Case Note & Summary
The petitioners, legal heirs of Smt. Sudha Avdhut Patil, filed a writ petition challenging the proceedings initiated by the Central Bank of India under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The deceased borrower had availed a home loan of Rs.5,50,000 in 2011 by mortgaging her plot. After her death in 2011, the petitioners paid some installments but the loan remained unpaid. The bank declared the account as non-performing asset (NPA) on 29.08.2014 and issued a notice under Section 13(2) of the SARFAESI Act. The petitioners challenged the notice and the subsequent orders under Section 14 of the Act. The court held that the legal heirs are bound by the mortgage and the bank was not required to issue a separate notice to them before declaring the account as NPA. The court further held that the petitioners had an efficacious alternative remedy under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal, and the writ petition was not maintainable. The petition was dismissed with liberty to the petitioners to approach the appropriate forum under Section 17.
Headnote
A) SARFAESI Act - Liability of Legal Heirs - Section 13(2) Notice - The legal heirs of a deceased borrower are bound by the mortgage created by the borrower and are liable to repay the loan. The bank is not required to issue a fresh notice under Section 13(2) to the legal heirs before declaring the account as NPA. The petitioners, as legal heirs, cannot challenge the proceedings on the ground that they were not served with notice before the account was declared NPA. (Paras 5-7) B) SARFAESI Act - Alternative Remedy - Maintainability of Writ Petition - Section 17 - A writ petition challenging a notice under Section 13(2) or orders under Section 14 of the SARFAESI Act is not maintainable when the petitioners have an efficacious alternative remedy under Section 17 of the Act before the Debts Recovery Tribunal. The court dismissed the petition on the ground of availability of alternative remedy and delay in approaching the court. (Paras 8-10)
Issue of Consideration
Whether the petitioners, as legal heirs of the deceased borrower, are liable under the SARFAESI Act and whether the writ petition challenging the Section 13(2) notice and Section 14 orders is maintainable without availing the alternative remedy under Section 17 of the SARFAESI Act.
Final Decision
The writ petition is dismissed. The petitioners are at liberty to approach the appropriate forum under Section 17 of the SARFAESI Act.
Law Points
- Legal heirs are bound by mortgage created by deceased borrower
- SARFAESI Act does not require notice to legal heirs before declaring account as NPA
- writ petition against Section 13(2) notice not maintainable when alternative remedy under Section 17 is available and efficacious
- delay in challenging proceedings is fatal
