Calcutta High Court
M/S Kavita Marketing Pvt Ltd vs State Bank Of India And Ors on 27 September, 2023
OD 1
WPO/1609/2023
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
ORIGINAL SIDE
M/S KAVITA MARKETING PVT LTD
VS
STATE BANK OF INDIA AND ORS
BEFORE:
The Hon'ble JUSTICE SABYASACHI BHATTACHARYYA
Date: 27th September, 2023.
Appearance:
Mr. Suddhasatva Banerjee, Adv.
Mr. Ishan Saha, Adv.
Ms. Sananda Ganguly, Adv.
Mr. Shubradip Roy, Adv.
. . .for the petitioner.
Mr. Anirban Pramanik, Adv.
Mr. P. Nath, Adv.
. . .for the respondents.
The Court: Learned counsel for the bank today, in continuation of the
arguments made on the last occasion, cites United Bank of India vs. Satyawati
Tandon & Ors. reported at AIR 2010 SC 3413 and argues that in case of
proceedings under the SARFAESI Act, the Writ Court does not ordinarily
interfere. Learned counsel places reliance on the findings of the Supreme Court
that the High Court must keep in mind that the legislation enacted by Parliament
and State legislatures for recovery of such dues are a code unto themselves
inasmuch as they not only contain comprehensive procedure for recovery of dues
but also envisage constitution of quasi judicial bodies for redressal of the
grievance of any aggrieved person.
Learned counsel for the bank places reliance on certain documents, which
were executed by the petitioner/guarantor subsequent to the issuance of the
previous notice under Section 13(2) dated January 18, 2018. By relying on the
said documents, learned counsel argues that the petitioner/guarantor admitted
its liability regarding repayment of the entire loan amount of Rs.36.05 crores
along with interest. It is, thus, submitted that the argument of the petitioner
that the liability of the guarantor stood crystallised to the amount of
Rs.4,71,38,280.27 is not acceptable.
Learned counsel for the bank further submits that vide order dated
November 21, 2019, the Presiding Officer of the Debts Recovery Tribunal 1
Calcutta directed the bank to file present status of the NCLT cases along with the
order, relevant papers and minutes of the meeting of COC and inform the
outcome of the settlement.
A perusal of the deed of guarantee, which is the corporate guarantee
furnished by the petitioner as guarantor, annexed at page 50 of the writ petition,
indicates that the same restricted the liability of the petitioner/guarantor to
credit facilities by way of Working Capital Term Loan (WBCTL) and Funded
Interest Term Loan (FITL) and such other facilities as may be agreed upon from
time to time between the bank and the borrower for sums not exceeding the
aggregate sum of Rs.36.305 crores.
In Clause 1 of the said document, it is stipulated that if at any time default
shall be made by the borrower in payment of the principal sum of Rs.36.305
crore together with interest, costs etc. and/or other monies for the time being
due to the bank in respect of or under the aforesaid credit facilities, the
guarantor shall forthwith on demand pay to the bank the whole of the principal
sum not exceeding 36.305 crores together with interest, cost etc. as may be then
due to the bank in respect of the aforesaid credit facilities.
A perusal of the notice sent by the bank under Section 13(2) of the
SARFAESI Act, 2002 dated January 18, 2018 shows that the bank specifically
quantified the outstanding liabilities of the petitioner as guarantor for the above
borrower in aggregate to the tune of Rs.4,71,38,280.27p. Admittedly and as
corroborated by the documents annexed to the writ petition, the said amount
was paid in full by the petitioner to the bank. Again, in the impugned
subsequent notice under Section 13(2) of the said Act dated July 17, 2023, the
bank renews the similar claim, now quantifying the amount allegedly due from
the petitioner to a sum of Rs.8,64,15,886.12 p.
Learned counsel for the petitioner is justified in contending that
substantially there is no difference in the quality and texture of the dues
enumerated in two notices under Section 13(2) of the SARFAESI Act, dated
respectively January 18, 2018 and July 17, 2023. Hence, even after the
petitioner having paid the entire amount which the bank itself enumerated to be
the total outstanding liabilities of the petitioner as guarantor "to discharge in full"
the liabilities of the petitioner towards the total secured amount of Rs.36.05
crore, the bank could not have claimed the same amount or issued a notice
under Section 13(2) of the SARFAESI Act on the self-same cause of action.
By virtue of payment of the entire amount as claimed by the bank by its
notice under Section 13(2) dated January 18, 2018, the entire claim of the bank
from the petitioner on such score stood extinguished. The plinth of the bank's
submission today seems to be the subsequent exercise of one time settlement
entered into between the borrower, the petitioner guarantor and the bank.
Before embarking on an enquiry in that regard it must be kept in mind that
admittedly the borrower company is at present in a CIRP proceeding.
Seen from such perspective, the letter dated October 30, 2019, a copy of
which has been handed over by the bank today, authored by the
petitioner/guarantor indicates that the amount already paid by the petitioner to
the bank may be adjusted with the entire loan amount due from the borrower to
the bank. The entire premise of the said letter and the supporting Board
resolution of the petitioner company revolves around the concept of the amount
which has already been paid by the petitioner, in full and final settlement of its
liabilities as guarantor, to be adjusted with the entire loan amount payable by
the borrower to the bank.
The letter dated October 30, 2019, in its second paragraph reads that the
petitioner requests and authorises the bank to adjust the amount of
Rs.4,76,83,300/- paid to the bank by the petitioner company from time to time
against the amount payable by DIL (the borrower) towards the one time
settlement (OTS).
Even the Board resolution backing up such communication, also handed
over by the bank today, shows that the borrower had intimated the petitioner of
the OTS and had requested the petitioner to approach the bank "to adjust"
Rs.4,76,83,300/- which was given by the company time to time, "against the
settlement amount payable by DIL to SBI".
Hence, the liability of the petitioner in the capacity of guarantor does not
hinge on the said resolution of the Board or the communication whereby the
petitioner merely communicated to the bank its willingness to have the amount
paid by the petitioner in lieu of its liability as guarantor to be adjusted with the
total amount payable by the borrower.
Hence, nothing in the said communications regarding OTS has any bearing
on any further liability being cast on the petitioner in the capacity of guarantor.
Thus, irrespective of the fact that the OTS has failed, I do not find any
subsequent cause of action for the bank to renew its claim and issue a second
notice under Section 13(2) of the SARFAESI Act, after the entire claim of the
bank from the petitioner as guarantor having been extinguished by virtue of full
payment by the petitioner.
Thus, the confusion sought to be raised by the bank with regard to the
alleged further liability of the petitioner lies in thin air and does not have any
basis to stand on.
In such view of the matter, nothing in the subsequent OTS exercise confers
any further right on the bank to issue a fresh notice under Section 13(2) of the
SARFAESI Act.
In so far as the cited judgment of Satyawati Tandon (supra) is concerned,
the same pertaina to the jurisdiction of this Court where measures have already
been initiated under Section 13(4) of the SARFAESI Act.
There is a sea difference between a notice under Section 13(2) and a
measure being taken under Section 13(4) of the 2002 Act.
At present, the petitioner has only given a reply under Section 13(3A) of the
SARFAESI Act to the notice under Section 13(2). Even if such reply has been
given by the petitioner, the said fact per se cannot give rise a defence for the bank
to say that the petitioner ought to have a taken recourse under Section 17 of the
SARFAESI Act. The bank has not been taken any measure under Section 13(4)
nor would have done so in view of the notice under Section 13(2) being de horse
the law. Hence, there is no bar to this Court to assume jurisdiction in the
matter.
Accordingly, in view of the above findings, WPO 1609 of 2023 is allowed on
contest, thereby setting aside the impugned notice issued by the respondent
bank under Section 13(2) of the SARFAESI Act, 2002 dated July 17, 2023 and
directing the respondent bank to return the title deeds kept with the respondent
bank by the petitioner as guarantor to the loan in question within three weeks
from date. Any action, if taken pursuant to and in terms of the notice under
Section 13(2) which has been quashed above, stands automatically cancelled.
(SABYASACHI BHATTACHARYYA, J.)
sp/
