ALLAHABAD BANK, A BANKING COMPANY Vs. SUNITA DEVI

JUDGEMENT

(1.) Heard learned counsel for the parties. PetitionerBank has challenged the proceedings instituted before Permanent Lok Adalat at the instance of sole respondent being P.L.A Case No. 23 of 2015.

(2.) As the sequence of facts narrated in the pleadings unfold, the sole respondent herein is the guarantor in respect of a loan from Petitioner Allahabad Bank which had granted cash credit limit of Rs. 85 Lakhs and term loan of Rs. 12 Lakhs to M/s R.K. Ispat. The sole respondent was one of the Guarantor. On failure to pay the same, the Bank issued notice under Section 13(2) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 on 1st February, 2014. That was however later on withdrawn and a fresh notice was issued on 24th December, 2014 to the borrower. Possession of mortgaged property was taken under Section 13(4) of the Act of 2002 on 4th March, 2015. The respondent herein approached this Court in W. P. ( C) No. 557 of 2015 with a prayer that the respondent Bank be restrained from taking coercive steps till the disposal of SARFAESI Appeal no. 94 of 2014. The writ petition was disposed of on 11th May, 2015 with an observation that the respondentAllahabad Bank (petitioner herein) being a State instrumentality would act in manner prescribed under SARFAESIE Act, 2002 and Security Interest (Enforcement) Rule 2002 and conform to fairness in action. The writ petitioner was granted liberty to challenge the notices dated 24th December, 2014/4th March, 2015 by seeking amendment in SARFAESI Appeal no. 94 of 2014 (Annexure10). The SARFAESI Appeal no. 94 of 2014 has been dismissed thereafter on 24. 8. 2015. The Bank, in the meantime, issued notice for auction sale of the property fixing the date as 26th August, 2015. Auction sale took place on 26th August, 2015 itself. In the midst of that, respondent instituted P.L.A. Case no. 23 of 2015 on 31st August, 2015 which is Annexure3 to the writ application with a prayer that the opposite partyBank be directed to hand over all the documents, and take Rs. 50.10 Lakhs before Your Honour's Court. The application was made under Section 19/22C of the Legal Services Authority Act and confined to one mortgaged property stating that the actual bid amount made in the auction sale undertaken on 26th August, 2015 was 50.10 Lakhs by the successful bidder. The property described in the petition preferred before Permanent Lok Adalat is under plot no. 6830, Khata no. 197, total area 13 decimal acquired by the respondent herein through registered deed no. 8494 dated 31st July, 2010. One more plot having an area of 10.5 decimals under deed no. 9608 dated 1st September, 2010 was also put on auction. Petitioner, Sunita Devi, respondent herein, thereafter preferred W. P( C) No. 4185 of 2015 on 2nd September, 2015 challenging the order passed in SARFAESI Appeal no. 94 of 2014. One more significant fact to be noted here is that at the time the petitioner instituted P.L.A case on 31st August, 2015, an application under Section 14 of SARFAESI Act was pending before learned Deputy Commissioner, Bokaro with a request to provide force for taking physical possession of the property in question. The P.L.A on 31st August, 2015 took up the matter and passed an interim order to the effect that Allahabad Bank, Bokaro Still City Branch shall maintain status quo and is also required not to take any further action against the petitioner/applicant.

(3.) Assailing the initiation of proceeding before P.L.A as a prelitigation application under Section 22 of Legal Services Authority Act, 1987, counsel for the petitioner Bank has submitted that Section 34 of SARFAESI Act, 2002 bars any such application before a civil court. No injunction should be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under the SARFAESI Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Permanent Lok Adalat has proceeded to entertain the P.L.A Case as prelitigation case in the midst of all the litigations between the borrower and PetitionerBank as have been referred to hereinabove. The outstanding dues in respect of loan amount as per the assertion made on affidavit by respondent borrower herself is more than Rs. 1 crore i.e., beyond pecuniary jurisdiction of P.L.A as per the notification dated 22nd March, 2015 AnnexureH at page 48 of the counter affidavit of the respondent. Even otherwise, the Permanent Lok Adalat can adjudicate in terms of provisions of Section 22C on merits only after following the procedure prescribed under the said provisions and after framing the terms of settlement to which the other party agrees to. This Court in the case of Branch Manager, Tata AIG Vs. Mrs. Bandana Devi reported in 2010 (3) JLJR 312 has laid down the procedure to be followed by P.L.A in such cases. Additionally, a ground has been taken that banking services have not been shown to be included in the category of Public Utility Service under Section 22A of the Act of 1987.