Ashok Saw Mill vs The Authorised Officer, Indian Overseas Bank and The Chairman and Managing Director, Indian Overseas Bank

F.M. Ibrahim Kalifulla, J.—The petitioner seeks to challenge the impugned proceedings of the first respondent, dated 26.07.2007, under the

Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as ''Rules'').

To state the facts briefly:

The petitioner availed certain credit facilities from the respondent/Indian Overseas Bank for its business purposes sometime in the year 1998. The

property covered by the impugned notice is one of the secured assets. The petitioner''s account was classified and declared as N.P.A. (Non

Performing Asset) and the Bank initiated Recovery Proceedings by way of filing Original Application before Debts Recovery Tribunal (in short,

D.R.T.). That apart, the Bank also issued a notice u/s 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of

Security Interest Act, 2002 (hereinafter referred to as Act) on 17.09.2002 claiming payment of certain sums. Thereafter, possession notice u/s

13(4) of the Act was issued by the Bank on 04.12.2002. It was in the above said background, the impugned notice dated 26.07.2007 came to be

issued, invoking Rule 8(5) and 9(1) of the Rules.

Mr. S. Sethuraman, learned Counsel appearing for the petitioner contends that, even though there is no specified time limit prescribed in the

provisions of the Act or the Rules, having regard to the law laid down by the Hon''ble Apex Court in its various decisions, the general law of

limitation would apply, by virtue of which, if at all the Bank wanted to bring the properties for sale covered by Section 13(4) notice, which was

issued in the year 2002, it could not have validly issued the present proceedings beyond three year period from the date of issuance of the notice

u/s 13(4) of the Act. In support of such contention, reliance was placed upon the decision of the Honourable Supreme Court reported in II (2006)

BC 225 (SC) Maharashtra State Financial Corporation v. Ashok K. Agarwal and Ors.

The stand of the petitioner was resisted by the respondents/Bank by contending that, whatever be the grievance of the petitioner, in the light of

the Division Bench decision of this Court reported in Digivision Electronics Ltd. Vs. Indian Bank, and the decisions of the Honourable Supreme

Court in Mardia Chemicals Ltd. Vs. Union of India (UOI) and Others Etc. Etc., and Transcore Vs. Union of India (UOI) and Another, , the

remedy of the petitioner is to approach appropriate D.R.T. having jurisdiction u/s 17 of the Act.

Having heard the learned Counsel for the parties, I find force in the submission of the learned Counsel for the respondents. In this context, when

Section 13(4) of the Act is perused, I find that, apart from taking possession of the secured assets by invoking the said provision, Sub-clauses (a)

to (c) thereof provide for very many other measures which can be taken by the secured creditor viz., the Bank herein, for the purpose of

recovering the secured debt. By virtue of the above referred to sub-clauses in Section 13(4) of the Act, a secured creditor can also resort to a

transfer of the secured asset which has been taken possession of by way of lease, assignment or sale. It can also take over the Management of the

business of the borrower including the right to transfer by way of lease, assignment or sale, provided substantial part of the business of the

borrower is specifically held as security for the debt. That apart, u/s 13(4)(c) of the Act, a secured creditor can also appoint any person as Manger

to manage the secured assets, the possession of which has been taken over by the secured creditor. When the above provision u/s 13(4) of the

Act with specific rights contained in various sub-clauses is considered by referring to the right of Appeal provided u/s 17 of the Act, I find that u/s

17, any person including a borrower, aggrieved by any of the measures referred to in Sub-section (4) of Section 13 taken by a secured creditor is

entitled to file an appeal before the D.R.T. having jurisdiction within 45 days from the date on which such measures had been taken.

It is relevant to state that the petitioner was not aggrieved against the action of possession taken by the Bank by issuing the notice u/s 13(4),

which was dated 04.12.2002. The present grievance of the petitioner is only as against the impugned action of the respondents as covered by the

present notice issued on 26.07.2007, invoking Rules 8(5) and 9(1) of the Rules. Under the said notice, the action contemplated is to bring the

secured asset which was already taken possession of by the respondents for sale; therefore, as the present measures taken by the respondents

under the impugned notice being a separate one though part of various measures covered by Section 13(4) of the Act, it can be safely held that it is

one of the measures covered by Section 13(4) and that the petitioner will be within his rights to invoke Section 17 of the Act and work out his

remedy by way of preferring appeal before appropriate D.R.T. having jurisdiction. Inasmuch as the Division Bench decision of this Court reported

in Digivision Electronics Ltd. Vs. Indian Bank, makes it clear that, aggrieved against such proceedings, the remedy of the debtor is to invoke

Section-17 by filing an Appeal before appropriate D.R.T. and since I have held that the present impugned proceedings would squarely fall under

the expression any of the measures referred to in Sub-section (4) of Section-13, the petitioner has to work out his remedy as statutorily provided

u/s 17 of the Act.

In the light of such efficacious remedy being available to the petitioner, the present writ petition cannot be maintained. The grievance of the

petitioner based on the ruling of the Hon''ble Supreme Court reported in (2006) II BC 225 (SC) can also be validly raised by the petitioner while

working out his remedy u/s 17 of the Act. The petitioner filed this Writ Petition on 03.08.2007 and the impugned order was issued on 26.07.2007;

therefore, the petitioner can be permitted to file the Appeal within three weeks from this date. Since the petitioner was diligently prosecuting his

rights by filing this Writ Petition, till the three weeks'' time granted to the petitioner to approach appropriate D.R.T., the threatened action of the

Bank proposed in the impugned notice shall stand suspended.

Writ Petition is dismissed with liberty to the petitioner to work out his statutory remedy u/s 17 of the Act. No costs. Connected Miscellaneous

Petition stands closed.