(Prayer: This Writ Petition is filed under Articles 226 & 227 of the Constitution of India praying to direct the respondents to consider the explanation of the petitioners dated 10.7.2019 Annexure-AD and 24.7.2019 Annexure-AF strictly in accordance with law and in terms of the law laid down by the Apex Court reported in 2015(4) SCC 770, para 54 especially to classify the account of the petitioner under which category it falls as NPA and etc.)1. The petitioners have filed the present writ petition for a writ of mandamus directing the respondents to consider the explanation of the petitioners dated 10/07/2019 Annexure-AD and 24/07/2019 Annexure-AF strictly in accordance with law and in terms of the law laid down by the Apex Court in the case of Keshavlal Khemchand and Sons Private Limited and others Vs. Union of India reported in 2015(4) SCC 770 para-54 especially to classify their account under which category it falls as NPA; declare that the proceedings under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, hereinafter referred to as ‘the SARFAEASI Act’) i.e.., Demand Notice dated 13/05/2019 as per Annexure-AC is not applicable since their account never became NPA, consequently SARFAESI Act, 2002 is not applicable; issue a writ of certiorari to quash the notice dated 13/05/2019 issued under Section 13(2) of the SARFAESI Act, 2002 Annexure-AC and also the rejection of their application vide notice dated 22/07/2019 Annexure-AG issued under Order 13(4) of the SARFAESI Act as illegal, void and in violation of the principles of natural justice; direct the respondents not to take any steps in pursuance of notice of possession dated 22/07/2019 in terms of Section 13(4) of the SARFAESI Act, Annexure-AG; and issue a writ of mandamus restraining the respondents-Banks from assessing the moveable assets of M/s. Singhi Build Tech Pvt. Ltd., i.e., the Tenant of petitioner No.2; declare that their account must be classified as NPA under Section 2(1)(o) of the SARFAESI Act, only on such classification made, Section 13(2) of the SARFAESI Act cannot be invoked by respondent No.1; declare that notice dated 22/07/2019 issued under Section 13(4), Annexure-AG is premature and void and hence, the same is liable to be quashed.I-FACTS OF THE CASE2. It is the case of the petitioners that petitioner No.1 – M/s. Steel Hyper Mart India Private Limited is a Private Limited Company incorporated under the Companies Act, 1956, petitioner No.2 is a major shareholder along with petitioner No.3 in a company called M/s. Singhi Build Tech Private Limited. M/s. Steel Hyper Mart Company Limited – petitioner No.1 has got its godown at Sy.No.184/1, Jigani Main Road, Khaneshumari Jigani, No.537/1 to 6 Khaneshumari Jigani, Bengaluru-105 and Sy.No.27/5B and 6B-1, Anumepalli Village, Zuzuvadi Panchayat, Hosur (Tamilnadu). Both the companies belong to petitioner Nos.2 and 3 and also some shares in the name of the other relatives and friends.3. It is further case of the petitioners’ that they were carrying on the business of domestic purchase and sale of Steel and Iron Products and registered under the Central Goods and Services Tax Act of 2018 and paying tax by filing the GST monthly returns as prescribed from through online and there is no discrepancy pointed out by any of the customers or from the persons from whom the supply have been obtained and they have not violated the Act and Rules framed thereunder; It is the further case of the petitioners that petitioner No.1 had borrowed a sum of Rs.137.50 Crores under consortium funding from the Indian Bank as a leading banker and Rs. 24.50 Crores from the Bank of Baroda (erstwhile Vijaya Bank) with pari-passu agreement as per the sanction letter dated 20/12/2018 issued by the Indian Bank and Vijaya Bank. When the said loan was sanctioned on 27/09/2017, they Hypothecated the stocks and books and debts of the company for a value of Rs. 170.62 Crores as on 31/03/2017 both primary and collateral. The petitioners submit that along with the Indian Bank, Vijaya Bank had also sanctioned a sum of Rs. 24.50 Crores based on pari-passu agreement in which Mr. Mahendra Kumar Singhi and M/s. Suman Singhi have stood as personal guarantors. However, the loan has been sanctioned as per sanction memo dated 03/02/2018 to M/s. Steel Hyper Mart India (Pvt.) Ltd. By the Vijaya Bank and the proceedings under the provisions of Section 13(2) of the SARFEASI Act has been commenced through a Demand Notice dated 06/06/2019, Annexure-E. They made representation requesting for enchancement of the work capital limited and the same was revised upto Rs.162 Crores on 20/12/2018 as per Annexure-F. They deposited the Memorandum of Title Deeds to the Bank on 22/12/2017 and 27/02/2018 as per Annexures-G and H. The account of the petitioners was in healthy condition and there was no default committed by them. In the first week of January, 2019, the Bank had processed and recommended for enhancement of OCC Limit from Rs. 162 Crores to Rs. 225 Crores and Rs. 63 Crores proposed enhancement to be funded by the 3rd Banker – M/s. Canara Bank, M.G. Road, Bengaluru -1 under consortium funding as per their letter dated 01/08/2019, Annexure-M. On 08/01/2019 when the petitioners requested for reduction in consortium fee and fresh assessment of cash credit limit from existing Rs. 162 Crores to Rs. 225 Crores as per Annexure-N, a notice of raid had been served on them under the provisions of Section 67 of the Karnataka Goods and Service/Central Goods and Service Tax, 2017 to inspect the premises by virtue of the authorization notice dated 08/01/2019 as per Annexure-P. A search was conducted on 09/01/2019 at 9.50 a.m. on the petitioners’ offices in Shanthinagar and Money Point at Bangalore, and the Warehouses at Jigani (Karnataka), Shoolagiri and Anumepalli Hosur were seized and mahazar was drawn and the seizure proceedings were completed on the same day i.e., 09/01/2019. De-seizure was done consequent upon the directions issued by this Court in W.P.No.2253/2019 (R-RES) and W.P.No. 2254/2019 (R-RES) on 31/01/2019.4. It is case of the petitioners that since the seizure made on 09/01/2019, both the Banks had stopped the debit transactions in the OCC accounts from 10/01/2019 and hence, they were barred from operating their accounts soon after the raids conducted by the GST Authority on 09/01/2019. It is their case that they neither committed default in payments nor their account had been classified as NPA, but it is only because of the raid conducted by the GST Authorities, they were refrained from operating their accounts.5. It is the further case of the petitioners that the last interest payment which was falling due on 31/12/2018, was paid on the same day to both the banks and the next interest payment was falling due on 31/01/2019, but in between these two dates, i.e., on 10/01/2019, there was a total block of the account transactions at the instance of the Bank and the right to operate the account was barred and once the bank voluntarily prevented them from operating their account, it was not their case that the account had become NPA. Thus once the account did not become NPA, the application of provisions of the SARFAESI Act, 2002 was not applicable. Therefore, notice issued under Section 13(2) of the SARFAESI Act, 2002 is not applicable to their case.6. When the things stood thus, to protect their reputation and on the fear of arrest which was spread all over India and in non-observance of law, mass arrests were made, the petitioners moved an application for anticipatory bail before the trial Court, Bangalore and the trial Court rejected the anticipatory bail to both petitioner Nos.2 and 3, who stood as Guarantors to the Banks. Since the petitioners were busy in safeguarding their personal liberty, the entire business was stopped from 09/01/2019 upto the date.7. It is submitted by the petitioners that the competent authority to waive the interest and to grant reduction in principal loan amount is the discretion of the Board of Directors of the Bank or the Competent Authority of Indian Bank. The Assistant Bank Manager has no jurisdiction to deal with One Time Settlement Application dated 25/04/2019. The rejection of the proposal summarily by the AGM of the Branch on 29/04/2019 is without jurisdiction. They further submit that the transactions in the OCC accounts by the Banks from 10/01/2019 as per the letter dated 17/01/2019 clearly establishes that their had not become NPA and it was because of the arbitrary act of the Bank in stopping the debit transactions in their OCC accounts. Their business had been paralyzed because of the act of the AGM of the Indian Bank. Hence, the condition precedent to apply SARFAESI Act, 2002 was not at all in existence and it is a question of jurisdiction of Enforcement or application of SARFAESI Act, 2002 against their account where the account did not become NPA. The operation of the account was barred at the instance of the Bank. Therefore, the proceedings are without jurisdiction.8. It is further contended by the petitioners that they approached the Bank Manager to press for OTS application. Further for equitable consideration and because of the circumstances beyond their control, unlawful and illegal act of the Assistant Branch Manager in stopping the operation of the accounts, they wanted to maintain a good relationship and when the talks were going on, suddenly the Bank Assistant Manager, Sri Vijay Kumar without disclosing the discussion, issued a legal notice dated 13/05/2019 under the provisions of Section 13(2) of the SARFAESI Act, 2002, to them as per Annexure-C. The petitioners sent their reply on 10/07/2019 as per Annexure-AD. Surprisingly, the reply notice dated 19/07/2019 was issued by the Bank to the petitioners in which no independent reasons were assigned by the so-called authorized officer for rejecting their reply to the notice issued under Section 13(2) of the SARFAESI Act, 2002.9. It is further contended that in the meanwhile, the respondents had affixed the Possession Notice under the provisions of Section 13(4) of the SARFAESI Act, 2002 on 22/07/2019 on the mortgaged immovable properties of the petitioners without serving the said notice on them which was acknowledged by them on 27/07/2019. Therefore, the petitioners are before this Court for the reliefs sought for.II – STATEMENT OF OBJECTIONS FILED ON BEHALF OF RESPONDENT NO.110. The 1st respondent has filed statement of objections contending that at the outset, the writ petition filed by the petitioners for the relief sought for is not maintainable as they have got an alternative and efficacious remedy under the provisions of Section 17(1) of the SARFAESI Act, 2002. It is further contended that in view of the dictum of the Honourable Supreme Court in the judgments of ICICI Bank Ltd., Vs. Umakanta Mohapatra and Others and Dwarikesh Sugar Industries Ltd. Vs Prem Heavy Engineering Works (P) Ltd., and Another has held that the High Courts should not entertain matters arising out of SARFAESI Act, 2002 and should not grant interim orders in favour of the persons whose loan accounts have become Non-Performing Assets.11. It is further contended that the 1st respondent received the reply dated 10/07/2019 from the petitioners in pursuance of the demand notice dated 13/05/2019, issued under Section 13(2) of the SARFAESI Act, 2002 by it for a total sum of Rs.142,73,29,479.23 ps. (Rupees One Hundred Forty Two Crores, Seventy Three Lakhs Twenty Nine Thousand Four Hundred and Seventy Nine and Twenty Three Paise only) which is based strictly on the relevant loan accounts maintained by the bank and regularly monitored by it’s Directors and Financial Personnel from time to time and the said loan account had been operated by the 1st petitioner. Therefore, there is no need for the Authorised Officer to provide breakup of dues or the basis for the interest calculation while issuing the Demand Notice in terms of the SARFAESI Act. It is further contended that the petitioners ever since January, 2019 had been interacting with the respondent – Bank, several meetings were held and also participated including as invitees to the Consortium Banks Meetings, etc, but had not paid any amount especially after January, 2019 when the default started.12. It is further contended that there is absolutely no necessity for the Bank or it is enjoined in the provisions of the SARFAESI Act or in any statutory provision, to notify and classify the account as ‘Standard’, ‘Sub-standard’, ‘default and classify as losses’ and ‘willful defaulters’ as a pre-requisite for issuance of Demand Notice under Section 13(2) of the SARFAESI Act, but the petitioners have misinterpreted the provisions of the SARFAESI Act in their reply notice dated 10/07/2019.13. It is further contended that the past credentials of the borrower on any renewal or restricting the loan account earlier, are of no valid criteria for withholding issuance of Demand Notice when the loan account is found to be NPA after certain period. The petitioners themselves have admitted in their reply notice dated 10/07/2019 that they had not made any payment of loan dues nor any effort to regularize the defaulted accounts in view of the enforcement action for recovery of GST dues by the GST Authorities.14. It is further contended by the 1st respondent that the loan account was reckoned as NPA on 30th April, 2019 due to continuous non-servicing of interest for 98 days. As could be seen from the statement of accounts the petitioners made a part payment of Rs. 1,31,483/-on 28/03/2019 and another grossly inception payment of Rs,12,73,136/- on 04/05/2019 which was grossly inadequate to regularize the loan account as on those dates or any other dates subsequent thereto. The legal notice of the Bank’s Panel Advocate dated 24/04/2019 was also issued by the Bank which was received by all the petitioners, but they have neither replied nor complied with the demands of the said legal notice. No payment of dues were made since January, 2019 consequence of which, the accumulation of the loan dues mounted beyond the permissible limit rendering the account NPA as on 30/04/2019 and therefore, the banks had inevitably issued the Demand Notice in terms of the provisions of the SARFAESI Act. All the correspondences by the petitioners including the representation for One Time Settlement (OTS) were not genuine and bonafide, but evidently done to while away time and protract payment of loan.15. It is further contended by the 1st respondent that the petitioners were all well aware that the Demand Notice was preceded by participation of the petitioners in several discussion including in the consortium meetings since January 2019 preceded by letters of the bank, legal notice, etc., calling upon them to pay the loan dues. Significantly in the alleged OTS offer letter dated 25/04/2019 as against the loan due of Rs. 1,41,32,53,484.23 ps. The petitioners had offered a total payment of a ridiculously low amount of Rs. 85 Crores to be paid in several months which is virtually making a mockery of their liability to pay the loan dues to the Bank. Therefore, the petitioners have not come to the Court with clean hands especially after availing sufficient time for regularizing the loan accounts and to interact with the Bank. Therefore, it is contended that the petitioners cannot now contend that there is any deficiency or short fall in the reply of the Bank dated 19/07/2019 to their representation dated 13/05/2019, as per the dictum of the Honourable Supreme Court in the case of ITC Ltd., Vs Blue Coast Hotels Ltd reported in (2018)15 SCC 99, and hence non-compliance of Section 13(3-A) of the SARFAESI Act cannot be of any avail to the debtor whose conduct has been merely to seek time and not to repay the loan as promised on several occasions. The alleged action by the GST Authorities both in Karnataka and Tamilnadu is not a ground for non-payment of amount to the bank within time. The petitioners having prima facie committed such serious economic offences, cannot now complaint that, they could not pay the demanded loan liability as per the Demand Notice in view of the revenue enforcement actions by the GST Authorities and certain alleged consequences arising out of the same. Therefore, the respondent – Bank Authorities cannot withhold its action for recovery for the large outstanding dues by proceeding against all moveable and immoveable properties including its seizure by the GST Authorities, cannot be accepted. Admittedly, due to the massive default of GST dues, had inevitably resulted in seizure assets, both moveable and immoveable, which had downgraded the loan account considerably as the security assets became readily not available. Therefore, the 1st respondent sought to dismiss the writ petition.III-STATEMENT OF OBJECTIONS FILED BY THE 4TH RESPONDENT16. The 4th respondent –Bank has also filed statement of objection contending that the 1st respondent-Bank has considered the request of petitioner No.1 for sanction of Working Capital Limits of Rs. 137,50,00,000/- to it, on 27/09/2017, for which, petitioner Nos. 2 and 3 stood as Guarantors for the said loan availed by petitioner No.1 and had executed the loan documents in favour of respondent No.1 – Bank. The petitioners had approached the 4th respondent-Bank for Cash Credit Hypothecation (CC Working Capital Limits) Facility of Rs. 24,50,00,000/- and the 4th respondent-Bank had considered the said request of the petitioners and sanctioned a Working Capital Limit of the said loan on 03/02/2018 and sought for creation of Pari Passu Charge on Primary and Collateral Securities with respondent No.1 Bank. Petitioner No.1 had resolved to avail credit facility from the Vijaya Bank presently Bank of Baroda as per their Board Resolution dated 05/02/2018. Therefore, the Company resolved and authorized the Directors of the Company to jointly execute the loan documents under the common seal of the Company.17. It is further contended by respondent No.4 that in terms of the immoveable security deposit, the petitioners had executed Memorandum of Deposit of Title Deeds dated 22/12/2017 for mortgaging the properties and in terms of Moveable Securities, the petitioners had executed Hypothecation Agreement for stock stored in Godowns situated at Jigani Unit at Bengaluru and also Shoolagiri Unit of Hosur by way of Hypothecation Agreement and also Working Capital Consortium Agreement by way of ceding the Pari Passu Charges between both the Banks. The petitioners had fully availed the loan facility and subsequently failed to adhere to the terms and conditions of the sanction and committed the breach of defaulting in repayment. They had not repaid the interest since January, 2019 onwards on the outstanding due amount inspite of repeated requests and reminders by the respondent-Banks and violated the terms and conditions of the sanctioned letter and loan documents. They also failed to regularize the Working Capital Loan Account with respondent No.4. Therefore, respondent no.4 classified their CCH Loan account as NPA on 29/05/2019 due to non-servicing of interest from the last 90 days as per IRAC Norms of RBI. Both the respondents-Banks on 24/04/2019 issued legal notice calling upon the petitioners to pay a sum of Rs.1,41,32,53,484.23 to respondent No.1 and Rs. 24,93,08,781/-to respondent No.4 together with future interest at the agreed rate from 01/04/2019, but the petitioners have failed to pay the said loan with interest. Therefore, both the Banks have initiated proceedings by issuing legal notice under the provisions of Section 13(2) and 13(4) of the SARFAESI Act on the petitioners. Therefore, the present writ petition filed by the petitioners is not maintainable and accordingly, sought to dismiss the writ petition.18. I have heard the learned Senior Counsel for the parties to the lis.IV- ARGUMENTS ADVANCED BY THE LEARNED SENIOR COUNSEL FOR THE PETITIONERS19. Sri V. Laxminarayana, learned Senior Counsel for the petitioners contended that the impugned notice issued by the respondent-Banks under Section 13(2) and 13(4) of the SARFAESI Act is without authority of law and contrary to the material on record, which cannot be sustained. He would further contend that the condition precedent in exercising power under the Guidelines of the SARFAESI Act is classification of NPA account. In respect of the reply, the learned Senior Counsel contended that the contended that the classification of NPA is mandatory and sine-qua-non for issuance of a notice under the provisions of Section 13(2) of the SARFAESI Act, the said condition precedent must be satisfied before invoking the provisions under Section 13(2) of the SARFAESI Act, but the authorized Officer has rejected the reply notice dated 19/07/2019 given by the petitioners and till now there is no reply which cannot be sustained. He would further contend that unless and until the classification of NPA is done as per the Guidelines of the Reserve Bank of India, the provisions of the SARFAESI Act is not applicable. The petitioners have not committed any default, but the Banks have stopped credit facilities on 10/01/2019 as on the date of NPA i.e., 29/05/2019. What was due to the Bank was only Rs. 142,73,29,479.23 inclusive of the principal amount. He would further contend that the loan was sanctioned on September 2017 and the Cash Credit Facility was enhanced on 20/12/2018. For both the accounts, the petitioners used to pay Rs. 1.60 to 1.62 Crores per month, and it would come to Rs. 16 Crores and odd per year. Thus on the date when the NPA was declared on 30/04/2019, the total amount due was less than 20% of the principal amount and interest thereon. In view of the provisions of Section 31(i) of the SARFAESI Act, the case of the petitioners’ does not fall under the SARFAESI Act.20. The learned Senior Counsel would further contend that under the provision of the SARFAESI Act, it is necessary to notify and classify the account as ‘Standard’, ‘Sub-standard’ default and classify as losses and willful defaulters as a pre-requisite for issuance of Demand Notice under the provisions of Section 13(2) of the SARFAESI Act. He would further contend that the petitioners had paid upto date amount due to the Bank, but could not pay after January, 2019 only because of the raid of the GST officials on their office, and godown at Hosur and Bangalore were seized. In view of the raid conducted on 22/01/2019, the bank had voluntarily stopped the transaction in cash credit account and debits were not allowed on 09/01/2019 which was without notice and the petitioners were directed to appear before them on 22/01/2019. Therefore, the petitioners have not committed any default as alleged by the bank so as to attract the provisions of Section 13(2) and 13(4) of the SARFAESI Act.21. The main grievance of the learned Senior Counsel for the petitioners is that before the due date i.e., on 31/01/2019, the cash credit facility was stopped from 10/01/2019 and it was not a case of NPA. It is the voluntary act of the Bank in stopping the loan facility and the bank had no power to declare as NPA and it is contrary to prudential norms issued by the Reserve Bank of India from time to time. Therefore, impugned actions of the respondents cannot be sustained.22. The learned Senior Counsel further contended that upon default, the bank/secured creditor is under statutory obligation to classify the assets of the borrower in terms of the RBI Circulars. The classification must be discernable from the records that after due application of mind, the competent authority has compiled with the Guidelines issued by the Reserve Bank of India and while classifying as per the Reserve Bank Circulars, providing benefits to upgrade the NPA is mandatory. The classification of NPA is a safeguard to the borrower before he is subjected to the provisions of the SARFAESI Act. He would further contend that classification of NPA is statutorily mandate before invocation of the SARFAESI Act of 2002 and the manner of classification of assets in terms of the RBI Circular that whether it is ‘Standard’. ‘doubtful’ and ‘loss of assets’ has not been done. The petitioners have been carrying on business of Iron and Steel for more than two decades and the business was increasing from year to year since 2013 to 2018. Therefore, this Court can review the orders passed by the Banks.23. The learned Senior Counsel would further contend that under Section 17 of the SARFAESI Act, an appeal provision is available only when the bank has classified NPA and objections/explanations given by the petitioners to a notice issued under Section 13(2) of the Act was considered in terms of Sub-section 3(a) of Section 13 of the Act and Rule 3(a) of the Rules and the remedy of appeal is available to a borrower as against the consequential action under Section 13(4) of the Act and not at a stage where default is committed and NPA is not classified by the secured creditor. Therefore, the alternative remedy is not available to the petitioners.24. The learned Senior Counsel for the petitioners contended that the petitioners approached for assistance of external, commercial borrowings framework for corporates and NBFCs in terms of the Circular dated 30/0 7/2019 where the rate of interest is 5% and the Central Government itself would be the Guarantor and even the NPA account holder of any corporate is also entitled to avail loan facility at 5%. Therefore, if six months time is granted, the entire money (principal + interest) would be paid by the Government of India itself under the said Circular to the Banks without any discounting the interest.25. The learned Senior Counsel further contended that if the secured creditor failed to classify NPA assets, it is treated as arbitrary and the provisions of the SARFAESI Act, 2002 cannot be invoked. Before invocation of the SARFAESI Act, 2002, classification of NPA is mandatory. In the absence of classification of NPA and failure to follow the norms and circular of RBI, at that stage, the writ petition is maintainable and the bar of alternative remedy would not come into picture.26. The learned Senior Counsel further contended that the petitioners never committed default and it is only at the instance of the GST authorities, who conducted raid on the office of the petitioners’ at Karnataka and Tamilnadu, the bank prevented the petitioners from availing cash credits facilities and failed to debit the payments towards the accounts of the petitioners towards loan and amount sent by the customers. Hence the petitioners were prevented from operating their accounts and this act of the secured creditor has lead to non-payment or default being committed by the petitioners and thereby the petitioners were classified as NPA without as NPA without following the procedure and the guidelines issued by the RBI. The learned Senior Counsel further referred to the Circular dated 01/07/2015 regarding the revised Guidelines issued by the Reserve Bank of India at Clause-3.1.1 which prescribes that the Banks should classify their assets into the following broad groups as under:(i) Standard Assets(ii)Sub-standard Assets(iii) Doubtful Assets(iv) Loss Assets27. The learned Senior Counsel further contended that RBI Guideline 3.2.1 defines the ‘Standard Asset’ as the one which does not disclose any problems and which does not carry more than normal risk attached to the business. Such an asset should not be an NPA; Guideline 3.2.2. defines Sub-standard Assets – that (i) with effect from March 31, 2005, a substandard asset would be one, which has remained NPA for a period less than or equal to 12 months. Such an asset will have well defined credit weakness that jeopardize the liquidation of the debt and are characterized by the distinct possibility that the banks will sustain some loss, it deficiencies are not corrected; (ii) An asset where the terms of the loan agreement regarding interest and principal have been re-negotiated or rescheduled after commencement of production, should be classified as sub-standard and should remain in such category for at least 12 months of satisfactory performance under the re-negotiated or rescheduled terms. In other words, the classification of an asset should not be upgraded merely as a result of rescheduling, unless there is satisfactory compliance of this condition;28. The learned Senior Counsel would further contend that Guideline 4.1.2 defines ‘Doubtful Assets’ as with effect from March 31,2005, an asset would be classified as doubtful, if it has remained in the sub-standard category for a period of 12 months. For Tier I banks, the 12 month period of classification of a substandard asset in doubtful category is effective from April 1, 2009. As in the case of substandard assets, rescheduling does not entitle the bank to upgrade the quality of an advance automatically. A loan classified as doubtful has all the weakness inherent in assets that were classified as substandard, with the added characteristic that the weakness make collection or liquidation in full, - on the basis of currently known facts, conditions and values – highly questionable and improbable.29. A Reliance is placed upon Guideline 3.2.4- Loss Assets which states that a loss is one where loss has been identified by the bank or internal or external auditors or by the Co-operation Department or by the RBI inspection but the amount has not been written off wholly or partly. In other words, such an asset is considered nun-collectible and of such little value that its continuance as a bankable asset is warranted although there may be some salvage or recovery value.30. Relying upon Guidelines – 3.3.1 – Basic considerations, 3.3.2 – Advances Granted under Rehabilitation Packages Approved by BIFR/Term Lending Institutions, 3.3.3- Internal System for Classification of Assets as NPA, the learned Senior Counsel contended that the respondents have proceeded to issue the impugned notices in utter violation of the provisions of the RBI Guidelines and therefore, the impugned action cannot be sustained.31. The learned Senior Counsel further contended that where there has been delay beyond the prescribed period in reporting the fraud to the Reserve Bank of India, the entire provision is required to be made discernable to the petitioners and also action where there has been any delay by the Bank in reporting a fraud or against the petitioners. Therefore, he sought to allow the writ petition.32. In support of his contentions, the learned Senior Counsel for the petitioners relied upon the following judgments:i) Keshavlal Khemchand and Sons Private Limited and others Vs. Union of India and others reported in (2015) 4 SCC 770-paragraphs -32 and 54;ii) ITC Limited Vs. Blue Coast Hotels Limited and others reported in (2018) 15 SCC 99 –paragraphs-19 and 21 to 28;iii) Mardia Chemicals ltd., and others Vs. Union of India and others reported in (2004) 4 SCC 311 – paragraphs-37 and 44;iv) Transcore Vs. Union of India and another reported in (2008) 1 SCC 125 – paragraphs-23 and 24;v) Central Bank of India Vs. Ravindra and others reported in (2002) 1 SCC 367 – paragraphs-56;vi) ICICI Bank Limited Vs. Official Liquidator of APS Star Industries Limited and others reported in (2010)10 SCC 1 – paragraphs-41;vii) Unreported Judgment in W.P.No.16694/2005 D.D 6th March, 2008 M/s. Raja Associated Vs. Union of India and others; andviii) Swiss Ribbons Private Limited Vs. Union of India and others reported in (2019)4 SCC 17 – paragraph- 17and sought to dismiss the writ petition.V – ARGUMENTS ADVANCED BY THE LEARNED SENIOR COUNSEL FOR RESPONDENT NO.133. Per contra, Sri Shashi Kiran Shetty, learned Senior Counsel for the respondents reiterating the averments made in the statement of objections contended that the petitioners as on the date of filing of the writ petition were due for a sum of Rs. 178,37,00,000/- (Rupees One Seventy Eight Crores and Thirty Seven Lakhs only) to the Bank since January to April, 2019 and the petitioners have not paid a single pie continuously for a period of three months. Therefore, the Bank was forced to issue notice to the petitioners. He would further contend that on 27/09/2017, the 3rd respondent-Bank sanctioned financial assistance (take over from SBI) by way of Open Cash Credit of Rs. 137,50,00,000/- for the purpose of business of Steel and Iron and the credit limit was extended up to Rs. 137,50,00,000/- on 20/012/2018 which was renewed for a period of one year subject to terms and conditions. On 14/01/2019 since the petitioners has already drawn the entire OCC limit and utilized the same, the bank stopped the borrower from overdrawing the amount and they were not allowed to over draw the loan account. The said stoppage of over drawing from the sanctioned limit had no embargo on the borrower to repay the loan. As on that date, the outstanding due payable by the petitioners to the 1st respondent-Indian Bank was Rs.137,47,57,028/-. From 30/11/2019 till 30/04/2019, there was no payment of interest no operation in the account and outstanding due was more than the limit sanctioned by the 3rd respondent-Indian Bank. The statement of accounts produced along with the statement of objections by the 1st respondent clearly depicts that as on 31/01/2019, the outstanding due payable by the petitioners to the 1st respondent-Bank was Rs. 138,61,09,385/-.Therefore, the respondent-Bank issued legal notice to the petitioners on 30/04/2019 calling upon to clear the due amount of Rs. 141,73,29,479/-. On 25/04/2019, the petitioners made proposal of one time settlement to the Indian Bank. On 29/04/2019, the Assistant Manager of the Indian Bank returned the application to the petitioners dated 25/04/2019 rejecting the OTS proposal and advised to clear the entire liability. On 30/04/2019 since the petitioners had not paid any interest in the account for a period of more than 90 days, the loan account was classified as NPA as per the provisions of Section 2(o) of the SARFAESI Act and in accordance with Guidelines 2.1.2 of the Reserve Bank of India Master Circular relating to NPA dated 01/07/2015. He would further contend that on 13 /05/2019, respondent Nos.1 to 3 once again issued notice under the provisions of Section 13(2) of the SARFAESI Act demanding a sum of Rs. 142,73,29,479/- along with interest from 30th April, 2019. On 10/07/2019 the petitioners replied to the demand notice denying the amount claimed and requested to withdraw the demand notice. He further contended that on 19/07/2019, Indian Bank addressed a letter to the petitioners informing rejection of the contentions or objections raised by them in their letter dated 10/07/2019 stating that the Bank shall proceed further for recovery of the amount due in terms of the provisions of the SARFAESI Act and accordingly, on 22/07/2019, respondent affixed the impugned Possession Notice under Section 13(4) of the SARFAESI Act, 2002 on the premises of the petitioners’ mortgaged immovable properties without serving the said notice on the petitioners. He further contended that the prayers sought by the petitioners in the present writ petition is not maintainable as the petitioners have an alternative and efficacious remedy under the provision of Section 17 of the SARFAESI Act and on that ground along, the writ petition is liable to be dismissed.34. The learned Senior Counsel for the 1st respondent submits that the contention of the petitioners that Section 31(j) of the SARFAESI Act is not applicable to their case cannot be accepted as the loan amount due including the principal interest should not be less than 20%. Admittedly in the present case, the petitioners owe more than 100% of the principal amount with interest. He would further contend that the petitioners availed the loan and utilized the total sanctioned loan amount of Rs. 137,50,00,000/- committed default by not paying interest and also the principal amount and as on 30/04/2019, the day on which the account has been classified as NPA, the total outstanding amount due is Rs. 142,73,29,479/-. It is his further contention that as the petitioners has withdrawn 100% of the principal loan amount and not paid the interest right from 01/01/2019 and as they were liable to pay more than 100% of the principal amount with interest, the provisions of Section 31(j) of the SARFAESI Act as alleged is not applicable to the case of the petitioners. It is further contended that as per the RBI Guidelines, the asset (financial assets means any debt or receivable secured by mortgagor or change on immoveable property, etc., as defined under Section 2(1) of the SARFAESI Act has been classified as NPA. The classification of the Asset is purely an internal business of the Bank and as per the Guideline 2.1.2, with a view to move towards International best practices and to ensure greater transperancy is ’90 days’ overdue norms for identification of NPAs have been made applicable from the year ended March 31, 2004 i.e., any amount due to the bank under any credit facility, if not paid by the due date fixed by the bank becomes overdue.35. Relying upon RBI Guidelines 2.1.2 and 4.2 of the RBI Guidelines, it is contended by the learned Senior Counsel for the respondents that the petitioners neither paid the principal amount or the interest for a period of 90 days and therefore, the respondents declared the petitioners’ account as NPA on 30th April, 2019 and the same was, accordingly, informed to the petitioners by issuing notice under the provisions of Section 13(2) of the SARFAESI Act on 19/07/2019.36. It is further contended that as could be seen from the Guidelines of the RBI, the classification of Assets as Non-Performing is under the Guidelines 4.2 of the Master Circular dated 01/07/2015. The account of the petitioners has been classified as ‘Sub-Standard’ and the same remained so far a period of 12 months from the date of declaration as NPA and therefore, there is illegality or infirmity in declaring the account of the petitioners as NPA in terms of Guidelines 2.1.2 and 4.1.1 of the RBI Master Circular.37. The learned Senior Counsel for the respondents contends that in terms of the RBI Guidelines, the Bank shall has to classify the account as NPA under Guideline 4, categories of NPAs under Guideline 4.1, Substandard Assets under Guideline 4.4.1, Doubtful Assets under Guideline 4.1.2 and Loss Assets under Guidelines 4.1.3. He further submits that respondents have followed the procedure as contemplated under the RBI Guidelines and in accordance with the law laid down by the Honourable Supreme Court. Therefore, he sought to dismiss the writ petition.38. In support of his contentions, the learned Senior Counsel for the respondents relied upon the following judgments to the effect that the writ petition itself is not maintainable.i) ICICI Bank Ltd Vs Umakanta Mohapatra reported in 2018 SCC Online 2349 (para-4) to the effect that the writ petition is not maintainable.ii) Dwarikesh Sugar Industries Ltd., Vs Prem Heavy Engineering Works (P) Ltd., reported in (1997) 6 SCC 450 (paras-29, 31 and 32) to the effect that the writ petition is not maintainable;iii) Authorised Officer, State Bank of Travancore Vs Mathew K.C. reported in (2018) 3 SCC 85 (Paras 10, 15, 16 and 17).Accordingly, he sought to dismiss the writ petition.VI – POINTS FOR DETERMINATION39. In view of the rival contentions raised by the learned Senior Counsel for the parties, the only point that arises for consideration in the present writ petition is:“Whether the petitioners have made out any case to interfere with the impugned notices issued by the respondent-Bank both under Sections 13(2) and 13(4) of the SARFAESI Act and any relief as sought for can be granted in the facts and circumstances of the present case?”VII – CONSIDERATION40. I have given my thoughtful consideration to the arguments advanced by the learned Senior Counsel for the parties and perused the entire material on record carefully.41. It is not in dispute that the respondent-Bank has sanctioned financial assistance to the petitioners on 27/09/2019 by way of Cash Credit Facility of Rs. 137,50,00,000/- and they had deposited the Title Deeds in respect of the immoveable properties in favour of the Indian Bank-respondent No.1 on 22/12/2017. It is also not in dispute that the 4th respondent –Vijaya Bank communicated the sanction of working capital of Rs. 24.50 Crores to the petitioners on 03/02/2018 and granted permission for ceding Pari Passu charge on primary security and collateral security on Reciprocal basis with the Indian Bank. It is also not in dispute that the petitioners by way of Memorandum of deposit of Title Deeds deposited the title deeds on 27/02/02018 in favour of the Indian Bank and Vijaya Bank in respect of immoveable properties. According to the petitioners, on 09/01/2019 the Revenue Officers in pursuance of the authorization order dated 08/01/2019 carried search and seizure on the premises of the petitioners for non-payment of GST.42. It is the contention of the petitioners that both the Banks stopped the debit transaction in the OCC Accounts of the petitioners from 10/01/2019 soon after the raids and the last interest payment was falling due on 31/12/2018 and the same was paid on the same day to both the banks. The respondent-Bank without consideration the representation and without providing an opportunity could not have classified as NPA. Therefore, he contended that the impugned action of the respondents cannot be sustained.43. It is the specific case of the respondents that from 31/01/2019 till 30/04/2019 there was no payment of interest, no operation in the account and the outstanding due was more than the limit sanctioned by respondent No.3-Indian Bank. The statement of account produced along with statement of objections filed by the 1st respondent as on 31/01/2019, the outstanding due payable by the petitioner to the 1st respondent-Indian Bank was Rs. 138,61,09,385/-. Inspite of issuing legal notice, the petitioners offered One Time Settlement to the Indian Bank, which was rejected on 29/04/2019. Since the petitioners have not paid any interest in the account for a period of more than 90 days, the loan account has been classified as NPA in terms of Section 2(o) of the SARFAESI Act and in accordance with Guideline 2.1.2 of the RBI Master Circular dated 01/07/2015 relating to NPA.44. The petitioners in the writ petition have contended that because of the raid conducted by the Revenue Authorities – GST authorities for non payment of GST, they were stopped from transacting/operating their Cash Credit Accounts. They had explained to the Bank Manager, that they were busy in De-Seizure proceedings including moving an anticipatory bail not only in Karnataka but also in Tamilnadu as there was fear of arrest which was spread all over India and in non-observance of law, mass arrests were made. Therefore to protect their reputation, they were involved in the proceedings of the anticipatory bail in safeguarding their personal liberty. Therefore, their entire business was stopped from 09/01/2019 up to the date, which clearly indicates that the petitioners have not made any effort to pay the amount due or interest from 30/01/2019 till 30/04/2019 inspite of legal notice issued by the Bank. Admittedly, the reply of the petitioners to the notice issued under Section 13(2) of the SARFAESI Act which was rejected by the bank, is not challenged thereby the respondent-Bank has proceeded to issue notice under Section 13(4) of the SARFAESI Act and on that ground alone, the writ petition is liable to be dismissed.45. The material on record clearly depicts that ever since January, 2019 the petitioners had been interacting with the respondent-Bank, several meetings were held any they also participated in the Consortium Bank Meetings as invitees, but they have not paid any amount due especially after January 2019, when the default started. The petitioners have admitted in their reply dated 10/07/2019 that they have neither made any payment of loan due nor made any effort to regularize the defaulted account in view of the enforcement action taken for recovery of GST dues by the GST Authorities. It is also not in dispute that the petitioners that as on the date of NPA i.e., 29/05/2019, the amount due to the bank was Rs. 142,73,29,479.23 ps. Inclusive of the principal amount not paid to the respondent-Bank. On that ground also the writ petition is liable to be dismissed as not maintainable.46. When the matter was argued on several occasions by the learned Counsel for the parties, this Court expressed and directed the learned Senior Counsel for the petitioners to show some bonafide attempt on the part of the petitioners by paying reasonable amount to the Bank in order to interfere with the proceedings initiated by the Bank under Section 13(2) and 13(4) of the SARFAESI Act. Inspite of the same, it is contended by the learned Senior Counsel for the petitioners that the very provisions of the SARFAESI Act is not applicable in view of the provisions of Section 31(j) of the SARFAESI Act, but the fact remains that the petitioners have not made any efforts to pay the interest from 31/01/2019 till 31/04/2019 which is not in dispute and after notice and after following the procedure, the respondents-Banks on 30/04/2019 have classified the Loan Account of the petitioners as NPA in terms of the provisions of Section 2(o) of the SARFAESI Act and in accordance with Guidelines 2.1.2 of the RBI Master Circular dated 01/07/2015 as the outstanding amount due payable by the petitioners to the 1st respondent-Bank was Rs. 142,73,29,479/-.47. The provisions of Section 2(o) of the SARFAESI Act as under:“2(o) “non-performing asset” means an asset or account of a borrower, which has been classified by a bank or financial institution as sub-standard, doubtful or loss asset,-(a) in case such bank or financial institution is administered or regulated by any authority or body established, constituted or appointed by any law for the time being in force, in accordance with the directions or guidelines relating to assets classifications issued by such authority or body;(b) in any other case, in accordance with the directions or guidelines relating to assets classifications issued by the Reserve Bank,”Guideline 2.1.2 of the R.B.I Master Circular dated 01/07/2015 reads as under:“2.1.2. A non performing asset (NPA) is a loan or an advance where;i. interest and / or instalment of principal remain overdue for a period of more than 90 days in respect of a term loan,ii. the account remains ‘out of order’ as indicated at paragraph 2.2 below, in respect of an Overdraft/Cash Credit (OD/CC),iii. the bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted,iv. the instalment of principal or interest thereon remains overdue for two crop seasons for short duration crops,v. the instalment of principal or interest thereon remains overdue for one crop season for long duration crops, 2 DBOD-MC on IRAC Norms -2015vi. the amount of liquidity facility remains outstanding for more than 90 days, in respect of a securitization transaction undertaken in terms of guidelines on securitization dated February 1, 2006.vii. in respect of derivative transactions, the overdue receivables representing positive mark-to-market value of a derivative contract, if these remain unpaid for a period of 90 days from the specified due date for payment.48. It is also not in dispute that the petitioners have not made any efforts to pay the amount due to the Bank subsequent to declaration of NPA on 30th April, 2019 till today. Therefore, the contention of the learned Senior Counsel for the petitioners that the provisions of the SARFEASI Act is not applicable to the present case, cannot be accepted as the petitioners, who are borrowers have availed and utilized the total sanctioned loan amount of Rs. 137,50,00,000/- and committed default in not paying any interest as well as the principal amount as on 30/04/2019. The petitioners were liable to pay more than 100% of the principal amount and interest. Therefore, the provisions of Section 31(i) of the SARFEASI Act is not applicable to the petitioners as rightly contended by the learned Senior Counsel for the respondents. Accordingly, the contention of the petitioners that the provisions of the SARFEASI Act is applicable cannot be accepted.49. The Honourable Supreme Court while considering the provisions of the SARFEASI Act in the case of ICICI Bank Ltd Vs. Umakanta Mohapatra reported in 2018 SCC Online SC 2349 at paragraph-4 has held as under:“4. The writ petition itself was not maintainable, as a result of which, in view of our recent judgment, which has followed earlier judgments of this Court, held as follows:-“18. We cannot help but disapprove the approach of the High Court for reasons already noticed in Dwarikesh Sugar Industries Ltd Vs Prem Heavy Engineering Works (P) Ltd., (1997) 6 SCC 450, observing:-“32. When a position, in law, is well settled as a result of judicial pronouncement of this Court, it would amount to judicial impropriety to say the least, for the subordinate courts including the High Courts to ignore the settled decisions and then to pass a judicial order which is clearly contrary to the settled legal position. Such judicial adventurism cannot be permitted and we strongly deprecate the tendency of the subordinate courts in no t applying the settled principles and in passing whimsical orders which necessarily has the effect of granting wrongful and unwarranted relief to one of the parties. It is time that this tendency stops.”50. In the case of Dwarikesh Sugar Industries Ltd Vs Prem Heavy Engineering Works (P) Ltd., And Another reported in (1997) 6 SCC 450, the Honourable Supreme Court while considering the bank guarantee at paragraphs-29 and 31 has held as under:“29. It is unfortunate that the High Court did not consider it necessary to refer to various judicial pronouncements of this Court in which the principles which have to be followed while examining an application for grant of interim relief have been clearly laid down. The observation of the High Court that reference to judicial decisions will not be much importance was clearly a method adopted by it in avoiding to follow and apply the law as laid down by this Court. Yet another serious error which was committed by the High Court, in the present case, was not to examine the terms of the bank guarantee and consider the letters of invocation which has been written by the appellant. If the High Court had taken the trouble of examining the documents on record, which had been referred to by the trial court, in its order refusing to grant injunction, the court would not have granted the interim injunction. We also do not find any justification for the High Court in invoking the alleged principle of unjust enrichment to the facts of the present case and then deny the appellant the right to encash the bank guarantee. If the High Court had taken the trouble to see the law on the point it would have been clear that in encashment of bank guarantee the applicability of the principle of undue enrichment has no application.31. It is unfortunate, that notwithstanding the authoritative pronounce-ments of this Court, the High Courts and the courts subordinate thereto, still seem intent on affording to this Court innumerable opportunities for dealing with this area of law, thought by this Court to be well settled.51. In the case of Authorised Officer, state Bank of Travancore and Another Vs Mathew K.C. reported in (2018) 3 SCC 85, the Honourable Supreme Court with regard to discretionary jurisdiction under Article 226 of the Constitution of India at paragraphs – 10, 15, 16 and 17 has held as under:“10. In Satyawati Tondon (United Bank of India Vs Satyawati Tondon, (2010) 8 SCC 110: (2010) 3 SCC (Civ) 260) the High Court had restrained (Satyawati Tondon Vs State of U.P., 2009 SCC Online All 2608) further proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the SARFAESI Act, the availability of remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal, the object and purpose of the legislation, it was observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available holding: (SCC pp. 123 & 128, paras 43 & 55)“43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this Rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection.”15. It is the solemn duty of the court to apply the correct law without waiting for an objection to be raised by a party, especially when the law stands well settled. Any departure, if permissible, has to be for reasons discussed, of the case falling under a defined exception, duly discussed after noticing the relevant law. In financial matters grant of ex parte interim orders can have a deleterious effect and it is not sufficient to say that the aggrieved has the remedy to move for vacating the interim order. Loans by financial institutions are granted from public money generated at the taxpayer’s expense. Such loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as entrustment by the public. Timely repayment also ensures liquidity to facilitate loan to another in need, by circulation of the money and cannot be permitted to be blocked by frivolous litigation by those who can afford the luxury of the same. The caution required, as expressed in Satyawati Tondon (United Bank of India Vs Satyawati Tondon, (2010) 8 SCC 110: (2010) 3 SCC (Civ) 260), has also not been kept in mind before passing the impugned interim order : (SCC pp 123-24, para 46)“46. It must be remembered that stay of an action initiated by the State and/or its agencies/instrumentalities for recovery of taxes, cess, fees, etc. seriously impedes execution of projects of public importance and disables them from discharging their constitutional and legal obligations towards the citizens. In cases relating to recovery of the dues of banks, financial institutions and secured creditors, stay granted by the High Court would have serious adverse impact on the financial health of such bodies/institutions, which (sic will) ultimately prove detrimental to the economy of the nation. Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters. Of course, if the petitioner is able to show that its case falls within any of the exceptions carved out in Baburam Prakash Chandra Maheshwari Vs Antarim Zila Parishad (Baburam Prakash Chandra Maheshwari Vs Antarim Zila Parishad, AIR 1969 SC 556), Whirlpool Corpn. Vs Registrar of Trade Marks (Whirlpool Corpn. Vs Registrar of Trade Marks, (1998) 8 SCC 1) and Harbanslal Sahnia Vs Indian Oil Corpn. Ltd (Harbanslal Sahnia Vs Indian Oil Corpn. Ltd., (2003) 2 SCC 107) and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order.”16. The writ petition ought not to have been entertained and the interim order granted for the mere asking without assigning special reasons, and that too without even granting opportunity to the appellant to contest the maintainability of the writ petition and failure to notice the subsequent developments in the interregnum. The opinion of the Division bench that the counter-affidavit having subsequently been filed, stay/modification could be sought of the interim order cannot be considered sufficient justification to have declined interference.17. We cannot help but disapprove the approach of the High Court for reasons already noticed in Dwarikesh Sugar Industries Ltd Vs Prem Heavy Engg. Works (P) Ltd (Dwarikesh Sugar Industries Ltd Vs Prem Heavy Engg. Works (p) Ltd., (1997) 6 SCC 450), observing: (SCC p. 463, para 32)“32. When a position, in law, is well settled as a result of judicial pronouncement of this Court, it would amount to judicial impropriety to say the least, for the subordinate courts including the High Courts to ignore the settled decisions and then to pass a judicial order which is clearly contrary to the settled legal position. Such judicial adventurism cannot be permitted and we strongly deprecate the tendency of the subordinate courts in not applying the settled principles and in passing whimsical orders which necessarily has the effect of granting wrongful and unwarranted relief to one of the parties. It is time that this tendency stops.”52. Though the learned Senior Counsel for the petitioners relied upon the judgment in the case of Mardia Chemicals Ltd Vs Union of India reported in (2004) 4 SCC 311 regarding paragraphs 37, 44 and 45, the said judgment is not helpful to the petitioners. In the said judgment at paragraph-37, the operative portion clearly states that from what is quite evident that guidelines as laid down by Reserve Bank of India which are in more details, but not necessary to be reproduced here, lay down the terms and conditions and circumstances in which the debt is to be classified as Non-Performing Asset as early as possible. Therefore, it was held that there was no substance in the submission made on behalf of the petitioners that there are no guidelines for treating the debt as Non-Performing Asset. At paragraph-40, in the operative portion has held as under:-“It is thus clear that an appeal under sub-section (1) of Section 17 would lie only after some measure has been taken under sub-section (4) of section 13 and not before the stage of taking of any such measure. According to sub-section (2), the borrower has to deposit 75% of the amount claimed by the secured creditor before his appeal can be entertained.53. Admittedly, in the present case, the respondent-Bank has issued notice under Sections 13(2) and 13(4) of the SARFAESI Act and therefore, the very writ petition filed for the reliefs sought for is not maintainable. The said judgment relied upon is in no way of any assistance to the petitioners. In the very judgment at paragraph-45, it has held as under:“45. In the background we have indicated above, we may consider as to what forums or remedies are available to the borrower to ventilate his grievance. The purpose of serving a notice upon the borrower under sub-section (2) of Section 13 of the Act is, that a reply may be submitted by the borrower explaining the reasons as to why measures may or may not be taken under sub-section (4) of Section 13 in case of non-compliance with notice within 60 days. The creditor must apply its mind to the objections raised in reply to such notice and an internal mechanism must be particularly evolved to consider such objections raised in the reply to the notice. There may be some meaningful consideration of the objections raised rather than to ritually reject them and proceed to take drastic measures under sub-section (4) of Section 13 of the Act. Once such a duty is envisaged on the part of the creditor it would only be conductive to the principles of fairness on the part of the banks and financial institutions in dealing with their borrowers to appraise them of the reason for not accepting the objections or points raised in reply to the notice served upon them before proceeding to take measures under sub-section (4) of Section 13. Such reasons, overruling the objections of the borrower, must also be communicated to the borrower by the secured creditor. It will only be in fulfillment of a requirement of reasonableness and fairness in the dealings of institutional financing which is so important from the point of view of the economy of the country and would serve the purpose in the growth of a healthy economy. It would certainly provide guidance to the secured debtors in general in conducting the affairs in a manner that they may not be found defaulting and being made liable for the unsavoury steps contained under sub-section (4) of Section 13. At the same time, more importantly, we must make it clear unequivocally that communication of the reasons for not accepting the objections taken by the secured borrower may not be taken to give occasion to resort to such proceedings which are not permissible under the provisions of the Act. But communication of reasons not to accept the objections of the borrower, would certainly be for the purpose of his knowledge which would be a step forward towards his right to know as to why his objections have not been accepted by the secured creditor who intends to resort to harsh steps of taking over the management/business of viz secured assets without intervention of the court. Such a person in respect of whom steps under Section 13(4) of the Act are likely to be taken cannot be denied the right to know the reason of non-acceptance and of his objections. It is true, as per the provisions under the Act, he may not be entitled to challenge the reasons communicated or the likely action of the secured creditor at that point of time unless his right to approach the Debts Recovery Tribunal as provided under Section 17 of the Act matures on any measure having been taken under sub-section (4) of Section 13 of the Act.”54. In the case of Transcore Vs Union of India and Another reported in (2008) 1 SCC 125, the Honourable Supreme Court has held that it is domain of the Bank or Financial Institutions which has to classify the assets as Standard, Substandard, doubtful or loss wherein at paragraph-23 and 24 it is held as under:23. On reading Section 13(2), which is the heart of the controversy in the present case, one finds that if a borrower, who is under a liability to a secured creditor, makes any default in repayment of secured debt and his account in respect of such debt is classified as non-performing asset then the secured creditor may require the borrower by notice in writing to discharge his liabilities within sixty days from the date of the notice failing which the secured creditor shall be entitled to exercise all or any of the rights given in Section 13(4). On reading Section 13(2) it is clear that the said sub-section proceeds on the basis that the borrower is already under a liability and further that, his account in the books of the bank of FI is classified as substandard, doubtful or a loss. The NPA Act comes into force only when both these conditions are satisfied. Section 13(2) proceeds on the basis that the debt has become due. It proceeds on the basis that the account of the borrower in the books of bank/FI, which is an asset of the bank/FI, has become non-performing. Therefore, there is no scope of any dispute regarding the liability. There is a difference between accrual of liability, determination of liability and liquidation of liability. Section 13(2) deals with liquidation of liability. Section 13 deals with enforcement of security interest, therefore, the remedies of enforcement of security interest under the NPA Act and the DRT Act are complementary to each other. There is no inherent or implied inconsistency between these two remedies under the two different Acts. Therefore, the doctrine of election has no application in this case.24. Section 13(3) inter alia states that the notice under Section 13(2) shall give details of the amount payable by the borrower as also the details of the secured assets intended to be enforced by the bank/FI. In the event of non-payment of secured debts by the borrower, notice under Section 13(2) is given as a notice of demand. It is very similar to notice of demand under Section 156 of the Income Tax Act, 1961. After classification of an account as NPA, a last opportunity is given to the borrower of sixty days to repay the debt. Section 13 (3-A) was inserted by amending Act 30 of 2004 after the judgment of this Court in Mardia Chemicals [(2004) 4 SCC 311] whereby the borrower is permitted to make representation/objection to the secured creditor against classification of his account as NPA. He can also object to the amount due if so advised. Under Section 13(3-A), if the bank/FI comes to the conclusion that such objection is not acceptable, it shall communicate within one week the reasons for non-acceptance of the representation/objection. A proviso is added to Section 13(3-A) which states that the reasons so communicated shall not confer any right upon the borrower to file an application to DRT under Section 17. The scheme of sub-sections (2), (3) and (3-A) of Section 13 of the NPA Act shows that the notice under Section 13(2) is not merely a show-cause notice, it is a notice of demand. That notice of demand is based on the footing that the debtor is under a liability and that his account in respect of such liability has become substandard, doubtful or a loss. The identification of debt and the classification of the account as NPA is done in accordance with the guidelines issued by RBI. Such notice of demand, therefore, constitutes an action taken under the provisions of the NPA Act and such notice of demand cannot be compared to a show-cause notice. In fact, because it is a notice of demand which constitutes an action, Section 13(3-A) provides for an opportunity to the borrower to make representation to the secured creditor. Section 13(2) is a condition precedent to the invocation of Section 13(4) of the NPA Act by the bank/FI. Once the two conditions under Section 13(2) are fulfilled, the next step which the bank or FI is entitled to take is either to take possession of the secured assets of the borrower or to take over management of the business of the borrower or to appoint any manager to manage the secured assets or require any person, who has acquired any of the secured assets from the borrower, to pay the secured creditor towards liquidation of the secured debt.55. As could be seen from the documents 2 and 3 produced along with the memo by the respondents on 18/11/2019, the respondents have classified the assets in terms of the dictum of the Honourable Supreme Court. Though the learned Senior Counsel for the petitioners relied upon paragraphs-23 and 24, in the very judgment in paragraphs-33 and 35, it is held as under:“33. Section 17 of NPA Act confers right to appeal. It inter alia states that any person including borrower, aggrieved by exercise of rights by the secured creditor under Section 13(4), may make an application to the DRT as an appellate authority within forty-five days from the date on which action under Section 13(4) is taken. That application should be accompanied by payment of fees prescribed by the 2002 Rules made under the NPA Act. A proviso is added to Section 17(1) by amending Act 30 of 2004. It states that different fees may be prescribed for making the application by the borrower and the person other than the borrower. By way of abundant caution, an Explanation is added to Section 17(1) saying that the communication of the reasons to the borrower by the secured creditor rejecting his representation shall not constitute a ground for appeal to the DRT. However, under Section 17(2), the DRT is required to consider whether any of the measures referred to in Section 13(4) taken by the secured creditor for enforcement of security are in accordance with the provisions of the NPA Act and the Rules made thereunder. If the DRT, after examining the facts and circumstances of the case and the evidence produced by the parties, comes to the conclusion that any of the measures taken under Section 13(4) are not in accordance with the NPA Act, it shall direct the secured creditor to restore the possession/management to the borrower (vide Section 17(3) of NPA Act). On the other hand, after the DRT declares that the recourse taken by the secured creditor under Section 13(4) is in accordance with the provisions of the NPA Act then, notwithstanding anything contained in any other law for the time being in force, the secured creditor shall be entitled to take recourse to any one or more of the measures specified under Section 13(4) to recover his secured debt.”“35. In the present matter, there is a controversy with regard to payment of court fee in the matter of appeal to the Appellate Tribunal against the action taken under Section 13(4) of the NPA Act. In this connection, certain facts are required to be stated. On 21/06/2002 the NPA Act came into force. As stated above, any person including borrower aggrieved by action taken under Section 13(4) of NPA Act is entitled to move the tribunal in appeal under Section 17(1) of NPA Act. The tribunal being established under Section 3(1) of the DRT Act. This aspect is important. The tribunal under the DRT Act is also the tribunal under the NPA Act. Under Section 19 of the DRT Act read with Rule 7 of the Debts Recovery Tribunal (Procedure) Rules, 1993 (“1993 Rules”), the applicant bank or FI has to pay fees for filing such application to DRT under the DRT Act, similarly, a borrower, aggrieved by an action under Section 13(4) of NPA Act was entitled to prefer an application to the DRT under Section 17 of NPA. Similarly, the borrower was required to file an appeal to DRT under Section 18 of the NPA Act. For such appeals a borrower was required to pay fees as prescribed by Section 20 of the DRT Act read with Rule 8 of the Debts Recovery Appellate Tribunal (Procedure) Rules, 1994 (“1994 Rules”). The Central Government, however, found that a borrower who was entitled to carry the matter further against the action taken under Section 13(4) was also required to pay court fees which give rise to difficulties and, therefore, it enacted the Securitisation and Reconstruction of Financial Assets and
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Enforcement of Security Interest (Removal of Difficulties) Order, 2004 (“Order 2004”) under Section 40 of the NPA Act to make provisions for levying fees in the matter of filing of application/appeal under Sections 17 and 18 of the NPA Act respectively. We quote hereinbelow the contents of the said Order, 2004:“NOW, THEREFORE, in exercise of the powers conferred by sub-section (1) of section 40 of the said Act, the Central Government hereby makes the following Order to make the provisions of levying of the fee for filing of appeals under Sections 17 and 18 of the said Act, being not inconsistent with the provisions of the Act, to remove the difficulty, namely:-Therefore the said judgment is in no way helpful to the petitioners.56. In so far as the judgments relied upon by the learned Counsel for the petitioners in the case of Central Bank of India Vs Ravindra and Others reported in (2002) 1 SCC 367 specifically with regard to not following the guidelines by the respondents, it is not the case of the petitioners either in the pleadings or in the arguments for violation of any guidelines issued by RBI, if the petitioners have any complaint against the respondent-Bank for violation of any of the guidelines, it is for them to approach the RBI against the respondent-Bank by establishing that the respondent-Bank has violated the guidelines of the RBI. The respondents-Banks in categorical terms in the Statement of Objections contended that they have followed the procedure as contemplated by the RBI Guidelines. Admittedly in the present case, the petitioners have not paid any single pie towards the interest since January 2019 till April, 2019 and therefore, the said judgment has no application to the facts and circumstances of the present case.57. In the case of Keshavlal Khamchand and Sons Private Limited and Others Vs Union Bank of India and Others reported in (2015) 4 SCC 770, relied upon by the learned Counsel for the petitioners, the Honourable Supreme Court while considering the provisions of Debt, Financial and Monetary Laws and provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 especially provisions of Section 2(1)(o) at paragraphs-32 held that since such a system was also found to be inadequate for the speedy recovery of the monies due from the borrowers to the creditors, the Parliament made the Act under which the process of ascertainment of the amounts due from a borrower by an independent adjudicatory body is dispensed with. The secured creditor is made the sole judge of the amount due and outstanding from a borrower subject to an appeal under Section 17 of the Act. Be that as it may, such an ascertainment of amount due and outstanding is not the only criteria on the basis of which the secured creditor is entitled to initiate proceedings under Section 13(4) of the Act, but the secured creditor is also required to classify the account of the borrower (asset of the creditor) as an NPA.58. Admittedly in the present case, the respondents have issued notice before declaring the petitioners’ accounts as NPA after 90 days as contemplated under the provisions of Section 2(1)(o) and as per the RBI Guideline 2.1.2 after 90 days. Therefore, the said judgment is in no way assistance to the petitioners’. Infact paragraphs-38 and 39 of the very judgment read as under:“38. To make any attempt to define the expression non-performing asset’ valid for the millions of cases of loan transactions of various categories of loans and advances, lent or made by different categories of creditors for all time to come would not only be an impracticable task but could also simply paralyse the entire banking system thereby producing results which are counter productive to the object and the purpose sought to be achieved by the Act.39. Realising the same, the Parliament left it to the Reserve Bank of India and other regulators to prescribe guidelines from time to time in this regard. The Reserve Bank of India is the expert body to which the responsibility of monitoring the economic system of the country is entrusted under various enactments like the RBI Act, 1934, the Banking Regulation Act, 1949. Various banks like the State Bank of India, National Housing Bank, which are though bodies created under different laws of parliament enjoying a large amount of autonomy, are still subject to the overall control of the Reserve Bank of India.”In so far as paragraph-54 of the said judgment, it is specifically contended by the respondents that they have followed the RBI Guidelines.59. In so far as the judgment of this Court relied upon by the learned Senior Counsel for the petitioners in the case of M/s. Raja Associates and Others Vs Union of India and Others in Writ Petition No. 16694/2015 D.D. 6th, March, 2008, it has no application to the facts and circumstances of the present case. The respondent-Bank therein had failed to adhere to the earlier directions issued by this Court to consider whether the petitioners’ account has been declared as NPA in terms of the RBI Guidelines, the same was not re-considered. Therefore, the said judgment passed in the year 2008 has no application to the facts and circumstances of the present case.60. The Honourable Supreme Court in the case of ITC Limited Vs Blue Coast Hotels Limited and Others reported in (2018)15 SCC 99 while considering the provisions of Section 13(3-A) of the SARFAESI Act r/w Rule 3-A of the Security Interest (Enforcement) Rules, 2002 at paragraph-32 has held as under: “32. In these circumstances, we have no doubt that the failure to furnish a reply to the failure to furnish a reply to the representation is not of much significance since we are satisfied that the creditor has undoubtedly considered the representation and the proposal for repayment made therein and has in fact granted sufficient opportunity and time to the debtor to repay the debt without any avail. Therefore, in the fact and circumstances of this case, we are of the view that the debtor is not entitled to the discretionary relief under Article 226 of the Constitution which is indeed an equitable relief.”61. There are disputed facts that arise for consideration with regard to the allegations made by the petitioners that the respondents have not complied with the RBI Guidelines, but the same is disputed by the respondents contending that they have followed the procedure as contemplated under the provisions of the SARFAESI Act and as per the Guidelines issued by the Reserve Bank of India. Therefore, this Court cannot decide the same in exercise of powers under Article 226 of the Constitution of India. The petitioners have got an alternative remedy under the provisions of Section 17 of the SARFAESI Act before the jurisdictional Debt Recovery Tribunal to decide the same as held by the Honourable Supreme Court time and again stated supra.VIII-CONCLUSION62. In view of the aforesaid reasons, the point raised in the present writ petition has to be answered in the negative holding that the petitioners have not made out any ground to interfere with the impugned notice issued by the respondents-Banks under the provisions of Section 13(2) and 13(4) of the SARFAESI Act and the petitioners are not entitled to any relief as sought for in the present writ petition in exercise of powers under Article 226 of the Constitution of India. Accordingly, writ petition is dismissed.63. However, it is needless to observe that it is always open for the petitioners to approach the Debt Recovery Tribunal under the provisions of Section 17 of the SARFAESI Act, if so advised and in accordance with law.64. Interim order earlier granted by this Court in this writ petition will ensure to the benefit of the petitioners for a period of 45 days from today.65. All the contentions raised by both parties are left open to be urged before the Debt Recovery Tribunal.Ordered accordingly.