Biswajit Mohanty, J.@mdash1. The petitioner, who happens to be a Private Ltd. Company, has filed the present writ petition with a prayer to quash the notice dated 09.01.2013 (Annexure-11) issued by the opp. parties under Section 13 (2) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, for short, "the Act".
2. The case of the petitioner is that it deals with production and sale of L.P.G. Cylinders and its ancillary products for the purpose of running its business. It maintains a cash credit account for raising financial assistance from opp. party No. 1. In the year, 2010, petitioner submitted an application before opp. party No. 1 for sanction of Working Capital Term Loans of about Rupees Three Crores for its business. In reply to the above request, the opp. party No. 1 by its letter dated 16.06.2010 called for submission of certain documents. According to the petitioner, it complied with above noted directions of the Bank. The opp. party No. 1 again vide letter dated 21.12.2010 sought for certain information for processing the proposal. The petitioner again complied with the above noted directions. On 11.07.2011, the opp. party No. 1 issued a letter sanctioning Working Capital Term Loans of Rs. 3.50 crores with certain terms and conditions while renewing working capital limits. However, the petitioner vide its letter dated 10.08.2011 expressed its inability to accept the WCTL limits with high rate of interest and requested the opp. party No. 1 to sanction F.C.N.R.B. facility to petitioner. According to the petitioner, F.C.N.R.B. facility is a short term loan provided to certain loanees at the time of necessities with lower rate of interest. In spite of the above request made by the petitioner on 10.8.2011, the opp. party No. 1 remained silent. After expiry of one year, opp. Party No. 1 on 3.9.2012 issued a letter to the petitioner indicating the irregularities in the cash credit account. An outstanding figure of Rs. 16.18 crores was shown vide Annexuere-8 dated 3.9.2012 and the opp. party No. 1 sought for payment of dues immediately. According to the petitioner, the transaction of petitioner with the opp. party No. 1 is more than 30 years old and it was never a defaulter earlier but for the present one on account of a sharp hike in the rate of interest from 14.25% up to 16.75% for the last year. The petitioner again vide its letter dated 4.1.2013 requested the opp. party No. 1 to restructure the account so that there can be smooth payment of outstanding dues. However, vide letter under Annexure-10, it was intimated to the petitioner that its cash credit account has become highly irregular and there was no transaction in the cash credit account since 02.10.2012 and the total dues payable including the interest as on 8.1.2013 came to more than Rs. 17 crores and accordingly the Bank demanded repayment of entire outstanding dues. Immediately thereafter, on 9.1.2013, the Bank issued a notice under Section 13 (2) of "the Act" asking the petitioner to pay more than Rs. 17 crores within 60 days from the date of notice. It was also made clear that the petitioner was also liable to pay future interest at the contractual rate to give with incidental expenses, cost, charges etc. Further, it was made clear that if the petitioner failed to repay the amount noted in the notice, the Bank would exercise all or any of the rights detailed under sub-section (4) of Section 13 of "the Act". This notice dated 9.1.2013 issued under sub-section (2) of section 13 of "the Act" has been filed as Annexure-11 to the writ petition. As would be clear from the prayer quoted earlier, the present petitioner only challenges the said notice under Annexure-11 in the present writ petition.
3. In this matter, notice was issued to the opp. parties on 26.03.2013. Further, on the said date, as an interim measure, this Court directed that operation of the notice dated 9.1.2013 under Annexure-11 should remain in abeyance till the next date subject to the petitioner depositing a sum of Rs. 2,00,00,000 (Rupees two crores) on or before 26th April, 2013. Again, on 24.7.2013, this Court directed that the opp. parties should go ahead with auctioning the properties of the petitioner, but should not confirm the sale thereof without leave of this Court till 16.8.2013, subject to compliance of the order dated 26.3.2013 by the petitioner on or before 12.08.2013. Further, on 4.3.2014, this Court directed stay operation of Electronic-Auction notice dated 01.02.2014 published in the English Daily ''The Times of India''.
4. Upon notice, the opp. parties have filed their counter. In their counter, they have stated at the outset that the writ petition is not maintainable either in law or in the facts and that the petitioner has deliberately, intentionally and with some oblique motive has suppressed the material facts and thus it is not entitled to any discretionary and equitable reliefs at the hands of this Court. According to the opp. parties due to deliberate default, violation of credit norms and the terms and conditions of the sanction as well as the agreements voluntarily executed by the petitioner-company, the loan account became irregular. Further, as per the guidelines of R.B.I., the said account became non-performing assets on 01.01.2012 and thereafter it had been classified as sub-standard assets. They have also pointed out that the petitioner without filing any objection to the notice dated 9.1.2013, on 8.3.2013 has filed the present writ petition, which is not at all maintainable. The opp.parties after expiry of statutory period of 60 days have initiated action under Sub-section (4) of Section 13 of the Act and on 27.3.2013 issued possession notices, which were published in two newspapers, viz., "The Times of India" and "Dharitri" on 30.3.2013. On 5.4.2013, the opp. parties came to know about the order dated 26.3.2013 passed by this Court in the present case, that is much after the possession notices were issued. Since the petitioner did not comply with the conditional order dated 26.3.2013 fully by 26.4.2013, on 19.6.2013, the Bank issued auction notices which were published in daily newspapers, "The Samaj" and "The Times of India" on 20.6.2013 with regard to property of the petitioner as well as others. The petitioner filed Misc. Case No. 14526 of 2013 with a prayer for stay operation of the said auction notice. That Misc. Case was disposed of on 24.7.2013 by directing that the opp. parties would go on auctioning the properties of the petitioner, but should not confirm the sale thereof without leave of the Court till 16.8.2013 subject to compliance of the order dated 26.3.2013 by the petitioner on or before 12.8.2013. In the meantime, the opp. parties have filed O.A. No. 227 of 2013 before the Debts Recovery Tribunal, Cuttack and the petitioner has appeared there. It is pointed out that the petitioner is making all efforts to drag the proceeding of aforesaid O.A. on some pleas or others. Further, it has been made clear in the counter that on 15.11.2013, the Bank took over the physical possession of the properties of the petitioner. In their counter, the opp. parties have also made it clear that the averments made in pragraphs-2 to 5 of the writ petition are not fully correct and allegations made in those paragraphs are totally false and baseless. With regard to averments made in paragraphs-6 to 11 of the writ petition, the opp. parties have taken a stand that the averments and allegations made thereof are totally misleading and the petitioner has committed deliberate default and violated the terms and conditions of sanction for which the opp. parties have initiated auction for realization of loan dues and as such there are no irregularities or illegalities in the auction initiated by them. No rejoinder has been filed by the petitioner-company to the counter filed by the opp. parties.
5. Mr. Mohanty, learned counsel for the petitioner submitted that the impugned order under Annexue-11 being a product of extreme arbitrariness and negligence on the part of the Bank, it should be quashed. According to him, the transaction of the petitioner with the opp. parties was more than 30 years old and except in the present instance; the petitioner-company had never committed any default of any kind. Further, according to him, the present default was on account of reasons beyond control of the petitioner and on this account, Mr. Mohanty pleaded that the notice under Annexure-11 ought to be declared illegal in the eyes of law.
6. Mr. R.K. Rath, learned Senior Counsel ably assisted by learned counsel, Mr. Himansu Pattnaik appearing for the opp. parties contended that this writ petition is not at all maintainable as the same has been preferred against a show cause notice without filing a reply. He further submitted that Annexure-11 was issued in tune with the provision of ''the Act'' by the Authorized Officer. He also denied the allegation relating to arbitrary exercise of power by the Bank. He further contended that a show cause notice can be declared void in law only when the same has been issued without jurisdiction or was totally non-est in the eyes of law. According to him such was not the case here. Besides this, he also contended that there was a direction of this Court on 26.3.2013 to deposit Rs. 2 crores on or before 26th April, 2013, however, the petitioner-company never deposited the same by 26.4.2013. After the expiry of the dead line by this Court; on 29.4.2013, the petitioner deposited Rs. 10 lakhs on 29.4.2013 and Rs. 15 lakhs on 3.5.2013. Further, he submitted that though vide order dated 24.7.2013, the petitioner was granted liberty to make payment by 12.8.2013, the petitioner also failed to comply the said deadline. In such background, he prayed that even otherwise such conduct of the petitioner also disentitled it for any relief from this Court. Accordingly, he prayed that the writ petition should be dismissed. Mr. Rath further submitted that though the petitioner has filed Misc. Cases for staying operation of two auction notices, however, it has not amended its prayer for quashing of such auction notices. Mr. Rath has filed a "List of Dates" dated 24.11.2015 on behalf of the opp. parties.
7. Heard learned counsel for the parties. Perused the records.
8. It is not disputed that on 9.1.2013 the notice under sub-section (2) of Section 13 of the Act (Annexure-11) was issued to the petitioner. Petitioner did not file any representation/objection to such notice and it approached this Court by filing the present writ petition on 8.3.2013, that is on the verge of expiry of two months after issuance of notice under Annexure-11. This Court vide order dated 26.3.2013 passed an interim order to the effect that the notice under Annexure-11 would remain in abeyance till next date, subject to the petitioner depositing a sum of Rs. 2 crores on or before 26.4.2013. On 27.3.2013, possession notice was issued which was published in daily newspapers- "The Times of India" and "Dharitri" on 30.3.2013. On 5.4.2013, the opp. parties came to know about the order dated 26.3.2013 passed by this Court after receipt of an Advocate''s notice. In any case by 26.4.2013, the order dated 26.3.2013 was not complied with. Only on 29.4.2013, the petitioner deposited Rs. 10 lakhs and thereafter on 3.5.2013 it made a further deposit of Rs. 15 lakhs. On 27.5.2013, the opp. parties-Bank filed O.A. No. 227 of 2013 before the Debts Recovery Tribunal, Cuttack and the petitioner has appeared in that case. Since the order dated 26.3.2013 of this Court was not complied, on 19.6.2013 the Bank issued auction notices and such auction notices were published on 20.6.2013 in daily newspapers-"The Samaj and "The Times of India" fixing the date of auction to be 29.7.2013. The petitioner filed Misc. Case No. 14526 of 2013 with a prayer for staying operation of the above noted auction notice dated 20.6.2013. The said Misc. Case was disposed of on 24.7.2013 with a direction that the opp. parties should go on auctioning the properties of the petitioner, but should not confirm the sale thereof without leave of this Court till 16.8.2013 subject to compliance of the order dated 26.3.2013 by the petitioner on or before 12.8.2013. It appears that this order was also not complied by the petitioner. Accordingly, the opp. parties moved the Collector and District Magistrate under Section 14 of "the Act". Ultimately on 15.11.2013, the Bank took over possession of the secured assets of the petitioner. On 1.2.2014 the opp. parties published auction notices of properties of the petitioner fixing auction to 5.3.2014 in "Times of India" dated 1.2.2014. Again, the petitioner filed Misc. Case No. 3941 of 2014 with a prayer to stay operation of the auction notice dated 01.02.2014 as published in daily "Times of India". On 4.3.2014, this Court disposed of the said Misc. Case by directing stay of operation of auction notice dated 1.2.2014 published in the English daily "The Times of India". On 12.12.2014, the opp. parties have filed Misc. Case No. 21752 of 2014 with a prayer to vacate the stay order dated 4.3.2014 passed in Misc. Case No. 3941 of 2014. In the said Misc. Case, the opp.parties have also made it clear that till 12.12.2014, the petitioner has not complied the order dated 26.3.2013 and has only deposited a sum of Rs. 10 lakhs on 29.4.2013 and Rs. 15 lakhs on 3.5.2013. The opp. parties have also filed another Misc. Case bearing No. 8298 of 2015 with a prayer to vacate the stay order dated 4.3.2014 as indicated earlier making it clear that as on the date of filing of the said Misc. Case, i.e., 30.4.2015, the dues of the opp. parties-Bank stood around Rs. 19.00 crores. It is interesting to note here that though the petitioner-company have filed Misc. Cases for staying of auction notices dated 20.6.2013 and 1.2.2014 published in Newspapers, however, it has not amended the prayer of the writ petition for quashing of the said auction notices.
9. Thus, before us the only challenge is to the show cause notice dated 9.1.2013 issued under sub-section (2) of Section 13 (Annexure-11). Though Mr. Mohanty, learned counsel for the petitioner contended that the said notice should be declared illegal as the same was a product of arbitrary exercise of power, however, he could not refute the plea of Mr. Rath, learned Senior Counsel appearing for the opp. parties that the said notice having been issued by the appropriate authority under "the Act", the same could not be quashed on account of allegations of arbitrariness when the Bank in its counter has disputed such allegations relating to arbitrariness. It is well settled that a show cause notice can be declared legally void only when the same has been issued wholly without jurisdiction or is totally non-est in the eyes of law. Since here the show cause notice has been issued under sub-section (2) of Section 13 of the Act by the Authorized Officer, it cannot be said that it has been issued wholly without jurisdiction and is totally non-est in the eyes of law. Secondly, the conduct of the petitioner in not complying with the interim orders of this Court passed in its favour on 26.3.2013 and 24.7.2013 is also a factor which goes against it. Lastly, the present lis also involves adjudication on disputed questions of fact as the Bank has refuted the allegation made against it.
10. In such background, we are not inclined to entertain this writ petition. Hence, the writ petition stands dismissed. Accordingly, all the interim orders stand vacated. However, we make it clear that dismissal of this writ petition will no way affect the adjudication of O.A. No. 227 of 2013, which is stated to be pending before the Debts Recovery Tribunal, Cuttack and CONTC No. 513 of 2013 pending before this Court.
P. Mohanty, J.@mdashI agree.
