2016 (12) TMI 307

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.... Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. It is further prayed to direct the respondent Bank to release working capital in favour of the petitioner No.2. 3. The first petitioner is a borrower proprietor concern. The petitioner No.2 is also borrower. The petitioner No.3 is the Proprietor of the first petitioner, also a surety. The fourth and fifth petitioners are the guarantors and sureties. 3.1 The first impugned notice dated 02nd August, 2016 was issued under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SERFAESI Act) assailing The petitioner to pay out sum of Rs. 08,11,38,261.10 Ps. along with interest due from 01st....

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....that there was a legitimate expectation that Bank would release the working capital. The prayer for release of working capital is made, however the same appears to be a camouflage for defence. Essentially, the petition challenges action on part of the respondent Bank taken under the SERFAESI Act, 2002. 4.1 It appears that petitioners were extended financial assistance by the Bank by placing properties on equitable mortgage as the petitioners wanted to purchase flat and bungalow. Sum of Rs. 07.30 crores was given as a loan for the purpose. It was on 29th May, 2015. Thereafter the respondent Bank by letter dated 21st July, 2015 sanctioned term loan facility to the tune of Rs. 09.50 crores as well as working capital facility to the extent o....

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....mination was whether the DRT would have jurisdiction to consider and adjudicate post Section 13(4) events or whether its scope in terms of Section 17 of the Act will be confined to the stage contemplated under Section 13(4) of the Act? On an examination of the provisions contained in Chapter III of the Act, in particular Sections 13 and 17, this Court held as under : "35. In order to prevent misuse of such wide powers and to prevent prejudice being caused to a borrower on account of an error on the part of the banks or financial institutions, certain checks and balances have been introduced in Section 17 which allow any person, including the borrower, aggrieved by any of the measures referred to in sub-section (4) of Section 13 tak....

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....mplates an efficacious remedy for the borrower or any person 1 affected by an action under Section 13(4) of the Act, by providing for an appeal before the DRT. 6.1 In United Bank of India Vs Satyawati Tondon [(2010) 8 SCC 110] the Apex Court observed, "the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the p....