SHRI GAGANDEEP SINGH v. RESERVE BANK OF INDIA AND ANOTHER` CWP 17173 of 2019
Facts:
1) Petitioner is a co-owner of residential property as detailed in para 2 of writ petition alon gwith his real brother namely Navdeep Singh. Housing loan of Rs.90 lakhs was availed of by petitioner on 02.12.2011 in order to purchase the said property of which petitioner is a co-owner. It is stated that on account of certain professional difficulties there was financial indiscipline on the part of petitioner which led to account being declared Non-Performing Asset (for short NPA) on 31.03.2017.
2) Notice dated 01.04.2017 (Annexure P-1) under Section 13(2) of SARFAESI Act was issued claiming outstanding amount to be Rs.85,81,320/- as on 30.03.2017 with interest being charged upto 28.02.2017. Tt is stated that amount included the dues towards a car loan also which was availed of by petitioner. It is stated that overdue amount of Rs.10.25 lakhs was deposited by petitioner after receipt of notice, therefore, account should have been regularized and it could not be termed NPA.
3)There was again default on the part of petitioner which led to issuance of notice dated 12.03.2018 (Annexure P-5) to petitioner and his brother Navdeep Singh seeking deposit of Rs.5,24,093.29/- alongwith interest @ 9.15% per annum. Legal notice dated 05.07.2018 (Annexure P-6) was thereafter issued by respondent no.2 to petitioner and ultimately notice dated 16.07.2018 (Annexure P-7) under Section 13(2) of SARFAESI Act was issued indicating that account in question had become NPA on 30.06.2018 with outstanding amount being Rs.72,08,286/-.
Issue: Prayer in this writ petition is for setting aside notice dated 01.04.2017, notice dated 05.07.2018and notices dated 04.01.2019, 28.02.2019 and 01.03.2019 issued under the provisions of SARFAESI
Arguments:
Petitioner:
1) Counsel argued that respondent-Bank has erroneously and illegally relied upon Clause 4.2.7(i) of the Master Circular for refusing to upegrade loan account of petitioner who settled position that an account once an NPA need not always remain NPA. It was contended that Clause 4.2.7(i) itself is illegal and arbitrary and violative of Article 14 of the Constitution of India inasmuch as it has no nexus with the purpose sought to be achieved. When petitioner is not a borrower in the other account and it is his brother who is under liability to pay, petitioner who is merely a guarantor/mortgager, should not be put to prejudice.
2) It was submitted that Moreover, Clause 4.2.7, it was urged is only directory and not mandatory, therefore, once petitioner is ready to upgrade his account, there is no occasion for respondent-Bank in not allowing the petitioner to do so. In fact, petitioner’s account should be regularized and not be permitted to continue as NPA being clubbed with the account of M/s. Navrang Infrastructure Inc. It was further submitted that definition of borrower as contained in Section 2(1)(f) of SARFAESI Act is not stricto sensu applicable in connection with circulars issued by Reserve Bank of India (for short RBI).
Respondent:
1) Counsel submitted preliminary objection qua entertainability of this writ petition itself while preliminary objection qua entertainability of this writ petition itself while submitting that petitioner had an efficacious alternate remedy of approaching learned Debt Recovery Tribunal under Section 17 of SARFAESI Act, if aggrieved by proceedings undertaken under SARFAESI Act, which otherwise are stated to have been carried out in complete consonance with the applicable provisions.
2) It was further submitted that there is no question of any relief being granted to petitioner as property in question i.e. the secured asset qua the loan accounts of petitioner is also mortgaged with respondent-Bank for securing credit facilities granted to M/s. Navrang Infrastructure Inc. Petitioner duly stood as guarantor and mortgagor in the said loan account alongwith co-owner of property i.e. Navdeep Singh, real brother of petitioner. It was strenuously urged that none of the two loan accounts i.e. of petitioner or the account in which petitioner is a guarantor are regular/standard, therefore, petitioner is not even entitled to challenge clause 4.2.7(i) of the Master Circular in question.
Decision: HC dismissed the petition.
Rationale:
1) It held that it is specifically provided in Clause 4.2.7(i) that asset classification has to be borrower-wise and not facility-wise. To read Clause 4.2.7(i) in isolation as had been urged by learned counsel for petitioner is clearly unjustified. As has been stated before us the said provision has been incorporated keeping in line with international practices and as per recommendations made by the Committee on Financial System. Rationale behind the Clause is absolutely clear. Argument raised by learned counsel for petitioner that definition of borrower in Section 2(1)(f) of SARFAESI Act is not per se applicable in relation to circulars issued by RBI, is rejected
2)` It held that petitioner is not entitled to escape the liability which is definitely imposed upon him in respect to loan account of M/s. Navrang Infrastructure Inc. as well by simply stating that he is merely a guarantor in the said loan account.
Order:
