- (1.) IN the writ petition the petitioner has prayed for a declaration that the securitisation and Reconstruction of Financial assets and Enforcement of Security interest Act, 2002 (hereinafter referred to as the 'act')is arbitrary and ultra vires the constitution of India and has challenged the notice under the Act issued by the Punjab national Bank ('bank' for short) on several grounds. The matter was moved on 19th February, 2004 when order was passed directing the parties to maintain status quo till 25th February, 2004. Thereafter, interim order was extended. On 25th February, 2004 directions were issued for filing of affidavits. Interim order, already granted was directed to continue until further orders. Affidavits have since been exchanged.
(2.) IT is to be noted that during the pendency of the writ petition, petitions were moved before the Apex Court challenging the validity of the Act. The Supreme Court in the judgment of Mardia Chemicals Limited v. Union of India, reported in (2004) 4 SCC 311 : (AIR 2004 SC 2371) had upheld the validity of the Act and its provisions except sub-section (2) of Section 17 of the Act which was declared ultra vires Article 14 of the constitution of India. Therefore, the challenge to the said Act fails. However, the learned senior advocate for the petitioner submitted that the writ petition is still maintainable since the notice does not fulfil the conditions precedent under Section 13 (2) for invoking the provisions of the Act. In the instant case the notice dated 3rd November, 2003 issued under the Act is vague as it neither gives the details nor does it comply with the requirements under the Act. Though intricate questions of fact cannot be gone into in the writ jurisdiction, however, since the drawal was within the sanctioned limits and the account credited was much more than the interest debited there was no question of the account becoming non-performing asset (for short "npa") and, thus, there was lack of jurisdiction on the part of the bank in issuing the notice impugned. Argument was fast track concept does not mean that it should be dehors the provisions of law. Though the bank was under a legal obligation to classify the asset as NPA, the notice under challenge does not disclose the basis of such declaration, as in that event the asset should have been "out of order". Unless classification is done in accordance with the Reserve Bank of India (for short 'rbi')guidelines, the writ Court has the jurisdiction to intervene as there is no provision for preferring appeal against the decision making process and the decision. In such an event, the question of adhering to the alternative remedy under the Act does not arise. The learned advocate for the petitioner had relied on the following decisions of the Supreme Court: 1) Chaube Jagdish Prasad v. Ganga prasad Chaturvedi, reported in AIR 1959 SC 492. 2) Ram Sarup Gupta (Dead) by LRs. v. Bishun Narain Inter College, reported in 1987 (2) SCC 555 : (AIR 1947 SC 1242 ). 3) Board of Technical Education, U. P. v. Dhanwantri Kumar, reported in AIR 1991 SC 271. 4) Whirlpool Corporation v. Registrar of trade Marks, Mumbai, (1998) 8 SCC 1 : (AIR 1999 SC 22 ). 5) Syed Dastagir v. T. R Gopalakrishna setty, reported in (1999) 6 SCC 337 : (AIR 1999 SC 3029 ). 6) Food Corporation of India v. State of punjab, reported in (2001) 1 SCC 291 : (AIR 2001 SC 250 ). 7. Commissioner of Central Excise, Bangalore v. Brindavan Beverages (P) Ltd. , reported in (2007) 5 SCC 388 : (2007 AIR SCW 7747 ). 8) M/s. Transcore v. Union of India, reported in AIR 2007 SC 712. 9) ABL International Ltd. v. Export Credit guarantee Corporation of India Ltd. , reported in (2004) 3 SCC 553. 10) Subramania Desika Gnanasarnbanda pandarasannidi v. State of Madras, reported in AIR 1965 SC 1578. 11) State of Orissa v. Dr. (Miss) Binapani dei, reported in AIR 1967 SC 1269. 12) Srikant Kashinath Jituri v. Corporation of the City of Belgaum, reported in (1994) 6 SCC 572 : (AIR 1995 SC 288 ). 13) Appropriate Authority v. Sudhat Patil, reported in AIR 1999 SC 181.
(3.) LEARNED counsel for the bank submitted that interpretation of the provisions should be made taking into account' the object of the Act. Since the petitioners were chronic defaulters, notice under Section 13 (2) was issued. However, save and except nupur,sharma, the guarantor, other petitioners chose not to challenge the notice. The property in question, solely financed by the bank, was mortgaged by deposit of title deeds. Though in the writ petition it has been stated that RBI guidelines are vague and uncontrolled, yet during submissions said guidelines have been relied on. Referring to the statement of accounts annexed to the affidavit in reply affirmed on 15th May, 2007 submission was made that as the asset had become NPA, interest was charged. Moreover, submissions were contrary to the averments in the petition since in the reply dated 31st December, 2003 to the notice it was admitted by the petitioner that 50 per cent of the amount was outstanding. Accordingly, the writ petition is without merit. The argument that the notice dated 3rd November,2003 is vague as it is bereft of details, is not tenable as the petitioner had understood the purport and had replied. Since the petitioner had represented or objected by letter dated 31st December, 2003 to the notice, the bank is ready to consider the written objection in accordance with the provisions of the Act and The Security Interest (Enforcement)Rules, 2002. Learned advocate on behalf of the bank had relied on the following judgments in support of his submission :-1) Nihar Ranjan Bhattacharjee v. Union of India, reported in AIR 2007 Gauhati 132. 2) Noorbari Tea Co. (P) Ltd. v. UCO Bank, reported in AIR 2007 Gauhati 135. 3) Punjab National Bank v. O. C. Krishnan, reported in AIR 2001 SC 3208. 4} Mardia Chemicals Ltd. v. Union of India, reported in (2004) 4 SCC 311: (AIR 2004 SC 2371 ). 5) M/s. Transcore v. Union of India, reported in AIR 2007 SC 712. 6) Bharat Bhari Udyog Nigam v. Jessop and Co. Ltd. , reported in (2003) 4 Comp LJ 333 (Cal ). 7) D. Ravichandra v. Manager, Indian overseas Bank, reported in (2006) 132 Comp Cas 803 (Mad ). 8) A. Venkatramani v, LIC Housing Finance Ltd. , reported in (2007) 135 Comp Cas 514 (Mad ). 9) Sushil Kumar Agarwalla v. State of assam, reported in (2006) 134 Comp Cas 14 (Gauhati ). 10) Barak Valley Tea Co. v. Union of India, reported in (2006) 133 Comp Cas 937 (Gauhati ). 11) Pooran Lal Arya v. State of uttaranchal, reported in (2006) 133 Comp cas 348 : (2005 CLC 1314) (Uttaranchal ). 12) Digvision Electronics Ltd. v. Indian bank, reported in (2005) 126 Comp Cas 630 : (2005 CLC 978) (Madras ). 13) Paramjit Lal Badhwar v. Prem Spinning and Weaving Mills Co. Ltd. , reported in (1986) 60 Comp Cas 420 : (1983 Tax LR 2506) (Allahabad ). 14) Noorbari Tea Co. P, Ltd. v. UCO Bank, reported in (2007) 139 Comp Cas 395 : (AIR 2007 SC 135) (Gauhati ).;