ASHIRBAD SEEDS AND OTHERS Vs. PUNJAB NATIONAL BANK

JUDGEMENT

(1.) By means of present writ petition, the petitioners seek writ in the nature of certiorari quashing the notice dated 19.02.2015 (Annexure no. 1), issued under Section 13(2) of the SARFAESI Act, 2002, by respondent Bank and further to quash the notice dated 27.04.2015 (Annexure no. 3). A writ in the nature of mandamus has also been sought commanding the respondent Bank not to proceed under the SARFAESI Act, 2002 against the petitioners.

(2.) Petitioner no. 1 is a partnership firm and is engaged in the business of processing of seeds. In the year 2007, petitioner no. 1 approached the respondent bank for financial assistance. Respondent bank sanctioned a Cash Credit (C/C) limit facility of Rs. 75,00,000/-. Since then, the petitioner firm is running its account with the bank. Respondent bank, on 19.12.2015, issued a notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the SARFAESI Act, 2002") demanding Rs. 98,29,835/- only as on 31.01.2015 within 60 days from the date of issuance of the notice.

(3.) It is the submission of learned counsel for the petitioners that in the notice dated 19.02.2015, issued under Section 13(2) of the SARFAESI Act, 2002, the respondent bank has nowhere mentioned the date of classifying the account of the petitioner no. 1 firm as non performing asset (NPA). The respondent bank has unilaterally classified the petitioner no. 1 firm as a NPA without issuing any show cause notice. The respondent bank has waived the demand notice dated 19.02.2015 issued under Section 13(2) of the SARFAESI Act, 2002 by issuing the second notice dated 25.02.2015. The possession notice dated 27.04.2015 is not according to Rule 8(1) and (2) of the Security Interest (Enforcement) Rules, 2002. It is also contended by learned counsel for the petitioners that the RBI has issued guidelines to all the banks for classifying the account as NPA. The guidelines show that the bank should classify an account as NPA only if the interest charged during any quarter is not serviced fully within 90 days from the end of the quarter. On the date, i.e., 31.012015, the interest of one quarter was not even due to be paid by the petitioner no. 1 firm, hence classifying the account of the petitioner firm as NPA on 31.01.2015, is absolutely bad in law and in violation of the guidelines issued by the RBI. Learned counsel for the petitioners also submitted that the other guidelines of the RBI has also been flouted by the respondent bank. According to Section 31(i) of the SARFAESI Act, 2002, the agriculture land cannot be considered as a secured asset for the purpose of SARFAESI Act and is out of the purview of the said Act. In this way the notice dated 19.02.2015, issued under Section 13(2) of the SARFAESI Act, 2002 as well as the possession notice dated 27.04.2015 are bad in law and without jurisdiction.