Article 227 jurisdiction cannot reappreciate evidence or substitute an alternative view for tribunal findings.

IDBI Bank sanctioned the petitioner an aggregate credit facility of ₹2.10 crore, comprising a term loan of ₹70 lakh and a cash-credit facility of ₹1.40 crore, secured by an equitable mortgage over property at 4/1A, Ambika Mukherjee Road, Belghoria, Kolkata.

The petitioner alleged that only ₹28 lakh of the term loan was disbursed, that the bank commenced recovery of an EMI of ₹4.12 lakh before expiry of the nine-month moratorium, and that the cash-credit account was improperly debited.

The petitioner further challenged the classification of its accounts as NPAs, contending that a payment of ₹1.25 lakh had been credited on 14 June 2012 and that the bank’s demand notice dated 29 August 2012 under Section 13(2) of the SARFAESI Act, demanding ₹1,67,58,707 towards the cash-credit account and ₹12,95,266 towards the term loan, was unlawful.

The DRT initially allowed the petitioner’s securitisation application and quashed the demand notice. After review, remand proceedings, and an appeal, the DRAT ultimately set aside the DRT’s order dated 7 February 2018 and upheld the bank’s action, relying, inter alia, on the RBI Circular dated 1 July 2010 and the account statements showing outstanding amounts above the sanctioned cash-credit limit.

The petitioner then invoked the High Court’s supervisory jurisdiction under Article 227 of the Constitution.

Whether the DRAT’s decision upholding the classification of the petitioner’s loan accounts as NPAs and the issuance of the demand notice under Section 13(2) of the SARFAESI Act disclosed any jurisdictional error, perversity, or manifest illegality warranting interference under Article 227 of the Constitution.

Whether the bank was entitled to treat the account as an NPA on the basis of non-renewal of the credit facilities, irregular outstanding amounts, and the RBI Circular dated 1 July 2010.

Whether the bank’s failure to reduce or reschedule the term-loan EMI, despite partial disbursement of the sanctioned amount and the stipulated moratorium, invalidated the recovery proceedings.

Whether the Section 13(2) demand notice was invalid for not expressly stating the date of NPA classification or for allegedly failing to address the petitioner’s representation under Section 13(3A).

The Court applied Article 227 of the Constitution, under which the High Court exercises limited supervisory jurisdiction to ensure that subordinate tribunals act within the bounds of their authority; it does not ordinarily reappreciate evidence, correct mere factual errors, or substitute its own view for a reasonably possible view taken by the tribunal.

Sections 13(2), 13(3), 13(3A), and 17 of the SARFAESI Act govern the demand notice, consideration of the borrower’s representation, and challenge to enforcement measures.

The Court accepted that Section 13(2) requires disclosure of the amount payable and the secured assets proposed to be enforced, but does not expressly require the notice to state the date of NPA classification.

The RBI Circular dated 1 July 2010 provides that an asset becomes non-performing when interest or principal remains overdue beyond the prescribed period, and permits classification where regular or ad hoc credit limits are not reviewed or renewed within 180 days from the due date.

Asset classification is also to be undertaken with reference to the borrower as a whole rather than facility-wise.

The Court further relied on Achutananda Baidya v. Prafullya Kumar Gayen, (1997) 5 SCC 76, and Bathutmal Raichand Oswal v. Laxmibat R. Tarta, (1975) 1 SCC 858, on the narrow scope of Article 227, and Indian Bank v. Blue Jaggers Estate Ltd., (2010) 8 SCC 129, on the borrower’s duty to repay public funds in accordance with the contractual terms.

The Court found that the DRAT had considered the parties’ pleadings, the RBI Circular, the account statements, and the material relating to renewal and repayment.

The cash-credit facility had expired after one year from sanction, while the petitioner sought renewal only on 24 December 2010; the DRAT therefore found that the account had not been renewed within the period contemplated by the RBI guidelines.

The bank had also required further financial and operational information, which the petitioner did not furnish, and the account remained substantially above the sanctioned limit for several months, with the outstanding amount increasing to ₹1,67,58,707 by 31 July 2012.

These circumstances supported the NPA classification and the amount specified in the Section 13(2) notice.

As to the term loan, the Court noted that disbursement was to be made in instalments upon the borrower’s request and that the petitioner later expressed its intention not to avail the balance sanctioned amount.

The Court accepted the DRAT’s conclusion that the EMI could not be rescheduled in the absence of the petitioner’s confirmation that no further disbursement was required, and that the moratorium ran from the date of sanction in accordance with the applicable terms.

The alleged defects in the EMI calculation, partial disbursement, and debit entries therefore did not establish that the recovery proceedings were legally void.

Since the DRAT’s conclusions were based on the record and did not amount to perversity, jurisdictional overreach, or manifest illegality, the High Court declined to interfere under Article 227.

The Court found no manifest illegality, perversity, or jurisdictional error in the impugned order and declined to reappreciate the factual findings concerning disbursement, moratorium, EMI computation, renewal, or account irregularity.

The civil revisional petition was accordingly dismissed, with the parties directed to act on the server copy of the judgment.