Allowed

G.Prabhakar v. State Bank of Hyderabad, Shapurnagar Branch

Telangana HC10 Jun 2010WP/4387/2010

Case brief

AI extract

What is this about?

In this writ petition, the petitioner challenged a notice and possession notice issued by the bank for taking possession of a mortgaged property. The bank failed to communicate its response to the petitioner's objections under Section 13(3A) of the Securitisation Act before initiating possession proceedings. The quashed the notices and directed the bank to restore possession if taken, allowing it

What did the court decide?

Notice dated 04.08.2009 and possession notice dated 06.01.2010 quashed; bank directed to restore possession if taken; writ petition allowed with costs of Rs.5000/-.

G.Prabhakar Vs State Bank of Hyderabad, Shapurnagar… — Banking and Recovery | Telangana HC (2010)

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THE HONOURABLE SRI JUSTICE GODA RAGHURAM

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AND

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THE HONOURABLE SRI JUSTICE NOUSHAD ALI

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W.P.NO. 4387 of 2010

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10-06-2010

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BETWEEN; G.Prabhakar

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...Petitioner

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vs.

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State Bank of Hyderabad, Shapurnagar Branch, rep. by its Chief Manager and another

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...Respondents

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THE HONOURABLE SRI JUSTICE GODA RAGHURAM AND

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THE HONOURABLE SRI JUSTICE NOUSHAD ALI

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W.P.NO.4387 of 2010

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ORAL ORDER: (Per GR,J)

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Heard Sri V.V.N. Narasimham, the learned counsel for the petitione and Sri Ch.Ravindra Babu, the learned counsel for the responden bank/secured creditor.

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Substantially, the petitioner assails the notice dated 04.08.200 issued by the bank, under Section 13(2) of the Securitisation an Reconstruction of Financial Assets and Enforcement of Security Interes Act, 2002 (for short “the Securitisation Act) intimating the petitioner that h had availed credit facilities and created mortgage by deposit of title deed

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of the specified property; that on account of default in repayments th account is declared as a non performing asset (NPA); that the outstandin liability in aggregate is Rs.40,07,438/- as on 12.09.2005 apart from futur interest, incidental expenses, costs, charges etc.; that he should discharg the liability in full within sixty (60) days from the date of notice, failing whic the bank would proceed further under the provisions of the Act.

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In response thereto, the petitioner by the representation dated 12 09-2009 denied obtaining any loan nor to have furnished any security fo any loan availed by M/s.Skin Remedies or Manohar Babu or others; tha all the documents relating to the loan account are vague and fabricate insofar as the petitioner is concerned; and that the liability is denied i toto. Thereafter, the bank issued a possession notice dated 06-01-201 under Rule 8(1) of the Security Interest (Enforcement) Rules, 2002 (fo short “the Rules”) read with Section 13(4) of the Securitisation Act.

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On receipt of the possession notice, the petitioner by a representatio dated 23-01-2010 intimated the bank that in response to the earlie objection/representation petition dated 12.09.2009 the bank has sent n response but yet issued the possession notice dated 06-01-2010. In thi representation the petitioner again denied his liability and further pleade that the property whose possession is sought to be taken belongs to hi daughter and hence he could not have mortgaged the same in favour o the bank.

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In response to the petitioner’s representation dated 23.01.2010, th bank got issued a lawyer’s notice dated 08.02.2010. To th extent relevant and material for the purposes of this writ petition and th issues considered herein, suffice it to note that the reply notice i extremely breezy and evasive manner averred that the bank had alread replied to the petitioner’s notice dated 12-09-2009 and 04-08-2009. N particulars are vouchsafed as to the date on which such notice (as i required to be furnished under the provisions of Section 13(3A) of the Ac has been issued or communicated to the petitioner and whether suc response of the bank was before the issuance of the possession notic dated 06-01-2010, or after.

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Aggrieved by initiation of proceedings under the provisions of the Ac and the issuance of the possession notice dated 06-01-2010, even withou sending a response under Section 13(3A) as mandated by the statutor provisions, the petitioner is before this court seeking appropriate relief, o invalidation of the proceedings under Sections 13(2) and 13(4) of th Securitisation Act.

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It would appear that after issuance of a possession notice unde Section 13(4) (dated 06-01-2010) the bank had applied to the Distric Magistrate, Hyderabad, which authority by an order dated 01-02-2010, i purported exercise of powers under Section 14 of the Act ordered th Tahasildar, Khairatabad to assist the bank. It is not clear whether the ban has assumed physical possession of the secured asset. The counte affidavit dated 31.03.2010 filed by the secured creditor is equall evasive. To the extent relevant and material for the purposes of the issue falling for consideration in this writ petition, para.6 of the counter whil equivocally admitting the issuance of the notice under Section 13(2) an receipt of the petitioner’s objections to such Sec.13(2) notice evasivel states “ at every stage the bank has been issued reply to th representations and legal notice got issued by the petitioner setting ou legal and factual possession”. No specifics are pleaded as to the date o which the statutorily obligated response of the bank [ under Sectio 13(3A)] was issued or communicated to the petitioner, in the manne required under Rule.3 of the Rules. The bank has also not produced an record in support of its equivocal assertion as to having responded to th objections lodged by the petitioner.

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In the circumstances above, the inference is compelling that the ban did not communicate its response to the objections lodged by the petitione on 12-09-2009 (to the notice issued by the bank under Section 13(2) of th Act), before initiating steps for taking possession (a) by issuing th possession notice dated 06.01.2010 under Section 13(4) read with Rul 8(1) of the Rules or before moving the District Magistrate under Section 1 of the Act.

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Section 13(3A) enjoins an obligation on the secured creditor t consider any representation or objection presented by the borrower to th notice issued under Section 13(2) and further enjoins the secured credito to communicate within one week of receipt of such representation o objection, the reasons for non acceptance of the representation o objection, to the borrower. As the bank admits the receipt of the objection dated 12-09-2009 submitted by the petitioner both in its lawyer’s repl notice dated 08-02-2010 as well as counter, it is disentitled t communicate its statutorily obligated response under Section 13(3A), a this distance of time. Should the respondent-secured creditor desire t pursue proceedings against the petitioner under the provisions of the Act, shall be at liberty commence proceedings by the issuance of a fresh notic under Section 13(2), as it has failed to communicate the Section 13(3A response within the time enjoined by the said provision.

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It is regrettable that the procedural safeguards guaranteed to th borrower under the provisions of this stringent law are willy-nilly violate by banking institutions and its officers who are remiss in acquaintin themselves with the procedural prescritions, before proceeding to exercis powers thereunder. The petitioner has been put to an avoidable litigativ trauma by way of this writ petition on account of such negligent attitude o the officers of the respondent-bank.

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For the aforesaid reasons, the notice dated 04-08-2009 and th possession notice dated 06-01-2010 issued by the bank, under th provisions of Section 13(2) and 13(4) of the Securitisation Act respectively are quashed and the bank is directed to restore possession of the secure asset to the petitioner if it has taken possession thereof. The bank i however at liberty to initiate fresh proceedings under the provisions of th Securitisation Act by following the substantive and procedura prescriptions thereof, in letter and spirit. As the action of the bank i issuing a possession notice and in filing a vague response both in th lawyer’s reply notice as well as in the counter-affidavit are illustrative of it laidback and negligent approach to the stringent provisions of the Act an as a consequence of it the petitioner has been put to avoidable litigativ

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trauma, this Court considers it appropriate to allow the writ petition wit costs of Rs.5000/- (Rupees Five Thousand only) payable by the bank t the petitioner within a period of three(3) weeks from the date of receipt of copy of this order.

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The writ petition is allowed with costs as above.

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GODA RAGHURAM,J

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NOUSHAD ALI,J

10^th JUNE 2010 TSNR