Dismissed

Ch. Siva Rama Krishna Prasad v. Govt. of India

Telangana HC16 Feb 2012WP/1660/2009

Case brief

AI extract

What is this about?

The petitioners challenged a possession notice issued by a second respondent bank under the SARFAESI Act following loan default. The Court held the bank was a notified 'financial institution', dismissed the writ, and directed the petitioners to pursue alternative remedies under the Act.

What did the court decide?

The Writ Petition and accompanying W.P.M.Ps were dismissed; no order as to costs.

Ch. Siva Rama Krishna Prasad Vs Govt. of India — Banking and Recovery | Telangana HC (2012)

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THE HON’BLE SRI JUSTICE V.V.S.RAO AND

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THE HON’BLE SRI JUSTICE G.KRISHNA MOHAN REDDY

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WRIT PETITION No.1660 of 2009

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Dated:16.02.2012

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Between:

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Ch.Sivarama Krishna Prasad, And another. And Govt. of India, And another.

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Petitioners

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... Respondents

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THE HON’BLE SRI JUSTICE V.V.S.RAO AND

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THE HON’BLE SRI JUSTICE G.KRISHNA MOHAN REDDY

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WRIT PETITION No.1660 of 2009

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ORDER: (Per Hon’ble Sri Justice V.V.S.Rao)

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The petitioners – wife and husband – availed housing loan to a tune of Rs.18,00,000/- from the second respondent. As they were irregular in paying the loan instalments, the second respondent issued notice of demand under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the Act), calling upon them to clear the bank debt. The same was not done, and therefore, the second respondent issued possession notice dated

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23.01.2009 under Section 13(4) of the Act. Aggrieved by the same, the present writ petition is filed.

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The petitioners mainly contend that the second respondent is not a financial institution as defined under Section 2(1)(m) of the Act.

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The Counsel for the second respondent bank relies on Section 2(1)(m) of the Act and the Government of India Notification No.SO 1282(E), dated 10.11.2003, in support of the contention that the second respondent has been treated as a “financial institution” for the purpose of Section 2(1)(m)(iv) of the Act.

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Section 2(1)(m) of the Act reads as under.

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(m) “financial institution” means:-

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(i) a public financial institution within the meaning of Section 4-A of the Companies Act, 1956 (1 of 1956);

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(ii) any institution specified by the Central Government under sub-clause (ii) of clause (h) of Section 2 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993);

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(iii) International Finance Corporation established under the International Finance Corporation (Status, Immunities and Privileges) Act, 1958 (42 of 1958);

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(iv) any other institution or non-banking financial company as defined in clause (f) of Section 45-I of the Reserve Bank of India Act, 1934 (2 of 1934), which the Central Government may, by notification, specify as financial institution for the purposes of this Act;

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(emphasis supplied)

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The notification referred to above, reads as under.

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Notification No.SO 1282(E), dated 10-11-2003:- In exercise of the powers conferred under sub-clause (iv) of clause (m) of sub-section (1) of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002), the central Government hereby specifies the following housing

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finance companies registered under sub-section (5) of section 29A of National Housing Bank Act, 1987 and with Tier I capital of Rs.10 crore (Rupees ten crore) or above as per their audited balance sheet for the year ended 31^st March, 2003 to be treated as “financial institution” for the purpose of the said sub-clause:-

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Sl.No.	Name of the Housing Company
(1)	(2)
1 to 19	omitted
20	National Trust Housing Fin.Ltd., Chennai
21 to 23	omitted

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In view of the fact that the second respondent has been notified as a financial institution by the notification extracted hereinabove, the writ petition is misconceived. If the petitioner has any other grievance with reference to the possession notice, it is always open to them to avail the alternative remedy under Section 17 of the Act or to approach the second respondent bank under Section 13(8) of the Act. We also record the submission of the Counsel for the second respondent that the mortgaged asset has already been sold by the bank.

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The Writ Petition is accordingly dismissed. The W.P.M.Ps shall also stand dismissed. There shall be no order as to costs.

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________________ (V.V.S.RAO, J)

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________________________________ (G.KRISHNA MOHAN REDDY, J)

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16.02.2012

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Ch. Siva Rama Krishna Prasad v. Govt. of India

Case brief

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Ch. Siva Rama Krishna Prasad v. Govt. of India

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