Case Title: Rajesh Sukamaran Nambiar V. The Central Bank Of India Through The Chief Manager
The Gujarat High Court declined to exercise its writ jurisdiction at the stage of issuance of notice under Section 13(2) of the SARFAESI Act and observed that adjudication of the matter would have to wait till the stage of Section 13(4) was reached. Thereafter, the aggrieved person can file a securitisation appeal under Section 17 of the SARFAESI Act before the Debt Recovery Tribunal.
The facts, in brief, are that the Petitioners had sought a “No Due Certificate” from the Bank releasing them from all liabilities in personal capacity and the capacity of the Director since Petitioner No. 1 had resigned from the post of Director and had deposited Rs. 20 lacs so as to secure the Bank. The same was provided by the bank. In light of this certificate, the Petitioner did not have any outstanding liabilities and the notice was entitled to be set aside. Further, the writ jurisdiction of the Court was invoked since the Respondent Bank had initiated recovery without jurisdiction.
It is the case of the Respondent Bank that while issuing No Due Certificate dated 27.03.2019, it is stated that the same is the subject to the liabilities of the other directors of Pentacool Softdrinks Pvt. Ltd. The property would still be mortgaged till the discharge of full and final payment of the bank.
The relevant extract from the said certificate is reproduced below:-
“NO DUE CERTIFICATE
We certify that Mr Rajesh Nambiar and Hemlata R Nambiar, R/O A1/202, Springwood Residency-1, behind Reliance Mall, Old Padra Road, Vadodara are the Director and Guarantor in the Pentacool Softdrinks Pvt Ltd and from now onwards both are discharged from all their liabilities and responsibilities of Pentacool Softdrinks Pvt Ltd but subject to the payment of Rs.20.00 lakhs towards the said liabilities and subject to the liabilities of other Directors of the Penta Cool Soft Drinks P Ltd….”
In light of this, it was observed that “This Court at thinks it fit to refer to the ratio as laid down by the Hon’ble Supreme Court in Civil Appeal No. 3563 of 2009 in the case of Punjab National Bank & Anr. v/s. M/s. Imperial Gift House & Ors. and held as under:
Leave granted.
Heard learned counsel for the parties.
By the impugned order, in effect and substance, the High Court has quashed notice issued by the bank under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (for short, "the Act"]. Upon receipt of notice, respondents filed representation under Section 13(3)(A) of the Act, which was rejected, Thereafter, before any further action could be taken under Section 13(4) of the Act by the Bank, the writ petition was filed before the High Court. In our view, the High Court was not justified in entertaining the writ petition against the notice issued under Section 13(2) of the Act and quashing the proceeding initiated by the bank. Accordingly, the appeal is allowed, impugned order passed by the High Court is set aside and the writ petition filed before it is dismissed.”
It further relied upon S.V. Developers v/s. State Bank of India and others wherein it has been held that the High Court is not justified in entertaining the writ petition before any further action could be taken by the Bank under Section 13 (4) of the SARFAESI Act. The aggrieved person however can approach the Debts Recovery Tribunal u/s 17 of the SARFAESI Act by filing a securitization application before the appropriate Tribunal.