APHC010537402024 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3329] THURSDAY ,THE NINTH DAY OF JANUARY TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SRI JUSTICE VENKATESWARLU NIMMAGADDA WRIT PETITION NO: 27779/2024 Between: M/s. Kanchipuram Murugan Collections, ...PETITIONER AND The Union Of India and Others ...RESPONDENT(S) Counsel for the Petitioner: 1. V SAI KUMAR Counsel for the Respondent(S): 1. S SATYANARAYANA MOORTHY 2. The Court made the following: 2 ORDER:- 1. This writ petition is filed claiming the following relief: “…To issue a writ of Order or Direction more particularly one in the nature of writ of mandamus declaring the action of the 3rd Respondent State Bank of India, SME Guntur Branch (Branch Code:06830) in issuing seizure notice dated 26.10.2024 in Loan Cash Credit [MSME] Account No.41707346623 without there being any proviso for taking the repossession of stocks etc., as mentioned in the seizure notice as illegal, arbitrary and also oppose to all cannons of justice as well as oppose to principles of natural justice consequentially stay of all further proceedings pursuant to the seizure notice dated 26.10.2024 issued by the 3rd Respondent State Bank of India, SME Guntur Branch [Branch Code:06830] in Loan Cash Credit [MSME] account No.41707346623 and to pass such other order or orders ...” 2. Learned counsel for the petitioner submits that Respondent No.3 issued the impugned seizure notice dated 26.10.2024 seizing the entire stocks as enumerated in the notice / which are lying in the petitioner’s shop, without specifying any provisions of the law or under which the Respondents are empowered to issue such a notice. He further submits that it is true that the petitioner availed Cash Credit Loan with the Respondents and the petitioner had executed all the required documents in favour of the Respondents, for which the petitioner also executed an agreement of hypothecation in respect 3 of movable properties and also mortgaged the immovable property as a security towards the loan sanctioned by the Respondent Bank. 3. Learned counsel further submits that in case of default on part of the petitioner, the Respondents have ample authority either to invoke jurisdiction as contemplated under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “the SARFAESI Act, 2002”) or can be recovered by initiating proceedings under the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short “the RDDBFI, Act, 1993”). Without resorting to the procedure as contemplated under the law, the Respondents straight away issued the impugned proceedings seizing the stocks in the petitioner’s shop. Such an action of the Respondents is illegal, arbitrary and liable to be set aside. 4. On the other hand, the learned Standing counsel for the Respondents submits that the impugned notices were issued pursuant to the agreement of hypothecation under which the Respondents are empowered to seize the movable stocks and materials lying with the petitioner, in the case of any default on part of the petitioner. 5. Learned counsel further submits that in the instant case, the petitioner committed default in addressing / payment of EMI as per the terms of the sanction. Having no other option, the Respondents issued the impugned notice pursuant to the terms of the agreement of Hypothecation. He further 4 submits that while invoking the jurisdiction under the terms of agreement of hypothecation, the Respondent Bank did not resort to any procedure or invoke jurisdiction under the provisions of the SARFAESI Act, 2002 or the RDDBFI Act, 1993. Therefore, the impugned notice is valid and can be enforced. 6. Heard learned counsel for the petitioner and learned Standing Counsel for the Respondent Bank and perused the material placed on record. 7. On perusal of the impugned seizure notice dated 26.10.2024 issued by the Respondents, no where the respondents states about the terms of agreement of hypothecation under which the Respondent is entitled or empowered to issue such notice and it can seize the material of the petitioner as was done by way of this impugned notice. 8. It is settled proposition of law that once the public Authority while exercising its power or administrative decision, the Authority should clear and categorically state about the origin of power or under which the Authority concerned was empowered to initiate such action or to pass such an order. 9. Admittedly, in the instant case the Respondent Bank did not followed the settled proposition of law and not stated anywhere in impugned order about the power conferred upon the Respondents to issue such a notice. In the absence of the same, the petitioner is entitled for relief and the Respondents cannot seized the property under the subject notice dated 26.10.2024. 5 10. In view of the reasons stated above, this Court is of the considered view that the present writ petition can be disposed of by setting aside the seizure notice dated 26.10.2024 issued by Respondent No.3. However, the Respondents are at liberty to initiate appropriate proceedings as per the terms of the agreement of the hypothecation or by resorting to the procedure either contemplated under the SARFAESI Act or the RDDBFI Act, 1993. 11. Accordingly, with the above direction, the writ petition is disposed of. There shall be no order as to costs. Consequently, miscellaneous applications pending if any, shall stand closed. ______________________________________ JUSTICE VENKATESWARLU NIMMAGADDA 9th January, 2025 Knr 6 HON’BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA WRIT PETITION No.27779 of 2024 9th January, 2025 Knr