LI Network
Published on: 14 June 2023 at 11:53 IST
The High Court of Jammu & Kashmir and Ladakh, presiding in Srinagar, has rejected a petition submitted by M/S Shaf Sons aiming to invalidate a notice issued by Jammu & Kashmir Bank Ltd. under Section 13(4) of the Sarfaesi Act 2022.
A division bench comprising Justice Atul Sreedharan and Justice Mohan Lal made the ruling following the presentation of arguments by both parties.
The petitioner, M/S Shaf Sons, operates as a partnership firm involved in trading Kashmiri Handicrafts. The firm had obtained a Cash Credit limit from Jammu & Kashmir Bank and had been a customer of the bank for more than two decades. In August 2019, a fire incident caused significant damage to the firm’s establishment, prompting the petitioner to report the event to the police and the insurance company.
The petitioner contended that they were in the midst of negotiating a one-time settlement (OTS) with the bank to repay the outstanding debt. They argued that while the bank had not expressly rejected their proposal, it had provided t
hem with multiple opportunities to improve their offer. Nonetheless, on February 7, 2023, the bank issued the disputed notice under Section 13(4) of the Sarfaesi Act, prompting the petitioner to seek recourse from the High Court.
Jammu & Kashmir High Court Rejects Petitioner’s Claim of Unlawful Notice Issuance by Bank under Sarfaesi Act
During the court proceedings, the counsel representing the petitioner argued that the bank had not provided a reasonable opportunity to settle the debt by specifying an amount and timeframe. They alleged that the bank had wrongfully issued the notice, misleading the petitioner into believing that an out-of-court settlement was still possible. The petitioner’s counsel also raised concerns about the violation of natural justice, as the notice under Section 13(2) of the Sarfaesi Act was not served to the petitioner.
In response, the bank’s counsel countered that the notice under Section 13(2) had indeed been dispatched to the petitioner, backed by proof of dispatch. They asserted that the petitioner’s claim of non-receipt of the notice constituted a disputed question of fact that could only be resolved by the Debts Recovery Tribunal (DRT). The bank’s counsel further argued that the petitioner had an alternative legal remedy available under the Sarfaesi Act and had not presented sufficient grounds to approach the High Court under Article 226 of the Constitution.
After careful consideration of the arguments and examination of the relevant documents, the division bench concluded that “the petitioner had failed to establish any exceptional circumstances that would render the alternative remedy before the DRT ineffective.”
The bench observed that “the dispute concerning the receipt of the notice under Section 13(2) raised a question of fact that could be addressed by the DRT through the examination of evidence.
Jammu & Kashmir High Court Relies on Precedents, Dismisses Petition by M/S Shaf Sons against Jammu & Kashmir Bank Ltd.
Referring to pertinent judgments, including the significant case of Whirlpool Corporation vs. Registrar Trademark Mumbai & Others, the division bench of Justice Mohan Lal and Justice Atul Sreedharan highlighted the discretionary power of the High Court to entertain or reject a writ petition, even when an alternative remedy exists.
Consequently, the High Court, in its order dated May 22, 2023, dismissed the petition filed by M/S Shaf Sons through Gowhar Ahmad Mir & Another against Jammu & Kashmir Bank Ltd. The court concluded that there had been no violation of natural justice and that the petitioner had not presented compelling reasons to bypass the available alternative remedy before the Debts Recovery Tribunal (DRT).
Case Details:
- Case Name: M/S Shaf Sons through Gowhar Ahmad Mir & Another. Vs Jammu & Kashmir Bank Ltd. & Ors
- Case Number: CM No. 1683/2023 in WP(C) No. 407/2023
- Bench: Justice Mohan Lal and Justice Atul Sreedharan
- Order Date: May 22, 2023