Madras High Court
S.Selvaraj vs The Authorised Officer/Chief Manager on 17 June, 2015
Bench: S. Manikumar, G. Chockalingam
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 17.06.2015
CORAM
THE HONOURABLE MR.JUSTICE S. MANIKUMAR
AND
THE HONOURABLE MR.JUSTICE G. CHOCKALINGAM
Writ Petition (MD) No.7838 of 2015
and M.P.No.1 of 2015
S.Selvaraj ... Appellant
Vs.
1. The Authorised Officer/Chief Manager,
State Bank of India,
Tirunelveli Branch,
No.5C/1, Trivandrum Road,
Tirunelveli.
2. The Branch Manager,
State Bank of India,
No.25, 25A, S.N.High Road,
Tirunelveli. ... Respondents
Prayer
Writ Petition under Article 226 of the Constitution of India, praying
for a Writ of Certiorari, to call for the entire records, pertaining to
impugned possession notice, dated 20.04.2015, issued by the 1st respondent,
in respect of the petitioner's house property, situated in Old Survey
No.385/C1, New Survey No.428/1, Ward No.8 at Door No.15-15, Plot No.3,
Pandarapattam, Perumpuli Desam, Nallur Village, Unnamalaikadai Town
Panchayat, Vilavancode Taluk, Kanyakumari District and quash the same.
!For Appellant : Mr.R.Anand
For Respondents : No appearance
:JUDGMENT
(Judgment of the Court was made by S.MANIKUMAR,J.) Possession Notice, dated 20.04.2015, issued by the Authorised Officer/Chief Manager, State Bank of India, Tirunelveli Branch, Tirunelveli, 1st respondent herein, is challenged by the petitioner-Guarantor, on the grounds, inter alia that as per the scheme of the Act, whenever, a demand notice, under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, the authorised officer must consider the objection of the borrower and before taking a decision, under Section 13(4) of the said Act, he must record reasons in brief, stating the necessity for taking symbolic possession of the secured assets.
2. Adding further, Mr.R.Anand, learned counsel for the petitioner submitted that the objections, dated 13.04.2015, raised by the borrower, Mr.Muthu Krishnan, was not considered, eventhough it is acknowledged.
3. Placing reliance on a decision of the Apex Court in Mathew Varghese v. M.Amritha Kumar reported in 2014 (5) SCC 610, learned counsel for the petitioner submitted that when there is a violation of any mandatory provision, writ Court has jurisdiction to entertain the same.
Heard the learned counsel for the petitioner and perused the materials available on record.
4. One Muthu Krishnan, has availed the bank loan in Cash Credit Facility and offered a house property, situated in Old Survey No.385/C1, New Survey No.428/1, Ward No.8 at Door No.15-15, Plot No.3, Pandarapattam, Perumpuli Desam, Nallur Village, Unnamalaikadai Town Panchayat, Vilavancode Taluk, Kanyakumari District, as secured debt. Apart from the above, two other properties, have also been given as secured debts. Vide notice, dated 11.02.2015, under Section 13(2) of SARFAESI Act, the loan amount has been declared as non-performing asset. The borrower acknowledged the said notice. Vide Lawyer's Notice, dated 13.04.2015, the borrower has replied that Schedules B and C mentioned in the notice, are not correct. He was under
financial lock, due to huge investment. But the goods were not delivered and that they were expected soon. In the notice, it is stated that the borrower is ready to regularise the loan amount. When the borrower has approached the Bank with pending dues, there was no response and in the abovesaid circumstances, he has called upon the Bank to withdraw the notice, under Section 13(2) of the SARFAESI Act. After receiving the said lawyer's notice, the impugned possession notice, under Section 13(4) of the said Act, has been issued.
5. Before adverting to the merits of the case, this Court deems it fit to extract few provisions in the SARFAESI Act and Security Interest Rules, 2002, considered in the reported judgment.
?Section 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 the court or tribunal, by such creditor in accordance with the provisions of this Act.
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(8) If the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the secured creditor at any time before the date fixed for sale or transfer, the secured asset shall not be sold or transferred by the secured creditor, and no further step shall be taken by him for transfer or sale of that secured asset.
Rule 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.
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(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 a owner of ordinary prudence would, under the similar circumstances, take of such property.
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(5) Before effecting sale of the immovable property referred to in sub- rule (1) of Rule 9, the authorised officer shall obtain valuation of the property from an approved valuer and in consultation with the secured creditor, fix the reserve price of the property and may sell the whole or any part of such immovable secured asset by any of the following methods:
(a) by obtaining quotations from the persons dealing with similar secured assets or otherwise interested in buying the such assets; or
(b) by inviting tenders from the public;
(c) by holding public auction; or
(d) by private treaty.
(6) The authorised officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under sub-rule (5):
Provided that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in two leading newspapers one in vernacular language having sufficient circulation in the locality by setting out the terms of sale, which shall include,-
(a) The description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor;
(b) the secured debt for recovery of which the property is to be sold;
(c) reserve price, below which the property may not be sold;
(d) time and place of public auction or the time after which sale by any other mode shall be completed;
(e) depositing earnest money as may be stipulated by the secured creditor;
(f) any other thing which the authorised officer considers it material for a purchaser to know in order to judge the nature and value of the property.
Rule 9. Time of sale, issue of sale certificate and delivery of possession, etc.-
(1) No sale of immovable property under these rules shall take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the proviso to sub-rule (6) or notice of sale has been served to the borrower.?
6. In Mathew Varghese v. M.Amritha Kumar reported in 2014 (5) SCC 610, the Bank has issued a notice under Section 13(2) of the SARFAESI Act and thereafter, stated to have taken possession of the mortgaged property, by invoking Section 13(4) of SARFAESI Act, read along with Rules 8 and 9 of the Rules, 2002. Securitisation application has been filed before the Debt Recovery Tribunal, challenging the possession notice. Prayer to restrain the Bank from evicting the respondents 1 and 2 therein, was also made. Subsequently, attempts have been made for one time settlement. The Bank withdrew its offer for One Time Settlement and attempted to sell the property under Rule 8(6) of the Rules, 2002, by fixing a reserve price and publication was made in the newspaper, inviting the tender cum auction. Parties were also intimated. At this juncture, writ petition was filed, challenging the proceedings initiated under the SARFAESI Act. Taking note of the O.A., filed by the Bank as well as S.A., filed by the parties, a learned single Judge directed the Debt Recovery Tribunal to hear the parties and dispose of, both the cases or at least the Securitisation Application, filed by the parties, without any delay. The Debt Recovery Tribunal fixed a date for disposal of both the applications. While issuing the said directions, the learned single Judge also gave liberty to the parties to settle the liability and directed the Bank to defer the sale posted, by six weeks, by imposing a condition on the parties, to deposit a sum of Rs.10,00,000/- before the date of sale. It was also observed that since the Bank had agreed for OTS, the bank should waive interest, if the parties offer a settlement, within a reasonable time and by making payment of the said amount. By virtue of the orders, sale was postponed and not effected. Amount was deposited, as directed. The Debt Recovery Tribunal dismissed the Securitisation Application, with costs. On the next day, the Bank, while accepting the tender of the appellant therein, asked him to deposit 25% of the bid amount and the balance amount, within 15 days. The Appellant deposited the 25% of the total bid amount and also the balance amount, as directed. Thereafter, the Bank confirmed the sale, in favour of the appellant. After confirmation, the parties were directed to collect the balance amount from the Bank. Review of the judgment made in the Writ Petition, ended in dismissal, giving liberty to the the parties to challenge the sale. At this juncture, another writ petition, challenging the virus of the Rules, 2002, was filed and subsequently, the same was also dismissed, on the grounds that the parties have efficacious remedy, under the Act. Writ Appeal filed, was allowed, wherein, the Hon'ble Division Bench took a view that the sale was not conducted in a just and proper manner, and that the Bank ought to have re-notified the sale or at least extended the time for receiving further tenders. In these circumstances, the Hon'ble Supreme Court was called upon to interpret Section 13(8) of the SARFAESI Act read with Rules 8 and 9 of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as ?the Rules, 2002?). Though the learned Senior Counsel for the appellant therein has contended that the Hon'ble Division Bench ought not to have exercised its jurisdiction, when the parties, as guarantors, had every right to work out their remedy as against the sale effected, under the SARFAESI Act, after considering the statutory provisions and decisions, disposed of the appeals, by giving directions.
7. In the reported judgment, interpretation of the provisions, stated supra, was the main issue, and therefore, on the facts and circumstances of the case, despite objections of availability of alternative remedy, the Hon'ble Supreme Court, after interpreting the provisions, issued appropriate orders. Reverting to the case on hand, guarantor has relied on Section 3-A of the SARFAESI Act. Needless to state when interpretations of provisions is required to be made, Courts have the jurisdiction to decide the same, and not to leave the same to the Tribunals, presided over by a Non- Judicial Member. That is a settled legal position.
8. Therefore, with due respect, the decision in Mathew Varghese's case (cited supra), rendered while interpreting the statutory provisions, in strict senso, cannot be made applicable to the facts on hand, for the reason that even taking it for granted, if there is any procedural violation of Section 3-A of the abovesaid Act, it is for the borrower, who can be said to be an aggrieved person. Section speaks only about the borrower and not the guarantor. Borrower can always approach the Debt Recovery Tribunal, for an action, under Section 17 of the Act, and if he fails to do so, then as per Section 17 of the Act, 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 under this Chapter, may make an application 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 measure had been taken. The said Section reads as follows:-
''17. Right to appeal.-- (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 under this Chapter, may make an application 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 measure had been taken:
Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower.
Explanation : For the removal of doubts, it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under this sub-section.
(2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder.
(3) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section (4) of section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management of the business to the borrower or restoration of possession of the secured assets to the borrower, it may by order, declare the recourse to any one or more measures referred to in sub-section (4) of section 13 taken by the secured creditors as invalid and restore the possession of the secured assets to the borrower or restore the management of the business to the borrower, as the case may be, and pass such order as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub-section (4) of section 13.
(4) If, the Debts Recovery Tribunal declares the recourse taken by a secured creditor under sub-section (4) of section 13, is in accordance with the provisions of this Act and the rules made thereunder, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor shall be entitled to take recourse to one or more of the measures specified under sub-section (4) of section 13 to recover his secured debt.
(5) Any application made under sub-section (1) shall be dealt with by the Debts Recovery Tribunal as expeditiously as possible and disposed of within sixty days from the date of such application:
Provided that the Debts Recovery Tribunal may, from time to time, extend the said period for reasons to be recorded in writing, so, however, that the total period of pendency of the application with the Debts Recovery Tribunal, shall not exceed four months from the date of making of such application made under sub-section (1).
(6) If the application is not disposed of by the Debts Recovery Tribunal within the period of four months as specified in sub-section (5), any part to the application may make an application, in such form as may be prescribed, to the Appellate Tribunal for directing the Debts Recovery Tribunal for expeditious disposal of the application pending before the Debts Recovery Tribunal and the Appellate Tribunal may, on such application, make an order for expeditious disposal of the pending application by the Debts Recovery Tribunal.
(7) Save as otherwise provided in this Act, the Debts Recovery Tribunal shall, as far as may be, dispose of the application in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the rules made thereunder.?
9. For the reasons, stated supra, this Court is not inclined to entertain this writ petition, leaving it open to the petitioner to take recourse, under the statute.
10. In the result, the Writ Petition is dismissed. No costs. Consequently, connected miscellaneous petition is closed.
To
1. The Authorised Officer/Chief Manager, State Bank of India, Tirunelveli Branch, No.5C/1, Trivandrum Road, Tirunelveli.
2. The Branch Manager, State Bank of India, No.25, 25A, S.N.High Road, Tirunelveli.
.