Statutory objection process under SARFAESI bars writ interference over NPA classification disputes

A borrower's writ challenge to notice and NPA classification is generally not favoured where the SARFAESI scheme provides a statutory representation route under Section 13(3A). Objections to classification are to be raised first before the secured creditor, which must consider them and give reasons if rejected; that internal mechanism was treated as the proper forum for factual and accounting disputes over NPA status. Where the borrower had invoked that route and received a speaking response, writ interference was not warranted and the challenge failed.

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Issues: Whether the writ challenge to the notice and classification of the account as a non-performing asset was maintainable in view of the statutory representation mechanism under Section 13(3A) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and whether the bank's decision on NPA classification called for interference.

Analysis: The statutory scheme permits a borrower, upon receipt of notice under Section 13(2), to make a representation or raise objections under Section 13(3A), which the secured creditor must consider and answer by reasons if the objection is found untenable. This mechanism was treated as an effective internal remedy for objections relating to classification of the account as NPA. The dispute raised by the borrower involved factual and accounting questions that were appropriately required to be examined first by the secured creditor through that mechanism. The record also showed that the borrower had, during pendency, invoked the statutory route and the bank had communicated a speaking response dealing with the objections.

Conclusion: The challenge did not warrant writ interference and the appeal failed.

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