Writ jurisdiction and NPA classification under SARFAESI: temporary overdrawal alone cannot justify enforcement action if RBI norms are not met.

Availability of a SARFAESI remedy under Section 17 does not automatically bar writ jurisdiction under Article 226, especially where the challenge concerns account classification and the issue can be decided on the record without disputed facts; the preliminary objection on alternative remedy was rejected. Under RBI prudential norms, a cash credit account may be treated as NPA only if it satisfies the prescribed "out of order" conditions for the requisite period, and a temporary overdrawal cured within time does not justify such classification; the account should be upgraded once arrears are cleared. On that basis, the NPA classification and consequential measures under Sections 13(2) and 13(4) were held unsustainable.

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Issues: (i) Whether the writ petition was not maintainable on the ground of availability of an alternative remedy under the SARFAESI Act, 2002. (ii) Whether the bank was justified in classifying the petitioners' cash credit account as a non-performing asset and in issuing notices under Sections 13(2) and 13(4) of the SARFAESI Act, 2002.

Issue (i): Whether the writ petition was not maintainable on the ground of availability of an alternative remedy under the SARFAESI Act, 2002.

Analysis: The existence of a remedy under Section 17 of the SARFAESI Act, 2002 does not by itself bar the exercise of writ jurisdiction under Article 226 of the Constitution of India. The petition was entertained because the challenge was directed against the classification of the account as NPA and the consequential measures, and the matter was found capable of decision on the record without requiring adjudication of disputed facts.

Conclusion: The preliminary objection based on alternative remedy was rejected; the writ petition was maintainable.

Issue (ii): Whether the bank was justified in classifying the petitioners' cash credit account as a non-performing asset and in issuing notices under Sections 13(2) and 13(4) of the SARFAESI Act, 2002.

Analysis: Under the RBI's prudential norms, a cash credit account can be treated as NPA only if it remains "out of order" in the manner prescribed, and temporary deficiencies are not enough to justify NPA classification. The account statements showed intermittent credits and did not establish continuous excess over the sanctioned limit for ninety days. The overdrawal was a temporary deficiency that was cured within the permissible period, and the account ought to have been upgraded to a standard account once the arrears were cleared. The consequential objection-rejection order and enforcement notices were therefore contrary to the applicable guidelines.

Conclusion: The classification of the account as NPA and the notices issued under Sections 13(2) and 13(4) were illegal and unsustainable.

Final Conclusion: The enforcement action against the petitioners could not be sustained, and the writ petition succeeded.

Ratio Decidendi: A cash credit account cannot be classified as NPA on the basis of a temporary overdrawal unless the conditions for an "out of order" account under the RBI guidelines are satisfied for the requisite period, and once the deficiency is cured within time the account must be upgraded to standard status.

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