TaxTMI 
TaxTMI 
2017 (2) TMI 957
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.... respondent). Against the said facility the respondent has taken security i.e. the residential house of the petitioner Nos. 2 and 3. It is the case of the petitioners that different due dates under the facility are as follows:- "a. 16th June 2016 b. 17th June 2016 c. 27th June 2016 d. 11th July 2016 e. 28th July 2016 f. 4th August 2016 g. 15th September 2016" 3. It is the grievance of the petitioners that the respondent issued notice under Section 13(2) read with Section 13(3) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'the SARFAESI Act' for short) on 14.10.2016 in which it is stated in paragraph 3 that the outstanding accounts of the petitioner were classified as non-performing asset ('NPA' for short) as on 14.09.2016. It is the specific case of the petitioners that as per the guidelines of the RBI any outstanding dues that is not paid for a period of more than 90 days, would be classified as NPA. 4. As per the case of the petitioners, the first due date under the facility was 16th June 2016 i.e. the petitioner had time limit till 16th June 2016 m....
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.... January 2017 (Annexure I)" 7. Learned Single Judge by impugned order dated 18.02.2017 dismissed the petition on the ground that petitioners are having alternative efficacious remedy to approach before the Debts Recovery Tribunal under Section 17 of the Act. Petitioners have, therefore, challenged the said order by filing the present appeal. 7. Heard learned advocate Mr. Arjun Sheth for the appellants and learned advocate Mr. Bharat Jani appearing for the respondent on caveat. 8. Learned advocate Mr. Sheth mainly contended that the learned Single Judge has committed an error by not considering the important aspect of the matter i.e. the date of considering the account of the petitioners as NPA. Learned advocate has placed reliance upon the master circular issued by the RBI on 01.07.2015 whereby instructions/guidelines were issued to the Banks. Learned advocate has referred to Clause 2.1 of the said instructions which provides for the definition of NPA. It is contended that as per the said definition, NPA is a loan or advance where interest and/or installment of principal remain overdue for a period of more than 90 days in respect of a term loan. 9. After referring to th....
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....ot entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under this subsection. (2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder. (3) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section (4) of section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management of the business to the borrower or restoration of possession of the secured assets to the borrower, it may by order, declare the recourse to any one or more measures referred to in sub-section (4) of section 13 taken by the secured creditors as invalid and restore the possession of the secured assets to the borrower or restore the management of the business to the borrower, as the case may be, and pass such order as it ....
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....rought in the aforesaid provision of the Act in the year 2016. At this stage, it is required to be noted that the Hon'ble Supreme Court in the case of United Bank of India v. Satyawati Tondon & Ors., reported in AIR 2010 SC 3413, observed in para 4, 5, 6, 12 and 17 as under: "4. Section 17 speaks of the remedies available to any person including borrower who may have grievance against the action taken by the secured creditor under subsection (4) of Section 13. Such an aggrieved person can make an application to the Tribunal within 45 days from the date on which action is taken under that sub-section. By way of abundant caution, an Explanation has been added to Section 17(1) and it has been clarified that the communication of reasons to the borrower in terms of Section 13(3-A) shall not constitute a ground for filing application under Section 17(1). Sub-section (2) of Section 17 casts a duty on the Tribunal to consider whether the measures taken by the secured creditor for enforcement of security interest are in accordance with the provisions of the Act and the Rules made thereunder. If the Tribunal, after examining the facts and circumstances of the case and evidence produce....
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....recommendations of the Narasimham and Andhyarujina Committees on the issue of constitution of special tribunals to deal with cases relating to recovery of the dues of banks etc. and observed: "One of the measures recommended in the circumstances was to vest the financial institutions through special statutes, the power of sale of the assets without intervention of the court and for reconstruction of assets. It is thus to be seen that the question of non-recoverable or delayed recovery of debts advanced by the banks or financial institutions has been attracting attention and the matter was considered in depth by the Committees specially constituted consisting of the experts in the field. In the prevalent situation where the amounts of dues are huge and hope of early recovery is less, it cannot be said that a more effective legislation for the purpose was uncalled for or that it could not be resorted to. It is again to be noted that after the Report of the Narasimham Committee, yet another Committee was constituted headed by Mr. Andhyarujina for bringing about the needed steps within the legal framework. We are, therefore, unable to find much substance in the submission made on behal....
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.....4 for opening a colour lab at 50/43, Raj Complex, K.P. Kakkar Road, Allahabad, but the loan has not been repaid by respondent No.4 and the bank is proceeding against the petitioner who is the guarantor of the loan. It is not clear from the documents produced by learned counsel for the bank as to what steps have been taken by the bank against the borrower of the loan and merely issuance of notice under section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 against the borrower is not sufficient. The bank should have proceeded against the borrower and exhausted all the remedies against him and thereafter the bank could have proceeded against the guarantor. Until further orders of this court, the respondents are restrained from proceeding under section 13(4) of the Act 2002 with regard to petitioner's property who was the guarantor of the loan. However, if any possession has been taken by the bank then the property shall not be sold to any one else and the petitioner shall be continued in possession of the property." xxx xxx xxx 17. There is another reason why the impugned order should be set aside. If respo....