Mita Banerjee vs Bank Of India & Ors.

Mr. Samanta, learned advocate appearing for the petitioner submits that the petitioner obtained a term loan facility from the Bank of India (in short,

the bank) to the extent of Rs.13.10 lacs in the month of March, 2013 under CGTMSE scheme framed and formulated by the Central Government, for

purchasing a bus for passenger transport business. Upon purchasing the vehicle and upon obtaining the stage carriage permit, the petitioner was

making payment of the loan amount. Surprisingly, bank authorities issued a notice under Section 13(2) of the SARFAESI Act on 24th August, 2016 to

which the petitioner replied on 20th September, 2017 stating inter alia that there were errors in the notice under Section 13(2) of the SARFAESI Act.

On consideration of such representation the bank issued a memo dated 4th October, 2017 and a fresh notice under Section 13(2) of the SARFAESI

Act on the said date itself. The petitioner replied to the same on 20th November, 2017 but the said reply was not considered by the bank and no

decision was communicated. As the insurance policy of the vehicle was due to expire with effect from 11th April 2017, the petitioner submitted a

representation on 10th April, 2018 to the respondent no.4 requesting him to validate the insurance policy. Without considering such representation, the

bank authorities through their recovery agents forcibly seized the vehicle on 11th April, 2018.

Mr. Samanta submits that the bank authorities neither followed the procedure prescribed under the SARFAESI Act nor did hand over the

hypothecation agreement to the petitioner. They have taken over possession of the vehicle in a manner not recognized by law and as such appropriate

direction needs to be issued for immediate release of the vehicle. In support of such contention, he has placed reliance upon the judgments delivered in

[Citicorp Maruti Finance Ltd. Vs. S. Vijayalaxmi] reported in (2012) 1 C Cr LR (SC) 139 and in [ICICI Bank Ltd. Vs. Prakkash Kaur & Ors.]

reported in (2007) 2 Supreme Court Cases 711.

Per contra Mr. Das, learned advocate appearing for the bank submits that there was an error in the first 13(2) notice and the same was rectified and

the petitioner’s representation was duly considered. As the petitioner failed to repay the loan amount the authorities were constrained to seize the

vehicle invoking the provisions of the hypothecation agreement. In reply, Mr. Samanta submits that the petitioner is ready and agreeable to repay the

loan amount within a specified period after release of the vehicle.

The bank authorities have failed to show that the petitioner’s reply under Section 13(2) of the SARFAESI Act dated 4th October, 2017 was

considered and an order was communicated to thje petitioner in terms of Section 13(3-A) of the SARFAESI Act. The bank has also not been able to

produce any document to show that the hypothecation agreement was handed over to the petitioner. It appears that failing to follow the procedure

prescribed under the SARFAESI Act, the bank proceeded on the basis of the hypothecation agreement.

From the document annexed at page 57 of the writ petition it appears that the vehicle inventory list was prepared with a title “City Investigation &

Detective†and the vehicle was seized on 11th April, 2018 by a recovery agent. Such practice of hiring recovery agents for seizing the vehicle has

been deprecated the Hon’ble Supreme Court. The bank authorities cannot resort to a procedure not recognized by law to take possession of

vehicle in cases where the borrower may have committed default in payment of the instalments.

In such circumstances, this Court directs the bank authorities to release the vehicle being WB-15B9963 and hand over the same to the petitioner

within a period of seven days from the date of communication of this order. Within a week thereafter the petitioner shall submit a representation to the

respondent no.4 for a one time settlement towards repayment of all the dues. Within two weeks from the date of receipt of such representation the

respondent no. 4 shall consider the same and pass a reasoned order and communicate the same to the petitioner.

In the event the petitioner fails to fulfil the terms and conditions spelt out in the said order, the bank authorities would be at liberty to take appropriate

steps, in accordance with law. With the above observations and directions the writ petition is disposed of. There shall, however, be no order as to

costs. Urgent photostat certified copy of this order, if applied for, be given to the learned advocates for the parties upon compliance of all necessary

formalities.