WP/23741/2007 of Badugu Vijayalakshmi W/o Balakotaiah Vs Authorized Officer and Chief and Manager, State Bank of on 31 December 2009

Conclusion

1. (2003) 3 SCC 3092.AIR 1996 SC 5503.(2003) 2 SCC 264.(1989) 4 SCC 155 : AIR 1989 SC 1988

THE HON’BLE SRI JUSTICE GHULAM MOHAMMEDANDTHE HON’BLE SRI JUSTICE NOOTY RAMAMOHANA RAO

W.P.NO. 23741 OF 2007

ORDER:Per the Hon'ble Sri Justice Nooty Ramamohana Rao This writ petition has been instituted questioning the validity ofthe action taken by the respondent – State Bank of India, in putting acommercial complex owned by the writ petitioner to auction. The case ofthe writ petitioner is that he availed certain credit facilities from therespondent – Bank, one is term loan and the other cash credit loan duringthe year 2004. He has created collateral security over his commercialcomplex building bearing Old Door No. 20-85, New Door No. 301/3, BlockNo. 7, T.S. Ward – 3, Chirala town. Though he has paid certaininstalments, it is admitted by the petitioner that there was defaultcommitted in the matter of repayment of the instalments regularly to thebank. The bank therefore invoked the provision under sub-section (2) ofSection 13 of the Securitisation and Reconstruction of Financial Assetsand Enforcement of Security Interest Act, 2002, for short `the Act’henceforth. He was called upon to liquidate the liability ofRs.26,23,999.10 ps outstanding as of 31.3.2005 within 60 days from thedate of the said notice. However, by 18.8.2006, the writ petitioner haspaid in all a sum of Rs.27,96,000/- to the respondent – Bank. He was stillfound due as of 18.8.2006, in a sum of little more than Rs.2.27 lakhs. Thecase of the petitioner is that he has approached the bank to liquidate thisreminder of the liability also, but, however, the bank insisted for paymentof another Rs.2 lakhs towards the securitisation expenses incurred by it. While the matter stood thus, the impugned notice has been got publishedon 21.10.2007 inviting sealed bids for the sale of the secured assetthrough tender notice No. 1 of 2007. It is this notice which is called inquestion in this writ petition.

It is contended by Sri G.Vidya Sagar, learned counsel for thewrit petitioner that the tender notice which has been published as of 21.10.2007 inviting bids has not bothered to verify as to whether theaccount has become a non performing asset or not in terms of Section2(o) of the Act. Secondly, the power has been improperly and unjustlyinvoked indicating the liability of Rs.26,23,999.10 ps as of 1.4.2005whereas the petitioner has paid of as much as Rs.27.96 lakhs by18.8.2007 and hence the proposed auction is the result of non applicationof mind to the relevant factors. It was also contended that the bank has noauthority to reject to receive the balance outstanding amount from aborrower until and unless the securitisation expenses are also paid upsimultaneously. It is contended that the securitisation expenses have gotto be rationally worked out taking into account, the expenses alreadybooked to his account and any irrational demand of securitisationexpenses is an unjust act warranting interference by this court.

Respondent – Bank has resisted the above writ petition byfiling a counter affidavit sworn to by the Manager of Chirala Branch of theBank. It is stated in paragraph (4) of the affidavit that the petitioner as theProprietrix of M/s. Vishnupriya Bar and Restaurant had availed cash creditfacility of Rs.5 lakhs and a term loan facility of Rs.19,64,000/- andexecuted the security documents in that regard on 28.6.2004. She hasalso created equitable mortgage over her immoveable property, the onethat is described by the writ petitioner and that the petitioner hascommitted default in repaying the debts and hence notice under Section13(2) of the Act was issued as on 5.10.2005 calling upon the petitioner topay sum of Rs.26,23,999.10 ps and though the writ petitioner has paidsubstantial amounts thereafter, his liability was outstanding as of20.11.2007 was Rs.2,96,684/- together with costs of Rs.1,90,000/-towards securitisation expenses, as claimed by M/s. Sisir and RaviAssociates, Visakhapatnam, the Recovery agent.

Sri Narender Reddy, learned counsel for the respondentBank was fair enough in stating that the impugned tender notice whichwas issued as of 21.10.2007 ought not to have mentioned the liability asRs.26,23,999.10 and instead it should have reflected the correct amountof liability as of that date. However, what the learned Standing Counselfor the respondent Bank would urge is, in terms of sub-section (7) of Section 13 read with Rule 4 of the Security Interest (Enforcement) Rules,2002, and the guidelines issued by the Reserve Bank of India on thesubject, the respondent – Bank is legitimate and justified in demanding asum of Rs.1,90,000/- from the petitioner towards securitisation expenses.

It was further stated by the Bank that pursuant to the interimdirections granted by this court on 7.11.2007, the writ petitioner has alsopaid a further amount of Rs. One lakh.

Pursuant to our further directions issued on 13.10.2009, thewrit petitioner has since deposited a further sum of Rs.2,11,000/- to therespondent Bank. Thus, the outstanding liability of Rs.2.96 lakhs wasalso cleared and an additional sum of Rs.15,000/- to cover thesecuritisation expenses, was also paid.

The only question of importance that is needed to be decidedin this writ petition is relating to the quantum of securitisation expenseswhich the financial institutions are entitled to recover from the borrowers interms of the provisions contained in the Act.

The Act has been ushered in for the purpose of regulatingsecuritisation and reconstruction of financial assets and for enforcing thesecurity interests of the banks and financial institutions. Section 13 of theAct exhaustively dealt with the manner in which the security interest canbe enforced by the banks and financial institutions. Sub-section (1) ofSection 13, which is couched in very broad language, has conferred widepowers in favour of secured creditors enabling them to enforce anysecurity interest created in their favour, without intervention of any court ortribunal. Sub-section (2) requires the secured creditor to demand theborrower whose debt or account has been classified as a non performingasset to discharge the entire liability within 60 days from the date of thenotice, failing which the secured creditor is entitled to exercise all or any ofhis rights. It is therefore absolutely fundamental that a secured creditorbefore proceeding any further has to necessarily ensure that the accountin respect of the debt concerned is classified as a non performing asset. The expression `non performing asset’ has been defined in Section 2(o) inthe following manner:

“2(o) `non-performing asset’ means an asset or account of a borrower, which has been classified by a bank or financialinstitution as sub-standard, doubtful or loss asset, -

(a) in case such bank or financial institution is administeredor regulated by any authority or body established,constituted or appointed by any law for the time being inforce, in accordance with the directions or guidelinesrelating to assets classifications issued by such authority orbody; (b) in any other case, in accordance with the directions orguidelines relating to assets classification issued by theReserve Bank; The guidelines relating to `assets classification’ issued by the ReserveBank of India were also required to be followed by the secured creditor. Itis, therefore, inevitable for any secured creditor to faithfully adopt andfollow the guidelines issued on classification of assets issued by theReserve Bank of India from time to time before action contemplated bysub-section (2) of Section 13 is initiated. Failure to do so would vitiateaction initiated under sub-section (2) of Section 13 of the Act. Equallyimportant to notice is the follow up action. Sub-section (3) enabled anysuch borrower, to whom a notice under sub-section (2) has beendelivered, to raise any objection with regard to the proposed action andsuch objections have got to be considered by the secured creditor andonly if the secured creditor comes to the conclusion that the objectionsraised by the borrower are not acceptable or tenable, he was required tocommunicate within one week of receipt of such representation orobjection, the reasons for non acceptance thereof. Thus, a safetymechanism has been built in for ensuring a recheck of the entire factsituation prevailing on record. Sub-section (4) of Section 13 enabledrecourse to the measures indicated therein to be adopted by the securedcreditor. In the instant case, the impugned tender notification is the one,indicating the action taken by the respondent – Bank under Clause (a) ofsub-section (4) of Section 13. After the notice under sub-section (2) ofSection 13 was delivered on the writ petitioner, the writ petitioner has infact cleared substantial portion of the debt. He has in fact paid moremoney Rs.27.96 lakhs, than Rs.26,23,999.10 ps, claimed as due in thenotice issued under sub-section (2) of Section 13. When once a borrowerpays up in full the liability, as demanded by the Notice, the follow up

action under sub-section (4) should not have been taken up at all. Itwould have been a different matter if the bank has initiated recourse toany of the measures indicated under sub-section (4), immediately after theexpiry of 60 days period after service of the notice, during which period theborrower continued to be a defaulter. But, wherever the secured creditorhas held on to his patience and he is allowing the borrower to liquidate hisliability at one go or in number of instalments, it is obligatory for thesecured creditor to verify as to whether the liability indicated in the noticeserved under sub-section (2) of Section 13 is still outstanding or isliquidated already before the follow up measures are initiated. If theamount of liability indicated in the notice served under sub-section (2) ofSection 13 is liquidated by the borrower, then recourse to any of themeasures contemplated by sub-section (4) of Section 13 areimpermissible to be undertaken. It would be a different matter that theliability of the borrower may not have stopped accruing during the postsub-section (2) of Section 13 notice period. The liability keeps swellingwith passage of time, to the extent it is subsisting and outstanding. Consequently, it is quite possible that the liability of a borrower wouldhave further increased by the time measures contemplated by sub-section(4) are taken up by the secured creditor. Clearly, the secured creditorwithout once again following the procedure contemplated by sub-section(2) cannot jump the queue and invoke the provisions contemplated bysub-section (4) of Section 13. It is too well known a legal principle thatthose who take the sword shall perish by it. If a statute has provided for aparticular procedure for performing an act, it shall be done in the samemanner or it shall not be allowed to be done at all. See Taylor v. Taylor –(1876) 1 Ch.D 426 – wherein it is held that “where a power is given to doa certain thing, the thing must be done in that way or not at all, and thatother methods of performance are necessarily forbidden. The principlebehind this rule is that if this were not so, the statutory provision might aswell not have been enacted at all. Therefore, we have no hesitation tohold that the respondent Bank has exceeded its power in publishing theimpugned notice.

Sub-section (7) of Section 13 enabled all costs, charges and expenses incurred properly by the secured creditor to be recovered fromthe borrower. Since, it will have a bearing upon the controversy at issue,we prefer to quote it:

13. Enforcement of security interest. – (7)Where any action has been taken against aborrower under the provisions of sub-section(4), all costs, charges and expenses which, inthe opinion of the secured creditor, have beenproperly incurred by him or any expensesincidental thereto, shall be recoverable fromthe borrower and the money which is receivedby the secured creditor shall, in the absence ofany contract to the contrary, be held by him intrust, to be applied, firstly, in payment of suchcosts, charges and expenses and secondly, indischarge of the dues of the secured creditorand the residue of the money so received shallbe paid to the person entitled thereto inaccordance with his rights and interests.Where any action has been taken against aborrower under the provisions of sub-section(4), all costs, charges and expenses which, inthe opinion of the secured creditor, have beenproperly incurred by him or any expensesincidental thereto, shall be recoverable fromthe borrower and the money which is receivedby the secured creditor shall, in the absence ofany contract to the contrary, be held by him intrust, to be applied, firstly, in payment of suchcosts, charges and expenses and secondly, indischarge of the dues of the secured creditorand the residue of the money so received shallbe paid to the person entitled thereto inaccordance with his rights and interests.

A mere look at the provision contained under sub-section (7) wouldindicate that all such costs, charges and expenses which have beenproperly incurred by the secured creditor and any other expensesincidental thereto to be recovered from the borrower. It is not very difficultto assume that the various measures contemplated by sub-section (4) ofSection 13 do not necessarily lead to sale of the secured asset at the veryfirst instance. The possession of the secured asset can be taken over andthe right therein can also be transferred by way of lease, assignment or bysale and further the management of the business of the borrower can betaken over with similar rights aforementioned. It is also possible for thesecured creditor to appoint any person as a Manager for the purpose ofmanaging the secured asset. Further, the secured creditor, upon takingover the possession of the secured asset, will have to protect andpreserve it and, if necessary maintain it. Therefore, the secured creditorcan incur, in a variety of ways, several expenses. Such expenses must beproperly incurred. The crucial expression used by the legislature,therefore, is “properly incurred”. In other words, if the expenses are notproperly incurred, they are not liable to be recovered from the borrower. The word “proper” has fallen for consideration before the Supreme Courtin Mithilesh Singh v. Union of India and others[[1]]and it was held:

“The expression “proper” means appropriate, inthe required manner, fit, suitable, apt. The meremaking of a request of leave, which has notbeen accepted, is not a proper intimation. Itcannot be said that the word is a surplusage. The intention of the legislature is primarily to begathered from the language used, and as aconsequence a construction, which results inrejection of the words as meaningless has to beavoided.”

It is therefore clear that the expenses must be incurred by the securedcreditor by applying the standard of a prudent and reasonable person. Learned counsel for the writ petitioner Sri Vidya Sagar, is right in drawingour attention to the statement of account of the writ petitioner filed at pages20-22 of the paper book. The respondent bank has already debited theaccount of the writ petitioner – borrower in a sum of Rs.10,000/- towardsinspection charges on 29.3.2006, and on 19.4.2006, an amount ofRs.17,632/- has been similarly debited towards auction notice. On8.5.2006, a sum of RS.15,727/- has been debited towards the newspapernotification bill. On 16.8.2006, a further sum of Rs.5,900/- has beenbooked towards the newspaper advertisement bill and an amount ofRs.750/- has been debited to his account on 17.8.2006 towards printing ofpamphlets and banners. Thus, substantial amount has already beencharged to the borrower. One can perhaps understand these amountsrepresenting proper expenditure. These expenses have been incurred bythe respondent bank for securing the realization of the secured asset byway of it’s sale. Therefore, they can legitimately pass the muster in termsof sub-section (7) of Section 13.

But what baffled us was the statement made in the counteraffidavit that the borrower is liable to pay a further sum of Rs.1,90,000/- forpayment to the recovery agent. It was brought to our notice that M/s. Sisirand Ravi Associates, Chartered Accountants, was appointed asenforcement agent of the respondent bank. They raised a bill in a sum ofRs.1,96,641/- on 15.11.2007. They have calculated their professionalfees at the rate of 5% on Rs.35,00,213/- which came to Rs.1,75,010/-. They also claimed additionally service tax at the rate of 12.36% thereon

which came to Rs.21,631/-. Thus, they raised a bill for the aforesaidamount of RS.1,96,641/-. Firstly, there was no satisfactory explanation asto why this enforcement agent has raised his professional bill on anamount of Rs.35,00,213/-. As was already noticed supra, as of 18.8.2006itself, the outstanding liability of the writ petitioner has come down toRs.2,27,165/-. Clearly, therefore there was some gross error of judgmenton somebody’s part. When we enquired as to the nature of instructionsissued by the Reserve Bank of India in this regard, the learned StandingCounsel of the bank has brought to our notice the E-circular issued by theState Bank of India at its Corporate center, Mumbai, to all the ChiefGeneral Managers on December 26[th], 2006. The circular has beenissued in continuation of an earlier circular dated 18.12.2006 wherein itwas advised that the scheme for outsourcing of recovery efforts will beused in respect of small accounts, with outstandings up to Rs.25 lakhsonly. For recovery in respect of accounts with outstandings above Rs.25lakhs, the service of enforcement agents may be utilized. However, theoperating offices of the bank sought for a demarcation and distinctionbetween the role of recovery agents and enforcement agents. Hence, thefollow up circular dated 26.12.2006 has been issued by the bank. However, the bank has made this much clear that that the efforts ofoutsourcing are for supplementing the recovery efforts of the branchofficials. In annexure (1) to the circular dated 26.12.2006, the role ofrecovery agents and enforcement agents has been set out in detail. Thefollowing parameters thereof are significant for our inquiry and hence weprefer to quote them.

ParameterRecovery AgentsEnforcement Agents

ParameterRecovery AgentsEnforcement Agents Functions/Duties:The Recovery Agent willThe Enforcement Agent willhelp/assist the Bank’s officialsassist help the Authorised Officerin the following functional areasin the following functional areasrelated to recovery of advances:related to recovery of advances:§Follow-up with the§Assist in takingborrower/guarantors.possession of movable§Follow-up of legaland immovablecases with the office ofproperties as an Agent ofthe Bank’s Advocate, inthe Authorised Officer, inconsultation with thefull compliance with theBank’s officials.procedure laid down§Follow-up of revenueunder the Rules.recovery cases with§Assist the AuthorisedRevenue officials inOfficer in preparing theconsultation with thepanchanama, inventoryBank’s officials (subjectof the property, etc., ast o related State Govt.per procedure andguidelines, if any).formats prescribed.§Follow-up of cases§Arrange, on behalf ofpending before Lokthe Authorised Officer,Adalat in consultationfor storage, maintenance,with the Bank’s officials.preservation and locking§Arranging buyers forup arrangements, asassets/propertiesappropriate, of thehypothecated/mortgagedmovable/fixed/immovableto the Bank.assets so taken over.§Collecting details of§Arrange, on behalf ofpersonal properties ofthe Authorised Officer,borrower/guarantors.for Security, Insurance§Marketingand/or any other actioncompromises/ OTSrequired to ensure safety(Settlement amount toof the asset taken over.be negotiated only in the§Assist the Authorisedpresence of branchOfficer to send notices toofficials).debtors of the borrower-§Any other legallyfollow up collection.permissible action that§Assist the Authorisedmay facilitate recovery.Officer in arranging forvaluation as perprocedure laid down.§Assist the AuthorisedOfficer in arranging forsale of the assets as perany of the modesprescribed.§Assist the AuthorisedOfficer in receipt of saleproceeds, issue of salecertificate and all othern e c e s s a r y formalitiesprescribed.

It is clear to our mind that the respondent bank has intendedto outsource the services of recovery agents or enforcement agents, as thecase may be, as a supplementing measure to the efforts of recovery whichthe bank officials themselves are required to undertake. In other words,without the bank officials undertaking steps and measures for recoveringthe securitisation asset, they cannot jump at the option of outsourcing theservice of recovery agents or enforcement agents. These agents areessentially chosen for their specialized knowledge. Therefore, it may notbe improper to describe them as professionals. The services ofprofessionals can be outsourced as a measure of supplementing to theefforts of the officials of the bank concerned inasmuch as recovering theloans advanced by the very same banks and financial institutions is alsoone of the important tasks assigned to such officials and they get paid bythe bank or the financial institution for also performing those duties. While performing these duties of recovery of loans, one can reasonably beassured, that the Officers, do not depart from the decorum and decencyand that they would not normally resort to unethical practices. Therefore,before outsourcing the services of recovery agents/enforcement agents,there should a modicum of effort made by the bank and its officials forrecovering the loan amount. Only when the efforts are not bearingadequate fruit, perhaps they can avail such an option. But not, in everycase as a matter of routine choice.

As was noticed supra, a very handsome commission of notless than 10% of the recovery amount has been indicated as payabletowards commission to these professional recovery/enforcement agents. In this context, it will be important to notice what exactly a profession or atrade or a calling is all about, and the answer has been furnished by theSupreme Court in INDIAN MEDICAL ASSOCIATION VS. V. P.

SHANTHA[[2]], SHANTA DEVI v. SWAMI[[3]]and SODAN SINGH v. NEW

DELHI MUNICIPAL COMMITTEE[[4]]to the following effect:

Profession. - `Profession’ means an occupation carried onby a person by virtue of his personal and specializedqualifications, training or skill. The word `occupation’ has awide meaning such as any regular work, profession, job,principal activity, employment, business or a calling in whichan individual is engaged. `Trade’ in its wider senseincludes any bargain or sale, any occupation or businesscarried on for subsistence of profit, it is an act of buying andselling of goods and services. It may include any businesscarried on with a view to profit whether manual ormercantile. `Business’ is a very wide term and wouldinclude anything, which occupies the time, attention andlabour of a man for the purpose of profit. It may include in itsform trade, profession, industrial and commercial operations,purchase and sale of goods, and would include anythingwhich is an occupation as distinguished from pleasure.

A `profession’ ordinarily is an occupation requiringintellectual skill, often coupled with manual skill. Thus ateacher uses purely intellectual skill while a painter usesboth. In any event, they are not engaged in an occupation inwhich employers and employees cooperate in theproduction or sale of commodities or arrangement for theirproduction or sale or distribution and their services cannotbe described as material services.

“Profession” involves the idea of an occupation requiringeither purely intellectual skill, or of manual skill controlled,as in painting and sculpture, or surgery, by the intellectualskill of the operator, as distinguished from an occupation,which is substantially the production or sale or arrangementfor the production or sale of commodities. According toRupert M.Jackson and John L Powell the occupationswhich are regarded as professions have four characteristics,viz.,

(i) the nature of the work which is skilled and specialized andthe substantial part is mental rather than manual;the substantial part is mental rather than manual;

(ii) commitment to moral principles which go beyond the generalduty of honesty and a wider duty to community which maytranscend the duty to a particular client or patient;duty of honesty and a wider duty to community which maytranscend the duty to a particular client or patient;

(iii) professional association which regulates admission andseeks to uphold the standards of the profession throughprofessional codes on matters of conduct and ethics; andseeks to uphold the standards of the profession throughprofessional codes on matters of conduct and ethics; and

(iv) high status in the community.

Profession, trade or calling. The words `profession, tradeor calling’ are very wide and include therein all activitieswherein a person may usefully and/or gainfully engagehimself.or calling’ are very wide and include therein all activitieswherein a person may usefully and/or gainfully engagehimself.

Therefore, a recovery agent/enforcement agent was requiredto know, not only the basic principles relating to law of contract, they arealso required to be familiar with the relevant principles governing, therecovery of possession and sale of immoveable assets. This apart, theyare required to be familiar with the provisions of the Act so as to ensurethat their actions are in conformity with the laws on the subject. Hence, acertain degree of intellectual exercise is called for. Hence their job is thatof other professionals.

When once the role of a recovery agent or an enforcementagent attracts the expression “profession” then there from flows acorresponding obligation to observe ethics. Every profession, in contrastto a trade, calls for certain value system to be preserved and protected. Certain amount of dignity and disinterestedness in self interests isassociated with it. No professional can show signs of chargingexorbitantly for their services. The professional charges are alwayscommensurate to the intellectual contribution of the individual. Where acontribution is not in a great, or significant measure charging exorbitantlyor excessively is often characterized as an act of fleecing rather thanpleasing. Even if the contribution is enormous, but still, if the situation does not warrant, a self imposed restraint on one’s own professionalcharges, is automatically deployed by the true professional.

The grant of exorbitant amount of commission to the recoveryagents and enforcement agents at a minimum rate of 10%, is, in ourconsidered opinion, too excessive and disproportionate to the nature ofwork liable to be performed by them. Payment of commission/fee to theagents, at exorbitant rates or percentages, amounts to exploitation of theweak or helpless situation of the borrower. Exploitation, in any form, isincompatiable to fairness in action. Plainly, that would not have been theintent of the Legislature. The learned Advocates who prosecute the casesof their clients, are regulated very carefully in the matter of theirprofessional fee. Rules have been framed regulating it and such feestructure is periodically updated also. The fee chargeable gets decreasedwith the increase in the value of the claim of the client. In other words, acarefully structured and graded scale is put in place. It never contained ashigh a flat rate of 10% of the claim. A similar exercise is required to becarried out, even in the matter of payment of commission to these Agents. Otherwise, the respondent banks would outsource the services ofrecovery agents and enforcement agents without in any manner seekingto effect the recoveries from the borrowers on their own. The respondentbank cannot draw comfort from the umbrella provided by sub-section (7) ofSection 13. To our mind, the statute makers have advisedly ensured thatproperly incurred expenses alone to be recovered from the borrowers. Otherwise, the banks and financial institutions would be patronizing a setof favoured few, calling them as recovery agents/enforcement agents, sothat the commission paid to them can be conveniently booked to theaccount of the borrower. A borrower cannot be subjected to an undulyharsh expenditure and hence the expression `properly incurred expense’has got to be understood in that context. It will not be very difficult toimagine a situation where, the leading newspapers in the country wouldbe adopting very steep advertisement charges, for those, that arepublished on their front and back pages. Until and unless the securityasset is considered that it may not attract potentially large number ofpurchasers, like in the case of specialized industries or trading houses, in

all other cases, perhaps an advertisement in any of the interior pages ofthe newspapers can be reasonably assumed to attract the attention of theprospective purchasers. Therefore, if an unnecessary attempt has beenmade by a bank or financial institution by getting the notice under sub-section (4) of Section 13 published in the front or the back pages of thenewspapers drawing inspiration from the fact that such an expenditurecan be booked to the account of the borrower, it would be a case of taxingthe borrower rather, than charging him appropriately. Such measures canhardly pass the test of properly incurred expenses.

We therefore hold that the claim of the respondent bank that asum of Rs.1,90,000/- as payable to M/s. Sisir and Associates, CharteredAccountants and Enforcement agents, Visakhapatnam as exorbitant andunreasonable. This is the reason why we directed a sum of Rs.15,000/- tobe paid by the writ petitioner towards the proper expenses in this regard,apart from what has already been found booked to his account, as noticedsupra. That is the reason why, apart from the balance outstanding ofRs.1,96,000/- the writ petitioner has paid a sum of Rs.2,11,000/- to therespondent – Bank. We therefore hold that the respondent – Bank is notjustified in proposing to charge the writ petitioner a further sum ofRs.1,90,000/- in terms of sub-section (7) of Section 13. We hope and trustthat the respondent bank, would focus it’s attention to what has beenpointed out by us and take appropriate measures for remedying thesituation, if necessary, in consultation with the Reserve Bank of India. Since the writ petitioner has liquidated the entire liability, weallow this writ petition and direct the respondent – Bank to treat the writpetitioner to have been freed from all further obligations. No costs.

---------------------------

Ghulam Mohammed, J

---------------------------------Nooty Ramamohana Rao, J

Note:

LR copy to be marked (b/o) knk

[1] (2003) 3 SCC 309[2] AIR 1996 SC 550[3] (2003) 2 SCC 26[4] (1989) 4 SCC 155 : AIR 1989 SC 1988