BHISHMA N THAKORE Vs. DENA BANK

JUDGEMENT

(1.) These three petitions under Article 226 of the Constitution of India have been preferred by the guarantors against the action of the respondent Dena Bank (hereinafter referred to as, "the Bank") in issuing notice for remittance of its dues 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 of 2002").

(2.) It is not in dispute that the Bank had advanced financial assistance to one Norris Medicines Limited (hereinafter referred to as, "the Company") to the extent of Rs.365 lakhs which was later enhanced to Rs.720 lakhs. The petitioners herein gave guarantee and offered the property in question in mortgage as collateral security. It is also not in dispute that the Company failed to discharge its liability to the Bank. The Bank has, therefore, approached the Debt Recovery Tribunal (hereinafter referred to as, "the Tribunal") under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as, "the Act of 1993"). The Bank has filed Original Application No.199/2001 for recovery of a sum of Rs 6,67,51,922=00 from the Company and nine others including the present petitioners. Pending the said proceeding, after introduction of the Act of 2002, the Bank has initiated proceeding for recovery of its dues as envisaged by the Act of 2002. On 7th December, 2005 the Bank has issued notice for remittance of its dues within sixty days as envisaged by Section 13(2) of the Act of 2002. Feeling aggrieved, the petitioners have preferred the present petitions.

(3.) The challenge is three-fold. Mr.Joshi has submitted that the Cornpany has moved reference before the Board for Industrial and Financial Reconstruction (hereinafter referred to as, "the BIFR") as envisaged by Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as, "the Act of 1985"). The BIFR has been seized of the mattter and is inquiring into the working of the Company. Pending the said inquiry, no recovery proceeding shall be maintainable against the Company as envisaged by Section 22 of the Act of 1985. He has submitted that the action taken by the Bank pending the inquiry by the BIFR is barred by law and requires to be quashed and set-aside. He has next submitted that against the impugned notice dated 7th December, 2005 the petitioners have lodged objections on 4th February, 2006. It is the statutory duty of the Bank to consider and decide the said objections and to communicate its decision to the petitioners. Unless the Bank discharges the said statutory obligation, the Bank has no authority to proceed further with the recovery proceeding as envisaged by Section 13(4) of the Act of 2002. In support thereof, he has relied upon sub-section (3A) of Section 13 of the Act of 2002. He has also submitted that the Bank, having instituted Original Application No.199/2001 before.the Tribunal for recovery of its dues, the Bank has no authority to proceed under the Act of 2002 as well. In support of this argument, he has relied upon the judgment of the Punjab and Haryana High Court in the matter of KALYANI SALES COMPANY AND ANOTHER V/S. UNION OF INDIA AND ANOTHER [I (2006) BC 1].