K.J.Raju vs State Bank Of India
2023 Latest Caselaw 5570 Ker

W.P.(C)No.4517/2023
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             IN THE HIGH COURT OF KERALA AT ERNAKULAM
                                     PRESENT
                THE HONOURABLE MR. JUSTICE T.R.RAVI
     THURSDAY, THE 4th DAY OF MAY, 2023/14TH VAISAKHA, 1945
                            WP(C) NO. 4517 OF 2023
PETITIONER:

             K.J.RAJU,
             AGED 59 YEARS, S/O. K.J.JOSEPH,
             PROPRIETOR BARNET ASSOCIATES,
             BARNET BUILDING, THAVALAKUZHY,
             ETTUMANNOOR, KOTTAYAM, PIN - 686631
             BY ADVS.
             SRI RENJITH B.MARAR
             MS.LAKSHMI.N.KAIMAL
             SRI ARUN POOMULLI
             MS.PREETHA S CHANDRAN
             SRI ABHIJITH SREEKUMAR


RESPONDENTS:

     1       STATE BANK OF INDIA,
             CORPORATE CENTRE, MADAME CAMA ROAD,
             NARIMAN POINT, MUMBAI, PIN - 400001
             REPRESENTED BY ITS MANAGING DIRECTOR.
     2       AUTHORIZED OFFICER,
             STATE BANK OF INDIA,
             STRESSED ASSETS RECOVERY BRANCH,
             VANKARATH TOWERS, 7TH FLOOR, PALARIVATTOM,
             BYE PASS JUNCTION, ERNAKULAM, PIN - 682024
     3       CHIEF MANAGER,
             SME BRANCH, STATE BANK OF INDIA,
             2ND FLOOR, PARAYKKAL BUILDING,
             LAL BAHADUR SASTHRI ROAD,
             KOTTAYAM, PIN - 686001
             BY ADV SRI S.EASWARAN

      THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION
ON   04.05.2023,      THE    COURT    ON    THE   SAME   DAY   DELIVERED   THE
FOLLOWING:
 W.P.(C)No.4517/2023
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                             T.R. RAVI, J.
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                      W.P.(C)No.4517 of 2023
              --------------------------------------------
                Dated this the 4th day of May, 2023

                              JUDGMENT

The prayer in the writ petition is for a direction to the

respondent to permit the petitioner to pay the total overdue

amounts in 20 equal monthly instalments along with regular

intalments and thereby regularise the loan account. There is a

prayer for renewal of cash credit facilities by accepting the pending

due payment, restructuring of the petitioner's loan accounts based

on Exts.P2 and P3 circulars and also for a direction to the bank to

withdraw all SARFAESI proceedings initiated against the petitioner

pursuant to Ext.P7 notice issued by the Advocate Commissioner.

2. Heard Sri Renjith B. Marar on behalf of the petitioner

and Sri S.Easwaran on behalf of the respondent bank.

3. The case of the petitioner is that the respondent bank

had classified the loan account of the petitioner as NPA on

30.3.2021 as evident from Ext.P11 and it is on that basis that

proceedings were initiated. Ext.P2 also confirms that the account

became NPA on 30.3.2021. On 28.10.2021, the petitioner

submitted a representation for restructuring the loan account W.P.(C)No.4517/2023

which was rejected by the Bank on 15.11.2021. When notice

under Section 13(4) of the SARFAESI Act was issued, the

petitioner approached this Court by filing W.P.(C)No.2301 of 2021.

The reason for approaching this Court was that the Debt Recovery

Tribunal was not functioning at that time. On 9.6.2022, this Court

by Ext.P5 judgment disposed of the writ petition without granting

any relief to the petitioner. This Court however, gave liberty to the

petitioner to raise all the contentions before the DRT. The

petitioner filed S.A.No.300 of 2022 before the DRT. Pending the

application, the respondent issued sale notice on 23.12.2022. The

petitioner filed OP(DRT)No.521 of 2022, which was disposed of

deferring the sale proceedings till 7.1.2023 on condition that the

petitioner remits a sum of Rs.10 lakhs. On 26.12.2022, the

petitioner deposited the amount of Rs.10 lakhs and on 9.1.2023,

the petitioner submitted Ext.P6 representation before the bank

seeking restructuring of the loan accounts. On 1.2.2023, the

respondent moved the Chief Judicial Magistrate Court, Kottayam

by filing M.C.No.666 of 2022 for taking physical possession of the

property. The application was allowed and an Advocate

Commissioner was deputed, who issued notice stating that

possession will be taken on 13.2.2023. It is thereupon that the

petitioner preferred this writ petition.

4. On 10.2.2023, when the case came up for admission, W.P.(C)No.4517/2023

this Court stayed the coercive proceedings against the petitioner

on condition that a sum of Rs.20 lakhs will be deposited on or

before 17.2.2023. On 17.2.2023, the petitioner remitted a sum of

Rs.10 lakhs and the further sum of Rs.10 lakhs was paid only on

24.2.2023. Subsequently, on 27.2.2023, this Court directed the

parties to appear before the High Court Mediation Centre on

6.3.2023 with the hope that the parties will arrive at a mediated

settlement. The mediation did not yield results. The petitioner, on

the other hand, preferred Ext.P8 representation for renewal and

restructuring of the loan accounts. According to the petitioner, on

6.3.2023, while the mediation was taking place, the officer of the

Bank informed that the date on which the account became NPA

was 24.9.2021. The petitioner had preferred a representation with

a proposal for restructuring of the loan accounts which was

rejected on 8.3.2023.

5. The contention of the counsel for the petitioner is that

the Bank had proceeded with SARFAESI proceedings on the

premise that the account became NPA on 30.3.2021, while as a

matter of fact, the date of becoming NPA was much later, on

24.9.2021. It is hence submitted that the entire proceedings have

been initiated without complying with the requirements of the

SARFAESI Act. The decision in M.J.Betty & Ors. v. Union Bank

of India & Ors. reported in [2007 (4) KHC 735] was relied on W.P.(C)No.4517/2023

to submit that where a minimum 90 days' period is required to

classify an account as a non-performing asset and where the

Statute requires the existence of certain facts for exercise of

certain powers, this Court can entertain a writ petition if it is

shown that the basic facts are not available for exercise of the

jurisdiction. Reliance was also placed on the judgment of the High

Court of Calcutta in Fabworth Promoters Private Limited &

Ors. v. Reserve Bank of India & Ors. (WPO No.841 of 2021),

wherein the Court in exercise of jurisdiction under Article 226 of

the Constitution quashed a notice issued under Section 13(2) of

the SARFAESI Act. Reliance was also placed on the judgment of

the Punjab & Haryana High Court in Amar Alloys Pvt. Limited v

State Bank of India reported in [2019 SCC OnLine P&H 571]

to emphasise on the importance of the circulars issued for

governing the classification of an account as NPA.

6. Sri S.Eawaran, on the other hand submitted that the

writ petition itself is not maintainable. Relying on Ext.P5 judgment

it is submitted that this Court had clearly held that the appropriate

forum for adjudicating issues as to violation of Reserve Bank of

India Guidelines in the matter of classification of accounts is the

DRT and such disputed questions of facts cannot be determined in

a writ petition under Article 226 of the Constitution of India. It is

submitted that after having approached this Court and suffered W.P.(C)No.4517/2023

Ext.P5 judgment, it is not open to the petitioner to raise the

question relating to wrong classification as NPA in a subsequent

writ petition. The counsel further points out that the petitioner has

not raised such a challenge before the DRT and that having agreed

to pay off the amounts in instalments, it is not open for the

petitioner to challenge the very classification as NPA and the entire

SARFAESI proceedings. The counsel for the respondent then

points out that after the matter was sent for mediation, the

petitioner had submitted a request on 1.3.2023, wherein the stand

taken is different. It is submitted that in the request, the

requirement was renewal of the credit facility and not for paying

the amounts. In the request made, the petitioner has sought

three months' holiday period before the initial instalment. Thirty

six equal monthly instalments was also sought for. The said

request was rejected by the Bank as per Ext.R2(e).

7. Having approached this Court earlier and agreed for

paying off the amounts in instalments, it is not now open to the

petitioner to challenge the proceedings initiated after Ext.P11. A

challenge to the proceedings on the ground that the date of

classification as NPA was wrong was not a challenge earlier taken.

In the communications which have been produced, the petitioner

has proceeded as if the amounts are liable to be paid and states

the reasons for non-payment of the amount already demanded. W.P.(C)No.4517/2023

The counsel for the respondent has pointed out that the very

prayer in W.P.(C)No.23019 of 2021 was for a direction to the Bank

to regularise the petitioner's loan account by allowing him to remit

the arrears outstanding. There is no challenge to the classification

as NPA raised in the said writ petition. This Court also did not

grant any relief in the said writ petition and only relegated the

petitioner to the DRT. It is further submitted that the petitioner's

remedy to challenge Ext.P7 notice issued by the Advocate

Commissioner was to move the DRT and for that reason also the

writ petition is not maintainable.

8. I have considered the contentions raised by the Counsel for

the petitioner and the respondents. The limits of exercise of jurisdiction

under Article 226 need not be stated extensively, since precedents in

that regard are a plenty. Recently, the Hon'ble Supreme Court in the

decision in South Indian Bank & Ors. v. Naveen Mathew Philip &

Anr. [2023 SCC OnLine SC 435], catalogued the earlier decisions

rendered by the Apex Court and reiterated the concerns expressed by

the Supreme Court regarding the interference by the High Court in

matters relating to action taken under the SARFAESI Act. Even

approaching the High Court for consideration of an offer by the borrower

has been frowned upon by the Hon'ble Supreme Court. While observing

that the power under Article 226 is rather wide, the Hon'ble Supreme

Court has categorically stated that the power should be used only in

extraordinary circumstances, when it comes to matters pertaining to W.P.(C)No.4517/2023

proceedings and adjudicatory schemes qua a Statute and more so in

commercial matters relating to a lender and borrower, where the Statute

prescribes a specific mechanism for redressal of grievances.

In view of the categoric pronouncement of the law, I am of the

opinion that the case on hand cannot be categorised as one within the

confines of the term "extraordinary circumstances" warranting

interference by this Court any further. The writ petition fails and is

dismissed, however, without prejudice to the rights and remedies

available to the petitioner under the Statute, before the appropriate

forum.

Sd/-

T.R. RAVI JUDGE

dsn W.P.(C)No.4517/2023

APPENDIX OF WP(C) 4517/2023

PETITIONER'S EXHIBITS Exhibit P1 A TRUE COPY OF THE NOTICE UNDER SECTION 13(2) OF THE SECURITISATION ACT DATED 21.10.2021 ISSUED BY THE 2ND RESPONDENT Exhibit P2 TRUE COPY OF CIRCULAR NO-

DOR.NO.BP.BC/3/21.04.048/2020-21 DATED 06.08.2020 ISSUED BY THE RESERVE BANK OF INDIA Exhibit P3 TRUE COPY OF CIRCULAR NO-DOR.STR.REC 11/21.04.048/2021-22 DATED 05.05.2021 ISSUED BY THE RESERVE BANK OF INDIA Exhibit P4 A TRUE COPY OF THE SECTION 13(4) POSSESSION NOTICE DATED 12.01.2022 ISSUED BY THE 2ND RESPONDENT Exhibit P5 TRUE COPY OF JUDGMENT IN WPC NO-

23019/2021 DATED 09.06.2022 Exhibit P6 TRUE COPY OF REPRESENTATION MADE BEFORE RESPONDENT NO-3 BY THE PETITIONER DATED 09.01.2023 Exhibit P7 TRUE COPY OF THE ADVOCATE COMMISSION NOTICE IN MC NO-666/2022 OF HON'BLE CHIEF JUDICIAL MAGISTRATE COURT, KOTTAYAM 01.02.2023 Exhibit P8 TRUE COPY OF THE REPRESENTATION MADE BEFORE THE RESPONDENT NO-2 DATED 01.03.2023 Exhibit P9 TRUE COPY OF THE REPRESENTATION MADE BEFORE THE RESPONDENT NO-2 DATED 07.03.2023 Exhibit P10 TRUE COPY OF THE COMMUNICATION NO-

SARB/VK/30/2022-23 DATED 08.03.2023 ISSUED BY THE RESPONDENT NO-2 Exhibit P11 TRUE COPY OF DEMAND NOTICE ISSUED UNDER SECTION-13(2) OF SARFAESI ACT DATED 30.07.2021 BY THE RESPONDENT NO-3 Exhibit P12 TRUE COPY OF THE COMMUNICATION DATED 22.09.2021 ISSUED BY THE RESPONDENT NO-3 RESPONDENT EXHIBITS EXHIBIT R2(a) COPY OF THE WRIT PETITION NO 23019 OF 2021 ON THE FILES OF THIS HONOURABLE COURT W.P.(C)No.4517/2023

EXHIBIT R2(b) COPY OF SA NO 300 OF 2022 (WITHOUT ANNEXURES) ON THE FILES OF DRT-II ERNAKULAM EXHIBIT R2(c) COPY OF THE REPRESENTATION DATED 1-3-2023 SUBMITTED BY THE PETITIONER EXHIBIT R2(d) COPY OF THE REPRESENTATION DATED 7-3-2023 SUBMITTED BY THE PETITIONER EXHIBITR2(e) COPY OF THE LETTER DATED 8-3-2023 ISSUED BY THE 2ND RESPONDENT EXHIBIT R2(f) COPY OF THE APPLICATION FOR AMENDEMENT FILED IN SA NO 300 OF 2022 ON THE FILES OF DRT-II ERNAKULAM EXHIBIT R2(g) COPY OF OP DRT NO 521 OF 2022 ON THE FILES OF THIS HONOURABLE COURT.