AI Structured Summary
Not yet generated for this judgment
Judgment
C.S.Dias, J
The original petition has filed challenging Ext.P1 order passed by the Debt Recovery Tribunal-I, Ernakulam in I.A. No.1786/2023 in S.A. No.164/2023.
The brief facts leading to the original petition are: the second respondent Company had approached the first respondent bank for financial assistance. The petitioner was a guarantor to the loan. The second respondent has gone into liquidation. The first respondent has issued Ext.P3 notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (in short, ‘Act’) without issuing notice to the principal borrower, which is sine qua non requirement under the Act. Hence, the entire proceedings leading to proceedings is ab initio void. The petitioner filed S.A.No.164/2023 (Ext.P4) and I.A. No.1786/2023 (Ext.P5) to stay the proceedings initiated in the Act. However, the Tribunal without considering the contentions raised by the petitioner in its proper perspective, by impugned Ext.P1 order, has dismissed Ext.P5 application. Ext.P1 is ex-facie illegal and unsustainable in law. Hence, the original petition.
Heard; Anish John Antony, the learned Counsel appearing for the petitioner and Sri.A.V.Thomas, the learned Counsel appearing for the respondents. In view of the judgment, I propose to pass, I dispense with the notice of the second respondent, which is in liquidation.
The crux of the petitioner’s contention is that, the Tribunal ought to have stayed further proceedings, pursuant to Ext.P3 notice, as Section 13(2) notice was not issued to the second respondent Company.
The Tribunal, after considering the pleadings and materials on record, held that the petitioner and other guarantors have not specifically averred in Exts.P4 or P5 that Ext.P3 is not in conformity with the requirements under the Act. Consequently, the Tribunal held that the petitioner has not made out a prima facie case to stay the coercive proceedings initiated under the Act.
Firstly, I find that the petitioner is a guarantor of the loan availed by the second respondent.
Indisputably, the second respondent is under liquidation and an Insolvency Professional has been appointed as per the provision of the Insolvency and Bankruptcy Act. It was in the said circumstances that the first respondent issued Ext.P3 notice to the petitioner and the other guarantors.
Section 2(1)(f) of the Act defines the term ‘the borrower’, to include any person who has given any guarantee or created any mortgage or pledge as security for the financial assistance granted by any bank or financial institution.
In the light of broad definition of the term borrower, it leaves room for any doubt that the guarantor is a borrower. Therefore, I do not find any error in Ext.P1 order passed by the Tribunal, declining to stay the proceedings pursuant to Ext.P3 on the ground that no notice was issued to the principal borrower.
De hors the above contention and the finding, if the petitioner is desirous of challenging the impugned order, he would be at liberty to invoke his statutory remedy under Section 18 of the Act, by filing an appeal before the Debt Recovery Appellate Tribunal. If any such appeal is filed, the same shall be considered by the Appellate Authority, untrammeled by the observation made by this Court on the question regarding non-issuance of notice to the second respondent.
Resultantly, the original petition is dismissed with the above observation.