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TMI Blog2010 (3) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... biting respondent Nos. 1 and 2 from taking actual possession of the factory situated at Plot No. D-24, MIDC, Tarapur, Taluka Palghar, District Thane, without following the procedure laid down in section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('the Act'). 3. The facts of the case, in brief, are, thus : The petitioner No. 1 is a duly registered public limited company and petitioner Nos. 2 to 5 are its directors. The petitioners are seeking to protect their factory premises situated at Plot No. D-24, MIDC, Tarapur, Taluka Palghar, District Thane from being proceeded against by or on behalf of the secured creditors. It is the case of petitioners that petitioner No. 1-company had in March 2002 approached respondent No. 1-State Bank of India for financial assistance as the petitioners were indebted to Bharat Co-operative Bank and needed further finances. The respondent No. 1 agreed to sanction Rs. 3 crore (three crore) and issued a pay order of Rs. 1.94 crore in favour of Bharat Co-operative Bank and took over the accounts. The petitioners were required to complete formalities to secure the debt, furnish underta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property till then. Thus, upon receiving the notice dated 5th January, 2010, the petitioners filed the present petition on 4th February, 2010. 5. The learned counsel appearing for the petitioners urged that after the issuance of the notice dated 10th July, 2003, under section 13(2) of the Act, the secured creditors while taking measures under section 13(4) of the Act ought to have issued notice for taking possession of the secured assets. According to the petitioners, such an action can be initiated under section 14 of the Act by moving an application before the Chief Metropolitan Magistrate or the District Magistrate for assistance in taking possession of the property which is the subject-matter of the secured debt. According to the learned counsel, the remedy under section 17 of the Act would be available if a person is aggrieved by adoption of the measures enumerated under section 13(4) of the Act. The learned counsel submitted that the petitioners were entitled to a notice under section 13(4) of the Act calling upon them to handover the possession, as once property is sold, the debtor would have no right to appeal under section 17 of the Act. The learned counsel, thus, contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ahsildar on 28th January, 2010 and it was reported that the factory was closed and that there was no activity of whatsoever nature going on in the factory. It was further contended that the petitioners are persistent defaulters in repayment of debt as they were originally indebted to SICOM and then became indebted to Punjab & Sind Bank for which they are facing recovery proceedings before the DRT-II, Mumbai. They had also borrowed amounts from Bharat Cooperative Bank but defaulted to repay and approached respondent-bank for taking over of the accounts but again defaulted to repay. The income-tax authorities had also attached the property of the petitioners for non-payment of dues. The respondent-bank filed an application being Original Application No. 65 of 2004 to recover dues and for enforcement of mortgage in respect of the factory. The DRT by its order dated 30th October, 2009 allowed the original application and directed payment of dues in the sum of Rs. 3,35,26,962.43 along with interest at the rate of 13 per cent per annum, with quarterly rests from the date of the original application till realisation. The learned counsel contended that in view of the non-obstante clause (N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since 21st June, 2002 with a view to regulate securitisation and reconstruction of financial assets and to enforce security interests. It enables banks and financial institutions in India to have an identical level playing field compared with other participants in global financial markets, so as to enforce security interests ; with power to take possession of securities and to sell them. The provisions in the Act aims at expeditious recovery of "non-performing assets" (NPA) of banks and financial institutions. Success of financial sector, particularly healthy banking industry is of salutary importance for the progress, growth and development of the nation's economy. Thus, the enactment is in the category of a reform legislation in financial sector to facilitate securitisation of financial assets of banks and financial institutions in India. While banks and financial institutions possess more drastic powers under the Act, the scheme of the Act also ensures safeguards to protect the borrower's interest. A lender owes a duty to act fairly and in good faith, while a borrower can plead deficiencies on the part of the bank or financial institution. As a borrower in default is entitled t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act is barred from entertaining any suit or to grant injunction in respect of matters which are required to be determined by the DRT or the DRAT constituted under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. In our view, therefore, power under the extraordinary writ jurisdiction under article 226 of the Constitution of India can be exercised sparingly and in exceptionally deserving cases, wherein the petitioner has made out a case that the secured creditor has failed to abide and follow any express legal provision, rule or regulation which is binding upon him, for which the petitioner is otherwise remediless. While the secured creditor, after the expiry of the notice period under section 13(2) of the Act, is expected to take measures under section 13(4) within a reasonable time, depending upon the facts of the case, after having considered the objections raised or the representation made, if any, by the borrower in view of section 13(3A) of the Act and after communicating non-acceptance thereof to the borrower, the secured creditor (banks or financial institutions, as the case may be) shall be enabled by machinery of law to overcome the problems ..... X X X X Extracts X X X X X X X X Extracts X X X X
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