Petitioner’s plea for blanket relief bypassing SARFAESI and IBC proceedings dismissed; Court advises exploring remedies under applicable laws
In a significant ruling, the Andhra Pradesh High Court has dismissed a writ petition filed by Omkaram Venkata Ramana, challenging the classification of his company’s accounts as Non-Performing Assets (NPA) by the Bank of India. The petition sought relief including the declaration of bank actions as illegal, the restoration of properties, compensation for financial loss, and penal action against bank officials.
The bench, comprising Mrs. Lisa Gill and Mr. Ninala Jayasurya, emphasized that the issues raised by the petitioner involve disputed questions of fact that cannot be resolved through writ proceedings. The court noted that such matters should be addressed through pending proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act and the Insolvency and Bankruptcy Code (IBC).
The petitioner, represented by advocate Mrs. Aiswarya Nagula, argued that the bank had arbitrarily classified accounts as NPA, resulting in wrongful dispossession of properties and financial hardship. The court, however, held that a writ petition seeking blanket relief bypassing ongoing proceedings is misconceived and not entertainable.
In its judgment, the court acknowledged the petitioner’s various efforts to settle the outstanding dues through One Time Settlement (OTS) proposals, which were rejected by the bank. However, the court stated that it cannot issue a directive to the bank to enter into an OTS with the petitioner, though parties are free to negotiate a mutually acceptable settlement.
The court referred to the Supreme Court judgment in Bijnor Urban Cooperation Bank Limited v. Meenal Agarwal, reinforcing that such directions cannot be issued by the court, but parties can voluntarily agree on settlements.
Moreover, the court granted liberty to the petitioner to pursue pending proceedings before various forums and explore other legal remedies. The petitioner can approach the bank for an OTS and pursue settlement in accordance with the law.
Ultimately, the writ petition was dismissed with no order as to costs, and pending miscellaneous applications were disposed of accordingly.
Bottom line:-
Writ petition challenging classification of accounts as NPA, dispossession from properties, and seeking compensation, penal action, and OTS direction dismissed. Court held that such issues involve disputed questions of fact, cannot bypass pending proceedings under SARFAESI Act and IBC, and no blanket relief can be granted.
Statutory provision(s): Article 226 of the Constitution of India, SARFAESI Act, Insolvency and Bankruptcy Code (IBC), Section 13(2) of the SARFAESI Act, Sections 405 and 420 of IPC, Section 10 of the Insolvency and Bankruptcy Code, Section 34 of IPC
Omkaram Venkata Ramana v. Union of India, (Andhra Pradesh)(DB) : Law Finder Doc id # 2888177
