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TMI Blog2016 (6) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... name of Light and White cream and sopa and a capsule in the name of Devifit for Diabetes. In August, 2013, the petitioner (hereinafter referred to as the borrower company) availed a C.C. limit facility for Rs. 25 lakhs as a working capital from the Punjab National Bank (respondent herein), which was subsequently enhanced to Rs. 80 lakhs in June, 2014. 3. On 02/03.12.2015, the respondent-bank affixed a sale notice on the outer wall of the premises of the borrower company indicating therein that due to non payment of bank's dues by the borrower, the account of the company became Non-Performing Asset (NPA for short). The borrower served a notice dated 20.12.2015 upon the respondent-bank, which was replied to by the respondent-bank on 07.01.2016. The borrower company was stopped by the respondent bank from operating its account with the respondent-bank. 4. On 02.01.2016, the respondent-bank issued a notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the 'SARFAESI Act') indicating therein the date of N.P.A. as 02.01.2016. In the previous notice, which was pasted on the oute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner is to the tune of Rs. 2,46,552/-. Learned counsel for the respondent-bank, at this juncture, submitted that the material worth Rs. 3.50 lakhs was kept in the godown of the petitioner company; the hypothetical goods have been disposed of by the petitioner company and the requested amount was not deposited by the petitioner. 9. In Mardia Chemicals Ltd. & others vs. Union of India & others, 2004 (4) SCC 311, it was observed by Hon'ble Supreme Court that the purpose of serving a notice upon the borrower under sub-section (2) of Section 13 of the Act is, that a reply may be submitted by the borrower explaining the reasons as to why the measures may or may not be taken under sub-section (4) of Section 33 in case of non-compliance of notice within 60 days. The creditors must apply its mind to the objections raised in reply to such notice and an internal mechanism must be particularly evolved to consider such objections raised in the reply to the notice. There may be some meaningful consideration of the objections raised rather than to ritually reject them and proceed to take drastic measures under sub-section (4) of Section 13 of the Act. Once such a duty is envisaged on the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant has alternative efficacious remedy of filing an appeal under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the Act). As it appears to us, Sub-Section 3A has been inserted in Section 13 of the Act with effect from 11th November, 2004. In terms whereof, the secured creditor, if not accepting representation or objection of the borrower, is obliged to communicate within one week of receipt of representation or objection, the reasons for non-acceptance of the representation or objection of the borrower. In the instant case, it is the contention of the appellant that within one week from the date of representation or objection of the appellant, respondent Bank did not communicate its decision not to accept such representation or objection with reasons in support thereof. However, even if the respondent Bank had communicated non-acceptance of the representation or objection of the appellant with reasons in support thereof, appellant could not prefer an application to the Debt Recovery Tribunal under Section 17 of the Act or to the Court of the District Judge under Section 17A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia ((2007 (4) KLT SN 53 (C.No.58) in support of his contention. It was held that this court is justified in interfering with steps initiated under Section 13(4) when there is arbitrary classification of the account as 'NPA' in violation of the guidelines issued by the Reserve Bank. A learned Judge of this court observed that the availability of alternate remedy is not a bar when a patent illegality has been committed and when the Bank has exercised its power in a most arbitrary manner." (emphasis supplied) 13. Much emphasis has been laid by learned counsel for the petitioner on the fact that the date of NPA is different in different papers. In the considered opinion of this Court, the said argument has hardly any legs to stand, inasmuch as declaration by the bank that the petitioner has become NPA is material and not the date, even if there is slight discrepancy in the same. 14. The next argument of learned counsel for the petitioner is that guidelines of RBI have not been followed. Even if it be conceded for the sake of arguments that it is so, the fact remains that the said guidelines are only in the form of executive instructions and appears to have no statutory backing, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld certainly be for the purpose of his knowledge which would be a step forward towards his right to know as to why his objections have not been accepted by the secured creditor who intends to resort to harsh steps of taking over the management / business of viz. secured assets without intervention of the court. Such a person in respect of whom steps under Section 13(4) of the Act are likely to be taken cannot be denied the right to know the reason of non-acceptance and of his objections. It is true, as per the provisions under the Act, he may not be entitled to challenge the reasons communicated or the likely action of the secured creditor at that point of time unless his right to approach the Debts Recovery Tribunal as provided under Section 17 of the Act matures on any measure having been taken under sub-section (4) of Section 13 of the Act." 18. It is the settled law that the secured creditor has obligation to communicate the reasons for non-acceptance of the representation or the objection of the borrower. In the instant case, in reply dated 07.01.2016 (Annexure 6 to the petition), the secured creditor has given sufficient reasons for not accepting the objections of the borro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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