SOUTH INDIAN BANK LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) The Petitioner Bank is challenging the correctness and sustainability of Ext.P6 order passed by the G. J.M., Kozhikode whereby the petition filed under Section 14 of the Sarfaesi Act seeking to avail the assistance of the learned Magistrate to take possession of the property in question has been turned down, stating that the notice under Section 13(2) of the Act served 'physically' upon the defaulter/guarantor who has endorsed the aceptance, is not sufficient so as to constitute proper and valid service under Rule 3 of the Security Interest (Enforcement) Rules.

(2.) The sequence of events as narrated in the Writ Petition is that a loan was availed by the second Respondent from the Petitioner Bank on 30.3.2007 creating security interest over the property of nearly 7.5 cents of land. But repayments were not effected on time, which made the Bank to declare the account as NPA and issued Ext. PI notice dated 1.7.2009 under Section 13(2) of the SARFAESI Act. The notice was sent by registered post to the Respondents No. 2 and 3, which was accepted by the second Respondent (wife of the third Respondent), as borne by the postal acknowledgement card, while, the notice sent to the third Respondent, who is the guarantor was returned 'unclaimed'. The authorised officer of the Bank gave a copy of the notice to the third Respondent directly, against proper acknowledgement on 10.09.2009. Since the said Respondents did not choose to clear the due amount, despite receipt of the notice, Ext.P5 application was filed by the Bank under Section 14 of the SARFAESI Act. After considering the said petition, the learned C.J.M. observed that service of the demand notice under Section 13(2) of the SARFAESI Act 'directly' on the third Respondent (herein) cannot be accepted as proper service as provided under 'Rule 3' of the Security Interest (Enforcement)Rules and accordingly, the application was rejected, as per Ext. P6, which in turn is under challenge.

(3.) The Respondents 2 and 3 have filed a counter affidavit stating that the Petitioner Bank is not justified in filing this Writ Petition in view of the subsequent developments. It is also stated that the impugned order is not assailable under any circumstances as 'Rule 3' of the Rules does not provide for personal service, as a mode of service. The learned Counsel for the said Respondents submits that challenging the action taken by the Petitioner Bank under Section 13(4) of the SARFAESI Act issuing possession notice dated 21.11.2009, necessary proceedings have been filed before the D.R.T., Ernakulam under Section 17 of the SARFAESI Act, wherein interim stay was granted by the Tribunal as borne by Ext. R3 subject to the condition as specified therein. The learned Counsel further submits that the condition imposed was satisfied, on which event, the interim order was extended further and the matter stands posted to July 2010 for final hearing. It is also brought to the notice of this Court that extension of the interim order was made by the Tribunal, of course, after hearing the learned Counsel for the Bank, as observed in Ext.R3 itself.