Dispatch Of Notice By Bank U/S 13(2) SARFAESI Act Is An Official Act, Presumption Under Evidence Act That It Was Performed Regularly: J&K High Court

The Jammu & Kashmir and Ladakh High Court has held that dispatching of notice by a Bank under Section 13(2) of the SARFAESI Act, to the borrower to discharge in full his liabilities, is an official act with a presumption that it was performed regularly.

Section 114(e) of the Evidence Act establishes a presumption that judicial and official acts are performed regularly and in the context of the SARFAESI Act, the dispatching of a notice by a bank to a borrower falls under this category of official acts, a bench comprising Justices Atul Sreedhan and Mohal Lal emphasised.

The bench was hearing a writ petition filed by M/s. Shaf Sons, a partnership firm dealing in Kashmiri Handicrafts, challenging a possession notice issued by a bank under Section 13(4) of the SARFAESI Act 2022.

The brief facts of the case involved a fire accident in August 2019 that destroyed the establishment of M/s. Shaf Sons. The firm had a Cash Credit limit with the respondent-bank. The petitioner contended that they were in the process of negotiating a one-time settlement (OTS) with the bank regarding the outstanding loan amount. However, the bank rejected the firm's proposals, leading to the issuance of the impugned notice under Section 13(4) of the SARFAESI Act.

Counsel for the petitioner Mr S.A Makroo argued that the bank had not given them a reasonable opportunity to settle the debt and had unlawfully issued the notice while leading the petitioner to believe that an out-of-court settlement was still possible. The counsel also contended that the notice under Section 13(2) of the SARFAESI Act, which sets out the liability and the time frame for its discharge, was never issued, thereby violating natural justice.

Advocate Adil Asimi for the respondent bank countered petitioner's submissions by presenting evidence of the notice dispatched to the petitioner under Section 13(2) of the Act. Mr Asimi also challenged the very maintainability of the writ petition on the ground that when a suitable alternate remedy is available to the Firm, it could not have approached the High Court invoking its jurisdiction under Article 226.

Adjudicating upon the matter the court noted that the bank, being a public sector institution, had prima facie proved the regular dispatch of the notice, thereby raising a presumption in its favour.

“This Court must assume prima facie that the said notice was regularly dispatched to the petitioner in the ordinary course of business of the Bank. In this regard, Section 114(e) of the Evidence Act raises a presumption that the judicial and official acts have been regularly performed. Dispatching of the notice by the Bank under Section 13(2) of the Sarfaesi Act is an official Act performed by it in the discharge of its functions”, the bench underscored.

The bench further observed that the petitioner's claim of not receiving the notice due to the absence of their signatures or endorsement by the postal department raised a disputed question of fact, which could only be determined by the Debt Recovery Tribunal (DRT) through the presentation of evidence.

Addressing the issue of maintainability of the writ petition, the court referred to the principle that the existence of an alternate remedy does not bar the jurisdiction of the high court under Article 226 of the Constitution. However, the petitioner was required to establish special circumstances or reasons why the alternate remedy provided by the SARFAESI Act was not equally efficacious. In this case, the Court said petitioner failed to provide such grounds.

Based on these considerations the court concluded that there was no violation of natural justice and that the writ petition lacked merit.

Case Title: M/S Shaf Sons through Gowhar Ahmad Mir & Another Vs Jammu & Kashmir Bank Ltd. & Ors.

Citation: 2023 LiveLaw (JKL) 157

Counsel For Petitioner: Mr S. A. Makroo, Sr. Advocate with Mr Basharat Ahmad Wani, Advocate

Counsel For Respondent: Mr Adil Asimi, Advocate

Click Here To Read/Download Judgment