Rajasthan High Court - Jaipur
Pradeep Kumar S/O Shri Lalchand Poonia vs State Of Rajasthan on 7 March, 2019
Author: Ashok Kumar Gaur
Bench: Ashok Kumar Gaur
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. Civil Writs No. 4219/2019
Pradeep Kumar S/o Shri Lalchand Poonia, Aged About 26 Years,
R/o 314, 3rd Floor Aradhana Residency Manglam City, Hathoj,
Kalwar Road Jaipur Rajasthan.
----Petitioner
Versus
1. State Of Rajasthan, Through District Magistrate And
District Collectorate, Collectorate, Bani Park Jaipur,
Rajasthan 302001
2. ICICI Bank Limited, 1st Floor Meera Path Madhyam
Marginal Mansarovar, Jaipur, Through Its Branch Manager.
3. Shri Om Prakash Bajaj, S/o Shri Nand Lal Bajaj, Plot No.
6-A, Acharya Kirpalani Marg, Adarsh Nagar Jaipur,
Rajasthan.
4. Shriram Housing Finance Limited, Regd. Office At 123,
Angappa Naichen Street Chennai Branch Office At E-2,
3Rd Floor, Sector-1, Noida, Uttar Pradesh, Through Its
Branch Manager.
----Respondents
For Petitioner(s) : Shri Digvijay Anand, Advocate.
HON'BLE MR. JUSTICE ASHOK KUMAR GAUR
Judgment
REPORTABLE
Judgment reserved on : 27th February, 2019.
Date of Judgment : 7th March, 2019.
By the Court:-
1. Instant petition has been filed by the petitioner challenging the order dt.29.01.2019 passed by the District Collector and District Magistrate, Jaipur in Application No.380/2018 filed by the respondent No.4-Shri Ram Housing Finance Limited under Section 14 of the Securitisation and Reconstruction of Financial Assets and (2 of 25) [CW-4219/2019] Enforcement of Securities Interest Act, 2002 (for short 'the Securitisation Act, 2002'). The petitioner has prayed in the writ petition that the respondent No.4-Shri Ram Housing Finance Limited may be directed not to act, take any coercive action or proceed further against the petitioner by taking possession of the petitioner's flat No.314, 3rd Floor, Aradhana Residency, Plot No.G-
01, Manglam City, Hathoj, Kalwar Road, Jaipur. The petitioner has further prayed that the respondent No.4-Shri Ram Housing Finance Limited may be directed to initiate, proceed and recover all the outstanding amount from the respondent No.3 Om Prakash Bajaj and further he may be directed to pay all the cost, interest, charges and expenses to the petitioner.
2. The brief facts pleaded in the writ petition are that the petitioner was sanctioned a home loan by the respondent No.2 ICICI Bank Limited (vide sanction memo dated 29.11.2017) of Rs.14,80,000/- for purchase of flat No.314, 3 rd Floor, Aradhana Residency, Plot No.G-01, Manglam City, Hathoj, Kalwar Road, Jaipur. The bank after obtaining and considering the legal opinion of their panel Advocate found that title of the said property was absolutely clear and marketable and thereafter sanctioned and disbursed the loan amount to the petitioner.
3. The petitioner has pleaded that he initially paid an amount of Rs.20,000/- vide agreement to sell dated 10.11.2017 to the respondent No.3 Om Prakash Bajaj and after the respondent No.2 ICICI Bank Limited was fully satisfied with the title search report, it had disbursed the loan and the petitioner purchased the said flat (3 of 25) [CW-4219/2019] by the registered sale-deed from the respondent No.3 Om Prakash Bajaj vide sale-deed dated 01.12.2017.
4. The petitioner has pleaded in his petition that the respondent No.4-Shri Ram Housing Finance Limited filed an application under Section 14 of the Securitisation Act, 2002 before the respondent No.1 for taking over possession of the petitioner's flat along with various other properties mortgaged by M/s.Om Sokhal Builders & Construction Pvt. Ltd. (hereinafter referred to as 'the builder') in pursuance of two loans sanctioned and disbursed by the respondent No.4 i.e. a project loan and loan against properties of the builder and the flats of the aforesaid project, constructed by the builder, where one of the flats being flat No.314 was subsequently purchased by the petitioner from the respondent No.3. The petitioner has pleaded that he was utterly shocked and surprised when he came to know that the respondent No.1 without providing any opportunity of hearing or following any procedure, as mentioned under the Act and Rules provided under the Securitisation Act, 2002 passed an order dated 29.01.2019 for taking over the possession of the petitioner's flat and other properties without following any due procedure.
5. The petitioner has pleaded that he is a bonafide purchaser and has paid full and final sale consideration of the aforesaid flat to the respondent No.3 and sale-deed has also been duly executed and registered in the office of Sub-Registrar, Jaipur and the petitioner also had to lodge a First Information Report against the respondent No.3 and others for committing fraud and cheating (4 of 25) [CW-4219/2019] with the petitioner and the same is pending investigation with the Police Station, Kalwar, Jaipur.
6. The petitioner has pleaded that the respondent No.1 while passing the order under Section 14 of the Securitisation Act, 2002 has not considered the fact that the petitioner is neither the borrower nor any valid, legal or any charge has been registered/created in favour of the respondent No.4. The petitioner has pleaded that neither any security interest nor any mortgage has been validly created in favour of the respondent No.4 by depositing the title-deed, as per the provisions of law. The petitioner has pleaded that as per Chapter-IV of the Securitisation Act, 2002, there is a necessity of registering and creating valid and legal security interest for every transaction for securitisation of financial assets before the Central Registry and as per Section 20(1) of the Securitisation Act, 2002 and Rules framed under Rule 2(e) and Rule 4 of the Securitisation Rules and every transaction is required to be registered before the Central Registry.
7. Learned counsel for the petitioner while assailing the order dated 29.01.2019 has made following submissions:-
a) The proceedings initiated by the respondent No.4 is without any authority of law and arbitrary as the petitioner is neither a borrower nor any security interest or secured assets have been legally or validly created and registered in favour of the respondent No.4.
b) The petitioner is having a valid and legal right, title, interest and peaceful possession over the flat and is paying the Equated Monthly Installments (EMIs) for repaying the loan to the (5 of 25) [CW-4219/2019] respondent No.2 and as such the petitioner being a bonafide purchaser, cannot be divested of his property.
c) The respondent No.4 is not a secured creditor in whose favour any security agreement, secured assets or any security interest has been validly registered and created.
d) The respondent No.4 has neither acted fairly and reasonably nor issued separate notices under Section 13(2) of the Securitisation Act, 2002 for two loans granted to the builder, as provided under Section 13(2) of the Securitisation Act, 2002. No specific outstanding amount against each loan granted to the borrower has been mentioned, as required under Section 13(3) of the Securitisation Act, 2002 read with Rule 8 of the Rules while issuing notice under Section 13(2) of the Securitisation Act, 2002.
e) The order of the respondent No.1 is patently illegal and arbitrary and possession of the flat from the petitioner cannot be taken without following due process of law and judicious mind.
f) The respondent No.1 while passing the impugned order dated 29.01.2019 failed to take into account that no specific affidavit, as mandated under Section 14 of the Securitisation Act, 2002 was filed.
8. Learned counsel for the petitioner was asked to satisfy this court about maintainability of the writ petition, as the order impugned in the instant petition, has been passed under Section 14 of the Securitisation Act, 2002.
9. Learned counsel for the petitioner has placed reliance on the judgments of the Apex Court in Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai and Ors reported in (6 of 25) [CW-4219/2019] (1998) 8 SCC 1, Popcorn Entertainment and Anr. Vs. City Industrial Development Corporation & Anr. reported in (2007) 9 SCC 593, Harshad Govardhan Sondagar Vs. International Assets Reconstruction Company Limited & Ors. reported in (2014) 6 SCC 1 and a decision dated 07.03.2018 passed by the Madhya Pradesh High Court in the case of Satish Kumar Rathore Vs. State of M.P. & Ors. [Writ Petition No.4488/2016].
10. I have heard learned counsel for the petitioner and perused the material on record.
11. This court finds that the Apex Court consistently has laid down the law in respect of the proceedings which are initiated under the Securitisation Act, 2002 holding that a writ petition under Article 226 of the Constitution of India ought not to be entertained if alternative statutory remedy is available. The Apex Court in the following cases has laid down the law about alternative remedy available to a person who feels aggrieved against the proceedings initiated under the Securitisation Act, 2002:-
(1) Aurthorized Officer, State Bank of Travancore & Anr.
Vs. Mathew K.C. reported in (2018) 3 SCC 85;
(2) ICICI Bank Ltd. Etc. Etc. Vs. Umakanta Mohapatra Etc. Etc. [Special Leave to Appeal (C) No(s).9145-9152/2014;
and (3) Hindon Forge Pvt. Ltd. & Anr. Vs. State of U.P. through District Magistrate Ghaziabad & Anr. reported in (2019) 2 SCC 198.
(7 of 25) [CW-4219/2019]
12. This court on careful perusal of the pleadings and documents finds that the application under Section 14 of the Securitisation Act, 2002 for seeking assistance for taking over possession of the mortgaged property was filed before the respondent No.1. The said application was filed by the respondent No.4 claiming it to be a "financial institution" as per the definition given under Section 2 of the Securitisation Act, 2002. The loan facility was extended to the borrower and for creating security interest over the secured assets, the title-deeds were deposited and registered and mortgage-deed was executed for creation of mortgage of the property. The mortgage-deed had given the details of the properties including 62 flats in the residential area i.e. Plot No.G-
01, Manglam City, Hathoj, Kalwar Road, Jaipur.
13. This court finds that the order dated 29.01.2019 was passed by the District Magistrate after satisfying the requirement as provided under the Securitisation Act, 2002 and further clearly recorded a finding that notices under Section 13(2) of the Securitisation Act, 2002 were served upon borrowers and as such for handing over the possession of secured assets, the order dated 29.01.2019 was passed exercising the powers conferred under Section 14 of the Securitisation Act, 2002.
14. This court finds that the Apex Court has consistently taken a view that if the proceedings under Section 13(2) of the Securitisation Act, 2002 are taken and measures are adopted, then the person aggrieved by any of the measures referred to in sub-section (4) of Section 13 of the Securitisation Act, 2002 taken by the secured creditor or his (8 of 25) [CW-4219/2019] authorized officer, may make an application to the Debts Recovery Tribunal having jurisdiction in the matter within 45 days from the date of which such measures have been taken.
15. This court finds that Section 13(4) of the Securitisation Act, 2002 provides that if the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the measures to recover his secured debt namely: (a) to take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realizing the secured asset;
and (b) to take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realizing the secured asset.
16. This court deems it proper to quote the provisions of the Securitisation Act, 2002, being relevant for the present purpose, which read as follows:-
"13. Enforcement of security interest-(1) Notwithstanding anything contained in section 69 or section 69A of the Transfer of Property Act, 1882 (4 of 1882), any security interest created in favour of any secured creditor may be enforced, without the intervention of court or tribunal, by such creditor in accordance with the provisions of this Act.
(2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under subsection (4).
Provided that -
(i) the requirement of classification of secured debt as non-performing asset under this sub-section shall (9 of 25) [CW-4219/2019] not apply to a borrower who has raised funds through issue of debt securities; and
(ii) in the event of default, the debenture trustee shall be entitled to enforce security interst in the same manner as provided under this section with such modifications as may be necessary and in accordance with the terms and conditions of security documents executed in favour of the debenture trustee; (3) The notice referred to in sub-section (2) shall give details of the amount payable by the borrower and the secured assets intended to be enforced by the secured creditor in the event of non-payment of secured debts by the borrower. (3A) If, on receipt of the notice under sub-section (2), the borrower makes any representation or raises any objection, the secured creditor shall consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate within one week of receipt of such representation or objection the reasons for non-
acceptance of the representation or objection to the borrower:
Provided that the reasons so communicated or the likely action of the secured creditor at the stage of communication of reasons shall not confer any right upon the borrower to prefer an application to the Debts Recovery Tribunal under section 17 or the Court of District Judge under section 17A.
(4) In case the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:-
(a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset;
(b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset;
Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt;
Provided further that where the management of whole of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security for the debt;
(c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor;
(10 of 25) [CW-4219/2019]
(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.
(5) to (13)XX XX XX
14. Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset-(1) Where the possession of any secured assets is required to be taken by the secured creditor or if any of the secured asset is required to be sold or transferred by the secured creditor under the provisions of this Act, the secured creditor may, for the purpose of taking possession or control of any such secured asset, request, in writing, the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such secured asset or other documents relating thereto may be situated or found, to take possession thereof, and the Chief Metropolitan Magistrate or, as the case may be, the District Magistrate shall, on such request being made to him-
(a) take possession of such asset and documents relating thereto; and
(b) forward such assets and documents to the secured creditor.
[Provided that any application by the secured creditor shall be accompanied by an affidavit duly affirmed by the authorised officer of the secured creditor, declaring that--
(i) the aggregate amount of financial assistance granted and the total claim of the Bank as on the date of filing the application;
(ii) the borrower has created security interest over various properties and that the Bank or Financial Institution is holding a valid and subsisting security interest over such properties and the claim of the Bank or Financial Institution is within the limitation period;
(iii) the borrower has created security interest over various properties giving the details of properties referred to in sub-clause (ii) above;
(iv) the borrower has committed default in repayment of the financial assistance granted aggregating the specified amount;
(v) consequent upon such default in repayment of the financial assistance the account of the borrower has been classified as a nonperforming asset;
(11 of 25) [CW-4219/2019]
(vi) affirming that the period of sixty days notice as required by the provisions of sub-section (2) of section 13, demanding payment of the defaulted financial assistance has been served on the borrower;
(vii) the objection or representation in reply to the notice received from the borrower has been considered by the secured creditor and reasons for non-acceptance of such objection or representation had been communicated to the borrower;
(viii) the borrower has not made any repayment of the financial assistance in spite of the above notice and the Authorised Officer is, therefore, entitled to take possession of the secured assets under the provisions of sub-section (4) of section 13 read with section 14 of the principal Act;
(ix) that the provisions of this Act and the rules made thereunder had been complied with:
Provided further that on receipt of the affidavit from the Authorised Officer, the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, shall after satisfying the contents of the affidavit pass suitable orders for the purpose of taking possession of the secured assets 2[within a period of thirty days from the date of application]:
[Provided further that if no order is passed by the Chief Metropolitan Magistrate or District Magistrate within the said period of thirty days for reasons beyond his control, he may, after recording reasons in writing for the same, pass the order within such further period but not exceeding in aggregate sixty days.] Provided also that the requirement of filing affidavit stated in the first proviso shall not apply to proceeding pending before any District Magistrate or the Chief Metropolitan Magistrate, as the case may be, on the date of commencement of this Act.] [(1A) The District Magistrate or the Chief Metropolitan Magistrate may authorise any officer subordinate to him,--
(i) to take possession of such assets and documents relating thereto; and
(ii) to forward such assets and documents to the secured creditor.] (2) For the purpose of securing compliance with the provisions of sub-section (1), the Chief Metropolitan Magistrate or the District Magistrate may take or cause to be (12 of 25) [CW-4219/2019] taken such steps and use, or cause to be used, such force, as may, in his opinion, be necessary.
(3) No act of the Chief Metropolitan Magistrate or the District Magistrate [any officer authorized by the Chief Metropolitan Magistrate or District Magistrate] done in pursuance of this section shall be called in question in any court or before any authority.
17. Application against measures to recover secured debts.- (1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer un- der this Chapter, [may make an aplication along with such fee as may be prescribed] to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken. [Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower."
(1A) to (7) XX XX XX"
17. This court finds that if the secured creditor finds that one of the measures including taking possession of the secured assets is to be adopted, an application under Section 14 of the Securitisa-
tion Act, 2002 is to be filed before the Chief Metropolitan Magis-
trate or the District Magistrate to assist the secured creditor in taking possession of secured assets.
18. This court finds that Section 17 of the Securitisation Act, 2002 permits any person, including borrower, aggrieved by any of the measures, referred to in sub-section (4) of Section 13 of the Securitisation Act, 2002, to make an application to the Debts Recovery Tribunal having jurisdiction in the matter within 45 days from the date on which such measures had been taken. This court finds that if the petitioner finds himself aggrieved against the measure of taking possession of the secured asset, he is free to exercise his right under Section 17 of the Securitisation Act, 2002.
The definition of "any person" is of a wide import and within its (13 of 25) [CW-4219/2019] ambit it not only covers the borrower but also the guarantor or any other person who may be affected by action taken under Section 13(4) of the Securitisation Act, 2002.
19. The Apex Court in the case of Hindon Forge Pvt. Ltd. (supra) has laid down the law that borrower/debtor can approach the Debts Recovery Tribunal under Section 17 of the Securitisation Act, 2002 at the stage of possession notice under Rules 8(1) and 8(2) of the Security Interest (Enforcement) Rules, 2002.
20. The Apex Court in the case of Authorized Officer, State Bank of Travancore and Anr. (supra) has again reiterated that normally a writ petition under Article 226 of the Constitution of India ought not to be entertained if alternative statutory remedies are available. The extract of the judgment, relevant for the present purpose, are reproduced as under:-
"13. In Ikbal it was observed that the action of the Bank under Section 13(4) of the 'SARFAESI Act' available to challenge by the aggrieved under Section 17 was an efficacious remedy and the institution directly under Article 226 was not sustainable, relying upon Satyawati Tandon, observing :
"27. No doubt an alternative remedy is not an absolute bar to the exercise of extraordinary jurisdiction under Article 226 but by now it is well settled that where a statute provides efficacious and adequate remedy, the High Court will do well in not entertaining a petition under Article 226. On misplaced considerations, statutory procedures cannot be allowed to be circumvented.
28.......In our view, there was no justification whatsoever for the learned Single Judge to allow the borrower to bypass the efficacious remedy provided to him under Section 17 and invoke the extraordinary jurisdiction in his favour when he had disentitled himself for such relief by his conduct. The Single Judge was clearly in error in invoking his extraordinary jurisdiction under Article 226 in light of the peculiar facts indicated above. The Division Bench also erred in affirming the erroneous order of the Single Judge."
(14 of 25) [CW-4219/2019]
14. A similar view was taken in Punjab National Bank and another vs. Imperial Gift House and others, observing:-
"3. Upon receipt of notice, the respondents filed representation under Section 13(3-A) of the Act, which was rejected. Thereafter, before any further action could be taken under Section 13(4) of the Act by the Bank, the writ petition was filed before the High Court.
4. In our view, the High Court was not justified in entertaining the writ petition against the notice issued under Section 13(2) of the Act and quashing the proceedings initiated by the Bank."
15. It is the solemn duty of the Court to apply the correct law without waiting for an objection to be raised by a party, especially when the law stands well settled. Any departure, if permissible, has to be for reasons discussed, of the case falling under a defined exception, duly discussed after noticing the relevant law. In financial matters grant of ex- parte interim orders can have a deleterious effect and it is not sufficient to say that the aggrieved has the remedy to move for vacating the interim order. Loans by financial institutions are granted from public money generated at the tax payers expense. Such loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as entrustment by the public. Timely repayment also ensures liquidity to facilitate loan to another in need, by circulation of the money and cannot be permitted to be blocked by frivolous litigation by those who can afford the luxury of the same. The caution required, as expressed in Satyawati Tandon, has also not been kept in mind before passing the impugned interim order:-
"46. It must be remembered that stay of an action initiated by the State and/or its agencies/instrumentalities for recovery of taxes, cess, fees, etc. seriously impedes execution of projects of public importance and disables them from discharging their constitutional and legal obligations towards the citizens. In cases relating to recovery of the dues of banks, financial institutions and secured creditors, stay granted by the High Court would have serious adverse impact on the financial health of such bodies/institutions, which (sic will) ultimately prove detrimental to the economy of the nation. Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters. Of course, if the petitioner is able to show that its case falls within any of the exceptions carved out in Baburam Prakash Chandra Maheshwari v. Antarim Zila Parishad, Whirlpool Corpn. v. Registrar of Trade Marks and Harbanslal Sahnia v. Indian Oil Corpn. Ltd. and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order."
(15 of 25) [CW-4219/2019]
16. The writ petition ought not to have been entertained and the interim order granted for the mere asking without assigning special reasons, and that too without even granting opportunity to the Appellant to contest the maintainability of the writ petition and failure to notice the subsequent developments in the interregnum. The opinion of the Division Bench that the counter affidavit having subsequently been filed, stay/modification could be sought of the interim order cannot be considered sufficient justification to have declined interference.
17. We cannot help but disapprove the approach of the High Court for reasons already noticed in Dwarikesh Sugar Industries Ltd. vs. Prem Heavy Engineering Works (P) Ltd., observing :-
"32. When a position, in law, is well settled as a result of judicial pronouncement of this Court, it would amount to judicial impropriety to say the least, for the subordinate courts including the High Courts to ignore the settled decisions and then to pass a judicial order which is clearly contrary to the settled legal position. Such judicial adventurism cannot be permitted and we strongly deprecate the tendency of the subordinate courts in not applying the settled principles and in passing whimsical orders which necessarily has the effect of granting wrongful and unwarranted relief to one of the parties. It is time that this tendency stops."
18. The impugned orders are therefore contrary to the law laid down by this Court under Article 141 of the Constitution and unsustainable. They are therefore set aside and the appeal is allowed."
21. The Apex Court in the case of ICICI Bank Ltd. Etc. Etc. (supra) has again not approved the power of the High Court to entertain the writ petition and petitions filed under the Securitisation Act, 2002 were not found maintainable and interim orders passed by the High Court have been set aside.
22. The submission of learned counsel for the petitioner that the Apex Court in the case of Harshad Goverdhan Sondagar (supra) has laid down the law that the decision of Chief Metropolitan Magistrate or District Magistrate can be challenged before the High Court under Articles 226 and 227 of the Constitution of India by the aggrieved party and High Court can examine the decision in (16 of 25) [CW-4219/2019] accordance with the settled principles of law, this court finds that the appellants before the Apex Court in the said case were tenants of different premises and such premises were mortgaged to different banks as securities for loan advanced by the banks. The borrowers had defaulted in payment of their secured debts and their accounts in respect of such debts were classified by the secured creditors as Non Performing Assets. The secured creditors had issued notice of sixty days' period under sub-section (2) of Section 13 of the Securitisation Act, 2002 to the borrowers informing them to enforce the secured assets in the event of non-
payment of secured debts. The borrowers had failed to discharge their liability within a period of sixty days from the date of notice, the secured creditors exercised their right under sub-section (4) of Section 13 of the Securitisation Act, 2002 to take possession of the secured assets of the borrowers and secured assets consisted of premises under possession of those appellants and the secured creditors made a request under under Section 14(1) of the Securitisation Act, 2002 to the Chief Metropolitan Magistrate, Mumbai to take possession and hand over the possession of the premises to the secured creditors in accordance with the provisions of Section 14 of the Securitisation Act, 2002.
23. Threatened by dispossession of the premises under possession of the appellants, the appellants had moved the Apex Court in batch of cases and their case was that they were not borrowers but they were lessee of the borrowers and entitled to remain in possession of the secured assets. The grievance raised by the appellants before the Apex Court was against judgment of (17 of 25) [CW-4219/2019] the Bombay High Court whereby the appellants had to surrender the possession to the Chief Metropolitan Magistrate, Mumbai and to move Debts Recovery Tribunal under Section 17 of the Securitisation Act, 2002. Such a remedy, according to the appellants, was not actually available under Section 17 of the Securitisation Act, 2002 and the remedy available was meaningless. The appellants feeling aggrieved by such judgment given by the Bombay High Court in International Asset Reconstruction Co.(P) Ltd. Vs. Union of India reported in AIR 2011 Bom 163 filed appeals by way of Special Leave under Article 136 of the Constitution of India.
24. The Apex Court considered the scope of Section 14 of the Securitisation Act, 2002 to find out whether it confers any power on the Chief Metropolitan Magistrate or the District Magistrate to assist the secured creditors in taking possession of the secured asset which is in lawful possession of the lessee under a valid lease. The relevant portion of the judgment of the Apex Court is quoted hereunder :
"23. We may now look at the provisions of Section 14 of the SARFAESI Act to find out whether it confers any power on the Chief Metropolitan Magistrate or the District Magistrate to assist the secured creditor in taking possession of the secured asset which is in lawful possession of the lessee under a valid lease.
24. Section 14 of the SARFAESI Act is extracted hereinbelow:
"14. Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset.-(1) Where the possession of any secured assets is required to be taken by the secured creditor or if any of the secured asset is required to be sold or transferred by the secured creditor under the provisions of this Act, the secured creditor may, for the purpose of taking possession or control of any such secured asset, request, in writing, the Chief Metropolitan Magistrate or (18 of 25) [CW-4219/2019] the District Magistrate within whose jurisdiction any such secured asset or other documents relating thereto may be situated or found, to take possession thereof, and the Chief Metropolitan Magistrate or, as the case may be, the District Magistrate shall, on such request being made to him-
(a) take possession of such asset and documents relating thereto; and
(b) forward such assets and documents to the secured creditor.
Provided that any application by the secured creditor shall be accompanied by an affidavit duly affirmed by the authorised officer of the secured creditor, declaring that-
(i) the aggregate amount of financial assistance granted and the total claim of the Bank as on the date of filing the application;
(ii) the borrower has created security interest over various properties and that the Bank or Financial Institution is holding a valid and subsisting security interest over such properties and the claim of the Bank or Financial Institution is within the limitation period;
(iii) the borrower has created security interest over various properties giving the details of properties referred to in Sub-clause (ii) above;
(iv) the borrower has committed default in repayment of the financial assistance granted aggregating the specified amount;
(v) consequent upon such default in repayment of the financial assistance the account of the borrower has been classified as a non-performing asset;
(vi) affirming that the period of sixty days notice as required by the provisions of Sub-section (2) of Section 13, demanding payment of the defaulted financial assistance has been served on the borrower;
(vii) the objection or representation in reply to the notice received from the borrower has been considered by the secured creditor and reasons for non-acceptance of such objection or representation had been communicated to the borrower;
(viii) the borrower has not made any repayment of the financial assistance in spite of the above notice and the Authorised Officer is, therefore, entitled to take possession of the secured assets under the provisions of Sub-section (4) of Section 13 read with Section 14 of the principal Act;
(ix) that the provisions of this Act and the rules made thereunder had been complied with:
(19 of 25) [CW-4219/2019] Provided further that on receipt of the affidavit from the Authorised Officer, the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, shall after satisfying the contents of the affidavit pass suitable orders for the purpose of taking possession of the secured assets:
Provided also that the requirement of filing affidavit stated in the first proviso shall not apply to proceeding pending before any District Magistrate or the Chief Metropolitan Magistrate, as the case may be, on the date of commencement of this Act.
(1-A) The District Magistrate or the Chief Metropolitan Magistrate may authorise any officer subordinate to him,-
(i) to take possession of such assets and documents relating thereto; and
(ii) to forward such assets and documents to the secured creditor, (2) For the purpose of securing compliance with the provisions of Sub-section (1), the Chief Metropolitan Magistrate or the District Magistrate may take or cause to be taken such steps and use, or cause to be used, such force, as may, in his opinion, be necessary. (3) No act of the Chief Metropolitan Magistrate or the District Magistrate done in pursuance of this section shall be called in question in any court or before any authority."
25. The opening words of Sub-section (1) of Section 14 of the SARFAESI Act make it clear that where the possession of any secured assets is required to be taken by the secured creditor or if any of the secured asset is required to be sold or transferred by the secured creditor "under the provisions of the Act", the secured creditor may, for the purpose of taking possession or control of any such secured asset, request, in writing, the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such secured asset or other documents relating thereto may be situated or found, to take possession thereof. Thus, only if possession of the secured asset is required to be taken under the provisions of the SARFAESI Act, the secured creditor can move the Chief Metropolitan Magistrate or the District Magistrate for assistance to take possession of the secured asset. We have already held that Section 13 of the SARFAESI Act does not provide that the lease in respect of a secured asset will get determined when the secured creditor decides to take the measures in the said section. Hence, possession of the secured asset from a lessee in lawful possession under a valid lease is not required to be taken under the provisions of the SARFAESI Act and the Chief Metropolitan Magistrate or the District Magistrate, therefore, does not have any power under Section 14 of the SARFAESI Act to take possession of (20 of 25) [CW-4219/2019] the secured asset from such a lessee and hand over the same to the secured creditor. When, therefore, a secured creditor moves the Chief Metropolitan Magistrate or the District Magistrate for assistance to take possession of the secured asset, he must state in the affidavit accompanying the application that the secured asset is not in possession of a lessee under the valid lease made prior to creation of the mortgage by the borrower or made in accordance with Section 65A of the Transfer of Property Act prior to receipt of a notice under Sub-section (2) of Section 13 of the SARFAESI Act by the borrower. We would like to clarify that even in such cases where the secured creditor is unable to take possession of the secured asset after expiry of the period 60 days of the notice to the borrower of the intention of the secured creditor to enforce the secured asset to realize the secured debt, the secured creditor will have the right to receive any money due or which may become due, including rent, from the lessee to the borrower. This will be clear from clause (d) of Sub-section (4) of Section 13, which provides that in case the borrower fails to discharge his liability in full within the notice period, the secured creditor may require, at any time by notice in writing, any person who has acquired any of the 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.
26. The opening words of Sub-section (1) of Section 14 of the SARFAESI Act also provides that if any of the secured asset is required to be sold or transferred by the secured creditor under the provisions of the Act, the secured creditor may take the assistance of the Chief Metropolitan Magistrate or the District Magistrate. Where, therefore, such a request is made by the secured creditor and the Chief Metropolitan Magistrate or the District Magistrate finds that the secured asset is in possession of a lessee but the lease under which the lessee claims to be in possession of the secured asset stands determined in accordance with Section 111 of the Transfer of Property Act, the Chief Metropolitan Magistrate or the District Magistrate may pass an order for delivery of possession of secured asset in favour of the secured creditor to enable the secured creditor to sell and transfer the same under the provisions of the SARFAESI Act. Sub-section (6) of Section 13 of the SARFAESI Act provides that any transfer of secured asset after taking possession of secured asset by the secured creditor shall vest in the transferee all rights in, or in relation to, the secured asset transferred as if the transfer had been made by the owner of such secured asset. In other words, the transferee of a secured asset will not acquire any right in a secured asset under Sub-section (6) of Section 13 of the SARFAESI Act, unless it has been effected after the secured creditor has taken over possession of the secured asset. Thus, for the purpose of transferring the secured asset and for realizing the secured debt, the secured creditor will require the assistance of the Chief Metropolitan Magistrate or (21 of 25) [CW-4219/2019] the District Magistrate for taking possession of a secured asset from the lessee where the lease stands determined by any of the modes mentioned in Section 111 of the Transfer of Property Act.
27. We may now deal with the remedies available to the lessee where he is threatened to be dispossessed by any action taken by the secured creditor under Section 13 of the SARFAESI Act. Sub-rules (1) and (2) of Rule 8 of the Security Interest (Enforcement) Rules, 2002 provide for a possession notice where the secured asset is an immovable property. Sub-rules (1), (2) and (3) of Rule 8 of the Security Interest (Enforcement) Rules, 2002 as well as Appendix IV of the said Rules, which is the form of such possession notice, are extracted hereunder:
"8. Sale of immovable secured assets.-(1) Where the secured asset is an immovable property, the authorised officer shall take or cause to be taken possession, by delivering a possession notice prepared as nearly as possible in Appendix IV to these rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the property.
(2) The possession notice as referred to in Sub-rule (1) shall also be published, as soon as possible but in any case not later than seven days from the date of taking possession, in two leading newspaper one in vernacular language having sufficient circulation in that locality, by the authorised officer.
(3) In the event of possession of immovable property is actually taken by the authorised officer, such property shall be kept in his own custody or in the custody of any person authorised or appointed by him, who shall take as much care of the property in his custody as an owner of ordinary prudence would, under the similar circumstances, take of such property."
"APPENDIX-IV [See Rule-8(1)] POSSESSION NOTICE (For Immovable Property) Whereas The undersigned being the authorised officer of the _______________ (name of the Institution) under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest [Act, 2002 (54 of 2002)] and in exercise of powers conferred under Section 13(12) read with Rule 9 of the Security Interest (Enforcement) Rules, 2002 issued demand notice dated _______________ calling upon the borrower Shri _______________/M/s.
_______________ to repay the amount mentioned in the notice being Rs. _______________ (in words (22 of 25) [CW-4219/2019] _______________) within 60 days from the date of receipt of the said notice.
The borrower having failed to repay the amount, notice is hereby given to the borrower and the public in general that the undersigned has taken possession of the property described herein below in exercise of powers conferred on him/her under Section 13(4) of the said 27 [Act] read with Rule 9 of the said rules on this _______________ day of _______________ of the year _______________.
The borrower in particular and the public in general is hereby cautioned not to deal with the property and any dealings with the property will be subject to the charge of the _______________ (name of the Institution) for an amount Rs.
_______________ and interest thereon.
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Description of the immovable property
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All that part and parcel of the property consisting of Flat No. _______/Plot No. _______ In Survey No. _______________/City or Town Survey No. _______/Khasara No. _______________ Within the registration Sub-district and District _______________.
Bounded;
On the North by On the South by On the East by On the West by Sd/-
Authorised Officer (Name of the Institution) Date:
Place:
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28. A reading of Sub-rules (1) and (2) of Rule 8 of the Security Interest (Enforcement) Rules, 2002 would show that the possession notice will have to be affixed on the outer door or at the conspicuous place of the property and also published, as soon as possible but in any case not later than seven days from the date of taking possession, in two leading newspapers, one in vernacular language having sufficient circulation in that locality, by the authorised officer. At this stage, the lessee of an immovable property will have notice of the secured creditor making efforts to take possession of the secured assets of the borrower. When, therefore, a lessee becomes aware of the possession being taken by the secured creditor, in respect of the secured asset in respect of which he is the lessee, from the possession (23 of 25) [CW-4219/2019] notice which is delivered, affixed or published in Sub-rule (1) and Sub-rule (2) of Rule 8 of the Security Interest (Enforcement) Rules, 2002, he may either surrender possession or resist the attempt of the secured creditor to take the possession of the secured asset by producing before the authorised officer proof that he was inducted as a lessee prior to the creation of the mortgage or that he was a lessee under the mortgagor in accordance with the provisions of Section 65A of the Transfer of Property Act and that the lease does not stand determined in accordance with Section 111 of the Transfer of Property Act. If the lessee surrenders possession, the lease even if valid gets determined in accordance with clause (f) of Section 111 of the Transfer of Property Act, but if he resists the attempt of the secured creditor to take possession, the authorised officer cannot evict the lessee by force but has to file an application before the Chief Metropolitan Magistrate or the District Magistrate under Section 14 of the SARFAESI Act and state in the affidavit accompanying the application, the name and address of the person claiming to be the lessee. When such an application is filed, the Chief Metropolitan Magistrate or the District Magistrate will have to give a notice and give an opportunity of hearing to the person claiming to be the lessee as well as to the secured creditor, consistent with the principles of natural justice, and then take a decision. If the Chief Metropolitan Magistrate or District Magistrate is satisfied that there is a valid lease created before the mortgage or there is a valid lease created after the mortgage in accordance with the requirements of Section 65A of the Transfer of Property Act and that the lease has not been determined in accordance with the provisions of Section 111 of the Transfer of Property Act, he cannot pass an order for delivering possession of the secured asset to the secured creditor. But in case he comes to the conclusion that there is in fact no valid lease made either before creation of the mortgage or after creation of the mortgage satisfying the requirements of Section 65A of the Transfer of Property Act or that even though there was a valid lease, the lease stands determined in accordance with Section 111 of the Transfer of Property Act, he can pass an order for delivering possession of the secured asset to the secured creditor.
29. Sub-section (3) of Section 14 of the SARFAESI Act provides that no act of the Chief Metropolitan Magistrate or the District Magistrate or any officer authorised by the Chief Metropolitan Magistrate or District Magistrate done in pursuance of Section 14 shall be called in question in any court or before any authority. The SARFAESI Act, therefore, attaches finality to the decision of the Chief Metropolitan Magistrate or the District Magistrate and this decision cannot be challenged before any court or any authority. But this Court has repeatedly held that statutory provisions attaching finality to the decision of an authority excluding the power of any other authority or Court to examine such a decision will not be a bar for the High Court or this Court to exercise (24 of 25) [CW-4219/2019] jurisdiction vested by the Constitution because a statutory provision cannot take away a power vested by the Constitution. To quote, the observations of this Court in Columbia Sportswear Company v. Director of Income Tax, Bangalore "17. Considering the settled position of law that the powers of this Court under Article 136 of the Constitution and the powers of the High Court under Articles 226 and 227 of the Constitution could not be affected by the provisions made in a statute by the Legislature making the decision of the tribunal final or conclusive, we hold that Sub-section (1) of Section 245S of the Act, insofar as, it makes the advance ruling of the Authority binding on the applicant, in respect of the transaction and on the Commissioner and income- tax authorities subordinate to him, does not bar the jurisdiction of this Court under Article 136 of the Constitution or the jurisdiction of the High Court under Articles 226 and 227 of the Constitution to entertain a challenge to the advance ruling of the authority." In our view, therefore, the decision of the Chief Metropolitan Magistrate or the District Magistrate can be challenged before the High Court under Articles 226 and 227 of the Constitution by any aggrieved party and if such a challenge is made, the High Court can examine the decision of the Chief Metropolitan Magistrate or the District Magistrate, as the case may be, in accordance with the settled principles of law."
25. This Court finds that the Apex Court in such background of the facts of the case with respect to the dispute of lessee who was under a valid lease, observed that the power of the High Court in a given case is to be exercised with settled principles of law.
26. This Court finds that after the judgment passed by the Apex Court in the above case, even the amendment has been made in Section 17 and sub-section (4A) has been inserted with effect from 01.09.2016 whereby any person who claims tenancy or lease hold rights upon the secured asset, can move to the Debts Recovery Tribunal.
(25 of 25) [CW-4219/2019]
27. This court finds that the Apex Court in the cases of Hindon Forge Pvt. Ltd. (supra), Authorized Officer, State Bank of Travancore (supra) and ICICI Bank Ltd. Etc. Etc. (supra) has laid down the law that if measures are taken under Section 13 of the Securitisation Act, 2002 and then the application is filed to the same effect under Section 14 of the Securitisation Act, 2002 by the secured creditor, the remedy lies by way of filing appeal and the order as such is required to be assailed in appeal by any person feeling aggrieved against any of the action taken by the secured creditor to take possession of the secured asset.
28. This court following the above referred judgments of the Apex Court, finds that the present writ petition is not maintainable before this Court. The petitioner is always free to avail the statutory alternative remedy provided to challenge the action of the respondents. Accordingly, the instant writ petition is dismissed as not maintainable.
(ASHOK KUMAR GAUR),J Solanki DS, PS Powered by TCPDF (www.tcpdf.org)