TaxTMI 
TaxTMI 
2013 (8) TMI 687
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.... The appellant company was enjoying credit facilities from the respondent bank with overall limit of Rupees 29,50,00,000 (Rupees Twenty Nine Crores and Fifty Lakhs) comprising of the following facilities : Cash Credit Rs. 25,00,00,000/- Standby Letter of Credit Rs. 3,75,00,000/- Inland Letter of Credit Rs. 75,00,000/- Periodically the said facilities were enhanced to Rs. 68,50,00,000/- (Rupees Sixty Eight Crores and Fifty Lakhs) in the following manner : (A) Fund based limits Cash Credit Rs. 62,50,00,000/- Standby Letter of Credit Rs. 5,00,00,000/- Total of fund based limits Rs. ....
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....sed officer of the respondent bank issued notice under Section 13 (2) of SARFAESI Act upon the appellant company. Under such circumstances, the appellants approached this Court, inter alia, praying for setting aside the impugned letters dated 10.01.2013, 14.01.2013, 18.01.2012 and 28.01.2013, as aforesaid. Prayer was also made for a direction to continue Inland Letter of Credit of Rs. 1,00,00,000/- in favour of West Bengal State Electricity Distribution Company Limited. The learned Single Judge has rejected such prayer on the ground of existence of alternate statutory remedy by way of representation under Section 13 (3A) of the SARFAESI Act, 2002 to the respondent bank. Hence, the appellants preferred this intra-court appeal. Mr. Khare, learned senior counsel appearing for the appellants argued that the bank had acted in an wholly arbitrary, capricious and unreasonable manner. While on the other hand, the respondent bank was actively considering the prayer for enhancement of Credit facilities, on the other hand, it issued notices threatening that the Credit facilities of the appellant company would be declared non-performing asset (NPA). He submitted that the classification of ....
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....e guidelines of the Reserve Bank of India. In this regard, the appellants have referred to Clause 2.1.3 of the Master Circulars dated 2nd July, 2012 which reads as follows:- 2.1.3 Bank should, classify an account as NPA only if the interest due and charged during any quarter is not serviced fully within 90 days from the end of the quarter. They have also assailed that the declaration of the Cash Credit facilities as NPA on 16.01.2013 was made on the 90th day bearing in mind that the last drawal on the Cash Credit facilities was 19th October, 2012, instead of completion of 90 days as required under Clause 4 of the said Master Circular. In Mardia Chemicals Ltd. v. Union of India [2004] 51 SCL 513 (SC) at paragraph 44 it has been held as follows : "44. As a matter of fact, the Narasimham Committee also advocates for a legal framework which may clearly define the rights and liabilities of the parties to the contract and provisions for speedy resolution of disputes, which is a sine qua non for efficient trade and commerce, especially for financial intermediation. Even the guidelines of the Reserve Bank of India in relation to classif....
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....easons shall not confer any right upon the borrower to prefer an application to the Debts Recovery Tribunal under section 17 or the Court of District Judge under section 17A." Incorporation of such statutory mechanism empowering the borrower to make a representation is an effective statutory mechanism and provides an adequate and effective statutory mechanism to expeditiously resolve any difficulty or objection raised by the borrower relating to classification of its securities or otherwise. Moreover, the issues relating to the validity of the decision of declaring an account as non-performing asset essentially relates to disputed questions of fact and accounting and the same has been rightly left to be adjudicated in the first instance by the respondent bank through the aforesaid statutory mechanism. To usurp such statutory jurisdiction of the secured creditor by invoking the writ jurisdiction is neither permissible on advisable in law. It appears that during pendency of the appeal the appellants have already resorted to such alternative statutory remedy and the bank by its letter dated 28.01.2013 has dealt with their various objections including one relating to classification ....