NPA classification under RBI norms supports SARFAESI steps, with writ interference declined where statutory remedy exists.

A cash credit account may be classified as a non-performing asset where the sanctioned limit has expired or remains unrenewed and the account is out of order under RBI directions, including continued default and insufficient credits to cover interest debits. The prior recall notice did not preclude NPA classification, and the later circular applied on the date of classification. Once that classification was sustained, the Section 13(2) notice and consequential SARFAESI measures under Section 13(4) were treated as statutory steps not ordinarily liable to writ interference, especially where an effective remedy was available before the Debts Recovery Tribunal under Section 17.

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Issues: (i) Whether the petitioners' account was validly classified as a Non-Performing Asset under the applicable RBI circulars. (ii) Whether the notice under Section 13(2) of the SARFAESI Act and the consequential measures under Section 13(4) were liable to be interfered with in writ jurisdiction.

Issue (i): Whether the petitioners' account was validly classified as a Non-Performing Asset under the applicable RBI circulars.

Analysis: The account was last renewed up to 31 December 2022 and was not renewed thereafter. The relevant RBI directions permitted classification of a cash credit account as NPA where the account remained out of order or the credit limit was not renewed within the stipulated period. The Court held that non-renewal, expiry of the sanctioned limit, continued default, and the absence of sufficient credits to cover interest debits established that the account did not remain in a merely temporary or technical default. The prior recall notice did not prevent NPA classification, and the later circular was applicable on the date of classification.

Conclusion: The NPA classification was upheld and was held to be justified.

Issue (ii): Whether the notice under Section 13(2) of the SARFAESI Act and the consequential measures under Section 13(4) were liable to be interfered with in writ jurisdiction.

Analysis: Once the NPA classification was sustained, the statutory steps under Section 13(2) and Section 13(4) followed as consequential measures. The notice under Section 13(2) was not required to contain elaborate reasons, and the petitioners were left to pursue the appropriate remedy before the Debts Recovery Tribunal under Section 17 of the SARFAESI Act. The ad interim observations relied upon by the petitioners were treated as tentative and not binding at the final stage.

Conclusion: Interference with the notice and consequential measures was declined.

Final Conclusion: The writ challenge failed in its entirety, and the petitioners were relegated to the statutory remedy before the Debts Recovery Tribunal.

Ratio Decidendi: A cash credit account may be classified as NPA where the sanctioned facility has expired or remains unrenewed and the account satisfies the RBI's criteria of being out of order, and once that classification is sustained, consequential SARFAESI measures ordinarily do not warrant writ interference when an effective statutory remedy is available.

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