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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

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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  

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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:    

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“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

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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

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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.

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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

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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

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