1. fN THE HIGH COURT OF ANDHRA PRADESH :: AMARAVATI (Special Original Jurisdiction) TUESDAY, THE SIXTH DAY OF MAY TWO THOUSAND AND TWENTY FIVE PRESENT HONOURABLE THE CHIEF JUSTICE SRI DHIRAJ SINGH THAKUR AND THE HONOURABLE SRI JUSTICE RAVI CHEEMALAPATI WRIT PETITION Nos: 22631. 22640 AND 22668 OF 2024 WRIT PETITION NO: 22631 OF 2024 Between: M/s. Sri Gokul Finance, a Partnership Firm, Represented by its Managing Partner Sri. Nara Venkata' Satyanarayana, S/o Kasi Visveswara Rao, R/o. 14- 193/1, Sri Krishna Nilayam, Ne^ar Rama Krishna Theatre, Rajamahendravaram, East Godavari District, Andhra Pradesh - 533501. ...PETITIONER AND 1. M/s State Bank of India, Represented by its Managing Director Having its registered head office at Marg, Nariman Point, Mumbai, Maharashtra -400021. ' The Authorized Officer under SARFAESI Act, SME Branch State Bank of India Rajamahendravaram, Andhra Pradesh. The State Bank of India, SME Branch, Rajamahendravaram Represented by its Branch Manager Raj amahendravaram. East Godavari District, Andhra Pradesh. 2. 3. ...RESPONDENTS Petition under Article 226 of the Constitution of India praying that in ■ the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate writ order or direction more particularly one in the nature of writ of mandamus declaring the, action of the respondents in initiating the proceedings under the SARPAESI Act against our Assets Backed Loan, Account No. 35772074611 and its ancillary 1. GECL (Account No.39522056768), 2. GECL Extension (Account i. No.40609950341) in spite of the admitted fact that the entire outstanding amount from the petitioner is less than 13.8% of the sanctioned loan limit, by virtue of which the provisions of the SARFAESI Act are not at all applicable, as provided under Section 31G) of the SARFAESI Act and in spite of the fact that SARFAESI proceedings cannot be initiated against the petitioner, which is MS Enterprises, to which the notification dt.29-05-2015 issued by the Ministry of MSME is applicable, providing for a frame work for revival and rehabilitation before resorting to SARFAESI Act provisions as illegal, arbitrary, mala fide, ultra vires, without jurisdiction and without any competence, unjust and against the constitutional guaranteesand to consequently direct the respondents to drop all further proceedings against the petitioner under the provisions of SARFAESI Act. lA NO: 1 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the writ petition, the Fligh Court may be pleased to stay all further proceedings of the respondents in pursuance of their notice dt.02-07-2024 under Section 13(2) of SARFAESI Act against our Loan, Account No. 35772074611 and its ancillary 1. GECL (Account No.39522056768), 2. GECL Extension (Account No.40609950341) during the pendency of this Writ Petition. Counsel for the Petitioner: SRI K. SARVA BHOUMA RAO Counsel for the Respondents: SRI S. SATYANARAYANA MOORTHY, SCFORSBI WRIT PETITION NO: 22640 OF 2024 Between: Sri Gokul Finance, A Partnership Firm, Represented by its Managing Partner Sri. Nara Venkata Satyanarayana, S/o. Kasi Visveswara Rao, R/o. 14-193/1, Sri Krishna Nilayam, Near Rama Krishna Theatre, Rajamahendravara m, East Godavari District, Andhra Pradesh - 533501. ...PETITIONER AND State Bank of India, Represented by its Managing Director Having its registered head office at Marg, Nariman Point, Mumbai, Maharashtra - 400021. The Authorized Officer under SARFAESI Act, SME Branch State Bank of India Rajamahendravaram, Andhra Pradesh. The State Bank of India, SME Branch, Rajamahendravaram Represented by its Branch Manager Rajamahendravaram. East Godavari District, Andhra Pradesh. 1. 2. 3. ...RESPONDENTS Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate writ order or direction more particularly one in the nature of writ of mandamus declaring the action of the respondents in initiating the proceedings under the SARFAESI Act against our Assets Backed Loan, account No. 36272231011 in spite of the admitted fact that the entire outstanding amount from the petitioner is less than 10.2% of the sanctioned loan limit, by virtue of which the provisions of the SARFAESI Act are not at all applicable, as provided under Section 31G) of the SARFAESI Act and in spite of the fact that SARFAESI proceedings cannot be initiated against the petitioner, which is MS Enterprises, to which the notification dt.29-05-2015 issued by the ministry of MSME is applicable, providing for a frame work for revival and rehabilitation before resorting to SARFAESI Act provisions as illegal, arbitrary, mala fide, ultra vires, without jurisdiction and without any competence, unjust and against the constitutional guarantees and to consequently direct the respondents to drop all further proceedings against the petitioner under the provisions of SARFAESI Act. . -I* lA NO: 1 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the writ petition, the High Court may be pleased to stay all further proceedings of the respondents in pursuance of their notice dt.02-07-2024 under Section 13(2) of SARFAESl Act against our Loan, Account No. 36272231011 during the pendency of this Writ Petition. Counsel for the Petitioner: SRI K. SARVA BHOUMA RAO Counsel for the Respondents: SRI S. SATYANARAYANA MOORTHY, SCFORSBI WRIT PETITION NO: 22668 OF 2024 Between: Sri Nara Venkata Satyanarayana, S/o. Kasi Visveswara Rao, R/o. 14-193/1, Sri Krishna Nilayam, Near Rama Krishna Theatre, Rajamahendravara m, East Godavari District, Andhra Pradesh - 533501. ...PETITIONER AND M/s. State Bank of India, Represented by its Managing Director Having its registered head office at Marg, Nariman Point, Mumbai, Maharashtra -400021. The Authorized Officer under SARFAESl Act SME Branch, State Bank of India Rajamahendravaram, Andhra Pradesh. The State Bank of India, SME Branch, Rajamahendravaram Represented by its Branch Manager Rajamahendravaram. East Godavari District, Andhra Pradesh. 1. 2. 3. ...RESPONDENTS Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate writ order or direction more particularly one in the nature of writ of mandamus declaring the action of the respondents in initiating the proceedings under the SARFAESl Act against 'V our Assets Back Loan, account No. 35317676719 and its ancillary 1. GECL (Account No.39433831593), 2. GECL Extension (Account No.40679222300) in spite of the admitted fact that the entire outstanding amount from the petitioner is very mu less than 16% of the sanctioned loan limit, by virtue of which the provisions of the SARFAESI Act are not at all applicable, as provided under Section 31G) of the SARFAESI Act and in spite of the fact that SARFAESI proceedings cannot be initiated against the petitioner, which is MS Enterprises, to which the notification dt.29-05-2015 issued by the ministry of MSME is applicable, providing for a framework for revival and rehabilitation before resorting to SARF-AESI Act provisions as illegal, arbitrary, mala fide, ultra vires, without jurisdiction and without any competence, unjust and against the constitutional guarantees and to consequently direct the respondents to drop all further proceedings against the petitioner under the provisions of SARFAESI Act. lA NO: 1 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the writ petition, the High Court may be pleased stay all further proceedings of the respondents in pursuance of their notice dt.01-07-2024 under Section 13(2) of SARFAESI Act against our Loan, Account No. 35317676719 and its ancillary 1. GECL (Account No.39433831593), 2. GECL Extension (Account No.40679222300) during the pendency of this Writ Petition. Counsel for the Petitioner: SRI K. SARVA BHOUMA RAO Counsel for the Respondents; SRI S. SATYANARAYANA MOORTHY, SC FOR SBI The Court made the following: COMMON ORDER Bench Sr.No:- 25 to 27 [3483] IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVAT! APHC010442822024 WRIT PETITION NO: 22631 of 2024 along with W.P.Nos.22640 & 22668 of 2024 WP.No.22631 of 2024 M/s. Sri Gokul Finance ...Petitioner Vs. M/s State Bank of India and others ...Respondents ********** Mr. K Sarva Bhouma Rao Advocate for Petitioner(s) Advocate(s) for Respondent(s): Mr. S Satyanarayana Moorthy CORAM :THE CHIEF JUSTICE DHIRAJ SINGH THAKUR SRI JUSTICE RAVI CHIEEMALAPATI : 6‘^ May, 2025 DATE PC : The present petitions have been filed challenging the action initiated by the respondent bank under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ‘for short, ‘the SARFAESI Act’] on the ground that the proceedings are without jurisdiction inasmuch as the same are barred under Section 31 (j) of the SARFAESI Act which specifically enjoins the provisions of the Act not to apply in certain cases. It is stated that Section 31 (j) further envisages that the 2. SARFAESI Act will not apply in a case where the outstanding amount is less r 1 2 '■v; HCJ & RC, J WPs_22631,22640 & 22668 of 2024 f- than 20% of the principal amount and interest thereupon and, therefore, it was urged that the proceedings need to be set aside as being without jurisdiction. Learned counsel for the respondent bank however has 3. controverted this plea of the petitioners by filing an affidavit in which the stand taken is that the SARFAESI proceedings have been initiated against the petitioners in regard to three accounts which have been declared as NPA and in all the three accounts, the amount due was more than 20% of the principal amount and interest calculated thereupon. The details of the accounts which have been declared as NPA and the outstanding amounts which are sought to be recovered which finds a mention in the affidavit filed by the respondent bank are given in a chart herein below. 4. Outstanding as on 01.07.2024 Name of the account holder Account number Sanctioned limit Date on which the account was declared as an NPA Section 13(2) notice dated Sri 01.07.2024 Rs.66,00,000/- [132% of the Gokul ABL:36272231011 Rs.50,00,000/- 30.06.2024 Finance total due/sanctloned limit]. Rs.1.11 Crores Sri Gokul ABL:35772074611 Rs.1.28 Crores; 30.06.2024 01.07.2024 Profits [86.75% of the total due/sanctloned limit] Nara Venkata Satyanarayana 01.07.2024 Rs.33,00,000/- [47% of the ABL:35317676719 Rs.70,00,000/- 30.06.2024 total due/sanctioned limit] 5. Learned counsel for the petitioners however has tried to submit that the calculations submitted by the respondent bank are not correct. 3 HCJ & RC, J WPs_22631,22640 & 22668 of 2024 In the additional affidavit filed by the petitioners, the petitioners have sought to project that the amounts which are due and outstanding were much below the prescribed 20% limit as envisaged in terms of Section 31 (J) of the SARFAESI Act. Details of calculations have also been reflected in the additional affidavit filed. Considering the fact that this Court is not equipped to determine 6. as to which of the outstanding amounts which have been referred to by the parties are correct and since the outstanding amount is being disputed, we feel that it may not be appropriate for us to invoke our extra-ordinary jurisdiction in such a situation. We leave the petitioners free to invoke the remedies which are otherwise available in law. Be that as it may, the Writ Pe.'titions are accordingly disposed of. With a view to enable the petitioners to avail the alternative remedy, no coercive steps be taken by the respondent bank for a period of two weeks. 7. No order as to costs. Miscellaneous applications pending, if any, shall stand closed. Sd/- M. PRABHAKAR RAO ASSISTANT REGISTRAR //TRUE COPY// SECTION OFFICER To, 1. M/s Managing Director, State Bank of India, Having its registered head office at Marg, Nariman Point, Mumbai, Maharashtra - 400021. 2. The Authorized Officer under SARFAESI Act, SME Branch State Bank of India Raj amahendravaram, Andhra Pradesh. 3. The Branch Manager, State Bank of India, SME Branch, Rajamahendravaram,East Godavari District, Andhra Pradesh. 4. One CC to Sri K. Sarva Bhouma Rao, Advocate [OPUC] 5. One CC to Sri S. Satyanarayana Moorthy, SC for SBI [OPUC] 6. Three C.D. Copies. Cnr HIGH COURT DATED:06/05/2025 COMMON ORDER WP.Nos.22631, 22640 & 22668 of 2024 DISPOSING OF THE W.Ps WITHOUT COSTS