IN THE HIGH COURT OF JUDICATURE AT PATNA
CWJC No.265 of 2011
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M/s Hi-Tech Auto Mobiles a proprietorship firm situated at N.H.-19,
Gandhi Setu Path, Hajipur through its Proprietor Amod Kumar, son of
Sriu Ram Kailash Singh, resident of village Bagmusa, P.S. Hajipur,
District Vaishali
……. Petitioner
Versus
1. The Union Bank of India, Head Office Union Bank Bhawan, 239,
Vidhan Bhawan Marg, Mumbai-400021 through its Chairman-cum-
Managing Director.
2. The Assistant General Manager, Nodal Regional Office, Union
Bank of India, Nasheman, Majharul Haque Path, Patna
3. The Chief Manager-cum-Authorized Officer, Union Bank of India,
Regional Office, Nasheman, Majharul Haque Path, Patna
4. The Branch Manager, Union Bank of India, Hajipur Branch,
District Vaishali.
…… Respondents
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For the Petitioner : Mr Gautam Kumar Kejriwal, Advocate
For Respondents : M/s Aditya Sharan and
Hemant Kumar Sharan, Advocates.
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15/ 25 .03.3011 This writ petition has been filed by the petitioner, which
is a proprietorship firm established in the year 2001 for running a
service centre of motor vehicles (Car) at Hajipur duly authorized by
M/s Maruti Udyog Limited. Respondents are the Union Bank of
India (hereinafter referred to as `the Bank’ for the sake of brevity)
having its Head Office at Mumbai and Regional Office at Patna and
its authorities.
2. Reliefs sought by the petitioner are for directing the
respondents to release the balance amount of term loan sanctioned
by the Bank as far back as in the year 2004 and to assist petitioner-
Unit with adequate capital in order to commence its industrial
activities and for quashing the entire proceeding under the
Securitisation and Reconstruction of Financial Assets and
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Enforcement of Security Interest Act, 2002 (hereinafter referred to
as `the Act’ for the sake of brevity) initiated by the Bank for
recovery of the part of sanctioned loan, which was paid to
petitioner-Unit, including notices dated 23.08.2010 and 23.11.2010
(Annexures 10 and 13) issued under sections 13(2) and 13(4) of the
Act by the Chief Manager-cum-Authorized Officer of the Bank
(respondentno.3) and further to allow petitioner-Unit to reorganize
and remanage its entire infrastructure and catch the industrial
activities at the earliest as well as for other ancillary reliefs.
3. The claim of the petitioner is that petitioner-Unit
had a term loan and cash credit account initially opened in State
Bank of India, Hajipur and it functioned well during 2001-2004, but
subsequently in the year 2004 the authorities of respondent-Bank,
namely, Union Bank of India approached the petitioner and
persuaded its proprietor to shift the entire banking from State Bank
of India to respondent-Union Bank of India, Hajipur Branch,
Vaishali and offered every assistance and co-operation at every
required stages. Accordingly, the petitioner shifted its entire banking
to respondent-Bank, which recommended for sanction of Rs. 18 lacs
by way of term loan and Rs. 10 lacs by way of Cash Credit Limit in
favour of petitioner-Unit vide letter dated 29.03.2004 (Annexure 2).
Furthermore, respondent-Bank also sent two cheques of
Rs.4,84,308.00 and Rs.1,66,232.00 in favour of State Bank of India,
Hajipur along with letter dated 31.03.2004 (Annexure 3) for the
purpose of taking over the existing loan account of petitioner-Unit.
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4. It is further claimed that inspite of repeated
persuasion of the petitioner, respondent-Bank disbursed only Rs.9
lacs between the period 31.03.2004 to 30.06.2004 of the term loan
account, but failed to disburse the entire amount of sanctioned term
loan. Inspite of repeated reminders, respondent-Bank maintained
silence over the issue of release of balance amount of the sanctioned
term loan, due to which the petitioner could not make payments to
the supplier Company and hence Paint Booth System could not be
established. The supplier, namely, M/s Neptune Equipment Private
Limited, Ahmedabad pursued the Bank also but when respondent-
Bank did not respond, the supplier cancelled the supply of the
system causing huge loss to the petitioner due to the said inaction of
the Bank.
5. However, despite non-cooperation and conservative
approach of respondent-Bank, the petitioner claimed that it
somehow managed to pay about Rs.3,64,500.00 between the years
2007 and 2009 towards outstanding dues. It is also stated that inspite
of the aforesaid facts and circumstances, notice dated 23.08.2010
(Annexure 10) under section 13(2) of the Act was issued by the
authorities of respondent-Bank and in reply to the said notice the
petitioner sent letter dated 30.10.2010 (Annexure 11) persuading it
to release further finance for revival of the industrial unit.
Respondent-Bank vide letter dated 09.11.2010 (Annexure 12)
denied the petitioner’s claim and directed it to discharge the loan
liabilities and within two weeks thereafter sent notice dated
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23.11.2010 (Annexure 13) under section 13(4) of the Act against the
assets mortgaged by the petitioner towards the collateral security.
6. Learned counsel for the petitioner also submitted
that petitioner-Unit is well-equipped and potentially viable in all
respects, but it is unable to complete its infrastructure, which
remained incomplete due to non-disbursement of the balance
amount of sanctioned term loan without any rhyme and reason by
respondent-Bank. It is also stated that withholding of the sanctioned
term loan by respondent-Bank without any reasonable cause is not
only unlawful and unreasonable but also amounts to
misrepresentation and subsequent non-cooperation, which is the sole
cause of the unexpected and undesired loss and damage to
petitioner-Unit, which is totally dependent upon respondent-Bank on
the point of financial assistance. Hence, he submitted that the entire
proceeding under section 13 of the Act including the orders under
challenge are against the spirit of the Act itself.
7. He further argued that the land in question is a big
agricultural plot and in a small portion thereof, there may be a room
or two for the purpose of agriculture, cultivation and irrigation, but
the entire plot is agricultural in nature, which is fully proved by an
album of photographs, which was produced by learned counsel for
the petitioner at the time of hearing of this case, and also by the list
given in Annexure 10 of the writ petition as well as the registered
deeds of transfer (Annexure 1 series of I.A. No. 942 of 2011) in
favour of the petitioner. Hence he submitted that the fact that the
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land in question is agricultural in nature is not a disputed one and
the respondents are merely trying to raise dispute for the purpose of
this case and, accordingly, provisions of the Act shall not apply to
any security interest created in the agricultural land as per section
31(i) of the Act.
8. It was also claimed by learned counsel for the
petitioner that Reserve Bank of India prescribed Guidelines for such
matters and a Revised Guideline for Rehabilitation of Sick S.S.I.
Units was prepared (Annexure 15) providing that it is of utmost
importance to take measures to ensure that sickness is arrested at the
incipient stage itself and the Bank should make full enquiry into the
financial health of the unit, its operations etc. and take remedial
action and should also be under obligation to provide timely
financial assistance depending on established need of the unit. He
also claimed that Reserve Bank of India’s Guidelines have statutory
force and are mandatory for all the Banks, but in the instant case,
respondent-Bank has clearly violated the said guidelines and for that
reason only the petitioner is suffering.
9. Learned counsel for the respondents, on the other
hand, claimed that cash credit account was given to the petitioner,
which availed the same. It was further claimed that the term loan for
the same purpose was not to be given directly, rather mode of
disbursement was provided in letter dated 20.03.2004 (Annexure
`G’) given under the head `Assessment of Term Loan’, but the
petitioner did not follow the said terms and was put to loss due to its
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own act. Learned counsel for the respondents further claimed that
M/s Neptune Equipment Private Limited, Ahmedabad sent letter
dated 01.07.2005 (Annexure E) to the petitioner refusing to supply
and refunded the cheques, whereafter respondent-Bank also sent a
consequential letter to the petitioner on 23.08.2005 (Annexure F),
but inspite of receiving all informations in the year 2005 itself, the
petitioner did not take any appropriate step in that regard and only
after six years, the instant writ petition has been filed in the year
2011.
10. He further averred that where ever there is any
procedural error, it can be legally considered in an appeal under
section 17 of the Act, which is prescribed against any step taken
under section 13(4) of the Act. He further submitted that it is
apparent that the petitioner had managed for six years without
receiving the remaining amount of term loan and it never reported of
any sickness or erosion of entire capital and hence there was no
question of revival of petitioner-Unit. Hence he claimed that
initiation of the proceeding under section 13 of the Act was quite
legal and justified and if any error has been committed by the
authorities in the said proceeding, the petitioner has an adequate and
efficacious remedy of appeal for redressal of its grievance.
11. Learned counsel for the respondents also argued that
the land in question is situated in Hajipur town surrounded by
buildings near National Highway and hence it cannot be agricultural
land. He also averred that merely that mere deeds of transfer cannot
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show as to whether any land is agricultural in nature rather the fact
of tilling it every year has to be proved for the said purpose. It was
also stated that neither in the affidavit of the petitioner (Annexure I)
nor in the opinion of the Lawyer dated 29.04.2004 (Annexure H)
supplied at the time of argument it is mentioned that the land in
question was agricultural in nature. It is also claimed that there are
bamboo clumps and banana trees on the land in question and hence
at worst it would come under the definition of horticulture and not
under the definition of agriculture as defined by the Apex Court in
case of Commissioner of Wealth-tax Andhra Pradesh vs. Officer-in-
charge (Court of Wards), Paigah, reported in A.I.R. 1977 Supreme
Court 113. Hence, he states that the said question is clearly disputed
question of fact, which cannot be decided by this Court.
12. Learned counsel for the respondents also argued that
after issuance of notice under section 13(2) of the Act dated
23.08.2010, no objection under section 13(3-A) of the Act was filed
by the petitioner and merely a frivolous notice was sent by the
petitioner after 60 days on 30.10.2010 (Annexure 11), which was
rejected by the authorities of the Bank on 09.11.2010 (Annexure
12), but no step was taken by the petitioner thereafter in the said
matter. Hence, he submitted that all these objections raised by the
petitioner are baseless, frivolous and misconceived.
13. Considering the entire facts and circumstances of
this case and the arguments raised by learned counsel for the
parties, it transpires that the land in question contains constructions
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and in the remaining land there are bamboo clumps and banana
trees, which is apparent from the photographs and other
documents. It is true that in the deed of transfer in favour of the
petitioner the land in question is recorded as agricultural land but
that document is the document of the petitioner and it does not
show that the land is still used for agricultural purposes.
14. A land can be said to be agricultural land only when
it is either actually used or ordinarily used or made to be used for
agricultural purposes and must have a connection with an
agricultural user or purpose. In the instant case what was really
required to be shown was the connection of the land in question
with an agricultural purpose and user and not the mere possibility
of user of land by some one for an agricultural purpose. It is
not mere potentiality but the actual condition and user of the land,
which can legally show as to whether it is agricultural land. Here in
the instant case, it is not established by the materials on record that
the land in question is still in any way connected with an
agricultural purpose and user and hence this is a disputed question of
fact, which cannot be decided by this Court.
15. So far the Reserve Bank of India’s Guidelines
for Rehabilitation of Sick S.S.I. Units are concerned, they provide
that the measures have to be taken to ensure that sickness is
arrested at the incipient stage itself. Here in the instant case,
the loan was sanctioned in March, 2004 and in the same
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month mode of disbursement was also provided under the
head `Assessment of Term Loan’ and the claim of respondent-
Bank is that the petitioner did not follow the said terms and was put
to loss due to its own acts. Hence this question is also a disputed
question of fact in view of the petitioner’s claim that respondent-
Bank did not follow the Guidelines provided by the Reserve Bank of
India, which have statutory force.
16. It is also apparent from the respective claims of the
parties that the loan was sanctioned in March, 2004,
whereafter M/s Neptune Equipments Private Limited was
appointed as supplier but the said supplier returned cheques and
refused to supply the required article vide letter dated
01.07.2005, whereafter respondent-Bank also sent a
consequential letter to the petitioner on 23.08.2005. All
these developments took place in the year 2005, but no step was
taken by the petitioner against respondent-Bank for taking steps
as per Reserve Bank of India’s Guidelines and only when
possession notice dated 23.11.2010 under section 13(4) of the
Act was sent to the petitioner, the instant writ petition was filed on
05.01.2011.
17. The materials on record clearly show that the
demand notice under section 13(2) of the Act was issued to the
petitioner on 23.08.2010 but no objection under section 13(3-A) of
the Act was ever filed by the petitioner before the authority
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concerned although it was incumbent upon the petitioner to file
objections under the said provision stating the entire facts and
raising all its claims. Sending merely a Lawyer’s notice to
respondent-Bank on 30.10.2010 (Annexure 11) and that too beyond
the period of sixty days, cannot be legally considered to be an
objection under any provision of law, more so when the said
Lawyer’s notice was merely to release further finance for revival
of the industrial unit, which was duly replied by respondent-
Bank vide letter dated 09.11.2010 denying the claim of the
petitioner and directing it to discharge its loan liabilities but when the
petitioner failed to comply, the impugned possession notice
under section 13(4) of the Act was sent by respondent-
Bank on 23.11.2010 (Annexure 13).
18. In the aforesaid facts and circumstances, this Court
does not find any reason to interfere with the steps taken by the
respondents under the provision of section 13 of the Act, specially
when the petitioner has got an adequate and efficacious remedy
available in terms of section 17 of the Act and, accordingly, this writ
petition is dismissed.
MPS/ ( S. N. Hussain, J. )