TaxTMI 
TaxTMI 
2017 (10) TMI 756
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....ika Swami" situated at Swami Pada Aggrawal Complex, Chandan Bhawan, Meerut. The petitioner has stated that the above noted credit facility was accorded to her by the bank on 30.9.2016 for a limit of Rs. 93,00,000/-. Due to demonetization goods purchased by her could not be sold out and after the enforcement of Goods and Service Tax (GST), her business further suffered losses and her account with the respondent No. 2 became irregular. The respondent No.2, bank issued a notice under Section 13 (2) dated 05.07.2017 under SARFAESI Act, 2002 for payment of the outstanding dues of Rs. 96,35,,532.00 and then the impugned possession notice dated 26.9.2017 has been issued by the bank under Section 13 (4) of the SARFAESI Act, 2002 read with Rule 8 of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as "Rules" only). The petitioner has stated that she is willing to deposit Rs. 3,50,000/- but the bank is not accepting the same and she is willing to pay the balance amount for regularization of her account in the respondent-bank. The learned counsel for the respondent No.2, Sri Sanjai Singh, has argued that against the possession notice dated 26.9.2017 issued ....
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....owered State Finance Corporations (SFCs) to enforce their security without intervention by courts. Such a measure was considered to be essential for recovering dues from borrowers who are wilful defaulters. The Committees constituted by the Central Government, inter alia, for dealing with Recovery of Debts were unanimous in providing powers to the banks to takeover the securities provided to them and to realize the dues without the intervention of the courts as a means for the reduction of the monies locked up a NPAs. This has resulted in the drafting of the Secularization and Reconstruction of Financial Assets and Enforcement of the Security Interest Bill which was promulgated as an ordinance twice by the President of India before it finally became an Act on 21st day of June, 2002. Adverting to the case in hand, it is clear from the pleadings on record, that the account of the petitioner has been classified as NPA on account of her failure to maintain financial discipline in the operation of her cash credit account with respondent-bank. The respondent-bank has initiated proceedings for recovery as per the provisions of SARFAESI Act, 2002 against the petitioner in its normal ....
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....considering the provision of appeal under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 held that the special act has been enacted with a view to provide a special procedure for recovery of debts due to the banks and the financial institutions and it cannot be derailed by taking recourse to proceedings under Articles 226 and 227 of the Constitution and the High Court should refrain from exercising its jurisdiction. It is settled law that writ does not lies merely because it is lawful to do so. A person should exhaust statutory/alternative remedy available to him in law prior to it. (Rajasthan State Industrial and Investment Corporation and another Vs. Diamond and Gem Development Corporation Ltd., AIR 2003 SC 1241). In view of the above legal position, the writ petition filed by the petitioner cannot be entertained by this court. It is further notable that the invoking of the jurisdiction of the High Court by the defaulters of the banks and financial institutions against the proceedings under SARFAESI Act, 2002 is not in their larger interest since in most of the cases, the petitioner offers to deposit the amount in installments and i....
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....secured asset: Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt: Provided further that where the management of whole of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security for the debt;] (c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor; (d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt." A perusal of the above provisions of the Act prove that starting point of the proceedings for recovery under the SARFAESI Act, 2002 is classification of the account of the borrower as NPA as per the prudential norms of the Reserve Bank of India. The inquiry into the correctness....
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....v) of the Security Interest (Enforcement) Rules, 2002 regarding the immovable secured assets, regarding their possession by the secured creditor. Publication of notices is two leading newspapers intimating the factum of possession and service of notice through electronic mode on the borrower in addition to the other modes is also provided. Regarding the sale of the movable and immovable secured assets, the provisions have been made in Rules 6 and 8 of the aforesaid Rules which are as under:- 6. Sale of movable secured assets.- (1) The authorised officer may sell the movable secured assets taken possession under sub-rule (1) of rule 4 in one or more lots by adopting any of the following methods to secure maximum sale price for the assets, to be so sold-- (a) obtaining quotations from parties dealing in the secured assets or otherwise interested in buying such assets; or (b) inviting tenders from the public ; or [(c) holding public auction including through e-auction mode; or] (d) by private treaty. (2) The authorised officer shall serve to the borrower a notice of thirty days for sale of the movable secured assets, under sub-rule....
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....ssion of immovable property is actually taken by the authorised officer, such property shall be kept in his own custody or in the custody of any person authorised or appointed by him, who shall take as much care of the property in his custody as an owner of ordinary prudence would, under the similar circumstances, take of such property. (4) The authorised officer shall take steps for preservation and protection of secured assets and insure them, if necessary, till they are sold or otherwise disposed of. (5) Before effecting sale of the immovable property referred to in sub-rule (1) of rule 9, the authorised officer shall obtain valuation of the property from an approved valuer and in consultation with the secured creditor, fix the reserve price of the property and may sell the whole or any part of such immovable secured asset by any of the following methods:-- (a) by obtaining quotations from the persons dealing with similar secured assets or otherwise interested in buying the such assets; or (b) by inviting tenders from the public; (c) by holding public auction including through e-auction mode; or (d) by private treaty. ....
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....n of the secured creditor fails against the borrower. The SARFAESI Act, 2002 is a strict act which requires strict compliance of the provisions provided therein and any deviation in compliance of the provisions renders the action of the secured creditor bad and unsustainable. The Debt Recovery Tribunal is fully empowered to go into the record of the secured creditor regarding the compliance of the provisions of the Act and Rule and the borrower gets an opportunity to see the record of the proceedings initiated and conducted by the bank against him in recovery of debt from him before the Debts Recovery Tribunal. In the writ petitions filed under Article 226 of the constitution before the High Court, the borrower never gets the opportunity to rebut the action taken by the secured creditor against him and by accepting the liability alleged by the secured creditor, he gets estopped from raising any objection against the action of the secured creditor, in future, since he admits the liability and thereby ratifies all the actions done by the secured creditor against the borrower. Therefore, the remedy under Section 17 of the SARFAESI Act, 2002 before the Debts Recovery Tribunal is ....