S.K. AGARWAL Vs. ORIENTAL BANK OF COMMERCE

JUDGEMENT

(1.) THE petitioner, a promoter/managing director of a company which has been declared a sick industrial unit and for whose financial assistance and facilities he gave personal guarantee, has impugned notice under Section 13(11) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'Act 54 of 2002'), served on him by the secured creditor, respondent Oriental Bank of Commerce.

(2.) THE short facts of the case and which are not disputed are that M/s. Superior Carbonate and Chemicals Ltd. (for short 'the company') was granted cash credit facility with second charge over the fixed assets of the company by the respondent -bank and the financial facility was secured with personal guarantee by the petitioner and his properties detailed in the impugned notice dated November 18, 2003, were accordingly charged to the bank as a security. The company suffered losses and reference was made before the Board for Industrial and Financial Reconstruction (for short 'BIFR') and presently the rehabilitation package is under preparation. The first charge over the entire fixed assets of the company is with the I.D.B.I. another secured creditor which had given substantial credit facilities to the company. The respondent -bank with a view to enforce the security under guarantee decided to resort to the provision of the 'Act 54 of 2002' and sent notice under Section 13(11) of the Act on November 18, 2003, showing the total outstanding dues at Rs. 1,10,42,548.02 and the said notice has been impugned in this petition.

(3.) IN the counter affidavit the respondent -bank raised the contentions that the petitioner being a guarantor has no right to take the advantage/protection under Section 22(1) of the 'SICA' ; that the agreement of guarantee has a specific Clause No. 12 which entitle the respondent -bank to enforce the guarantee without first enforcing, selling or realizing any of the securities kept by the borrower lien, hypothecated, pledged or mortgaged with it ; that the steps have already been taken for symbolic possession of the properties charged on July 15, 20,04, which has been duly received by the petitioner and that the petitioner has no locus to file the writ petition challenging the validity of the notice under Section 13(11) of the Act 54 of 2002.