Geostan Marine INDIA Private Limited vs. The Chief General Manager/Authorized Officer
Original PDF →IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL TUE AY, THE 03RD DAY OF MARCH 2020 / 13TH PHALGUNA, 1941 WP(C).No.26702 OF 2019(K) PETITIONERS: 1 GEOSTAN MARINE INDIA PRIVATE LIMITED 35/1429A, NEAR ST.MARTIN CHURCH, PALARIVATTOM, ERNAKULAM-682025, REPRESENTED BY ITS DIRECTOR GEORGE JOSE.V. 2 GEORGE JOSE.V. AGED 51 YEARS S/O.JOSE GEORGE, RESIDING AT 3/249B1, CHEMBUMUKKU, KAKKANAD WEST.P.O., ERNAKULAM-682030, DIRECTOR, GEOSTAN MARINE INDIAN PRIVATE LIMITED. BY ADVS. SRI.K.M.JAMALUDHEEN SMT.LATHA PRABHAKARAN RESPONDENTS: 1 THE CHIEF GENERAL MANAGER/AUTHORIZED OFFICER, PUNJAB NATIONAL BANK, D.H.ROAD, ERNAKULAM-682016. 2 THE BRANCH MANAGER, PUNJAB NATIONAL BANK, D.H.ROAD, ERNAKULAM-682016. 3 THE PUNJAB NATIONAL BANK, HEAD OFFICE, PLOT NO.4, SECTOR-10, DWARAKA, NEW DELHI-110075, REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER/CHAIRMAN. R1-3 BY ADV. SRI.C.AJITH KUMAR THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 03.03.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C).No.26702 OF 2019(K) 2 JUDGMENT The petitioners are engaged in the business of transporting of bunker fuel from Indian refineries from Kochi outlet and supplying it to the ships passing through the Cochin Port obtained a cash credit facility of Rs.2.50 crores from the respondent bank. In view of the aforementioned cash credit facility mortgaged
25 Ares of land situated in Sy.No.358 in Kakkulissery Village in Chalakkudy District and 1.62 Ares of land with building in Sy.No.554/2B/2 and 554/2A/1 in block 8 in Re-Sy.No.539/23 of Vazhakkala Village in Ernakulam District as security. The aforementioned opportunity was availed in the year 2016 and the upper sealing of cash credit facility of sanction was Rs.2.50 crores. The tax fixed as per GST was 18% and subsequently it was reduced to 5%. In this regard, the oil companies and traders represented the matter with GST Council for reducing the rate of interest vide Ext.P2. Since the petitioners had defaulted in not depositing the amount and maintaining the limit, the bank initiated the proceedings under the SARFAESI Act by issuing notice under Section 13(2) of the SARFAESI Act Ext.P4 dated 01.06.2019. The aforementioned notice was duly replied vide
WP(C).No.26702 OF 2019(K) 3 Ext.P6 reply dated 13.08.2019. In terms of the introduction of the provisions of sub Section 3A inserted with effect from 11.11.2004, The bank declined the aforementioned objections vide impugned communication Ext.P7 dated 26.08.2019. 2. The learned counsel appearing on behalf of the petitioners submitted that the reasoning assigned in the impugned order is not in accordance with the provisions of the aforementioned Act and the petitioners have no remedy to approach the DRT under Section 17 of the SARFAESI Act, In view of the proviso to sub section 3A. In support of the aforementioned contention reliance has been laid to para 29 of the judgment rendered by Hon’ble Supreme Court in ITC Ltd. V. Blue Coast Hotels Ltd. And Others [2018 (15) SCC 999]. It is contended that the reasoning assigned is totally bereft as to how and in what manner the request/representation of the petitioners submitted in response to the notice under Section 13(2) has been rejected.
Per contra, the learned counsel for the bank controverted the arguments of the petitioners ie. the objection qua maintainability on the premise that two items of the
WP(C).No.26702 OF 2019(K) 4 property, has referred to was taken into possession, one before filing of the present writ petition and the other, in October 2019. In such circumstances the petitioner has an alternative remedy under Section 17 of the SARFAESI Act, even otherwise. The reason assigned are in accordance with the provisions of section 13(3A), whereby taking of the possession of the property would be construed as a measure, which would not preclude the petitioners to avail the remedy as enshrined under Section 17 and urges this court for dismissal of the writ petition with exemplary costs.
I have heard the learned counsel for the parties and perused the paper book. There is no force and merits in the submission of the learned counsel for the petitioners. The reasoning assigned in the impugned order is extracted herein below and as well as the para 29 of the judgment: In Ext.P7: “ We have issued you show cause notice dated 31.07.2019, after carefully examining your account. It is crystal clear from your account that you have not done the transactions through the CC account maintained with the Bank. The sale proceeds were only sparingly routed through the Account maintained with the bank. Further, from the correspondence, it is clear that you were maintaining account with other banks. The book debts which was also hypothecated to the bank from your major debtors has
WP(C).No.26702 OF 2019(K) 5 never came to the banks's account. This is sheer violation of the sanction terms and against the guidelines of the bank and prescribed by the Reserve Bank of India as well. This is further made clear by your own statement in the reply dated 13.08.2019 that you have utilized the credit facilities sanctioned for working capital for payment to shipping Agent, rent for the ship, day to day expenses for maintaining the ship in Cochin port and towards salary of the crews, instead of the purposes for which it was sanctioned. Further, instead of making payment to HPCL, amount from your account has gone to various individual accounts. This is nothing but clear diversion of bank's fund.” “29. There is nothing in the legislative scheme of S.13(3A) which requires the Court to consider whether or not, the word 'shall' is to be treated as directory in the provision. As the Section stood originally, there was no provision for the above mentioned requirement of a debtor to make a representation or raise any objection to the notice issued by the creditor under S.13(2). As it was introduced via sub- section (3A), it could not be intention of the Parliament for the provision to be futile and for the discretion to ignore the objection/representation and proceed to take measures, be left with the creditor. There is a clear intendment to provide for a locus poenitentiae which requires an active consideration by the creditor and a reasoned order as to why the debtor's representation has not been accepted.”
On just perusal of the reasoning and the ratio culled out in para 99, I am of the view that the argument of Mr. K.M.
WP(C).No.26702 OF 2019(K) 6 Jumuruddin is not able to cut ice to bring the case within the realm of judicial review under Article 226 of the Constitution of India. The proviso and sub section 3A of Section 13, same reads as under: “[(3A) If, on receipt of the notice under sub-section (2), the borrower makes any representation or raises any objection, the secured creditor shall consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate [within fifteen days] of receipt of such representation or objection the reasons for non- acceptance of the representation or objection to the borrower:” Provided that the reasons so communicated or the likely action of the secured creditor at the stage of communication of reasons shall not confer any right upon the borrower to prefer an application to the Debts Recovery Tribunal under Section 17 or the Court of District Judge under Section 17A.]” On plain and simple usage of the afore mentioned provisions, it is discerned that against the decision communicated under the aforementioned provisions, the petitioners would not have a cause to file the petition under Section 17 of the SARFAESI Act. but I cannot remain unmindful of the fact that the bank had already taken the possession of one item of the
WP(C).No.26702 OF 2019(K) 7 property before filing the writ petition and the second post the writ petitions obviously under the provisions of sub section 4 of Section 13. Thus the proviso will not preclude the petitioners to avail the alternative remedy as sought to be not available according to the submissions.
For the reasons afore mentioned, the writ petition is devoid of merit and accordingly dismissed. AMIT RAWAL nak JUDGE
WP(C).No.26702 OF 2019(K) 8 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1OF THE CERTIFICATE OF INCORPORATION OF THE 1ST PETITIONER COMPANY. EXHIBIT P2OF THE REPRESENTATION SUBMITTED BEFORE THE GST COUNCIL. EXHIBIT P3OF THE ORDER OF THE MAHARASHTRA AUTHORITY FOR ADVANCE RULING DATED 15.6.2019. EXHIBIT P4OF THE NOTICE U/S 13(2) O SARFAESI ACT DATED 1.6.2019. EXHIBIT P5OF THE LETTER DATED 31.7.2019 BY THE 2ND RESPONDENT. EXHIBIT P6OF THE REPRESENTATION OF THE PETITIONERS DATED 13.8.2019. EXHIBIT P7OF THE LETTER OF THE 1ST RESPONDENT DATED 26.8.2019. //// P.A TO JUDGE
Reproduced from the public record of the Kerala High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.