GATS FINANCIAL RECONSTRUCTORS LTD. Vs. UNION OF INDIA

JUDGEMENT

(1.) CHALLENGE in this writ petition filed under Articles 226/ 227 of the Constitution of India is for quashing the impugned order dated 29.6.2011, Annexure P.9 depaneling the petitioner without payment of outstanding dues and affording any opportunity of hearing. A few facts relevant for the decision of the case, as narrated in the petition may be noticed. The petitioner is a Public Limited Company incorporated under the provisions of the Companies Act, 1956. The respondent -State Bank of India is a Public Sector Bank constituted under the provisions of the State Bank of India Act. After the enactment of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short, "the SARFAESI Act"), the respondent -Bank issued a public advertisement inviting applications for appointment of Enforcement Agents, Recovery Agents and Resolution Agents. In response to the advertisement, several persons including the petitioner offered their services to the respondent Bank to act as Enforcement Agent. After the interview, 29 persons including the petitioner were appointed as Enforcement Agents on 13.3.2003, Annexure P.4. The name of the petitioner is at Sr. No. 7. According to the petitioner, although no formal agreement was signed between it and the respondent Bank but a copy of the fee structure to specify the fee payable was supplied to it. The respondents had a uniform fee structure, copy of which is attached as Annexure P.5 with the petition. The petitioner was entrusted several cases from time -to -time. The letter appointing the petitioner as an Enforcement Agent was issued separately in each case. Copies of two such letters are attached as Annexures P.6 and P.7 with the petition. As per the said letters, the petitioner was only to handle a particular case and the fee was payable to it strictly in terms of the schedule approved by the appropriate authorities of the Bank. The Bank was required to serve a notice under Section 13(2) of the SARFAESI Act on the borrowers and in case of default, the secured assets were required to be possessed in terms of Sections 13(4) of the Act with the help of the orders from the District Magistrate under Section 14 of the SARFAESI Act. As and when the matter was entrusted to the petitioner, the petitioner after following due process as required under Sections 13(4) and 14 of the SARFAESI Act was able to take actual physical possession in most of the cases with the help of the District Administration but thereafter the matter used to be kept in abeyance by the officers of the Bank. According to the petitioner, the respondent Bank was not interested in early recovery and after the actual physical possession of the secured assets was taken over by the petitioner by virtue of Sections 13 and 14 of the SARFAESI Act, the matter remained in abeyance because of the arbitrary attitude of the authorised officers as the valuation was not got done for several months and in certain cases for years and the petitioner was told to keep on maintaining the actual physical possession. In this way, the payments of the petitioner were being delayed and ultimately vide communication dated 29.6.2011, Annexure P.9, the petitioner was informed that it stood depanelled from the approved list of Enforcement Agents. Hence this petition.

(2.) LEARNED Counsel for the petitioner submitted that the respondent -Bank vide Annexure P.9 has depanelled the petitioner Company from the Bank's panel of approved Enforcement/Resolution Agents with immediate effect. According to the Counsel, the same has been done in violation of principles of natural justice as no hearing has been afforded to the petitioner before de -paneling it. Relying upon the judgments of the Apex Court in M/s. Erusian Equipment and Chemicals Limited v. State of W.B. and Another, : 1975(1) SCC 70 and Zonal Manager, Central Bank of India v. M/s. Devi Ispat Limited and Others, : III (2010) CLT 159 (SC) = V (2010) SLT 596 = 2010 (11) SCC 186, the action of the respondents in de -paneling the petitioner has been challenged.

(3.) LEARNED Counsel for the respondent Bank further submitted that empanelment of the petitioner did not confer any legal right on it and in view of the peculiar facts as noticed hereinabove, the action of the respondents was justified and with reference to language used in the correspondence and the attitude of the petitioner expressed in the communications addressed to the Bank, the petitioner is also not entitled to any relief from this Court. It was also submitted that the petitioner had filed 11 cases against the Bank in the Civil Court and, therefore, the petitioner could not claim continuation of empanelment with the Bank in such circumstances.