Decided on July 23,2004



C.K.Lahiri, - (1.) THIS is an appeal preferred by the appellant M/s. Vijay Industries & 4 Ors. under Section 17(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Securitization Act, 2002 for short hereafter) against the respondents the Authorised Officer Union Bank of India, Regional Office Pandu Nagar, Karpur and the Branch Manager of Union Bank of India, Naini Branch, Allahabad praying to quash the impugned notice dated 8.3.2004, to stay the operation of the impugned notice dated 8.3.2004, to issue direction to the Bank to provide copy of statement of account duly signed by an authorised officer of the Bank, to disclose the reasons before the Hon'ble Tribunal for not approving the proposals of the appellants and to pass such other order as will be deem fit and proper. Back Ground Facts: 1. Respondent Bank sanctioned Cash Credit Limit to the tune of Rs. 7.00 lacs and in term loan account to the tune of Rs 3.00 lacs in the year 1999 totalling Rs. 10.00 lacs. The transaction between the appellant No. 1 and the respondent Bank in the above account were being run smoothly. There was recession in the market in the year 2000. Goods produced by appellant No. 1 lost its demand and finally business activity-was closed. Although the appellant No. 1 company engineered its sincere effort to market of his products but it was in vain. Account of the appellant No. 1 was declared as NPA. Respondent Bank asked appellant No. 1 to send a proposal for one time settlement proposing Rs. 10.00 lacs against the Bank dues as on 13.10.2000. Rs. 40,000,00 was deposited by the appellant to the Bank. It was further requested to the Bank to verify the actual dues. Respondent Bank turned deaf ear and did not supply any detailed copy of statement to the appellant. By letter dated 20.8.2001 the Bank informed the appellant about their recovery camp in which OTS of dues were to be settled. Recovery camp was scheduled to held on 21st and 22nd August, 2001 at the Branch Office, Naini, Allahabad. Appellant attended the recovery camp on 21.8.2001. Appellants submitted a proposal towards settlement of the dues of the Bank. Respondent Bank remained silent. A reminder was sent to the Bank on 7.12.2001 with a request to consider their proposal Bank turned deaf ear. Respondent Bank sent a demand letter on 14.1.2003. Appellants again submitted a proposal to the Bank for recovery of their dues vide letter dated 23.12.2002. Respondent No. 2 Branch Manager acknowledged the said letter, allowed the proposal. In reality the proposal has not yet been materialized by the official of the Bank. Appellants again requested the respondents for their cooperation as per their earlier assurance vide letter dated 7.2.2003. It was not considered. Appellants further informed the respondent Bank by letter dated 28.7.2003 that they have deposited some amount and requested to consider the matter of proposal as per their commitment. It was in vain. Appellants further requested to the respondent Bank to allow at least two months' time to deposit further amount showing their good intention by letter dated 15.12.2003. For not responding to the request of the appellants they wrote to the Bank by letter dated 10.3.2004 to disclose the details of the deposit made with the respondent bank on different dates. They further requested the Bank about the fate of their compromise proposal. On 8.3.2004 the respondent Bank issued notice to the appellants under Section 13(2) of the Securitization Act, 2002 demanding an incorrect amount of dues. The appellants not being provoked by* such notice were depositing the amount as and when they received from their sources. The notice under Section 13(2) of the Securitization Act dated 8.3.2004 was received by the appellants on 12.3.2004. In the notice it has been disclosed for taking over the possession of the immovable property mortgaged with the Bank. Thereafter the respondent Bank issued the acknowledgement of taking possession of the assets on 1.6.2004 under Section 13(4) of the Securitization Act. The Bank also issued the necessary certificate of taking possession but it does not bear the signature of the authorised officer of the Bank.
(2.) Such notice under Section 13(2) of the Securitization Act, 2002 has no legal basis and is liable to be rejected. Respondent Bank has not submitted any certificate of claim to verify the actual dues of the appellant. According to the celebrated ruling of the Apex Court of India in the case of Mardia Chemicals it is legal requirement that before sending notice under Section 13(4) of the Securitization Act, 2002 the matter about the actual dues should be adjudicated by a reasoned order. Here no such order has been passed by the Bank authorities although a considerable amount has already been deposited.
(3.) SENDING notices under the provisions of the Securitization Act, 2002 without legal requirement are illegal, mala fide and arbitrary particularly when the borrower has deposited a considerable amount with the Bank out of the settlement. Such action of the respondent Bank against the appellants is against the principle of natural justice as well as against the guidelines of the Hon'ble Supreme Court. The appellants wanted the copy of statement of Account only to verify the actual dues so that further amount could be deposited. Instead of giving an opportunity to the appellants to make a plan by the letter for payment of balance amount the statement of account was needed. Unfortunately the Bank has been trying to sell the valuable property at a throw away price by adopting legal recourses under the provisions of the Securitization Act, 2002 and the reasons for the same is best known to them.;

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