Gujarat High Court
Vijay Timber Industries Private ... vs District Collector & 2 on 28 December, 2017
Author: Rajesh H.Shukla
Bench: Rajesh H.Shukla
C/SCA/2403/2014 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 2403 of 2014
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE RAJESH H.SHUKLA : Sd/
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1 Whether Reporters of Local Papers may be NO
allowed to see the judgment ?
2 To be referred to the Reporter or not ? NO
3 Whether their Lordships wish to see the
fair copy of the judgment ? NO
4 Whether this case involves a substantial
question of law as to the interpretation
of the Constitution of India or any NO
order made thereunder ?
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VIJAY TIMBER INDUSTRIES PRIVATE LIMITED & 3...Petitioners
Versus
DISTRICT COLLECTOR & 2....Respondents
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Appearance:
MR BHARAT JANI for the Petitioner(s) No. 1 4
NR VENUGOPAL PATEL AGP for the Respondent(s) No. 1 2
MS NALINI S LODHA for the Respondent(s) No. 3
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CORAM: HONOURABLE MR.JUSTICE RAJESH H.SHUKLA
Date : 28/12/2017
ORAL JUDGMENT
1. The present petition is filed by the petitioners under Articles 14, 19(1)(g), 226 and 227 of the Constitution of India as well as under the provision of the Securitisation & Reconstruction Page 1 of 29 HC-NIC Page 1 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the SARFAESI Act") read with Rules made thereunder for the prayers inter alia that appropriate writ, order or direction may be issued quashing and setting aside the orders passed by the Additional District Magistrate dated 19.09.2013, 23.10.2013 and 20.01.2014 and also the order passed by the respondent no.2 dated 10.12.2013 on the grounds stated in the memo of petition.
2. Heard learned advocate, Shri Bharat Jani for the petitioners, learned AGP Shri Venugopal Patel for the respondent nos.1 and 2 and learned advocate, Ms.Nalini Lodha for the respondent no.3.
3. Learned advocate, Shri Jani referred to the background of the case and submitted that the petitioners are the borrowers, however, the procedure for the recovery under the SARFAESI Act has not been followed, particularly, Section 14 of the SARFAESI Act provides for the procedure, which has not been followed. Learned advocate, Shri Jani referred to Section 14 of the SARFAESI Act and submitted that as provided in Section 14(c) of the Page 2 of 29 HC-NIC Page 2 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT SARFAESI Act, affidavit is required to be submitted, which is not submitted by the respondentBank. For that purpose, he pointedly referred to Page No.250 and submitted that affidavit is affirmed subsequently as the dates would indicate. He submitted that inward stamp number refers to 18th March, 2013, whereas the affidavit before the Notary is affirmed on 25th March, 2013. Learned advocate, Shri Jani specifically referred to Section 14 of the SARFAESI Act and submitted that it provides that the District Magistrate to assist secured creditor in taking possession of the secured asset, however proviso refers to the application by the secured creditor stating that it shall be accompanied by affidavit duly affirmed by the authorized officer of the secured creditor. Learned advocate, Shri Jani submitted that such affidavit has not been filed. He further submitted that there is no notice to the tenant and the objections or the representation of the borrower have not been considered. He, therefore submitted that without providing sufficient opportunity, the impugned orders passed by the District Magistrate is in Page 3 of 29 HC-NIC Page 3 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT violation of the provision of the SARFAESI Act as well as the Rules of natural justice.
4. Learned advocate, Shri Jani referred to the judgment of the High Court reported in case of Manjudevi R. Somani Vs. Union of India & Ors., reported in 2013 (2) GLH 390 = AIR 2013 Gujarat 242 and submitted that the powers are with the Chief Metropolitan Magistrate, whereas the order is passed by the Additional Chief Metropolitan Magistrate. Similarly he referred to the order dated 23.10.2013 passed by the District Magistrate, KutchBhuj and submitted that though it is recorded that the order is passed in the presence after hearing, no such opportunity has been given or documents, which have been produced, are not considered. Learned advocate, Shri Jani also referred to AnnexureB at Page No.26, which is the order passed by the Executive Magistrate, Gandhidham Kutch and submitted that order is passed by the Executive Magistrate. He submitted that though it has a reference to the borrowers, no notice has been issued to the tenants, who were in actual possession and occupation of the premises. Learned advocate, Shri Jani also Page 4 of 29 HC-NIC Page 4 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT referred to the judgment and order of the Hon'ble Division Bench in Writ Petition (PIL) No.68 of 2012 (Coram : Bhaskar Bhattacharya, CJ & J.B. Pardiwala, J.) dated 11.10.2012 and submitted that as observed in Paragraph No.7, the notice is required to be given so that the innocent person in lawful possession may not be harassed and inspite of that, no such notice has been given to the tenants. He also referred to Paragraph No.8 and submitted that as observed, if the concerned Magistrate comes to know about the interim order passed by any competent forum, the protection could be given accordingly. Learned advocate, Shri Jani referred to the papers and submitted that to the knowledge of the respondentbank, the orders have been passed by the AAIFR, the appellate authority. He pointedly referred to the communication dated 19.08.2013 by the petitioners produced at Page No.34 and submitted that as stated, facts are not provided by the bank. He also referred to the Original Application No.27 of 2010 filed before Debt Recovery Tribunal, Ahmedabad as well as Case No.69 of 2010 before the BIFR regarding the suit filed by the tenant and Page 5 of 29 HC-NIC Page 5 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT submitted that the injunction granted has not been conveniently mentioned. He submitted that it was directed to maintain status quo and inspite of that, the bank has proceeded for taking over the possession in exercise of the power under Section 14 of the SARFAESI Act. He also referred to another communication dated 27.08.2013 to support his submission. Learned advocate, Shri Jani also referred to the letter addressed by the lawyer dated 04.10.2013 to the District Magistrate and submitted that it has been informed that the matter is before the BIFR and the order of status quo is in operation, which was specifically mentioned. He submitted that this has been overlooked and, therefore, the present petition has been filed and the interim relief has been granted. Learned advocate, Shri Jani referred to the judgment of the Hon'ble Apex Court in case of Harshad Govardhan Sondagar Vs. International Assets Reconstruction Company Limited & Ors., reported in (2014) 6 SCC 1 and submitted that effect of the Transfer of Property Act as well as SARFAESI Act has been considered. He emphasized that lawful possession of the premises could not Page 6 of 29 HC-NIC Page 6 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT have been taken over and, therefore, the petition would be maintainable. Learned advocate, Shri Jani also referred to the affidavit in rejoinder.
5. Learned advocate, Ms.Lodha referred to the papers as well as background of the case and submitted that the petitionerfirm is the principal borrower and in exercise of the power under Section 14 of the SARFAESI Act, steps have been taken after the order is passed by the Debt Recovery Tribunal in favour of the present respondent no.3 - secured creditor in Securitization Application No.63/2009. She pointedly referred to the Securitization Application No.63/2009 and submitted that the Bank had already taken symbolic possession of the property and, therefore, it is now too late to raise any such contention. She submitted that the petitioners have not come with clean hands as the contentions are raised that the notice has not been served to the tenants or the guarantors and though the procedure under Section 14 of the SARFAESI Act providing for filing of the affidavit, affidavit has not been filed and, therefore, whole procedure is bad. However, learned advocate, Ms.Lodha referred to Section 14 Page 7 of 29 HC-NIC Page 7 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT as well as the affidavit, which is required to be filed and submitted that affidavit has been filed and even if there is some lapse, it would not justify the exercise of any discretionary relief in favour of the petitioner considering the chequered history as well as different proceedings, which have been pursued only to stall the recovery. For that purpose, she referred to the background and submitted that there were proceedings before the BIFR and, thereafter, before the appellate authority, AAIFR. She also submitted that the Securitization Application No.63/2009 was before the Debt Recovery Tribunal and, thereafter, there were another application/petition filed challenging the said order and the High Court has passed an order in Special Civil Application No. No.7078/2015 declining to interfere. She referred to the order of the Debt Recovery Tribunal in Securitization Application No.63/2009 at AnnexureD and also the order passed in Special Civil Application No. No.7078/2015. Learned advocate, Ms.Lodha submitted that the Court may examine the papers and also submitted that the petitioner is coming forward in Page 8 of 29 HC-NIC Page 8 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT the name of guarantors or the tenants, which requires scrutiny as to whether there is any genuine tenancy or the guarantor. She submitted that though the petitioners have pursued the remedy including the petition before the High Court as well as before the Hon'ble Apex Court, no such contention has been raised and even before the appellate authority under the Debt Recovery Tribunal, such contention has not been raised. Learned advocate, Ms.Lodha submitted that the application was filed for condonation of delay against the order of the Debt Recovery Tribunal, which was rejected and against that, Special Civil Application No.7078 of 2015 was filed, which was also dismissed by the High Court (Coram : N.V. Anjaria, J.) vide order dated 07.12.2016. Therefore, learned advocate, Ms.Lodha submitted that the contentions are raised as an afterthought. She also submitted that the submission about the tenancy right also cannot be made without any specific supportive documents. For that purpose, learned advocate, Ms.Lodha referred to the judgment of the Hon'ble Apex Court in case of Harshad Govardhan Sondagar (supra) and Page 9 of 29 HC-NIC Page 9 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT pointedly referred to the observations made in Paragraph No.36 and submitted that as observed, any such claim based on lease or tenancy could be claimed by the registered documents. She submitted that admittedly, the petitioners have not produced any document. Learned advocate, Ms.Lodha also submitted that one of the persons is said to have filed a suit before the Civil Court at Bhuj contending that he is having leave and license in respect of the premises. Further she submitted that licensee may not have any right, title, interest and cannot get protection as a tenant. Learned advocate, Ms.Lodha therefore submitted that the judgment of the Hon'ble Apex Court in case of Harshad Govardhan Sondagar (supra) relied upon by learned advocate, Shri Jani is required to be considered with the background of the facts. She submitted that it is required to be considered as to whether the petitioners have fulfilled the requirement. She submitted that the observation in the judgment would not be attracted and on the contrary, unless there is registered document regarding the tenancy or the lease, no one can claim such right and such contentions can be said Page 10 of 29 HC-NIC Page 10 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT to be afterthought. Learned advocate, Ms.Lodha also referred to the judgment of the High Court in case of IDBI Bnak Ltd. Vs. Hytaisun Magnetics Ltd., reported in 2011 (2) GLR 1438 and submitted that the judgment of the learned Single Judge referred to and relied upon by learned advocate, Shri Jani for the petitioner in case of Authorised Officer, Canara Bank Vs. Sulay Traders, Through Bipin Kantilal Vakta & Ors., reported in (2010) 1 GLR 770 is no longer a good law. For that purpose, she pointedly referred to the Paragraph No.21 of the judgment in case of IDBI Bnak Ltd. (supra) and submitted that it has been specifically stated that the judgment in case of Authorised Officer, Canara Bank (supra) and in Special Civil Application No.3943/2008 are no longer good law. Learned advocate, Ms.Lodha also referred to the observation made in Paragraph Nos.6 and 7 of the judgment and submitted that admittedly, the petitioners have been borrowers and the bank has taken the measures as provided under Section 13(4) read with Section 14 of the SARFAESI Act and the judgment and order of the Debt Recovery Tribunal in Securitization Application No.63/2009 has Page 11 of 29 HC-NIC Page 11 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT considered all aspects and said judgment has not been quashed and set aside. Therefore, when further steps are taken for recovery of the possession after the symbolic possession is taken, such contention cannot be raised. Learned advocate, Ms.Lodha has also submitted that the order passed by the Appellate Authority was sought to be challenged by the petitioners by way of Special Civil Application No.7465/2014, which came to be dismissed and, therefore, the submissions about the status quo are misconceived as there was no such order and if at all there was any, the petitioners could have been produced on record.
6. Learned AGP Shri Venugopal Patel submitted that the petition deserves to be dismissed on the ground of suppression of material facts and non joinder of necessary and proper party. He submitted that the petitioners have conveniently not stated about some orders passed by the authority like Appellate Authority of BIFR as well as the fact that Special Civil Application No.17465/2014 has been dismissed. Not only that, the petitioners have conveniently not chosen to state about the tenants and now what is sought to Page 12 of 29 HC-NIC Page 12 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT be contended in the name of tenant requires closer scrutiny. He submitted that the possession is sought to have been claimed by some persons, who are partners or the guarantors of the principal borrowers, Vijay Timber Industries. He submitted that the petitioners are filing the petition invoking jurisdiction of this Hon'ble Court in the name of tenants, who have never come forward and if the possession of the tenant is disturbed, they would have been vitally affected and they would have moved the Court. He submitted that throughout socalled tenants or the person having any right, title interest have not chosen to take any steps and, therefore, the petitioners have no locus standi to pursue such petition having failed in earlier round of litigations before the High Court as well as before the Debt Recovery Tribunal and/or other authority like BIFR. He submitted that there is no record or material suggesting about actual physical possession by the tenant and, therefore, statutory provision of SARFAESI Act would have its application, particularly when the order of the Debt Recovery Tribunal in Securitization Application No.63/2009 has not been Page 13 of 29 HC-NIC Page 13 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT disturbed, there is no justification to stall at the stage of recovery of the possession. Learned AGP Shri Patel submitted that symbolic possession was also taken and, therefore, such contention cannot be raised. Learned AGP Shri Patel submitted that the District Magistrate is not required to adjudicate and, therefore, such submission that he has not considered the documents, etc. has no relevance.
7. In rejoinder, learned advocate, Shri Bharat Jani reiterated his submission. He pointedly referred to the submission that the affidavit as required under Section 14 of the SARFAESI Act has not been filed. He referred to the papers to support his contention and again reiterated about the manner in which such affidavit is filed and tried to submit that the procedure as required under Section 14 of the SARFAESI Act for making an application to the District Magistrate has not been followed and, therefore, the order passed by the District Magistrate deserves to be set aside. He also submitted that the opportunity has not been given though to the knowledge of the District Magistrate, some orders have been passed and/or Page 14 of 29 HC-NIC Page 14 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT there were issues regarding the tenancy rights and, therefore, when the notices have not been issued to all concerned including the tenants and the guarantors, such orders are in violation of the Rules of natural justice. He also tried to submit that there was an order of status quo granted by the AAIFR, which has not been considered and, therefore, the present petition may be allowed. Learned advocate, Shri Jani referred to the judgment in case of Authorised Officer, Canara Bank (supra) to support his submission and also judgment in case of Apex Electricals Ltd. & Ors. Vs. ICICI Bank Ltd., reported in 2003 (2) GLR 1785 and submitted that the provision of the SARFAESI Act and the Transfer of Property Act with regard to the security interest in the property has to be considered and same has not been considered when the notice is not given to the tenants. Learned advocate, Shri Jani has also again referred to the order of the Hon'ble Division Bench in Writ Petition (PIL) No.68 of 2012 at Page No.84 and submitted that though it was pointed out that the property is rented with documents, relevant documents are not Page 15 of 29 HC-NIC Page 15 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT considered.
8. Learned advocate, Ms.Lodha in reply, however, submitted that the judgment of the learned Single Judge in case of Authorised Officer, Canara Bank (supra) is no longer a good law as per the judgment of the Hon'ble Apex Court in case of IDBI Bnak Ltd. (supra). Similarly, she submitted that no stay has been granted even though Special Civil Application No.17468/2014 was filed challenging the refusal of the condonation of delay against the order passed in Securitization Application No.63 of 2012 before the Debt Recovery Tribunal. She, therefore, submitted that the order of the Debt Recovery Tribunal was not disturbed and as no order has been passed by the High Court even though the petition has been filed, the submissions are misconceived as pending proceeding or the order, the respondent has initiated the proceeding. Learned advocate, Ms.Lodha submitted that the submission regarding the tenancy or the premises is rented is without any basis as the petitioner has failed to produce any such material on record and, therefore, such ground is not permissible to be raised in such proceedings, Page 16 of 29 HC-NIC Page 16 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT which have been filed as and by way of abuse of the process of the Court only to stall the recovery proceeding. Learned advocate, Ms.Lodha submitted that the petition is filed by the petitioners in the name of tenants, who have never come forward and if the possession and occupation is with somebody or the tenants, they would have been vitally affected and would have filed proceeding. She pointedly referred to the facts that the socalled boggy of tenant is an afterthought and, therefore, the present petition may not be entertained and may be rejected.
9. In view of these rival submissions, it is required to be considered whether the present petition deserves consideration.
10. As could be seen from the background of the facts and the rival submissions, much emphasis is given on the aspect of procedure referring to Section 14 of the SARFAESI Act. The provision of Section 14 of the SARFAESI Act provides for the procedure to be followed for the purpose of possession and the Chief Metropolitan Magistrate or the District Magistrate on a request being made by the secured creditor, the assist is required to be given to Page 17 of 29 HC-NIC Page 17 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT the secured creditor for the recovery of the possession. However the first proviso to Section 14 of the SARFAESI Act has a reference to the application by secured creditor with an affidavit of the secured creditor with all declaration as stipulated in the proviso. It further provides that on receipt of such affidavit of the authorized officer, the Metropolitan Magistrate or the District Magistrate as the case may be after satisfying the contents of the affidavit may pass suitable orders for taking possession of the secured assets. Learned advocate, Ms. Lodha has stated that this has been inserted by the amendment w.e.f. 15.01.2013 and, therefore, the application or the affidavit is not required. Further she referred to the objection or the representation, which is required to be considered by the secured creditor and, thereafter, if the borrower has not made payment inspite of the notice then, the secured creditor may proceed to recover the possession. Again Chapter - III, which provides for "Enforcement of security interest". Section 13 referred to "Enforcement of security interest". The provision of Section 13(3A) of the Page 18 of 29 HC-NIC Page 18 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT SARFAESI Act, which has been brought into force by amendment has a reference to the aspect of raising any objection by the borrower, which is required to be considered. The provision of Section 13(4) provides that where the borrower fails to discharge liability, the creditor may have recourse to take possession of the secured assets. Section 14(4)(d) of the SARFAESI Act also provides, "(d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt."
11. Therefore, it contemplates that when the borrower fails to discharge his liability, the secured creditor can take recourse or the measures to recover the debt and at that stage, may by notice in writing to the person, who has acquired any interest in the secured asset from the borrower, may be called upon to pay to the secured creditor. Thus the SARFAESI Act provides a complete code for the procedure to be followed. The petitioner herein has been pursuing the remedy or litigation Page 19 of 29 HC-NIC Page 19 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT as a gainful exercise to stall the recovery proceeding and has been raising contention in the present petition in the name of the tenant. However admittedly, the notice has been issued to the petitioner and the provision of Sections 13 and 14 of the SARFAESI Act has to be read with Rule 4 of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as "the Rules, 2002"). Rule 4 of the Rules, 2002 provide, "4. Procedure after issue of notice. If the amount mentioned in the demand notice is not paid within the time specified therein, the authorised officer shall proceed to realise the amount by adopting any one or more of the measures specified in subsection (4) of section 13 of the [Act] for taking possession of movable property."
12. It is at that stage, the person in possession may have right to move or take any objection. In the instant case, though it is claimed that the actual possession is with the tenant, there is no such material or evidence placed on record or even contended. Moreover as rightly contended that if the possession is with the tenant or third party, who would be affected, may have moved the Debt Page 20 of 29 HC-NIC Page 20 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT Recovery Tribunal. The amendment to Section 17 of the SARFAESI Act has widen scope by inserting after the amendment "any person aggrieved". Thus it provides that any person, who is aggrieved by any measure referred to in Section 13(4) or Section 14 of the SARFAESI Act or the authorised officer may have right to move by making an application to the Debt Recovery Tribunal. Admittedly no such application has been made till date by any so called tenant or the guarantor or anyone claiming any interest or right in the secured asset. Again the judgment of the Hon'ble Division Bench of the High Court in case of IDBI Bank Ltd. Vs. Hytaisun Magnetics Ltd., reported in 2011 (2) GLR 1438 has considered the aspect of enforcement of security interest with reference to the provision of Section 13(4) of the SARFAESI Act. The Hon'ble Division Bench has therefore while concluding has clearly observed, "If such measures taken under Section 14 which amount to measures taken under Section 13(4) is not in accordance with the Securitization Act or the Rules framed thereunder, including the objection, if any, raised that the asset is not a secured asset to be taken under Section Page 21 of 29 HC-NIC Page 21 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT 13(4), the aggrieved person has a remedy under Section 17 before the Debts Recovery Tribunal to show that the measures taken are against the Act [Section 13(4)] or the Rules framed thereunder."
13. It has also been observed that the judgment of the High Court in case of Authorized Officer, Canara Bank vs. Sulay Traders through Bipin Kantilal Vakta, reported in 2010 (1) GLR 770 does not lay down a good law. Therefore the contentions which have been sought to be raised with reference to the Chief Metropolitan Magistrate and the District Magistrate, are misconceived. It has been clearly answered by the Hon'ble Division Bench in a judgment of the Hob'ble Division Bench of the High Court in case of Manjudevi R. Somani Vs. Union of India & Ors., reported in 2013 (2) GLH 390 = 2013 (4) BC 694 that when similar contentions were raised that the Chief Metropolitan Magistrate or the District Magistrate may have power and Additional Chief Metropolitan Magistrate does not have jurisdiction, such contentions have been negatived. Further the submission with reference to the tenancy rights of the tenant or the lease also cannot be readily accepted. The Hon'ble Apex Page 22 of 29 HC-NIC Page 22 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT Court in a judgment in case of Harshad Govardhan Sondagar Vs. International Assets Reconstruction Company Ltd. & Ors., reported in (2014) 6 SCC 1 has considered the provision of the SARFAESI Act as well as the Transfer of Property Act. The HOn'ble Apex Court has considered that the creation of lease of the mortgage and the effect on the mortgagee with reference to the provision of the Transfer of Property Act read with SARFAESI Act has been considered. The secured assets and the security interest have to be considered. The Hon'ble Apex Court in this judgment has considered this aspect of creation of right in favour of the tenant/ lessee of the borrower. It has discussed regarding the lease granted by the borrower, which could be classified in three classes:
"Class (1) Leases created prior to mortgage which created the secured asset; Class (2) Leases created after creation of the mortgage, vide S. 65A TPA but prior to receipt of S. 13(2) SARFAESI Act notice by borrower; and Class (3) Leases created after creation of the mortgage, vide S. 65A TPA but after receipt of S. 13(2) SARFAESI Act notice by borrower."
14. Therefore considering different procedure Page 23 of 29 HC-NIC Page 23 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT regarding the application of the provision of the SARFAESI Act read with the provision of the Transfer of Property Act in such situation for the purpose of right of the secured creditor like the bank and the right of the lessee or the tenant, the observations have been made. It has also considered the extent to which the provision of the SARFAESI Act would override the provision of the Transfer of Property Act, 1882 in light of Section 35 of the SARFAESI Act. The Hon'ble Apex Court has clearly observed that when the lease falls in Class (3) and when there is no valid lease then, such a person would be liable for immediate eviction and delivery of possession to the secured creditor by Chief Metropolitan Magistrate. Again as stated above, this has to be read with the observation made by the Hon'ble Apex Court in Paragraph No.32 regarding the provision of Section 17 of the SARFAESI Act after the amendment providing for a wider scope after the amendment when "any person aggrieved" has been inserted, which may include even the lessee or the tenant. This has also to be read with the Rules, 2002. The judgment of the Hon'ble Apex Court in Page 24 of 29 HC-NIC Page 24 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT case of Transcore Vs. Union of India & Anr., reported in (2008) 1 SCC 125 has also been considered.
15. However in the instant case, there is no valid registered lease deed nor any issue of tenancy is claimed, raised or established by any third party claiming such right, Again such right or claim would require some evidence suggesting right of third party by way of tenancy or lease, which is required to be prima facie shown or established by some document. In the instant case, as any such tenancy or lease in favour of any third party or anyone has not been brought on record or established by any material. The submissions made by learned advocate, Shri Jani for the petitioner are misconceived.
16. Not only that, the petitioner had filed petition being Special Civil Application No.7078 of 2015, which was also dismissed by the High Court (Coram : N.V. Anjaria, J.) vide order dated 07.12.2016. Again where such lease is created before the security interest are created or after would be relevant. In the facts of the case, there is no such evidence suggesting about the creation Page 25 of 29 HC-NIC Page 25 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT of any such lease or tenancy right in favour of anybody. Not only that, during earlier round of litigation, it has not been claimed or canvassed. Further, the person as a tenant or lessee likely to be affected has not come forward. The lease as it appears is claimed in favour of the partner or the guarantor of the principal borrower i.e. the firm and, therefore, veil is required to be lifted to see through any such game to stall the recovery proceedings and, thereby dupe the public money. In fact this kind of litigation has been pursued as stated above only with an intention to frustrate the very aim and object of the SARFAESI Act, which aims at speedy recovery of such money of the bank or the financial institution with a drastic provision made for such recovery. It is also not in dispute that SARFAESI Act is a complete code in itself. Moreover, the Hon'ble Apex Court in the aforesaid judgment in case of Harshad Govardhan Sondagar (supra) has also clearly observed, "the provisions of the SARFAESI Act override the provisions of Section 69 or Section 69A of the Transfer of Property Act, but may not override the provisions of the Transfer of Property Act relating Page 26 of 29 HC-NIC Page 26 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT to the rights of a lessee under a lease created before receipt of a notice under subsection (2) of Section 13 of the SARFAESI Act by a borrower (Emphasis Supplied)".
17. Therefore if the petitioner claims that the possession of the secured assets is with the tenant, he has to produce proof of such registered lease deed or the tenancy in favour of the tenant. If he does not produce any such proof of execution of the registered document or the instrument in favour of third party as a tenant or lessee, the Chief Metropolitan Magistrate or the District Magistrate may have to come to a conclusion that the bank/ secured creditor is entitled to possession of the secure assets. A useful reference can be made to the judgment of the Hon'ble Apex Court in case of Transcore (supra) more particularly Paragraph No.74 of this judgment. When the issue with regard to the actual possession with the tenant is sought to be raised, reference is required to be made to the judgment of the Hon'ble Apex Court in case of Dilboo (Smt) (dead) by Lrs. & Ors. Vs. Dhanraji (Smt) (dead) & Ors., reported in (2000) 7 SCC 702, wherein it has Page 27 of 29 HC-NIC Page 27 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT been clearly observed that the recovery of the possession of mortgaged property transferred by mortgagee has to be by registered document and the date of registration become the date of knowledge. In the instant case, there is no such document created or placed on record. Therefore, the contentions raised by learned advocate, Shri Jani are only to stall the proceeding for recovery. Moreover as recorded hereinabove, there is no material suggesting actual and physical possession with the tenant and, therefore, when the order passed by the Debt Recovery Tribunal in Securitization Application No.63/2009 has not been disturbed, there is no justification to exercise the discretionary jurisdiction under Article 226 of the Constitution of India by this Court. As rightly submitted, the petitioner has also not raised such contentions in Special Civil Application No.7078 of 2015, which came to be dismissed by the High Court (Coram : N.V. Anjaria, J.) vide order dated 07.12.2016.
18. Therefore having regard to the aforesaid relevant aspects reflecting the conduct of the petitioner and the statutory provision of the SARFAESI Act, Page 28 of 29 HC-NIC Page 28 of 29 Created On Thu Dec 28 23:19:10 IST 2017 C/SCA/2403/2014 JUDGMENT the present petition cannot be entertained and deserves to be dismissed. Rule is discharged. Interim relief, if any, stands vacated. No order as to costs.
Sd/ (RAJESH H.SHUKLA, J.) FURTHER ORDER After the order of pronounced, learned advocate, Shri Jani has requested for stay of the order of the order to enable his client to approach the higher forum. The request is granted.
st The operation of the order is stayed upto 31 January, 2018.
Sd/ (RAJESH H.SHUKLA, J.) Gautam Page 29 of 29 HC-NIC Page 29 of 29 Created On Thu Dec 28 23:19:10 IST 2017