Disposed

M/S Kashetriya Shri Gandhi Ashram v. Indian Bank & Anr.

Punjab & Haryana HC4 Mar 2014CWP/4056/2014

Case brief

AI extract

What is this about?

A writ petition by a charitable institution against a bank threatened with asset auction under the SARFAESI Act. The Chief Justice held that if the petitioner makes a concrete offer to a purchaser, the bank should grant reasonable time, and if not, the petitioner can avail remedies under the Act as per Mardia Chemicals.

What did the court decide?

Petition disposed; bank to give reasonable time to petitioner if concrete offer is made for asset sale to clear liability.

M/S Kashetriya Shri Gandhi Ashram Vs Indian… — Banking and Recovery | Punjab & Haryana HC (2014)

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I N THE HI GH COURT OF PUNJAB AND HARYANA AT CHANDI GARH

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Civil Writ Petition No.4056 of 2014 (O&M) DATE OF DECI SI ON: 03.03.2014

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M/ s Kashetriya Shri Gandhi Ashram

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…..Petitioner

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versus

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Indian Bank and another

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.....Respondents

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CORAM:- HON'BLE MR.JUSTI CE SANJAY KI SHAN KAUL, CHI EF JUSTI CE HON’BLE MR. JUSTI CE ARUN PALLI

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Present: Mr. P.K. Mutneja, and Mr. Vivek Salathia, Advocates for the petitioner

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SANJAY KI SHAN KAUL, CHI EF JUSTI CE : (Oral)

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The petitioner claims to be a charitable and philanthropic institution registered under the Societies Registration Act, 1860. The petitioner claims that it is financed by the Khadi and Village Industries Com mission (KVIC) as well as by respondent-bank from whom cash credit limit has been obtained. The KVIC is also stated to have made a disclaimer of prior rights qua the bank when the loan facility was being obtained.

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The petitioner is stated to have incurred losses which resulted in the account being declared as NPA and proceedings being initiated under the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Act, 2002. The notice under Section 13(2) of the said Act apparently evinced no response from the petitioner with the result that now a notice has been issued under Section 13(4) of the said Act.

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Chand Parkash 2014.03.04 17:11 I attest to the accuracy and integrity of this document

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CW P- 4056 - 2014

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- 2 -

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On our query, learned counsel for the petitioner concedes that remedy under Section 17(1) of the SARFAESI Act ought to be availed of by the petitioner but then the petitioner has not even responded to the notice under Section 13(2) of the said Act. Learned counsel submits that there is a threatened action of the respondent No.1Bank to take over the assets of the petitioner and put them for auction. It is his submission that as per the petitioner even one property out of the four properties mortgaged should be sufficient to liquidate the outstandings of the bank and the petitioner approached the respondentbank by making a representation in this behalf on 7.2.2014 (Annexure P- 5).

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Learned counsel for the petitioner submits that all that the petitioner requires from the bank is some time to obtain a prospective purchaser who can directly pay the amount to the bank for liquidation of its liability and the documents can be released by the bank in favour of the prospective purchaser. Learned counsel has also drawn our attention to an order passed by the Ist D.B. in CWP No.21553 of 2013 on 27.9.2013 which reads as under: -

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“ Learned counsel for the petitioner submits that after making the representation dated 27.7.2013 at Annexure P/ 6, they have been able to locate prospective customers for the mortgaged property and the value to be realized from the sale would suffice to clear the liability.

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If the aforesaid be true, nothing precludes the petitioner from approaching the institution making the said offer and we are sure that if a concrete offer is made, occasion for the institution to take coercive steps in terms of SARFAESI Act would not arise.

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In case the matter does not resolve, as aforesaid, and the petitioner wants to avail of any other remedy that will have to be in accordance with the SARFAESI Act as

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Chand Parkash 2014.03.04 17:11 I attest to the accuracy and integrity of this document

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CW P- 4056 - 2014

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- 3 -

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enunciated by Mardia Chemicals v. Union of India (2004) 4 SCC 311.

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Petition accordingly stands disposed of.”

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Learned counsel submits that all he prays for is an order in the aforesaid terms to facilitate the liquidation of liability of the bank.

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In view of the aforesaid position, we are of the view that it is certainly open to the petitioner to approach the respondent No.1-bank, making the offer as stated above and, if a concrete offer is made, the occasion for respondent No.1 to take coercive steps in terms of SARFAESI Act would not arise. We are sure that respondent No.1 will give reasonable time to the petitioner to obtain a prospective purchaser considering the fact that petitioner is really a charitable organisation but, in case the matter does not resolve as aforesaid, the petitioner would, naturally, have the option to avail of the remedy in accordance with the SARFAESI Act, as enunciated in Mardia Chemicals v. Union of I ndia ( 2004) 4 SCC 311.

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The petition accordingly stands disposed of.

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( SANJAY KI SHAN KAUL ) CHI EF JUSTI CE 03.03.2014 ( ARUN PALLI ) parkash* JUDGE

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Chand Parkash 2014.03.04 17:11 I attest to the accuracy and integrity of this document

M/S Kashetriya Shri Gandhi Ashram v. Indian Bank & Anr.

Case brief

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M/S Kashetriya Shri Gandhi Ashram v. Indian Bank & Anr.

Case brief

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