Single Judge bench of the Calcutta High Court was recently hearing a case, where the bank had issued a second notice to the borrower under SARFAESI Act. The Bench held that when the challenge to the earlier SARFAESI proceedings was pending adjudication before the learned Debts Recovery Tribunal in SA No. 118 of 2021, The second notice under Section 13(2) was superfluous and unnecessary.
Facts of the case
The writ petition has been filed in Calcutta High Court challenging a second notice under Section 13(2) issued by the Union Bank of India against the petitioners on 24th of September, 2021. An earlier notice under Section 13(2) dated 3rd of May, 2021 culminated in Section 13(4) where possession of the secured asset was taken under Rule 8(1) of the Security of Enforcement Rules on 18th August, 2021. The petitioner challenged the same in SA No. 118 of 2021 before the Debts Recovery Tribunal, Kolkata, which is pending.
Contention of the parties
Counsel for the petitioner would rely upon the judgments of M/s. Dauji Farms Limited & Ors. vs. Dena Bank & Anr. reported in AIR 2009 Chhatisgarh 22 and M/s. Sravan Dall Mill P. Ltd. vs. Central Bank of India & Anr. reported in AIR 2010 Andhra Pradesh 35. Further reliance is placed today on the decision of Chandra Sengar & Another vs. Union Bank of India & others reported in REED 2018 Del 01204; Veesons Energy Systems Pvt. Ltd. vs. State Bank of India & Anr. reported in REED 2016 Mad 11203. By reference to the aforesaid judgments, Counsel for the petitioner would argue that SARFAESI Act, 2002 accepts only one notice under Section 13(2) and subsequent notices thereunder are not maintainable.
The High Court noted that the challenge to the earlier SARFAESI proceedings was pending adjudication before the Debts Recovery Tribunal in SA No. 118 of 2021. The second notice under Section 13(2) was superfluous and unnecessary. The existing notices under Sections 13(2) and 13(4) being the subject matter of SA No. 118 of 2021 were to enforce the bank’s claims against the petitioner. The argument of the petitioner was, therefore, academic. If one accepts that the second notice under Section 13(2) was not maintainable, the writ petition could not be entertained as it was settled that a notice under Section 13(2) did not create any cause of action.
Conclusion
The High Court observed that the challenge to the earlier SARFAESI proceedings is pending adjudication before the learned Debts Recovery Tribunal in SA No. 118 of 2021. The second notice under Section 13(2) is superfluous and unnecessary. The existing notices under Sections 13(2) and 4 being the subject matter of SA No. 118 of 2021 are to enforce the bank’s claims against the petitioner. The argument of the petitioner is, therefore, academic.
For the reasons stated hereinabove, the High Court was of the view that no relief could be granted to the petitioner in the instant writ petition. The writ petition shall stand disposed of with liberty to the petitioner to proceed with SA No. 118 of 2021 or institute fresh proceedings when the bank has taken out proceedings under Section 13(4) in aid of the latest notice under Section 13(2) dated 24th September, 2021.