Notice under section 12(2) of SARFAESI Act to be dismissed if doesnot fall under jurisdiction of Jammu and Kashmir : High Court Of Jammu and Kashmir

Ind Swift Limited V. Union Of India high court Of jammu And kashmir OWP No. 10416 16 02 2017 Ind Swift Limited Union Of India HON BLE JUSTICE B.S. WALIA J. AIR 2017 J&K 95 2017JKJ 589 4BC 158 B.S. Walia J.—Petitioner has sought the issuance of a writ of Certiorari for quashing of notice dated 3 2 2016 issued u S.13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 as also a Writ of Mandamus for commanding the respondents to adhere to the provisions of law as applicable to the State of Jammu and Kashmir while dealing with the unit of the petitioner on the ground that the Act was not applicable in the State of Jammu and Kashmir and that the petitioner unit had availed loan facility from the respondent Bank for establishment of its unit at Samba and that while the unit was functional the respondent Bank had resorted to proceedings under the Act which as per the concluded judgment of this Court was not applicable in the State of Jammu and Kashmir 2. That it needs noticing that the impugned notice u S.13 SARFAESI was issued inter alia to M s. Ind Swift Ltd. a Company registered under that Companies Act 1956 with its registered office at 781 Industrial Area Phase II Chandigarh PIN 160002. Sh. Navrattan Munjal r o House No. 382 Sector 6 Panchkula Haryana Sh Gopal Munjal r o House No. 1085 Sector 7 Panchkula Haryana Sh. Sanjiv Rai Mehta r o House No. 333 Sector 6 Panchkula Haryana Sh. Rishav Mehta r o House No. 322 Sector 6 Panchkula Haryana Sh. Himanshu Jain r o House No. 1133 Sector 21 B Chandigarh Smt. Nidhi Munjal r o House No. 382 Sector 6 Panchkula Haryana Smt. Neeta Munjal r o House No. 1085 Sector 7 Panchkula Haryana by the Punjab National Bank Asset Recovery Management Branch Sector 17 B Chandigarh on behalf of all Banks including the Bank of India from which the Company had availed credit facilities 3. That a perusal of the impugned notice reveals that the same specifically mentions that the securities contemplated therein do not cover Stock Book Debt Plant and Machinery Furniture Fixture etc. whether present or future relating to the State of Jammu and Kashmir. In addition thereto perusal of the writ petition reveals the same having been filed by Ind Swift Ltd IGC Phase 1 Samba Jammu and Kashmir i.e. a unit of the Company having its registered office at Chandigarh against the Bank of India through its Jammu Branch without impleading the Lead Bank issuing the impugned notice and situated outside the State of Jammu and Kashmir the outstanding was Rs 56 19 47 070 . Likewise details of book outstanding of the Company as on 31 12 2015 of other Banks have also been given in the impugned notice 5. That the grievance of the petitioner is that the Bank had proceeded to issue the impugned notice despite fully knowing that SARFAESI was not applicable to the State of Jammu and Kashmir that in view thereof the Bank was not entitled to recover the loan from the petitioner by taking recourse to the provisions of the Act. Reliance has also been placed on Annexure F dated 8th September 2014 issued by the Bank of India Jammu Mid Corporate Branch to the Managing Director of the Company at Chandigarh confirming receipt of payment from the Company PPC charges in respect of ECB sanctioned to the Company and further mentioning that the ECB was managed and handled by the Jammu Mid Corporate Branch of Bank of India 6. That in paragraph No. 8 of the writ petition apart from taking up the plea that the case was covered by the judgment delivered by this Court it has categorically been mentioned Since the issue involve is about the taking over of immovable property of the petitioner situated within the State of Jammu and Kashmir therefore the provisions of SARFAESI Act cannot be invoked by the respondent Bank. 7. That in paragraph No. 9 of the writ petition it has been mentioned that since part of the cause of action arose within the State of Jammu and Kashmir and the proposed action of the Bank initiated u S. 13 of the Act was going to affect the working of the petitioner Company s unit at Samba which may have consequential effect of disturbing the entire chain of commercial activity of the petitioner Company therefore the petitioner had challenged the notice issued by the respondent Bank along with others 8. That in the objections filed on behalf of the Bank of India it has been mentioned that none of the properties in respect of which the notice dated 3rd February 2016 had been issued u S. 13 of the Act was situated within the State of Jammu and Kashmir therefore the writ petition challenging the impugned notice on the ground that the provisions of the Act were not applicable to the State of Jammu and Kashmir was wholly misconceived and liable to be rejected out rightly that the provisions of the Act had been declared legal and valid by the Hon ble Supreme Court and the same being applicable to the properties mentioned in the impugned notice no writ petition in respect of the properties situated outside the State of Jammu and Kashmir sought to be proceeded against by the Bank under the Act was maintainable by the petitioner before the Jammu and Kashmir High Court nor was the registered office of the petitioner situated in the State of Jammu and Kashmir nor its promoters or Directors were residents of the State of Jammu and Kashmir the averments that the petitioner was permanent resident of the State of Jammu and Kashmir was totally false and incorrect for as per list Annexure R 1 all the Directors Promotors of the Company were residents of either Panchkula or Chandigarh Details of the loans limits sanctioned by the Bank of India in favour of the Company against the creation of pari passu charge on the entire fixed assets of the Company including the immovable properties as mentioned in the impugned notice apart from other property situated within the State of Jammu and Kashmir have also been given and the same are as under : a) Term Loan of Rs. 10 crore b) Corporate Loan of Rs. 20 crore c) FITL of Rs. 5.20 crore d) External Commercial Borrowings of Rs. 8 Mn and cannot be held to be beyond that legislative competence of parliament as is wrongly been held by the High Court...... 48............. We therefore set aside the judgment of the High Court. As a result notices issued by Banks in terms of Section 13 and other coercive methods taken under the said Section are valid and can be proceeded with further. The appeals are accordingly allowed with no order as to costs. 12. That in view of the decision of the Hon ble Supreme Court the challenge in the writ petition to the initiation of proceedings under SARFAESI on the basis of the Division Bench judgment in Santosh Gupta s case no longer survives as the very judgment on the basis of which the challenge had been raised has been set aside by the Hon ble Supreme Court. In the circumstances the writ petition is liable to be dismissed with liberty to the Bank to take out proceedings against the noticees under the Act. However it needs noticing that the writ petition was filed primarily by pleading Since the issue involved is about the taking over of immovable property of the petitioner situated within the State of Jammu and Kashmir therefore the provisions of SARFAESI Act cannot be invoked by the respondent Bank However the aforementioned averment s are contrary to the record and the same is evident from the note to the notice impugned in the writ petition that the notice did not cover Bank FI AR s claim Charge over any property whether immovable or movable including Stock Book Debt Plant and Machinery Furniture Fixture etc. whether present or future relating to the State of Jammu and Kashmir. By filing the writ petition of false averments the petitioner has tried to over reach the process of law to obtain undue benefit of stalling recovery proceedings by the Bank running into crores of rupees of public funds. Therefore it is a fit case where the writ petition should be dismissed with costs. Accordingly the writ petition is dismissed with costs assessed at Rs. 20 000 . (Rs. twenty thousand only). Stay granted vide order dated 20 7 2016 is vacated (Printed For: Reetasa Samal 24 12 2021 On: 04:32:PM Ind Swift Limited V. Union Of India Costs are directed to be deposited with the Legal Aid Authority High Court of Jammu & Kashmir within four weeks from today. Registrar Judicial to report compliance Disclaimer: Legitquest has made all efforts to avoid any omission and or mistake in publishing this document and adding editorial and other enhancements. 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Summary: The question as to whether a writ petition against a notice under section 12(2) of the SARFAESI Act be valid , was examined by THE HIGH COURT OF JAMMU AND KASHMIR , consisting of Justice B.S Walia in the matter of  Mr. Ind. Swift Limited Vs. UOI  [AIR 2017 J&amp;K 95] on 16.02.2017. The facts of the case are a notice u S.13(2) of SARFAESI was issued to  Ind Swift Lts , a company registered under the Companies Act, 1956 . The petitioner has sought issuance of a writ of certiorari and writ of mandamus against the said notice and for the respondents to adhere to the provisions applicable to the state of Jammu and Kashmir. the grievance of the petitioner is that the Bank had proceeded to issue the impugned notice despite fully knowing that SARFAESI was not applicable to the State of Jammu and Kashmir, that in view thereof, the Bank was not entitled to recover the loan from the petitioner by taking recourse to the provisions of the Act. since part of the cause of action arose within the State of Jammu and Kashmir and the proposed action of the Bank initiated u/S. 13 (2) of the Act was going to affect the working of the petitioner Company’s unit at Samba which may have consequential effect of disturbing the entire chain of commercial activity of the petitioner Company, therefore the petitioner had challenged the notice issued by the respondent Bank along with others. The learned Counsel for the petitioner contented that  High Court of Jammu and Kashmir held that  the SARFAESI ACT was not enforceable in the state of Jammu and Kashmir .  The learned counsel on behalf of the respondent contended that none of the property that has been issued under section 13(2) of the SARFAESI Act are situated within the state of Jammu and kashmir and the writ petition challenging the impugned notice on the ground that the provisions of the Act were not applicable to the State of Jammu and Kashmir was wholly misconceived. The Hon’ble Supreme Court has also declared the provisions of the act legal and valid. The High Court of J&amp;K contended that the writ petition under the SARFAESI is dismissed as the very judgment based on which the challenged was sought is dismissed by the Hon’ble Supreme Court of India. However, the aforementioned averments are contrary to the record and the same is evident from the note to the notice impugned in the writ petition that the notice did not cover Bank/FI/ARs claim/Charge over any property whether immovable or movable including Stock/Book Debt/Plant and Machinery/Furniture/Fixture etc., whether present or future relating to the State of Jammu and Kashmir. By filing the writ petition of false averments, the petitioner has tried to over reach the process of law to obtain undue benefit of stalling recovery proceedings by the Bank running into crores of rupees of public funds. Therefore it is a fit case where the writ petition should be dismissed with costs.