PEJAN Vs AMARJEET SINGH
Bench: GYAN SUDHA MISRA,MADAN B. LOKUR
Case number: SLP(C) No.-019466-019466 / 2013
Diary number: 19466 / 2013
Advocates: RAMESHWAR PRASAD GOYAL Vs
Page 1
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
SPECIAL LEAVE PETITION (CIVIL) NO. 19466 OF 2013
Devi Ispat Limited & Anr. ….Petitioners
versus
State Bank of India & Ors. ..Respondents
J U D G M E N T Madan B. Lokur, J.
1. Petitioner No.1 (Devi Ispat) is engaged in the manufacture
and trade of iron and steel products while petitioner no.2 is one of
its Directors.
2. Devi Ispat had availed of credit facilities from the State Bank
of India with an overall limit of Rs. 29.5 crores. This credit facility
was enhanced from time to time to Rs. 68.5 crores and Devi Ispat
sought a further enhancement to Rs. 93 crores but that was not
sanctioned.
3. While the Bank was processing the request of Devi Ispat, it
issued a letter to it on 10th January 2013 informing that its cash
credit account is irregular inasmuch as the outstanding was about SLP (Civil) No. 19466 of 2013 Page 1 of 7
Page 2
Rs.11.7 crores against the permissible limit of Rs. 5.6 crores.
Devi Ispat was also informed that it was not servicing the interest
of cash credit, Foreign Currency Non-Resident Bank Account etc.
It was also informed that its account was heading for becoming a
non-performing asset (NPA) and Devi Ispat was requested to
regularize all its accounts by 14th January 2013 failing which there
would be no alternative but to call up the advance.
4. Devi Ispat replied to the above letter but since the response
was not satisfactory another letter was issued by the Bank on 14th
January 2013 calling upon Devi Ispat to regularize its accounts
position failing which the Bank would be constrained to take
appropriate action.
5. Since there was again no positive response from Devi Ispat,
the Bank issued a letter on 18th January 2013 intimating Devi
Ispat that its account had been classified as an NPA on 16 th
January 2013 and it was requested to regularize the accounts
position within seven days.
6. Instead of regularizing its accounts, Devi Ispat sent a reply
on 22nd January 2013 pointing out that the cash credit account
SLP (Civil) No. 19466 of 2013 Page 2 of 7
Page 3
had been operated on 19th October 2012 and therefore its
declaration as an NPA on 16th January 2013 (that is on the 90th
day instead of on completion of 90 days) was in violation of the
guidelines issued by the Reserve Bank of India.
7. The Bank then issued a notice to Devi Ispat under Section
13(2) of the Securitization and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002 (the SARFAESI
Act) on 28th January 2013 demanding payment of the outstanding
liabilities due to the extent of about Rs. 17.9 crores, $ 1.11 crores
(of the FCNB account ) and interest.
8. Devi Ispat reacted by filing a writ petition in the Calcutta
High Court challenging, inter alia, the declaration of its being an
NPA and for setting aside the previous letters issued by the Bank.
9. The learned Single Judge hearing the writ petition dismissed
it by an order dated 19th March 2013 on the sole ground that Devi
Ispat had an alternate statutory remedy under Section 13(3A) of
the SARFAESI Act to make a representation against the letter
issued under Section 13(2) thereof.
10. Section 13(3A) of the SARFAESI Act reads as follows:
SLP (Civil) No. 19466 of 2013 Page 3 of 7
Page 4
“13. Enforcement of security interest.
(1) , (2) and (3) xxx
(3A) If, on receipt of the notice under sub-section (2), the borrower makes any representation or raises any objection, the secured creditor shall consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate within one week of receipt of such representation or objection the reasons for non-acceptance of the representation or objection to the borrower.
Provided that the 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.”
11. After the dismissal of its writ petition, Devi Ispat made a
representation to the Bank under Section 13(3A) of the Act on
22nd March 2013. This was followed almost immediately
thereafter by an intra court appeal filed against the order of the
learned Single Judge. Although the appeal was filed on 1st April
2013 (and we have gone through the contents of the appeal
memo) there is no mention of Devi Ispat having made a
representation to the Bank under Section 13(3A) of the Act. SLP (Civil) No. 19466 of 2013 Page 4 of 7
Page 5
12. Be that as it may, the representation was considered by the
Bank and rejected on 2nd April 2013. The Division Bench was
informed of this during the hearing of the intra court appeal on
26th April 2013.
13. The Division Bench was of the opinion that in view of the
observations by this Court in Mardia Chemicals v. Union of
India1 as well as the provisions of Section 13(3A) of SARFAESI
Act, the writ court was right in not entertaining the writ petition
and permitting the issues raised by Devi Ispat to be considered by
the Bank through the statutory mechanism.
14. While upholding the view of the learned Single Judge and
despite the fact that the representation made by Devi Ispat had
been rejected on 2nd April 2013, the Division Bench heard the
matter on merits. However, it did not deal with the merits of the
case since Devi Ispat had availed of the statutory remedy
available to it. Accordingly, the appeal filed by Devi Ispat was
dismissed on 26th April 2013.
15. While challenging the order dated 26th April 2013 passed by
the Division Bench, learned counsel submitted that Devi Ispat had 1 AIR 2004 SC 2371 SLP (Civil) No. 19466 of 2013 Page 5 of 7
Page 6
no alternative but to file a writ petition challenging the notice
issued by the Bank on 18th January 2013. We find no merit in this
contention.
16. Firstly, Devi Ispat had an alternate remedy to make a
representation to the Bank under the provisions of Section 13(3A)
of the Act and there was no reason to by-pass the statutory
mechanism.
17. Secondly, Devi Ispat did in fact make a representation to the
Bank under Section 13(3A) of the SARFAESI Act and that
representation was rejected on 2nd April 2013 during the
pendency of the intra court appeal. The statutory remedy having
been availed of by Devi Ispat, nothing really survived in the
dispute raised.
18. Thirdly, we now find from the written submissions submitted
by the Bank that it has taken possession of the secured assets of
Devi Ispat on 25th May 2013 and 27th May 2013 under the
provisions of Section 13(4) of the SARFAESI Act and a possession
notice has also published in the newspapers on 31st May 2013.
SLP (Civil) No. 19466 of 2013 Page 6 of 7
Page 7
19. On the facts on record and the statutory remedy having
been availed of, we see no reason to interfere with the impugned
order passed by the Calcutta High Court. However, it is left open
to Devi Ispat to take such appropriate steps as may be considered
necessary for safeguarding its interests.
20. There is no merit in this petition and it is accordingly
dismissed.
………………………………J (Gyan Sudha Misra)
………………………………..J (Madan B. Lokur)
New Delhi; April 16, 2014
ITEM NO.1B COURT NO.14 SECTION XVI
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Petition(s) for Special Leave to Appeal (Civil)
No(s).19466/2013
(From the judgement and order dated 26/04/2013 in APOT
No.172/2013 of The HIGH COURT OF CALCUTTA)
DEVI ISPAT LTD. & ANR. Petitioner(s)
VERSUS
SLP (Civil) No. 19466 of 2013 Page 7 of 7
Page 8
STATE BANK OF INDIA & ORS. Respondent(s)
[HEARD BY HON'BLE GYAN SUDHA MISRA AND HON'BLE MADAN B.
LOKUR, JJ.]
Date:16/04/2014 This Petition was called on for judgment
today.
For Petitioner(s) Mr. Rameshwar Prasad Goyal,AOR
For Respondent(s) Mr. Anil Kumar Sangal,AOR
Hon'ble Mr. Justice Madan B. Lokur pronounced the judgment of the Bench comprising Hon'ble Gyan Sudha Misra and His Lordship.
For the reasons recorded in the Non-Reportable judgment, which is placed on the file, the special leave petition is dismissed.
(Parveen Kr.Chawla) Court Master
(Phoolan Wati Arora) Assistant Registrar
SLP (Civil) No. 19466 of 2013 Page 8 of 7