Case: M/S. Prestige Lights Ltd Vs. State Bank Of India

To appreciate the controversy, few relevant facts may be notedAppellant herein is a Private Limited Company engaged in manufacturing bulbs, chokes and fittings. The factory of the appellant is situated at Dhalwala Industrial Area, Rajpur Road, Dehradun, Uttranchal. In 1992, the appellant obtained a loan of Rs. 85 lakhs from State Bank of India, Commercial Branch, Radha Palace, Rajpur Road, Dehradun - respondent herein. The Company mortgaged its land and building with the respondent-Bank. According to the appellant, till 2001, the business of the appellant was comparatively good and it had no problem in depositing the interest accrued towards credit facilities. In or about 2001-02, however, because of heavy slump in the market due to arrival of cheaper Chinese Products, the appellant suffered huge losses and could not deposit the interest-amount with the respondent-Bank. The respondent-Bank, therefore, issued a notice on October 16, 2004 under sub-section (2) of Section 13 of the Securitization, Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to the Act) alleging therein that the appellant failed to pay a sum of Rs.87,64,549.42 P. It was stated that the appellant had created security by equitable mortgage of land, bearing Khasra No. 550/3 and 550/4 admeasuring 10,036 sq. ft. situated at village Jagjitpur, Pargana Jwalapur, Tehsil and District Haridwar. The notice also sought to invoke personal guarantee given by M.P. Goel, Sudha Goel and Abhinav Goel. The appellant was called upon to deposit the amount mentioned in the notice with interest, expenses and costs within sixty days failing which the Bank would exercise power under sub-section (4) of Section 13 of the Act. It was also stated that the appellant should not transfer by sale, lease or otherwise the secured assets detailed in Schedule to the notice. The notice was served on the appellant-Company on October 19, 2004. It is the case of the appellant that it submitted a representation on October 20, 2004 wherein it was stated that the appellant had proposed to pay dues of the Bank after selling the land and building of the Factory. It was further stated that the appellant had proposed to regularize assets of the Company as per fixed plan. If the respondent-Bank would continue working in a healthy spirit, the appellant was confident that it would be able to regularize the assets of the Company as per the proposal. It was also stated that the Bank had a second charge on the assets of the Company and the dues to be paid to Uttar Pradesh Financial Corporation were very small and the substantial sale proceeds of the assets of the Company would automatically go to the Bank and the Bank need not take any hasty action by invoking the provisions of the ActIt may be stated at this stage that it is the case of the respondent-Bank that it had not received any such representation said to have been sent by the appellant on October 20, 2004. According to the appellant-Company, without considering the representation of the appellant, dated October 20, 2004, the respondent-Bank in purported exercise of the power under sub-section (4) of Section 13 of the Act, threatened the appellant to take over residential premises of the Directors of the appellant-Company by a communication, dated February 8, 2005. On March 19, 2005, the respondent-Bank issued a notice to take over possession of the residential house of the Director. Being aggrieved by all these illegal actions and dispossession-notice, the appellant approached the High Court of Uttranchal at Nainital on March 24, 2005 by invoking writ jurisdiction of the Court under Article 226 of the Constitution. The High Court, however, dismissed the petition in limine on March 29, 2005 which constrained the Company to challenge the action of the respondent-Bank in this Court under Article 136 of the ConstitutionIt appears that a mention was made to the Court on April 28, 2005 and the Court ordered Registry to list the matter as notified. Stay of dispossession was, however, granted. On May 6, 2005, notice was issued and interim relief was granted on certain terms and conditions which we will refer to at an appropriate stage. Affidavits and further affidavits were filed and the Court directed the Registry to place the matter for final hearing. Accordingly, the matter has been placed before us.

Reasoning: hold that by dismissing the petition in limine, the High Court has neither committed an error of law nor of jurisdiction. The appellant-Company is not entitled to any relief. Though the respondent-Bank is right in submitting that the appellant has suppressed material facts from this Court as also that it has not complied with interim order passed by the Court and it has, therefore, no right to claim hearing on merits, we have considered the merits of the matter also and we are of the considered view that no case has been made out for interference with the action taken by the respondent-Bank or the order passed by the High Court.