D.N. MOTORS Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) THE petitioner, in this writ petition, has prayed for quashing the notice dated 23.10.2007 issued under Section 13(2) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 whereby the petitioner has been asked to discharge in full the liabilities to the tune of Rs. 10,78,529/ - to the Bank within sixty days from the date of issuance of the notice. The petitioner has also prayed for a direction to dispose of the representation dated 14.12.2007 filed under the provision of Section 13(3 -A) of the Act in response to the notice sent to him under Section 13(2) of the said Act.

(2.) THE petitioner deals in motor parts and other accessories and his shop is at Ratu Road, Ranchi. For smooth running of the shop, he had applied for loan from the Respondent -Bank through its Jugsalai Branch. The loan was sanctioned by a letter dated 22.1.2004 to the petitioner whereby cash credit facility was sanctioned to the petitioner up to Rs. 10 lakhs. The said cash credit facility was secured by the securities as also by equitable mortgage of landed property of the value of Rs. 19,97,600/ -. The loan was also secured by 3rd party guarantee and it was also stipulated that the advance will be made against hypothecation of all stocks stored in the shop and godown.

(3.) THE petitioner has filed representation/objection under Section 13(3 -A) of the Act and requested to consider the grievance of the petitioner. It has been stated that the representation under Section 13(3 -A) of the Act was sent by the petitioner through registered post on 14.12.2007. The petitioner has enclosed a copy of the representation/objection with the photo copy of the postal registration receipt dated 14.12.2007. Before considering the said representation/objection of the petitioner under Section 13(3 -A) of the Act, the respondent -bank has issued the notice dated 23.10.2007 purportedly for the contemplated action under Section 13(4) of the Act. It has been stated that the said action of the bank without complying with the provisions of Section 13(3 -A) of the Act is highly prejudicial to the borrower -petitioner who has been willing to make payment of the dues. It has been contended that before proceeding under the provisions of Section 13(4) of the said Act the respondent -bank has to record a reason as to why the petitioner's representation has not been accepted, but no such rejection or reason has been communicated to the petitioner. The Bank cannot proceed under Section 13(4) of the Act by passing the said provision and as such the action of the Bank in publishing the notice under Section 13(4) of the Act is arbitrary, illegal and without jurisdiction.