M/S. STAR CHAIRS v. CANARA BANK

2nd petitioner is its Proprietor. The writ petition has been filed seeking to restrain the respondent-Bank from initiating any coercive measures for realisation of amounts as per Exts.P3, P4, P6, P7 and P8 notices including taking physical possession of the secured assets.

2. The petitioners state that they started their business in the year 2000. They applied for MSME Term Loan for business purpose and purchase of machinery. By Ext.P1, a loan of ₹1,20,00,000/- with repayment term of seven years with rate of interest 12.30%, was sanctioned. W.P.(C) No.33628/2023 : 3 : The MSME Term Loan was disbursed on 23.12.2016.

3. The 2nd petitioner mortgaged property having an extent of 13.94 Ares in Anjoor Village with a building therein and another property of his cousin Jose V.T. having an extent of 3.85 Ares, as collateral security. The petitioners had also availed an MSME overdraft facility for ₹30 lakhs. A GECL Loan of ₹40 lakhs was also given to the petitioners on

30.03.2021. The petitioners further availed four agricultural gold loans of ₹3 lakhs and another ₹99,000/-, totalling to ₹12,99,000/-, by mortgaging gold ornaments.

4. Due to unexpected turn of events, loss in business and spread of Covid-19 pandemic, the business of the petitioners suffered substantially. Repayments in EMIs were defaulted.

5. The Bank issued notice dated 18.10.2022 informing the 2nd petitioner that ₹17,73,500/- is due towards repayments of three loans. Section 13(2) notice under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 was issued W.P.(C) No.33628/2023 : 4 : directing the petitioners to pay an amount ₹2,67,96,709.81. Another demand notice under Section 13(2) was also published in Malayala Manorama Daily. The petitioners submit that the amounts sought to be realised as per Exts.P3 and P4 notices are wrong and faulty.

6. Subsequently, the respondent issued Ext.P6 notice under Section 13(2) demanding ₹1,34,94,797.81. Later, Ext.P6 possession notice was issued under Section 13(4). By the time, the demand was enhanced to ₹2,54,92,959.87.

7. Ext.P8 sale notice was issued for realisation of ₹2,68,55,240.82. An Advocate Commissioner was also appointed under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, who in turn issued Ext.P9 notice. The petitioners filed W.P.(C) No.20404/2023 before this Court seeking to set aside sale notices. This Court disposed of the writ petition by Ext.P11 judgment permitting the petitioners to submit a proposal before the respondent-Bank. W.P.(C) No.33628/2023 : 5 : Though the petitioners submitted a proposal, the Advocate Commissioner issued Ext.P12 notice dated 19.09.2023 threatening taking over of possession of secured assets.

8. The petitioners state that the Bank has made demands without considering the amounts paid by the petitioners towards repayment. The amount sought to be realised as per Ext.P6 is exorbitant. The interest charged are excessive. The value of the properties mentioned in the sale notice is much lower than the market value. The respondent-Bank has failed to consider the proposal of the petitioners in compliance of Ext.P11 judgment, contended the counsel for the petitioners.

9. Standing Counsel entered appearance on behalf of the respondent-Bank and resisted the writ petition. The Standing Counsel submitted that the petitioners were given ample opportunity to clear the loans disbursed to the petitioners. The petitioners consistently defaulted in repayments and refused to maintain the loan account properly. In the circumstances, the respondent had no other W.P.(C) No.33628/2023 : 6 : go than to invoke the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. In the facts and circumstances of the case, the writ petition is liable to be dismissed, contended the Standing Counsel.

10. I have heard the learned counsel for the petitioners and the learned Standing Counsel representing the respondent.

11. The fact that the petitioners have availed various loans from the respondent-Bank is not in dispute. When the repayments of loans were defaulted, the respondent declared the loan accounts as NPA and initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, for enforcement of their security interest. Challenging the sale notices and the possession notice issued under the SARFAESI Act, 2002, the petitioners have approached this Court. W.P.(C) No.33628/2023 : 7 :

12. The counsel for the petitioner submitted that certain Non Banking Financial Companies have come forward to advance money to the petitioner and take over the liability of the petitioner to the respondent-Bank. However, no document concluding such arrangements between the Non Banking Financial Companies and the petitioner are brought on record. Therefore, the contention of the petitioner cannot be accepted.

13. In view of the law laid down by the Hon’ble Apex Court in South Indian Bank Limited v. Naveen Mathew Philip [2023 (4) KLT 29], no relief can be granted to the petitioner. The writ petition is therefore not maintainable and the same is dismissed. The petitioner, however, will be at liberty to resort to appropriate proceedings challenging the impugned order or to approach the respondent, for any relief in the matter. aks/04.01.2024 Sd/- N. NAGARESH, JUDGE W.P.(C) No.33628/2023 : 8 : APPENDIX OF WP(C) 33628/2023 PETITIONER'S EXHIBITS Exhibit P1 Exhibit P2 Exhibit P3 Exhibit P4 Exhibit P5 Exhibit P6 Exhibit P7 Exhibit P8 Exhibit P9 Exhibit P10 Exhibit p11 Exhibit P12 Exhibit P13 Exhibit P14 Exhibit P15 Exhibit P16 TRUE COPY OF THE SANCTION MEMORANDUM DATED 15/04/2016 TRUE COPY OF LETTER ISSUED BY RESPONDENT DATED 18-10-2022 TRUE COPY OF DEMAND NOTICE U/S. 13(2) OF SARFAESI ACT DATED 25-10-2022 TRUE COPY OF DEMAND NOTICE PUBLISHED IN MALAYALA MANORAMA DATED 06-11-2022 TRUE COPY OF REPLY SENT BY THE 1ST PETITIONER DATED 16-11-2022 TRUE COPY OF DEMAND NOTICE U/ S. 13(2) OF SARFAESI ACT DATED 13-12-2022 TRUE COPY OF POSSESSION NOTICE DATED 09-03-2023 TRUE COPY OF THE NOTICE OF SALE DATED 20-05-2023 TRUE COPY OF NOTICE ISSUED BY ADVOCATE COMMISSIONER IN M.C. NO. 366/2023 OF CJM COURT, THRISSUR DATED 16-06-2023 TRUE COPY OF THE MEMORANDUM OF WRIT PETITION IN W.P.(C) NO. 20404 /2023 DATED 20-06-2023 TRUE COPY OF THE JUDGMENT IN W.P.(C) NO. 20404 /2023 DATED 03-07-2023 TRUE COPY OF THE NOTICE ISSUED BY ADVOCATE COMMISSIONER DATED 19-09-2023 TRUE COPY OF CRL.M.P. NO. 8136/23 IN MC NO. 366/23 OF CJM COURT, THRISSUR DATED 23-09-2023 TRUE COPY OF THE ORDER IN CRL.M.P. NO. 8136/23 IN MC NO. 366/23 OF CJM COURT, THRISSUR DATED 25-09-2023 TRUE COPY OF THE A WRITTEN REVIVAL PROPOSAL DATED 07-10-2023 TRUE COPY OF THE ONE TIME PROPOSAL DATED 07/12/2023 WAS SUBMITTED TO THE RESPONDENT BANK W.P.(C) No.33628/2023 : 9 : Exhibit P17 Exhibit P18 TRUE COPY OF THE LETTER ISSUED BY THE PETITIONER TO THE COMPANY DATED 22-11- 2023 TRUE COPY OF THE COMMUNICATION ISSUED BY THE COMPANY DATED 29-11-2023