PUSHPALATHA Vs. STATE BANK OF TRAVANCORE

JUDGEMENT

(1.) The petitioner availed a loan from the first respondent. According to her, that was on the basis of a then available financial assistance scheme of the second respondent, Khadi and Village Industries Commission. She states that the second respondent recommended her application and forwarded it to the first respondent, Bank, however, that the bank did not duly honour its commitments and hence margin money and other amounts payable by the second respondent, Commission was not appropriately released.

(2.) On default in repayment, the bank initiated action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002(in short, SARFAESI Act). A notice under Section 13(2) was issued. The petitioner replied to that as per Ext.P11, stating that in view of the disputes between the petitioner and the first respondent regarding the total amount outstanding from her to bank, the parties have to go for arbitration in terms of Section 11 of SARFAESI Act read with the provisions of Arbitration and Conciliation Act, 1996.

(3.) If a measure is taken under Section 13(4), the obvious remedy for the petitioner is to take recourse to Section 17 of SARFAESI Act and move the Debt Recovery Tribunal. If further action under Section 13(4) has not followed, the petitioner would not have any right to challenge the decision of the bank, rejecting the objections to the notice under Section 13(2). This proposition settled by Apex Court in the judgment in Mardia Chemicals v. Union of India, 2004 4 SCC 311. It is contended that the said ratio is not applicable, in view of the fact that the petitioner s challenge is to the bank s decision that it does not agree for arbitration in terms of Section 11 of SARFAESI Act.