TMI Blog2013 (8) TMI 687X X X X Extracts X X X X X X X X Extracts X X X X ..... iswanathan, P.K. Traffdar and Ms.Supriya Mitra. For the Respondent : Hirak Moitra, S.K. Sinha, P.K. Roy and D.K. Singh. Judgment:- PER : Joymalya Bagchi This appeal has been preferred against the judgement and order dated 19th March, 2013 whereby the learned Single Judge has dismissed the writ petition on the ground that alternative statutory remedy of the appellants lay in making representation under Section 13 (3A) of The Securitisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002 (hereinafter referred to as "SARFAESI Act") in enabling them to make representations against the impugned notice issued under Section 13 (2) of the said Act and granted the appellant company liberty to urge all issues raised before the appropriate authority. The facts giving rise to this appeal are as follows:- The appellant company was enjoying credit facilities from the respondent bank with overall limit of Rupees 29,50,00,000 (Rupees Twenty Nine Crores and Fifty Lakhs) comprising of the following facilities : Cash Credit Rs. 25,00,00,000/- Standby Letter of Credit Rs. 3,75,00,000/- Inland ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that regard. It was also alleged that there was violation of Clause 2.1.3 of the said guidelines of Reserve Bank of India. Subsequently, on 28.01.2013 the authorised officer of the respondent bank issued notice under Section 13 (2) of SARFAESI Act upon the appellant company. Under such circumstances, the appellants approached this Court, inter alia, praying for setting aside the impugned letters dated 10.01.2013, 14.01.2013, 18.01.2012 and 28.01.2013, as aforesaid. Prayer was also made for a direction to continue Inland Letter of Credit of Rs. 1,00,00,000/- in favour of West Bengal State Electricity Distribution Company Limited. The learned Single Judge has rejected such prayer on the ground of existence of alternate statutory remedy by way of representation under Section 13 (3A) of the SARFAESI Act, 2002 to the respondent bank. Hence, the appellants preferred this intra-court appeal. Mr. Khare, learned senior counsel appearing for the appellants argued that the bank had acted in an wholly arbitrary, capricious and unreasonable manner. While on the other hand, the respondent bank was actively considering the prayer for enhancement of Credit facilities, on the other hand, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a. We have heard the submissions of both the parties. The contention of the appellant is that its Credit facilities were classified as non-performing asset in violation of the guidelines of the Reserve Bank of India. In this regard, the appellants have referred to Clause 2.1.3 of the Master Circulars dated 2nd July, 2012 which reads as follows:- 2.1.3 Bank should, classify an account as NPA only if the interest due and charged during any quarter is not serviced fully within 90 days from the end of the quarter. They have also assailed that the declaration of the Cash Credit facilities as NPA on 16.01.2013 was made on the 90th day bearing in mind that the last drawal on the Cash Credit facilities was 19th October, 2012, instead of completion of 90 days as required under Clause 4 of the said Master Circular. In Mardia Chemicals Ltd. v. Union of India [2004] 51 SCL 513 (SC) at paragraph 44 it has been held as follows : "44. As a matter of fact, the Narasimham Committee also advocates for a legal framework which may clearly define the rights and liabilities of the parties to the contract and provisions for speedy resolution of disputes, which is a sine qua non for ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons so communicated or the likely action of the secured creditor at the stage of communication of reasons shall not confer any right upon the borrower to prefer an application to the Debts Recovery Tribunal under section 17 or the Court of District Judge under section 17A." Incorporation of such statutory mechanism empowering the borrower to make a representation is an effective statutory mechanism and provides an adequate and effective statutory mechanism to expeditiously resolve any difficulty or objection raised by the borrower relating to classification of its securities or otherwise. Moreover, the issues relating to the validity of the decision of declaring an account as non-performing asset essentially relates to disputed questions of fact and accounting and the same has been rightly left to be adjudicated in the first instance by the respondent bank through the aforesaid statutory mechanism. To usurp such statutory jurisdiction of the secured creditor by invoking the writ jurisdiction is neither permissible on advisable in law. It appears that during pendency of the appeal the appellants have already resorted to such alternative statutory remedy and the bank by it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce was interfered with inasmuch as the representation under Section 13 (3A) was not disposed of. In the instant case, the representation has not only been disposed of but the same has also been communicated to the appellants. In an unreported decision of Andhra High Court in Sravan Dall Mill (P.) Ltd. v. Central Bank of India in W.P. No. 18089 of 2006 delivered on 11.09.2009, the authority had approached the Court being aggrieved by a cryptic unreasoned response to their objection to classification of their accounts as NPA. In the instant case, the writ petition was filed even prior to making representation under Section 13 (3A) of the SARFAESI Act to the respondent bank. During pendency of the appeal such representation was made and dealt with elaborately by the respondent bank by passing a speaking order which was communicated vide its letter dated 28.01.2013 to the appellants. The internal adjudicatory mechanism as envisaged in Mardia Chemical (Supra) to deal with objections raised by a borrower with regard to the demand notice including classification of its accounts as NPA appears to have been effectively complied with in the instant case. For the aforesaid reasons, we do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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