MANOKAMNA STEEL PVT LTD Vs. PUNJAB NATIONAL BANK

JUDGEMENT

(1.) In the year 2005, the petitioner had taken a loan from the respondent bank for the purpose of, running a factory. Initially, a Cash Credit limit of Rs. 100 lacs and a Term Loan of Rs. 160 lacs was granted. This Cash Credit limit was enhanced from time to time and eventually, it was extended upto Rs. 600 lacs. In the year 2009, the loan was re-structured. It is alleged that the Cash Credit limit was reduced from Rs. 600 lacs to Rs. 400 lacs and the Term Loan limit was reduced from Rs. 160 lacs to Rs. 48 lacs.

(2.) On 8th July, 2010;, a notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'the Act') was issued by the respondent bank indicating that the petitioner's account has been classified as a non-performing asset (NPA) as on 30th June, 2010 as per the Reserve Bank of India guidelines and indicating therein that the outstanding amount was liable to be recovered. The notice also indicated the list of assets through which the amount was to be recovered. In response to the notice, the petitioner filed an objection indicating that the account of the petitioner could not be classified as a non-performing asset as per the Reserve Bank of India guidelines and that the notice was illegal, perverse and was issued in gross violation of the Act of 2002.

(3.) It transpires that the petitioner further sent a reply on 19th April, 2011 contending that the factory has been erected on a leased land and consequently could not be sold in view of the provision of Section 31(e) of the Act. Since the petitioner's representations remained pending, the petitioner approached the Court in May, 2011 praying for the quashing of the notice dated 8th July, 2010 issued by the respondent bank under Section 13(2) of the Act.