Case Note & Summary
The petitioners, Shivabassappa I. Kankanwadi and his wife Sushila S. Kankanwadi, filed a writ petition before the Bombay High Court at Goa challenging the notices and orders issued under Sections 13(2) and 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) by the Mapusa Urban Co-operative Bank of Goa Ltd. (respondent no.1). The petitioners were guarantors for a loan availed by one Ajay Verma, who had been appointed by petitioner no.1 to develop a plot of land. The bank issued a notice under Section 13(2) on 31.10.2011 and a possession notice under Section 13(4) on 20.11.2013, followed by orders dated 10.07.2014 and 30.10.2014. The petitioners sought quashing of these notices and orders on the ground that they were not properly served and that the bank had not complied with the mandatory requirements of the SARFAESI Act. The court examined the facts and found that the bank had not proved service of the Section 13(2) notice upon the petitioners. The court held that proper service of the notice under Section 13(2) is a condition precedent for taking action under Section 13(4). Since the bank failed to establish service, the entire action was vitiated. The court also rejected the bank's objection regarding alternative remedy under Section 17 of the SARFAESI Act, holding that a writ petition is maintainable when the action is without jurisdiction or in violation of natural justice. Consequently, the court allowed the writ petition and quashed the impugned notices and orders.
Headnote
A) SARFAESI Act - Section 13(2) Notice - Service of Notice - The court examined whether the notice under Section 13(2) was properly served upon the petitioners, who were guarantors. The court found that the bank failed to prove service of the notice as required under the Act and Rules. Held that proper service is a mandatory condition precedent for initiating action under Section 13(4) (Paras 10-15). B) SARFAESI Act - Section 13(4) Notice - Validity - The court considered the validity of the possession notice under Section 13(4) and found that it was issued without proper compliance with Section 13(2). Held that the entire action under Section 13(4) is vitiated if the preceding notice under Section 13(2) is not validly served (Paras 16-20). C) SARFAESI Act - Alternative Remedy - Maintainability of Writ Petition - The court addressed the objection regarding alternative remedy under Section 17 of the SARFAESI Act. Held that where the action is without jurisdiction or in violation of principles of natural justice, the writ petition is maintainable despite availability of alternative remedy (Paras 21-25).
Issue of Consideration
Whether the impugned notices and orders under Sections 13(2) and 13(4) of the SARFAESI Act are liable to be quashed for non-compliance with statutory requirements and lack of proper service upon the petitioners.
Final Decision
The court allowed the writ petition and quashed the impugned notices dated 31.10.2011 and 20.11.2013 and orders dated 10.07.2014 and 30.10.2014.
Law Points
- SARFAESI Act
- Section 13(2) notice
- Section 13(4) notice
- Guarantor liability
- Service of notice
- Proper compliance
- Writ jurisdiction
- Alternative remedy
