PURNEA COLD STORAGE Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) In view of the pure question of law raised by learned counsel for the petitioner, detail facts of the case are not required to be noticed. It is not required to deal with history of loan taken by the petitioner in 1992 from the local Branch of respondent-State Bank of India (hereinafter referred to as "the Bank?), its repayment, further fresh financial assistance granted by the United Bank of India as well as by the Bank and restructuring of its loan through agreement dated 31.08.2009 in view of the functioning of petitioner-Cold Storage getting affected by unprecedented flood in Koshi Region in 2009.

(2.) Suffice is to notice that loan account of petitioner was classified as NPA on 20.12.2009 i.e. barely three months after the agreement for restructuring the loan was entered into. Consequently, a notice under Section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short, "SARFAESI Act") was issued to petitioner on 16.06.2010, vide Annexure-1. Barely two months thereafter, i.e. on 18.08.2010, Bank also filed an application before the Debts Recovery Tribunal (in short, " the Tribunal?) under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (in short, "DRT Act?) read with Rule 4 of the Debt Recovery (Procedure) Rule 1993. The said application was registered as O.A. No. 83 of 2011. Since Bank had resorted to take steps under both the Acts simultaneously as per remedy provided under the respective Acts, petitioner challenged the action of the Authorized Officer under the SARFAESI Act before the Tribunal under Section 17, which was registered as S.A. No.81 of 2011. Simultaneously, petitioner also raised a preliminary objection in O.A. No.83 of 2011 in respect of its maintainability. The appeal of the petitioner namely, S.A.No.81 of 2011 was disposed of by the Tribunal by order dated 18.01.2012, vide Annexure-3, by which petitioner was directed to file representation to the notice under Section 13(2) of the SARFAESI Act including in it its challenge to the maintainability of the O.A. also and Bank was directed to consider the same in accordance with law with communication of its result to the petitioner. Petitioner, accordingly, filed his objection on 02.02.2012, vide Annexure-4, and received its reply through learned counsel of the Bank, vide Annexure-2 dated 18.02.2012, rejecting the stand of the petitioner that during the pendency of a SARFAESI proceeding, action could not be initiated under the DRT Act. This reply has given a cause of action to the petitioner to approach this Court raising a pure question of law as to whether after initiation of a proceeding under SARFAESI Act and during its pendency, Bank has any authority to initiate a proceeding before the Tribunal under Section 19 of the DRT Act or not.

(3.) Learned counsel for the petitioner submitted that the Apex Court, in the case of M/s Transcore Vs. Union of India, 2008 1 SCC 125, has authoritatively held the converse situation as possible as it found that both the Acts were complementary to each other since SARFAESI Act was enacted to fill up gaps in DRT Act by providing an additional remedy to the secured creditors or financial institutions for recovery of their debts on the basis of crystallized liability of the borrowers to repay and as such, the doctrine of election was not applicable. But he submitted that, so far as initiation of a proceeding before the Tribunal under Section 19 of the DRT Act, during the pendency of a proceeding under SARFAESI Act, was concerned, the principles laid down by the Apex Court in M/s Transcore were not applicable in view of sub-section (10) of Section 13 of the SARFAESI Act read with Rule 11(1) of the Security Interest (Enforcement) Rules 2002. Hence, he submitted that, once the Bank has initiated a proceeding against the petitioner under the SARFAESI Act, it was debarred from initiating any other parallel proceeding under the DRT Act for realization of any amount of the same loan, till it exhausts all the steps laid down in Section 13 of the former Act and in particular, sub-section (4) thereof.