Gujarat High Court
Paresh Indravadanbhai Brahmbhatt vs State Of Gujarat on 30 March, 2022
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
C/SCA/6226/2022 ORDER DATED: 30/03/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 6226 of 2022
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PARESH INDRAVADANBHAI BRAHMBHATT
Versus
STATE OF GUJARAT
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Appearance:
MR DEVDIP BRAHMBHATT(3490) for the Petitioner(s) No. 1,2
for the Respondent(s) No. 2
ADVANCE COPY SERVED TO GOVERNMENT PLEADER/PP for the
Respondent(s) No. 1
MR CR ABICHANDANI(2421) for the Respondent(s) No. 3
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 30/03/2022
ORAL ORDER
1. Heard learned Advocate Mr. Devdip Brahmbhatt for the petitioners and learned Advocate Mr. PR Abhichandani for the respondent No. 3
2. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs:-
"(A) That this Hon'ble Court may be pleased to allow this petition and to issue a writ of certiorari or any other appropriate writ, direction or order in the nature of writ, directing the respondents for not to take the possession of the secured asset as Page 1 of 21 Downloaded on : Sat Dec 24 13:54:00 IST 2022 C/SCA/6226/2022 ORDER DATED: 30/03/2022 mentioned in the order dated 28.12.2021 by quashing and setting aside the impugned order dated 28.12.2021 passed in Criminal Miscellaneous Application No. 1927 of 2020 passed by the learned in-charge Chief Metropolitan Magistrate of Ahmedabad City;
(B) Pending admission and final disposal of this petition, the further proceedings in the impugned order dated 28.12.2021 passed in Criminal Miscellaneous Application No. 1927 of 2020 passed by the learned In-Charge Chief Metropolitan Magistrate of Ahmedabad City may be stayed;
(C) That this Hon'ble Court may be pleased to grant such further and other reliefs, as may be deemed to be just and proper."
3. The petitioners No. 1 is the borrower and petitioner No. 2 is a co-borrower, who had taken housing loan of Rs. 14,64,239/- on 18.05.2018 from the respondent No.3-Financial Institution.
4. The petitioners had mortgaged their residential property situated at flat No. A-1107, 11th Floor, Samor heights, Nr. S.P. Ring Road Nr. Muthiya Tall Naka, Naroda, Ahmedabad-382330, Gujarat with the respondent No. 3.
5. The petitioners could not repay the installments of the housing loan regularly and hence, the loan account of the petitioners was Page 2 of 21 Downloaded on : Sat Dec 24 13:54:00 IST 2022 C/SCA/6226/2022 ORDER DATED: 30/03/2022 declared as Non Performing Assets (NPA) on 8.11.2019 by the respondent No. 3 as per the directives of the Reserve Bank of India read with provisions of the Banking Regulation Act, 1949.
6. The respondent No. 3 issued the Notice under Section 13(4) of the The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'SARFAESI ACT') on 02.12.2019 by the respondent No. 3. It is not the case of the petitioners that such notice was never served upon the petitioners as the respondent No. 3 also published a public notice in newspaper on 6.12.2019.
7. It appears that thereafter in exercise of powers conferred under Section 13(4) of the SARFAESI Act read with Rule 9 of the Security (Enforcement) Interest Rules, 2002 ( for short ' Rules 2002'), the respondent No. 3 issued the possession notice on 21st May, 2020 in the newspapers in vernacular language and in English language on 26th May, 2020.
8. The respondent No.3 thereafter preferred an application under Section 14 of the SARFAESI Act Page 3 of 21 Downloaded on : Sat Dec 24 13:54:00 IST 2022 C/SCA/6226/2022 ORDER DATED: 30/03/2022 on 4.08.2020 before the Chief Metropolitan Magistrate, Ahmedabad. The Chief Metropolitan Magistrate, Ahmedabad passed the impugned order dated 28.12.2021 under Section 14 of the SARFAESI Act, 2002 after considering the application made by the respondent No. 3 for assistance to get physical possession of the secured assets from the petitioners.
9. Learned Advocate Mr. Devdip Brahmbhatt submitted that the impugned order passed by the Chief Metropolitan Magistrate, Ahmedabad, is without giving an opportunity of hearing to the petitioners in as much as there are also defects in the Notice issued by the respondent No. 3 as the correct figures with interest is not reflected in such Notice.
10. It was submitted that this petition is required to be entertained by this Court in view of the decision of the Apex Court in case of Harshad Govardhan Sondagar vs. International Assets Reconstruction Company Ltd. reported in (2014) 6 SCC 1 wherein the Apex Court has held as under:
"29. Sub-section (3) of Section 14 of the SARFAESI Act provides that no act of the Chief Page 4 of 21 Downloaded on : Sat Dec 24 13:54:00 IST 2022 C/SCA/6226/2022 ORDER DATED: 30/03/2022 Metropolitan Magistrate or the District Magistrate or any officer authorised by the Chief Metropolitan Magistrate or the 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 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 Co. v. Director of Income Tax [(2012) 11 SCC 224] : (SCC p. 234, para
17) "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 245-S 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 Page 5 of 21 Downloaded on : Sat Dec 24 13:54:00 IST 2022 C/SCA/6226/2022 ORDER DATED: 30/03/2022 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."
11. It was further submitted that as the Chief Metropolitan Magistrate has passed the impugned order in flagrant breach of the principles of natural justice, this Court can entertain the petition under Article 226 of the Constitution of India and, therefore, petition deserves to be allowed.
12. On a query raised by this Court with regard to alternative efficacious remedy available to the petitioners, under Section 17 of the SARFAESI Act, it was submitted by learned Advocate Mr. Brahmbhatt that though the alternative efficacious remedy is available, it is the choice of the petitioners to challenge the order passed by the Chief Metropolitan Magistrate, invoking the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India in view of the sub-Section 3 of the Section 14 of the SARFAESI Act, which gives finality to the order passed under Section 14 of the SARFAESI Act.
13. It is true that this Court has jurisdiction to entertain the petition under Article 226 as held by Page 6 of 21 Downloaded on : Sat Dec 24 13:54:00 IST 2022 C/SCA/6226/2022 ORDER DATED: 30/03/2022 the Hon'ble Apex Court in the case of Harshad Govardhan Sondagar (supra), however, when there is alternative efficacious remedy available to the petitioner, the Hon'ble Supreme Court in such cases has held that the High Court should restrain itself from exercising the jurisdiction under Article 226 of the Constitution of India, while entertaining the petition challenging the order passed under the SARFAESI Act. The Hon'ble Supreme Court in the recent case of Phoenix ARC Private Ltd. vs. Vishwa Bharati Vidya Mandir & Ors. Reported 2022 (1) Scale 441 in such circumstances, after analyzing the case law on the subject has held as under:
"7. At the outset, it is required to be noted that in the present case, the respondents - borrowers whose accounts have been declared as NPA in the year 2013 have filed the writ petitions before the High Court challenging the communication dated 13.08.2015 purporting it to be a notice under Section 13(4) of the SARFAESI Act. It is required to be noted that as per the appellant - assignor approximately Rs.117 crores is due and payable to the Bank. While passing the ex-parte interim order on 26.08.2015 and while entertaining the writ petitions against the communication dated 13.08.2015, the High Court has directed to maintain status quo with respect to the possession of the secured properties on condition that the borrowers deposit Rs. 1 crore only. Despite the fact that subsequently an application for vacating the ex- parte ad-interim order has been filed in the year 2016, the application for vacating the interim order has not been decided and disposed of. On the contrary, the High Court thereafter has further extended the ex-parte ad-interim order dated 26.08.2015 on condition that the borrowers should deposit a further sum of Rs. 1 crore. Thus, in all Page 7 of 21 Downloaded on : Sat Dec 24 13:54:00 IST 2022 C/SCA/6226/2022 ORDER DATED: 30/03/2022 the borrowers are directed to deposit Rs. 3 crores only against the dues of approximately Rs.117 crores.
7.1 It is the case on behalf of the appellant that the writ petitions against the communication dated 13.08.2015 proposing to take further action under Section 13(4) of the SARFAESI Act and that too against a private Assets Reconstructing Company (ARC) shall not be maintainable. It is also the case on behalf of the appellant that assuming that the communication dated 13.08.2015 can be said to be a notice under Section 13(4) of the SARFAESI Act, in view of the alternative statutory remedy available by way of appeal under Section 17 of the SARFAESI Act, the High Court ought not to have entertained the writ petitions.
7.2 While considering the issue regarding the maintainability of and/or entertainability of the writ petitions by the High Court in the instant case, a few decisions of this Court relied upon by the learned Senior Advocate appearing on behalf of the appellant - ARC are required to be referred to.
7.3 In the case of Satyawati Tondon & Ors. (supra), it was observed and held by this Court that the remedies available to an aggrieved person against the action taken under section 13(4) or Section 14 of the SARFAESI Act, by way of appeal under Section 17, can be said to be both expeditious and effective. On maintainability of or entertainability of a writ petition under Article 226 of the Constitution of India, in a case where the effective remedy is available to the aggrieved person, it is observed and held in the said decision in paragraphs 43 to 46 as under:-
"43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved Page 8 of 21 Downloaded on : Sat Dec 24 13:54:00 IST 2022 C/SCA/6226/2022 ORDER DATED: 30/03/2022 person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.
44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution.
45. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance.Page 9 of 21 Downloaded on : Sat Dec 24 13:54:00 IST 2022
C/SCA/6226/2022 ORDER DATED: 30/03/2022
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 [AIR 1969 SC 556], Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8 SCC 1] and Harbanslal Sahnia v. Indian Oil Corpn. Ltd. [(2003) 2 SCC 107] and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order."
7.4 In the case of City and Industrial Development Corpn. Vs. Dosu Aardeshir Bhiwandiwala, (2009) 1 SCC 168, it was observed by this Court in paragraph 30 that the Court while exercising its jurisdiction under Article 226 is duty bound to consider whether ...............(c) the petitioner has any alternative or effective remedy for the resolution of the dispute."
7.5 In the case of Kanaiyalal Lalchand Sachdev and Ors. (supra) after referring to the earlier decisions of this Court in the cases of Sadhana Lodh Vs. National insurance Co. Ltd. and Anr., (2003) 3 SCC 524; Surya Dev Rai Vs. Ram Chander Rai and Ors., (2003) 6 SCC 675 and State Bank of India Vs. Allied Chemical Laboratories and Anr., (2006) 9 SCC 252 Page 10 of 21 Downloaded on : Sat Dec 24 13:54:00 IST 2022 C/SCA/6226/2022 ORDER DATED: 30/03/2022 while upholding the order passed by the High Court dismissing the writ petition on the ground that an efficacious remedy is available under Section 17 of the SARFAESI Act, it was observed that ordinarily relief under Articles 226/227 of the Constitution of India is not available if an efficacious alternative remedy is available to any aggrieved person. 7.6 Similar view has been expressed by this Court in subsequent decisions in the case of General Manager, Sri Siddeshwara Cooperative Bank Limited & Anr. (supra) as well as in the case of Agarwal Tracom Private Limited (supra).
8. Applying the law laid down by this court in the aforesaid decisions, it is required to be considered whether, in the facts and circumstances of the case, the High Court is justified in entertaining the writ petitions against the communication dated 13.08.2015 and to pass the ex-parte ad interim order virtually stalling/restricting the proceedings under the SARFAESI Act by the creditor.
9. It is required to be noted that it is the case on behalf of the appellant that as such the communication dated 13.08.2015 cannot be said to be a notice under Section 13(4) of the SARFAESI Act at all. According to the appellant, after the notice under Section 13(2) of the SARFAESI Act was issued in the year 2013 and thereafter despite the Letter of Acceptance dated 27.02.2015, no further amount was paid, the appellant called upon the borrowers to make the payment within two weeks failing which a further proceeding under Section 13(4) of the SARFAESI Act was proposed. Thus, according to the appellant, it was a proposed action. Therefore, the writ petitions filed against the proposed action under Section 13(4) of the SARFAESI Act was not maintainable and/or entertainable at all.
10. Assuming that the communication dated 13.08.2015 can be said to be a notice under Section 13(4) of the SARFAESI Act, in that case also, in view of the Page 11 of 21 Downloaded on : Sat Dec 24 13:54:00 IST 2022 C/SCA/6226/2022 ORDER DATED: 30/03/2022 statutory remedy available under Section 17 of the SARFAESI Act and in view of the law laid down by this Court in the cases referred to hereinabove, the writ petitions against the notice under Section 13(4) of the SARFAESI Act was not required to be entertained by the High Court. Therefore, the High Court has erred in entertaining the writ petitions against the communication dated 13.08.2015 and also passing the ex-parte ad-interim orders directing to maintain the status quo with respect to possession of secured properties on the condition directing the borrowers to pay Rs. 1 crore only (in all Rs.3 crores in view of the subsequent orders passed by the High Court extending the ex- parte ad-interim order dated 26.08.2015) against the total dues of approximate Rs.117 crores. Even the High Court ought to have considered and disposed of the application for vacating the ex-parte ad- interim relief, which was filed in the year 2016 at the earliest considering the fact that a large sum of Rs.117 crores was involved.11. Now, in so far as the reliance placed upon the decision of this Court in the case of J. Rajiv Subramaniyan and Anr. (supra) by the learned senior counsel appearing on behalf of the borrowers in support of his submission that writ petition would be maintainable, it is to be noted that in the aforesaid case, the learned counsel appearing on behalf of the Bank did not press the maintainability and/or entertainability of the writ petition under Article 226 and therefore, this Court had no occasion to consider the entertainability and/or maintainability of the writ petition. Therefore, the aforesaid decision is not of any assistance to the respondents - borrowers.
12. Even otherwise, it is required to be noted that a writ petition against the private financial institution - ARC - appellant herein under Article 226 of the Constitution of India against the proposed action/actions under Section 13(4) of the SARFAESI Act can be said to be not maintainable. In the present case, the ARC proposed to take action/actions under the SARFAESI Act to recover the borrowed amount as a secured creditor. The ARC as such cannot be said to be performing public Page 12 of 21 Downloaded on : Sat Dec 24 13:54:00 IST 2022 C/SCA/6226/2022 ORDER DATED: 30/03/2022 functions which are normally expected to be performed by the State authorities. During the course of a commercial transaction and under the contract, the bank/ARC lent the money to the borrowers herein and therefore the said activity of the bank/ARC cannot be said to be as performing a public function which is normally expected to be performed by the State authorities. If proceedings are initiated under the SARFAESI Act and/or any proposed action is to be taken and the borrower is aggrieved by any of the actions of the private bank/ bank/ARC, borrower has to avail the remedy under the SARFAESI Act and no writ petition would lie and/ or is maintainable and/or entertainable. Therefore, decisions of this Court in the cases of Praga Tools Corporation (supra) and Ramesh Ahluwalia (supra) relied upon by the learned counsel appearing on behalf of the borrowers are not of any assistance to the borrowers.
13. Now, so far as the submission on behalf of the borrowers that in exercise of the powers under Article 226 of the Constitution, this Court may not interfere with the interim / interlocutory orders is concerned, the decision of this Court in the case of Mathew K.C. (supra) is required to be referred to.
13.1 In the case of Mathew K.C. (supra) after referring to and/or considering the decision of this Court in the case of Chhabil Dass Agarwal (supra), it was observed and held in paragraph 5 as under:-
"5. We have considered the submissions on behalf of the parties. Normally this Court in exercise of jurisdiction under Article 136 of the Constitution is loath to interfere with an interim order passed in a pending proceeding before the High Court, except in special circumstances, to prevent manifest injustice or abuse of the process of the court. In the present case, the facts are not in dispute. The discretionary jurisdiction under Article 226 is not absolute but has to be exercised judiciously in the given facts of a case and in accordance with law.Page 13 of 21 Downloaded on : Sat Dec 24 13:54:00 IST 2022
C/SCA/6226/2022 ORDER DATED: 30/03/2022 The normal rule is that a writ petition under Article 226 of the Constitution ought not to be entertained if alternate statutory remedies are available, except in cases falling within the well- defined exceptions as observed in CIT v. Chhabil Dass Agarwal [CIT v. Chhabil Dass Agarwal, (2014) 1 SCC 603], as follows: (SCC p. 611, para 15) "15. Thus, while it can be said that this Court has recognised some exceptions to the rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal case [Thansingh Nathmal v. Supt. of Taxes, AIR 1964 SC 1419] , Titaghur Paper Mills case [Titaghur Paper Mills Co. Ltd. v. State of Orissa, (1983) 2 SCC 433] and other similar judgments that the High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation."
13.2 Applying the law laid down by this Court in the case of Mathew K.C. (supra) to the facts on hand, we are of the opinion that filing of the writ petitions by the borrowers before the High Court under Article 226 of the Constitution of India is an abuse of process of the Court. The writ petitions have been filed against the proposed action to be taken under Section 13(4). As observed hereinabove, even assuming that the Page 14 of 21 Downloaded on : Sat Dec 24 13:54:00 IST 2022 C/SCA/6226/2022 ORDER DATED: 30/03/2022 communication dated 13.08.2015 was a notice under Section 13(4), in that case also, in view of the statutory, efficacious remedy available by way of appeal under Section 17 of the SARFAESI Act, the High Court ought not to have entertained the writ petitions. Even the impugned orders passed by the High Court directing to maintain the status quo with respect to the possession of the secured properties on payment of Rs.1 crore only (in all Rs.3 crores) is absolutely unjustifiable. The dues are to the extent of approximately Rs.117 crores. The ad-interim relief has been continued since 2015 and the secured creditor is deprived of proceeding further with the action under the SARFAESI Act. Filing of the writ petition by the borrowers before the High Court is nothing but an abuse of process of Court. It appears that the High Court has initially granted an ex- parte ad-interim order mechanically and without assigning any reasons. The High Court ought to have appreciated that by passing such an interim order, the rights of the secured creditor to recover the amount due and payable have been seriously prejudiced. The secured creditor and/or its assignor have a right to recover the amount due and payable to it from the borrowers. The stay granted by the High Court would have serious adverse impact on the financial health of the secured creditor/assignor. Therefore, the High Court should have been extremely careful and circumspect in exercising its discretion while granting stay in such matters. In these circumstances, the proceedings before the High Court deserve to be dismissed.
14. In view of the above and for the reasons stated above, present appeals succeed. The Writ Petition Nos. 35564 to 35566 of 2015 before the High Court are dismissed. Consequently, the ex-parte ad-interim order dated 26.08.2015 further extended by orders dated 28.02.2017 and 27.03.2018 stand vacated."
Page 15 of 21 Downloaded on : Sat Dec 24 13:54:00 IST 2022C/SCA/6226/2022 ORDER DATED: 30/03/2022 Thus, in view of the above conspectus of law, this petition is not entertained as it would amount to abuse of process of Court as held by the Hon'ble Apex Court in the above decision.
14. The Division Bench of this Court also in case of Idbi Bank Limited vs. Hytaisun Magnetics Limited reported in 2011 (2) GLR 1438 has also held that the alternative efficacious remedy against the order passed by the Magistrarte under Section 14 is to prefer an application under Section 17 of the SARFAESI Act, 2002 as under:
"20. In view of the Division Bench decisions as referred to above, the provisions of law as already cited and the observations already made by us, we hold as follows :-
(i) Under Chapter III of the Securitization Act, a secured creditor has right to enforce security interest without the intervention of the Court or Tribunal in accordance with the provisions of the said Act. [Section 13(1)]
(ii) The borrower, who is under liability to the secured creditor under a secured agreement, is entitled to take a notice under Section 13(2) of the said Act.
(iii) The secured creditor who intends to enforce the secured asset is bound to give details of amount payable by the borrower and the secured assets intended to be enforced. [Section 13(3)] Page 16 of 21 Downloaded on : Sat Dec 24 13:54:00 IST 2022 C/SCA/6226/2022 ORDER DATED: 30/03/2022
(iv) Under Section 13(3A), the borrower has right to make representation or raise objection. If any objection is there with regard to the secured asset, that can be raised only at the stage of Section 13(3A). Under the said provision, only the secured creditor will determine the objection and not any Court or Tribunal.
(v) No cause of action takes place even after the decision taken by the secured creditor under Section 13(3A) till the secured creditor takes recourse of one or more measures including the measure to take possession of the secured asset of the borrower under Section 13(4) of the Act.
(vi) The secured creditor is competent to take possession of all the secured assets of its own following the procedure laid down under Rule 8 of the Security Interest (Enforcement) Rules, 2002.
(vii) Only when the secured creditor finds difficulty to take possession of the secured asset, it may take assistance of the Chief Metropolitan Magistrate or the District Magistrate under Section 14 of the Act.
(viii) The measures taken under Section 14 amounts to measures taken under Section 13(4) of the Act.
(ix) As the measures taken under Section 14 amount to measures taken under Section 13(4) of the Act, under Section 14(3) such measures cannot be called in question before any Court or Tribunal.
(x) 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 13(4), the aggrieved person Page 17 of 21 Downloaded on : Sat Dec 24 13:54:00 IST 2022 C/SCA/6226/2022 ORDER DATED: 30/03/2022 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.
(xi) All such determination is to be made by the Debts Recovery Tribunal including the question whether the asset is a secured asset or not and the Chief Metropolitan Magistrate or the District Magistrate has not been empowered to adjudicate such dispute, but is directed only to assist the secured creditor in taking possession of the secured asset. If they are not empowered to adjudicate the dispute, they cannot also call for the secured creditor to produce any document to decide whether the asset is secured asset or not, which will be futile exercise in absence of power to adjudicate such issue. Under Clauses (a) and (b) of Section 14(1), the Chief Metropolitan Magistrate or the District Magistrate and on request, are bound to take possession of the secured assets as also the documents relating thereto. If the documents are to be obtained by them, the question of asking the secured creditor to produce the document in all cases does not arise. Therefore, they do not have jurisdiction even to call for the documents."
21. In view of the aforesaid findings, we hold that the judgments delivered by the learned Single Judge in the case of Authorized Officer, Canara Bank vs. Sulay Traders through Bipin Kantilal Vakta, reported in 2010 (1) GLR 770 and the unreported decision dated 3.3.2008 in the case of Dena Bank vs. The District Magistrate in Special Civil Application No. 3943 of 2008 do not lay down good law.
22. For the reasons aforesaid, the District Magistrate, Mehsana having no jurisdiction to call for the record or to adjudicate the matter, we hold that the order passed by the District Magistrate, Mehsana dated 21.9.2010 in MCC Case No. 1 of 2001 is illegal. We set aside the same. The case is remitted to the District Magistrate, Mehsana to assist the Page 18 of 21 Downloaded on : Sat Dec 24 13:54:00 IST 2022 C/SCA/6226/2022 ORDER DATED: 30/03/2022 petitioner - bank in taking possession of the secured assets and documents thereto. It must be made within a fortnight.
However, the findings on this case will not affect the case preferred by the respondent - borrowers before the Debts Recovery Tribunal, Ahmedabad under Section 17 of the Securitization Act."
15. The Apex Court in the recent decision in case of Panjab National Bank vs. Union of India & Ors. In Civil Appeal No. 2196 of 2012 dated 24.02.2022 after considering the provisions of the SARFAESI Act, and in the Central Excise Act, 1944, has held as under:
43) In view of the above, we are of the firm opinion that the arguments of the learned counsel for the Appellant, on the second issue, hold merit.
Evidently, prior to insertion of section 11E in the Central Excise Act, 1944 w.e.f. 08.04.2011, there was no provision in the Act of 1944 inter alia, providing for First Charge on the property of the assessee or any person under the Act of 1944. Therefore, in the event like in the present case, where the land, building, plant machinery, etc. have been mortgaged/hypothecated to a secured creditor, having regard to the provisions contained in section 2(zc) to (zf) of SARFAESI Act, 2002, read with provisions contained in Section 13 of the SARFAESI Act, 2002, the Secured Creditor will have a First Charge on the Secured Assests, Moreover, section 35 of the SARFAESI Act, 2002 inter alia, provides that the provisions of the SARFAESI Act, shall have overriding effect on all other laws. It is further pertinent to note that even the provisions contained in Section 11E of the Central Excise Act, 1944 are subject to the provisions contained in the SARFAESI Act, 2002.
44) Thus, as has been authoritatively established by the aforementioned cases in general, and Union of Page 19 of 21 Downloaded on : Sat Dec 24 13:54:00 IST 2022 C/SCA/6226/2022 ORDER DATED: 30/03/2022 India vs SICOM Ltd. (supra) in particular, the provisions contained in the SARFAESI Act, 2002, even after insertion of Section 11E in the Central Excise Act, 1944 w.e.f. 08.04.2011, will have an overriding effect on the provisions of the Act of 1944.
45) Moreover, the submission that the validity of the confiscation order cannot be called into question merely on account of the Appellant being a secured creditor is misplaced and irrelevant to the issue at hand. The contention that a confiscation order cannot be quashed merely because a security interest is created in respect of the very same property is not worthy of acceptance. However, what is required to be appreciated is that, in the present case, the confiscation order is not being quashed merely because a security interest is created in respect of the very same property. On the contrary, the confiscation orders, in the present case, deserve to be quashed because the confiscation orders themselves lack any statutory backing, as they were rooted in a provision that stood omitted on the day of the passing of the orders. Hence, it is this inherent defect in the confiscation orders that paves way for its quashing and not merely the fact that a security interest is created in respect of the very same property that the confiscation orders dealt with.
46) Further, the contention that in the present case, the confiscation proceedings were initiated almost 8-9 years prior to the charge being created in respect of the very same properties in favour of the bank is also inconsequential. The fact that the charge has been created after some time period has lapsed post the initiation of the confiscation proceedings, will not provide legitimacy to a confiscation order that is not rooted in any valid and existing statutory provision.
47) To conclude, the Commissioner of Customs and Central Excise could not have invoked the powers under Rule 173Q(2) of the Central Excise Rules, 1944 on 26.03.2007 and 29.03.2007 for confiscation of land, buildings etc., when on such date, the said Rule 173Q(2) was not in the Statute books, having Page 20 of 21 Downloaded on : Sat Dec 24 13:54:00 IST 2022 C/SCA/6226/2022 ORDER DATED: 30/03/2022 been omitted by a notification dated 12.05.2000. Secondly, the dues of the secured creditor, i.e. the Appellant-Bank, will have priority over the dues of the Central Excise Department, as even after insertion of Section 11E in the Central Excise Act, 1944 w.e.f. 08.04.2011, and the provisions contained in the SARFAESI Act, 2002 will have an overriding effect on the provisions of the Central Excise Act of 1944."
16. In view of the foregoing reasons, without entering into the merits of the matter, this petition is not entertained as the petitioner has alternative efficacious remedy under Section 17 of the SARFAESI Act, and the petitioner is relegated to avail such remedy before the Debts Recovery Tribunal.
The petition is accordingly dismissed with no order as to costs.
(BHARGAV D. KARIA, J) MANISH MISHRA Page 21 of 21 Downloaded on : Sat Dec 24 13:54:00 IST 2022