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TMI Blog2024 (7) TMI 1306X X X X Extracts X X X X X X X X Extracts X X X X ..... was directed to give effect to the letter of Arrangement dated 28.06.2021 and to give the benefit of the same to the writ petitioner/ respondent no. 1 herein. Any amount appropriated by the Bank from the account of the petitioner for the purpose of adjustment or otherwise was also directed to be returned to the respondent no. 1 within a specified time. 4. The facts leading to the filing of the writ petition and this appeal, in a nutshell, are as follows. 5. The respondent no. 1 had three separate transactions with the appellant Bank which consisted of a loan for the business, a housing loan and a vehicle loan. The credit facility for the business had an overall limit of Rs. 3.50 crores, of which the Cash Credit (for short 'CC') Limit was Rs. 75 lakhs and the Letters of Credit (for short "LC") and Bank Guarantees (for short "BG") had the limits of Rs. 75 lakhs and Rs. 2 crores respectively. The respondent no. 1 claims that on account of Covid 19 pandemic and repeated lockdowns he ran out of funds for which he could not repay the LCs for which 4 LCs amounting to Rs. 1.62 crores devolved. The respondent no. 1 applied for restructuring of his account on May 30, 2021. On September 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention, Mr. Rai placed reliance upon the decision of the Hon'ble Supreme Court in the case of Devi Ispat Limited & Anr. vs. State Bank of India reported at (2014) 5 SCC 762. 9. By drawing the attention of the Court to various correspondences between the parties and the statements of accounts, Mr. Rai contended that the finding of the learned Single Judge, that the respondent no. 1 was not informed of the extension of the time limit by reason of restructuring of the accounts, is a perverse one. 10. Mr. Rai submitted that after acceptance of the fresh sanction letter dated 11.11.2021 by the respondent no.1, the earlier letter of restructuring dated 28.06.2021 got novated and substituted. In support of such contention, he placed reliance upon the decision of the Hon'ble Supreme Court in the case of National Insurance Company Limited vs. Baghore Polylab (P) Limited reported at (2009) 1 SCC 269. 11. Mr. Rai, concluded by submitting that the writ petition was also liable to be dismissed on the ground of delay as the same was filed only in July, 2022 when the respondent no. 1 became aware of the restructuring of accounts on September 26, 2021. In support of his contention that the wri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notice under Section 13(4) of the said Act was issued on 5th July 2022. The writ petition was filed on 20th July, 2022 i.e. after issuance of the notice under Section 13(4) of the said Act. It appears from the writ petition that the respondent no. 1 filed the writ petition challenging the issuance of notices issued under Section 13(2) and 13(4) of the SARFAESI Act, 2002, including the illegal and arbitrary action on the part of the appellant bank for alleged non-compliance of the letter of arrangement dated June 28, 2021. 15. The Hon'ble Supreme Court in Phoenix ARC Private Limited (supra), after taking note of the various decisions, held that writ petitions at the instance of borrowers against the proposed action to be taken under Section 13(4) of the SARFAESI Act, 2002 is an abuse of process of the Court in view of the statutory, efficacious remedy available by way of appeal under Section 17 of the SARFAESI Act. It was further held that under such situation the High Court ought not to have entertained the writ petitions. The Hon'ble Supreme Court held thus- "10. In Satyawati Tandon, it was observed and held by this Court that the remedies available to an aggrieved person agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance. 46. It must be remembered that stay of an action initiated by the State and/or its agencies/instrumentalities for recovery of taxes, cess, fees, etc. seriously impedes execution of projects of public importance and disables them from discharging their constitutional and legal obligations towards the citizens. In cases relating to recovery of the dues of banks, financial institutions and secured creditors, stay granted by the High Court would have serious adverse impact on the financial health of such bodies/institutions, which (sic will) ultimately prove detrimental to the economy of the nation. Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters. Of course, if the petitioner is able to show that its case falls within any of the exceptions carved out in Baburam Prakash Chandra Maheshwari v. Antarim Zila Parishad [AIR 1969 SC 556], Whirlpool Corpn. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the Debts Recovery Tribunal -1 Kolkata which was registered as SA No. 221 of 2022. After going through the application filed by the respondent no. 1 being SA 221 of 2022, this Court finds that the respondent no. 1 herein prayed for setting aside the notice dated April 7, 2022 issued under Section 13(2) of the SARFAESI Act, 2002 and the possession notice dated July 5, 2022 under Section 13(4) of the said Act and also prayed for an order directing refund of Rs. 92.56 lakhs along with interest to the respondent no. 1 herein by the appellant bank against alleged wrongful transfer of funds from the Cash Credit Account to the Working Capital Term Loan Account without the knowledge and consent of the respondent no. 1. Therefore, it is evident that more or less identical reliefs have been claimed by the writ petitioner/ respondent no. 1 herein in the writ petition as well as in SA 221 of 2022. 19. After going through the impugned judgment and order it appears to this Court that the writ petitioner/ respondent no. 1 herein sought to pursue the proceedings which are already pending before the Debts Recovery Tribunal in so far as the notices issued by the Bank under Sections 13(2) and 13( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from Kerala Police within the stipulated time for Covid-19 Pandemic, the respondent no. 1 by a letter dated May 28, 2021 submitted necessary documents with a request to the bank to restructure the credit facilities. It is evident from the record that by a letter dated June 28, 2021 the bank has sanctioned the credit facilities in the manner as specifically contained in the said letter. It appears from the said letter that the existing LC limit of Rs. 2.00 crores was revised to zero and the existing bank guarantee of Rs. 0.75 crores was revised to Rs. 0.67 crores. A Working Capital Term Loan (for short "WCTL") of Rs. 1.58 crores and Fixed Investment Term Loan (for short "FITL") of Rs. 0.04 crores was also sanctioned in favour of the respondent no. 1. 24. The respondent no. 1 claims that such restructuring of the credit facilities was not communicated to him at the relevant point of time. From the statement of accounts for the period 06.05.2021 to 01.07.2021, it appears that a sum of Rs. 1.58 crores and a further sum of Rs. 4 lakhs was credited to the account of the respondent no. 1. 25. The aforesaid amounts credited to the account of the respondent no.1 on 28.06.2021 appears to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties. 30. The respondent no. 1 after having accepted the conditions stipulated in the letter of arrangement dated 11.11.2021 cannot now turn around and pray for specific performance of the letter of arrangement dated 28th June, 2021 which got substituted by the acceptance of the terms and conditions of the subsequent letter of arrangement dated 11.11.2021. 31. The issue of non service of letter of arrangement dated 28.06.2021 which weighed with the learned Single Judge pales into insignificance in view of the aforesaid observations of this Court. 32. Mr. Rai contended that the respondent no.1 failed to comply with the conditions stipulated in the letter of arrangement dated 11.11.2021 as he did not liquidate the WCTL by 31.12.2021. Such issue is left open to be agitated before the appropriate forum. 33. For the reasons as aforesaid, this Court is of the considered view that after the respondent no. 1 accepted the letter of arrangement dated 11.11.2021, the cause of action for seeking specific performance of the letter of restructuring dated 28.06.2021 no longer survives. This Court, therefore, holds that the direction passed by the learned Single Judge upon the Bank to give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s by referring to various clauses in the RBI master circular that since the home loan of the writ petitioner/respondent no. 1 became NPA on 01.10.2021 therefore, all accounts of the writ petitioner were rightly classified as NPA on 18.03.2022. Mr. Kohli would contend that the classification of his accounts as NPA on 18.03.2022 is bad. However, since the respondent no. 1 has already approached the Debts Recovery Tribunal by filing an application under Section 17 of the SARFAESI Act, 2002 being SA 221 of 2022 this Court refrains from making any observations on the submissions made by the respective parties in that regard. 40. The decision in Mathew K.C (supra) is not applicable to the case on hand as in the said reported decision the interim order was passed without assigning any reasons and without giving any opportunity to contest the maintainability of the writ petition. 41. Umakanta Mohapatra (supra) is distinguishable on fact as it deals with an issue as to whether interim order could be passed when the writ petition was not maintainable. 42. For all the reasons as aforesaid, the impugned judgment and order dated November 3, 2021 stands set aside and quashed. The appeal accor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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