KADALI SAROJA Vs. ICICI BANK LIMITED

JUDGEMENT

(1.) THESE writ petitions are filed either by the borrowers or sureties who entered into loan transactions with banks/financial institutions (FIs). In a couple of cases, the petitions are filed against Securitization and Reconstruction Companies (SRCs) in whose favour the loans were assigned. Similar questions of law that arise necessitating this common order are (1) Whether a writ petition under Article 226 of the Constitution of India would lie against private banks/FIs or SRCs; and (2) Whether it is not necessary for the petitioners to exhaust the effective and efficacious alternative remedy available to them. These questions arise in the context of recovery proceedings initiated by the private bodies for enforcement of security interest under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the SARFAESI Act or the Act).

(2.) IT would be suffice to refer to three cases to notice the factual matrix illustratively. W.P.No.24887 of 2010 is filed against the ICICI Bank Limited (ICICI) and Asset Reconstruction Management Services (ARMS) which is a division of Asset Reconstruction Company (India) Limited (ARCIL). The petitioner's son availed loan about Rs.16.39 lakhs for construction of house. The loan is secured by the insurance policy issued by ICICI Lombard Limited and mortgage on the property. The borrower was a software engineer in Mumbai. He died in suspicious circumstances. A Sessions Case being S.C.No.91 of 2008 on the file of the Sessions Judge, Alibagh in Maharashtra against the borrower's wife and others was pending. After death of his son, the petitioner got issued lawyer's notice dated 09.09.2006 requesting the ICICI to adjust the insurance amount towards the loan. The ICICI responded by issuing notice of demand under Section 13(2) of the Act. The petitioner sent two more legal notices on 21.10.2008 and 06.02.2009 requesting ICICI to settle the insurance claim, in vain. The petitioner moved Banking Ombudsman, Mumbai who passed an order to the effect that since the criminal case was pending, the matter will be decided after conclusion of the criminal case. It appears ICICI Lombard denied liability on the ground that the insured committed suicide disentitling the nominee to claim insurance amount.

(3.) THE petitioner's father purchased house site (205.7- square yards) under registered sale deed dated 19.12.1952. After his death, the property devolved on owner's wife who appears to have executed a settlement deed in favour of petitioner's son on 21.07.1972 giving vested remainder. The respondents 3 and 4 availed loan from Dhanalakshmi Bank Limited. The petitioner's son was a guarantor. When the loan became a non-performing asset (NPA), the second respondent initiated action under the SARFAESI Act and Security Interest (Enforcement) Rules, 2002 (the Rules). After issuing possession notice, the bank also approached Chief Metropolitan Magistrate, Vijayawada who appointed an Advocate Commissioner to take physical possession from the petitioner and his tenants. Assailing the said action, the petitioner filed the instant writ petition seeking declaration and direction not to interfere with her possession. We may mention that W.P.Nos.22265 of 2010 and 7402 and 27955 of 2011 are also filed against Dhanalakshmi Bank when they initiated action under the SARFAESI Act. Two incorporated companies filed the instant writ petition challenging the action initiated by the Axis Bank Limited. They prayed for declaration that the action of the said bank in not furnishing the necessary details as requested in the interim objections filed under Section 13(3A), in response to notice of demand issued under Section 13(2) of the SARFAESI Act to M/s.Prestige Avenue Limited (Prestige, for brevity) as illegal and arbitrary besides being contrary to the Banking Code and Standard Board of India and Guidelines issued by the Reserve Bank of India and for further directions.