M/S YENNAREES ENGINEERS (INDIA) PVT LTD v THE SOUTH INDIAN BANK LIMITED

``` IN THE HIGH COURT OF KERALA AT ERNAKULAM ``` ## `PRESENT` ``` THE HONOURABLE MR.JUSTICE C.S.DIAS TUESDAY, THE 6[TH] DAY OF JUNE 2023 / 16TH JYAISHTA, 1945 ``` ## `WP(C) NO. 42557 OF 2022` ## `PETITIONER:` ``` 1M/S YENNAREES ENGINEERS (INDIA) PVT LTD, REP. BY ITS MANAGING DIRECTOR NPC ABOOBACKER AGED 64 YEARS 11/1311, HIDAYATHU ISLAM MADRASSA BUILDING, KOVOOR, MEDICAL COLLEGE P.O, KOZHIKODE, PIN - 673008 BY ADV N.K.SANATH KUMAR ``` ## `RESPONDENTS:` ``` 1THE SOUTH INDIAN BANK LIMITED REP. BY ITS CHAIRMAN HEAD OFFICE, SIB HOUSE, T.B ROAD, MISSION QUARTERS, THRISSUR, PIN - 680001 2CHIEF MANAGER AND AUTHORISED OFFICER OF SOUTH INDIAN BANK LTD, KOZHIKODE SOUTH INDIAN BANK, REGIONAL OFFICE, KOZHIKODE, FIRST FLOOR, HAPPY TOWERS, VAIKKOM MUHAMMED BASHEER ROAD, MANANCHIRA, KOZHIKODE, PIN - 673001 3BRANCH MANAGER, SOUTH INDIAN BANK LTD, MAIN BRANCH, DOOR NO 18/1175-B, FIRST FLOOR, T.T. COMPLEX, JAIL ROAD, KOZHIKODE, PIN - 673004 BY ADVS. SRI SUNIL SHANKAR A VIDYA GANGADHARAN(K/000424/2020) SANDHRA.S(K/001610/2021) ``` ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 06.06.2023, THE ``` ``` COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` WPC No.42557 of 2022 ``` ``` 2 ``` ## JUDGMENT Dated this the 06[th] day of June, 2023 The writ petition is filed challenging the action of the third respondent in classifying the petitioner’s accounts as a Non-Performing Asset (NPA). 2. The petitioner’s case is that, they had entered into an agreement with the Kozhikode Corporation for construction of a Hydraulic Car Parking System near the Kozhikode Railway Station. The first respondent bank had agreed to finance the said project. Accordingly, a loan was sanctioned to be repaid in eighty four equated monthly instalments commencing from 06.08.2022. Surprisingly, by Ext.P7 letter, the third respondent classified the loan account as NPA on 03.06.2022. Thereafter, the respondent initiated proceedings under the Securitization ``` WPC No.42557 of 2022 ``` ``` 3 ``` and Reconstruction of Financial Assets and Enforcement of Security Interest Act (in short, ‘Act’) by issuing Exts.P8 and P9 notices under Section 13(2) of the Act. Although the petitioner submitted Ext.P10 reply to Exts.P8 notice, the first respondent has proceeded with Exts.P8 and P9 which is arbitrary and illegal. Hence, the writ petition. 3. The third respondent has filed a counter affidavit denying the allegations in the writ petition. It is contended that in view of the law settled by the Hon'ble Supreme Court, this Court may not entertain the writ petition under Article 226 of the Constitution of India. In addition to the above contention, it is also averred that the petitioner had availed a project finance loan for Rs.2,22,15,000/-. The original Date of Commencement of Commercial Operation (DCCO) was bilaterally agreed as 01.03.2020. ``` WPC No.42557 of 2022 ``` ``` 4 ``` But, there was continuous delay on on the part of the petitioner to start the project. Despite multiple revisions granted by the first respondent in respect of date of commencement of the operation i.e. from 01.03.2020 to 30.06.2021 and finally to 30.06.2022, the same was not adhered to by the petitioner. The disbursement of the loan was only after the submission of the project report. As the petitioner failed to abide by the date fixed by the first respondent, the petitioner’s account was classified as NPA, which is in accordance with law. Hence, the contention that the respondents have acted in an arbitrary and capricious manner, de hors the date fixed in Ext.P6 order, is untenable and unsustainable in law. Therefore, the writ petition may be dismissed. 4. Heard; Sri.Sarath Kumar, the learned counsel appearing for the petitioner and Sri.Sunil ``` WPC No.42557 of 2022 ``` ``` 5 ``` Sankar, the learned counsel appearing for the respondents. 5. The learned counsel appearing for the petitioner reiterated the contentions in the writ petition and argued that as per Ext.P14 master circular issued by the Reserve Bank of India, the respondents are obliged to extend the repayment schedule upto two years, especially when there is a delay on the part of statutory authorities. This aspect was not considered by the respondents and warrants interference by this Court under Article 226 of the Constitution of India. 6. The Hon’ble Supreme Court in South Indian Bank Ltd vs. Naveen Mathew Philip (2023 LiveLaw (SC) 320) , after adverting to a plethora of judicial pronouncements rendered under the Act, has categorically declared the law that High Courts shall not, unless in extra ordinary circumstances, interfere with proceedings ``` WPC No.42557 of 2022 ``` ``` 6 ``` initiated under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, in writ proceedings under Article 226 of the Constitution of India. 7. Indisputably, the petitioner had agreed to commence the project by 01.03.2020, which was further extended by the respondents till 30.06.2022. Admittedly, the petitioner has not commenced the project, alleging that the statutory authority has not issued the licence. As there is a breach of a contractual condition, it can never be construed and held that the respondents have acted in an arbitrary and high handed manner in classifying the accounts of the petitioner as NPA. It is not for this Court to sit in appeal and decide on the contractual disputes. Whether there is a breach, and if it is justifiable or not is a matter to be decided by the statutory ``` WPC No.42557 of 2022 ``` ``` 7 ``` forum and not in a writ petition. 8. I do no find any extraordinary circumstances made out to entertain the writ petition by exercising the plenary powers of this Court under Article 226 of the Constitution of India. Nonetheless, it will be upto the petitioner to approach the Debt Recovery Tribunal under the Act and work out its statutory remedies. Resultantly, the writ petition is dismissed without prejudice to the right of the petitioner to work out its remedies in accordance with law. Sd/- C. S. DIAS JUDGE SKP/06-06 ``` WPC No.42557 of 2022 ``` ``` 8 ``` ## `APPENDIX OF WP(C) 42557/2022` |`PETITIONER EXHIBITS`|| |---|---| |`EXHIBIT P1`|`TRUE COPY OF AGREEMENT DATED 04.03.2016 ENTERED IN`| ||`TO BETWEEN CALICUT DEVELOPMENT CORPORATION AND THE`| ||`PETITIONER`| |`EXHIBIT P2`|`TRUE COPY OF SANCTION LETTER NO. BR/GE/287/19-20`| ||`DATED 03.03.2020 ISSUED BY THE SOUTH INDIAN BANK TO`| ||`THE PETITIONER.`| |`EXHIBIT P3`|`TRUE COPY OF UTILIZATION CERTIFICATE DATED`| ||`06.01.2021 ISSUED BY CHARTERED ACCOUNTANT`| |`EXHIBIT P4`|`TRUE COPY OF PROGRESS REPORT DATED 17.06.2020 MADE`| ||`BY THE REGISTERED ENGINEER, DIRECTOR OF URBAN`| ||`AFFAIRS, GOVT OF KERALA`| |`EXHIBIT P5`|`TRUE COPY OF MINUTES OF THE MEETING OF THE KOZHIKODE`| ||`CORPORATION HELD ON 03.11.2022`| |`EXHIBIT P6`|`TRUE COPY OF EMAIL DATED 26.04.2022 OF SOUTH INDIAN`| ||`BANK TO THE PETITIONER`| |`EXHIBIT P7`|`TRUE COPY OF LETTER DATED 05.07.2022 ISUED BY SOUTH`| ||`INDIAN BANK TO THE PETITIONER`| |`EXHIBIT P8`|`TRUE COPY OF NOTICE DATED 23.08.2022 ISSUED U/S`| ||`13(2) OF SARFAESI ACT`| |`EXHIBIT P9`|`TRUE COPY OF PUBLICATION OF 13(2) NOTICE IN MALAYALA`| ||`MANORAMA DAILY DATED 23.10.2022 BY THE 2ND`| ||`RESPONDENT`| |`EXHIBIT P10`|`TRUE COPY OF REPLY DATED 10.11.2022 OF THE`| ||`PETITIONER TO 2ND RESPONDENT FOR EXT, P 9 NOTICE`| |`EXHIBIT P11`|`TRUE COPY OF LETTER DATED 11.11.2022 OF 2ND`| ||`RESPONDENT TO THE PETITIONER`| |`EXHIBIT P12`|`TRUE COPY OF THE LAWER NOTICE DATED 11.10.2022`| ||`ISSUED TO THE REGIONAL MANAGER OF THE IST REPONDENT`| ||`BANK ON BEHALF OF PETITIONER`| |`EXHIBIT P13`|`TRUE COPY OF REPLY DATED 28.10.2022 OF 2ND`| ||`RESPONDENT AGAINST EXT. P 12 NOTICE`| |`EXHIBIT P14`|`TRUE COPY OF MASTER CIRCULAR - PRUDENTIAL NORMS ON`| ||`INCOME RECOGNITION, ASSET CLASSIFICATION AND`| ||`PROVISION PERTAINING TO ADVANCES DATED 0107.2006`| |`EXHIBIT P15`|`TRUE COPY OF LOAN ACCOUNT SATATEMENT FOR THE PERIOD`| ||`06.07.2020 TO 08.07.2022`| |`EXHIBIT P16`|`TRUE COPY OF THE POSSESSION NOTICE DATED 26/04/2023`| ||`ISSUED BY THE 2ND RESPONDENT, AUTHORIZED OFFICER,`| ||`SOUTH INDIAN BANK`| |`EXHIBIT P17`|`TRUE COPY OF THE PAPER PUBLICATION MADE IN MALAYALA`| ||`MANORAMA DAILY DATED 26/04/2023`| ``` RESPONDENTS' EXHIBITS:NIL ``` ``` TRUE COPY ``` ``` P.A.TO JUDGE ```