued in which the Bank took a turn around to the effect that the amount settled for payment is Rs.37 lakhs. The petitioners objected to the stand of the Bank and submitted Ext.P15 letter to the effect that he is ready and willing to pay the amount as settled on 16.02.2009. But the Bank proceeded with further steps under the SARFAESI Act and notice under Section 13 (2) was issued. 2. In the counter affidavit filed by the respondent Bank has not conceded to any of the contention of the petitioners that there was a settlement arrived on 16.02.2009. On the other hand the Bank reiterates its contention that the settlement was for Rs.37 lakhs, as mentioned in Ext.P13. The petitioners had filed a reply affidavit sticking on to their contentions as narrated above. They have further filed I.A. No.14910/2009 seeking orders to call for records such as 'Minutes Book' of the Bank showing the One Time Settlement discussions held on 16.02.2009, Communication prepared by the Bank pursuant W.P.(C)No. 14818 of 2009 -3- to the One Time Settlement arrived on 16.02.2009 and all further records pertaining to Ext.P13 notice. 3. The proceedings under the SARFAESI Act is challenged on the ground that the respondent Bank is not entitled to initiate such proceedings contrary to the terms of settlement alleged to have been arrived at. But the very factum of the compromise settlement itself is in dispute. This court under Article 226 is not supposed to enter upon any adjudication regarding the disputed facts and to arrive at any conclusion as to whether there was any settlement or not. Further, there is an effective remedy by way of appeal provided under Section 17 of the SARFAESI Act if the petitioners are aggrieved by any steps taken by the Bank under Section 13 (4). 4. Therefore I am of the opinion that the writ petition can be dismissed without prejudice to rights of the petitioners to approach the statutory appellate authority. It is evident from Ext.P9 that on receipt of the notice under Section 13 (2), the petitioner had filed detailed objection. W.P.(C)No. 14818 of 2009 -4- On considering Ext.P9 the authorized officer has issued Ext.P11 reply. Considering the above situation it is clear that the petitioners can challenge further action if any taken under Section 13 (4) before the statutory authority. 5. Under the above circumstances the writ petition is hereby dismissed, reserving liberty to the petitioners to approach the statutory appellate authority. 6. It is made clear that if any appeal is filed, the same shall be dealt with independently, untrammelled by any of the observations made hereunder. 7. The respondents are restrained from proceeding with any further steps of dispossession of the petitioners from the property, without issuing notice under Section 13 (4) of the SARFAESI Act. The writ petition is disposed of with the above observations. C.K. ABDUL REHIM JUDGE shg/