M/S.Sri Krishna Refineries, v. Reserve Bank Of India,

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED: 05.07.2017

CORAM:

THE HON'BLE MR.JUSTICE S.MANIKUMAR AND THE HON'BLE MRS.JUSTICE V.BHAVANI SUBBAROYAN W.P.No.17030 of 2017 and WMP No.18484 of 2017 M/s.Sri Krishna Refineries Rep. by its Managing Partner, Mr.K.Karthikeyan ... Petitioner vs.

1. Reserve Bank of India, Rep. by its Manager, Banking Supervision Department, No.16, Rajaji Salai, Fort Glacis, Chennai - 600 001.

2. M/s.Pegasus Asset Reconstruction Private Limited, Rep. by its Authorised Officer, No.55-56, Fifth Floor, Free Press House, Nariman Point, Mumbai - 400 021.

3. Karur Vysya Bank Limited, Rep. by its Chairman, Having its Head Office at Post Box No.21, Erode Road, Karur - 639 002.

4. Karur Vysya Bank Limited Rep. by its Chief Manager, 24, Muthurangam Street, Erode - 638 001 ... Respondents WRIT Petition filed under Article 226 of the Constitution of India, praying for the issuance of a writ of Certiorarified mandamus, calling for the records leading to the assignment of petitioner's loan account to 2nd respondent made vide impugned order of the 4th respondent dt. 04.10.2013, quash the same and thus direct the 2nd, 3rd and 4th respondent to reconstruct the Loan Account as represented vide the representation dt. 05.05.2017.

For Petitioner :

Mr.Karthikeyan Sekar

ORDER

(Order of the Court was delivered by S.MANIKUMAR, J) Borrower, who has availed loan from Karur Vysya Bank has failed to repay the loan amount. Bank has declared the same, as Non Performing Asset and assigned the loan account to M/s.Pegasus Asset Reconstruction Private Limited, Rep. by its Authorised Officer, No.55-56, Fifth Floor, Free Press House, Nariman Point, Mumbai - 400 021. Letter dated 04.10.2013 of Karur Vysya Bank, Erode, intimating the borrower M/s.Shri Krishna Refineries, Erode, about the assignment is reproduced hereunder.

04.10.2013 Without Prejudice To M/s.Sri Krishna Refineries, No.174, Bhavani Main Road, Erode - 638 004.

Dear Sir, Ref: Assignment of Credit facilities by the Karur Vysya Bank Ltd., (KVB) to Pegasus Asset Reconstruction Pvt. Ltd., (Pegasus) ****** We, KVB, refer to the various credit facilities, whereof set out herein (Collectively the Facilities) extended to and availed by M/s.Sri Krishna Refineries. Nature of Facility Date of Loan Amount Sanctioned OCC - REGULAR LIMIT 18.07.11 10.00 CRORES OCC - EXCEEDING 27.03.12 1.00 CRORE MACHINERY LOAN 29.12.2008 6.00 CRORES DEVOLVED LC 18.07.2011 1,34,60,884.00 DEVOLVED LC 18.07.2011 89,74,320.00 DEVOLVED IC 18.07.2011 1,34,68,429.00 BG 18.07.2011 32.75 lac (no outstanding) We hereby notify you that on 30th September, 2013, KVB has absolutely assigned and transferred to Pegasus the facilities together with all underlying security

interests thereto an all KVB's rights, title and interests in all agreements, deeds and documents in relating to or in connection with the Facilities. We hereby advise you to hereafter deal directly with Pegasus in all respects in connection with or in relating to the facilities directly to Pegasus.

2. Material on record discloses that subsequently, on 25.02.2016, Pegasus Asset Reconstruction Pvt. Ltd., Mumbai has issued possession notice under Section 13(4) of the SARFAESI Act, 2002. Responding to the above, petitioner has sent a letter dated 31.03.2016 to Pegasus Asset Reconstruction Pvt. Ltd., Mumbai, offering one time settlement for the group accounts.

3. Writ petitioner has offered payment of Rs.5 Crores under two cheques under one time settlement. Petitioner has further requested that on receipt of Rs.5 Crores, to release the property in the name of Smt.Kaveriammal and Smt.Susheela - Land and Building at Erode - G.S.No.45/part and 44/Part(new No.37 part and 36/Part) Old Door Nos.49, 50, 51, 52 and 53 Bhavani Main Road, measuring 6.86 acres, so as to enable them to raise further funds for making payment of the balance amount. Writ petitioner has requested the Pegasus Asset Reconstruction Pvt. Ltd., Mumbai, not to proceed with the SARFAESI Act and to help them to mobilize funds at the earliest, to pay the balance of the OTS amount. In the said letter dated 31.03.2016, writ petitioner has also stated that balance of Rs.21.95 Crores would be positively paid by the end of June 2016.

4. Perusal of the one time settlement offer also shows that on 31.03.2016, Pegasus Asset Reconstruction Pvt. Ltd., Mumbai, has received the letter and the cheques without prejudice to the rights and further stated that the proceedings of the cheque would be credited to the loan account and this should not be considered as acceptance of proposal.

5. Writ petitioner has filed S.A.No.171 of 2016, before the Debts Recovery Tribunal at Mumbai to quash the possession notice dated 25.02.2016, issued pursuant to demand notice under Section 13(2) dated 14.02.2015. A comparative study of the supporting affidavit filed to the instant writ petition and the averments made in S.A.No.171 of 2016, shows that contentions are more or less the same. Added further, accepting the assignment by Karur Vysya Bank to and in favour of Pegasus Asset Reconstruction Pvt. Ltd., Mumbai, writ petitioner has offered one time settlement.

6. When the matter stood thus, writ petitioner has sent a letter dated 05.05.2017 to (1) Reserve Bank of India, Banking Supervision Department, Chennai (2) M/s.Pegasus Asset

Reconstruction Pvt. Ltd., Mumbai and (3) Karur Vysya Bank Limited, Erode, seeking for certain particulars.

7. As stated supra, writ petitioner, in S.A.No.171 of 2016, has already made averments contending that particulars of the loan transaction were not furnished by M/s.Pegasus Asset Reconstruction Pvt. Ltd., Mumbai. While that be the case, it is for the tribunal to consider the averments and take appropriate decision, while considering the prayer to set aside the possession notice dated 25.02.2016. When the petitioner has admitted assignment and offered one time settlement, contention before this Court that they should have been put on notice before assignment and thus, there is violation of principles of natural justice, is untenable. As per the provisions of the SARFAESI Act, 20002, assignment can be made. There is no provision to put the borrower or the guarantor, as the case may be, a notice before assignment.

Having acquiesced to the assignment, instant writ petition to issue a writ of certiorarified manadmus to quash the same and for a further prayer directing the respondent 2 to 4, to reconstruct the loan account on the basis of the representation dated 05.05.2017 cannot be granted. Hence, the writ petition is dismissed. No Costs. Consequently, the connected Writ Miscellaneous Petition is closed.

Sd/- Assistant Registrar(CS III) //True Copy// Sub Assistant Registrar ars To

1. The Manager, Reserve Bank of India, Banking Supervision Department, No.16, Rajaji Salai, Fort Glacis, Chennai - 600 001.

2. The Presiding Officer, Debt Recovery Tribunal, Mumbai.

+1cc to Mr.S.V.Pravin Rathinam, Advocate, S.R.No. 47405 W.P.No.17030 of 2017 and WMP No.18484 of 2017 SS(CO) CS/20/07/17