Gujarat High Court
Savariyaji Trading Co. Proprietary ... vs Rajkot Nagarik Sahakari Bank Ltd. on 17 December, 2018
Author: Sonia Gokani
Bench: Sonia Gokani
R/SCR.A/9975/2018 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CRIMINAL APPLICATION NO. 9975 of 2018
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SAVARIYAJI TRADING CO. PROPRIETARY CONCERN THRO MALIWAL
RAKESHKUMAR RADHESHYAM
Versus
RAJKOT NAGARIK SAHAKARI BANK LTD.
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Appearance:
MR SIDDHARTHA SAMAL(3089) for the PETITIONER(s) No. 1
MRS NISHA M PARIKH(2397) for the PETITIONER(s) No. 1
MR JR SHAH(762) for the RESPONDENT(s) No. 1
MS JIGRA JHAVERI, APP for the RESPONDENT(s) No. 2
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CORAM: HONOURABLE MS JUSTICE SONIA GOKANI
Date : 17/12/2018
ORAL ORDER
1. By way of this petition, the petitioner challenges the orders dated 10.04.2018 and 26.10.2018 passed in Criminal Misc. Application No.8877 of 2017 by the learned Chief Metropolitan Magistrate, Ahmedabad. The present petitioner obtained certain credit facilities from the respondent-Bank, which the petitioner could not repay to the Bank. So the account of the petitioner was declared as non performing account by the respondent-bank. The respondent filed Application under Section 14 of the Secutarization & Reconstruction of Financial Page 1 of 20 Downloaded on : Fri Oct 11 04:00:40 IST 2019 R/SCR.A/9975/2018 ORDER Assets and Enforcement of Security Interest Act, 2002 (herein after referred to as "SARFAESI Act", against the petitioner and others for taking physical possession of the securities. The Chief Metropolitan Magistrate allowed the said application vide order dated 10.04.2018 and the same was challenged before the Debt Recovery Tribunal in Securitisation Application No.68 of 2018. The Debt Recovery Tribunal-I, Ahmedabad passed an order dated 18.05.2018.
2. Before the Debt Recovery Tribunal, learned counsel for the petitioners had submitted that owing to the financial crisis, the petitioners would not be in a position to deposit the amount and adhere to financial discipline of the Bank. However, the learned counsel for the petitioners and petitioners present in-person as noted by the Debt Recovery Tribunal, submitted that they would be paying the entire dues of the Bank as per the demand notice issued under Section 13(2) of the SARFAESI Act, 2002 for the sum of Page 2 of 20 Downloaded on : Fri Oct 11 04:00:40 IST 2019 R/SCR.A/9975/2018 ORDER Rs.1,67,12,030.60Ps including all expenses as on 30.06.2016 along with agreed rate of interest from 01.07.2016 and actual expenses incurred by the Bank in process under the Securitisation Act within 6 months from 01.07.2018 and would also pay minimum RS.10,00,000/-on or before 30.06.2018 and further would pay Rs.3,00,000/- in every block of two months to be commenced from 01.07.2018, but would pay the entire dues within 6 months. The petitioners had waived and relinquished all the grounds taken in the Securitisation application and on a Single default, the Bank was permitted to be entitled to execute the order passed by the learned Chief Judicial Magistrate under Section 14 of the SARFAESI Act, 2002.
3. Accordingly the following consent terms were recorded by the Debt Recovery Tribunal :
"I have heard the Ld. Counsel for the parties and I feel judicious to pass following orders on the consent of both the parties.
i. The applicants will deposit entire
due amount of the bank as per the Demand
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R/SCR.A/9975/2018 ORDER
Notice issued under Section 13(2) of the SARFAESI Act, 2002 i.e. Rs.1,67,12,030.60Ps including all expenses as on 30.06.2016 alongwith agreed rate of interest from 01.07.2016 (without any penal interest) and actual expenses incurred by the bank in process under Securitisation Act within 6 months from 01.07.2018 and will pay minimum Rs.10,00,000/- on or before 30.06.2018 and further would pay Rs.3,00,000/- in every block of two months to the commenced from 01.07.2018, but would pay the entire dues within 6 months. In case of single default applicants will be liable to pay the amount claimed in the demand notice alongwith agreed rate of interest include penal interest. ii. It will be the duty of the applicants to have the calculations from the bank and they will not raise any excuse at any point of time that bank has not supplied calculations.
iii. In case of single default the bank will be at liberty to proceed under Securitization & Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 on the process already initiated. iv. Applicants waive their all grounds and objections taken in secularization application. Time is/ will be the essence of this compromise and applicants will not be entitled for any time extension in future. v. Applicants will not raise any objection to the said process in any manner.
vi. The minimum payable amount will be payable on or before last day of respective each block of two months.
vii. If this is complied with bank will not take any coercive measures against the security. However, in case of default and even non-deposit of Rs.10,00,000/-, the bank will be able to proceed to take possession in accordance with law.
viii. Any amount recovered under this compromise will not be considered as amount Page 4 of 20 Downloaded on : Fri Oct 11 04:00:40 IST 2019 R/SCR.A/9975/2018 ORDER recovered by Secularization Agency and as such on this amount the bank will not be able to charge or deduct or pay any amount to any enforcement agency by way of commission or fee. However, any amount already paid will be recoverable from borrower. In terms of the proposal given by counsel for the applicants this present S.A. is disposed of.
This compromise will not effect other rights and remedy of the bank against the other borrowers/co- borrowers or guarantors even otherwise available to bank in accordance with law.
This order has been passed at the instance of
applicants and on their commitment that they will pay
the amount within stipulated period as such time will
be the essence of this order."
4. Yet another application was moved by the
present respondent before the Court of learned Chief Metropolitan Magistrate inter alia contending that there was a non-fulfillment of consent terms by the present petitioner. Therefore, as per Condition No.vii, where the petitioner had agreed that if these terms has not complied with, the bank would be entitled to proceed to take possession in accordance with law, default is made on the part of the petitioner and extension of 90 days had been sought for.
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R/SCR.A/9975/2018 ORDER
5. After hearing both the sides, learned Chief Metropolitan Magistrate on 26.10.2018 extended the period for implementing the earlier order dated 10th April 2018 for 90 days.
6. Being aggrieved, the petitioner is before this Court seeking following reliefs :
"12. The petitioner, therefore, prays :
(A) that the Hon'ble Court be pleased to issue a writ of certiorari and/or any other writ to quash and set aside the orders dated 10.04.2018 and 26.10.2018 passed by the Ld. Chief Metropolitan Magistrate, Ahmedabad in Cr. MA NO.8877/2017.
(B) Pending admission, hearing and final disposal of this Petition the Hon'ble Court may be pleased to stay the implementation, execution and operation of the orders dated 10.04.2018 and 26.10.2018 passed by the Ld. Chief Metropolitan Magistrate, Ahmedabad in Cr.
MA No.8877/2017.
(C) That this Hon'ble Court may be pleased to pass any other or further as may be deem fit in the interest of justice and (D) To award cost of this Petition."
7. This Court issued a notice on 06.11.2018 and made it returnable on 26.11.2018.
8. Learned advocate Mr.J.R. Shah appearing for the respondent No.1-Bank filed an affidavit-in- Page 6 of 20 Downloaded on : Fri Oct 11 04:00:40 IST 2019
R/SCR.A/9975/2018 ORDER reply. In the affidavit-in-reply, it is contended that there is no error, and the order dated 10th April 2018 could not be executed by the respondent-Bank in wake of the consent terms proposed by the present petitioner and the order of the Debt Recovery Tribunal dated 18th May 2018, challenge being absolutely without any substance and request is made to dismiss this petition.
9. This Court has heard Mr.Siddhartha Sanal learned advocate appearing for the petitioner, who along the line of the petition has urged that while passing an order of 10th April 2018 and also subsequently at the time of the order dated 26.10.2018, the learned Chief Judicial Magistrate has disregarded the settled position of law. He has also urged that the Court has no power to pass subsequent orders for having become functus Officio, as the time limits set of earlier order was of 90 days. Grievance is also made that the compliance which was necessary prior to the Court deciding the application under Section 14 of the Page 7 of 20 Downloaded on : Fri Oct 11 04:00:40 IST 2019 R/SCR.A/9975/2018 ORDER SARFAESI Act is not being made in this case and the Court has not adhere to the strict interpretation of the provision of Section 14 of the SARFAESI Act as is required to be done since the Bank became a judge in its own cause. So far as Section 14 is concerned, highlight is made of the mistake in the affidavit filed by the Bank referring to the wrong party. Grievance is also made that after this Court issued a Notice, a Notice came to be issued by the Bank on 23rd December 2018 knowing fully well that the matter is pending before this Court.
9.1. Relying on the decision of the Apex Court in the Case of Standard Chartered Bank Vs. V. Noble Kumar and others with Senor Manager, State Bank of India and another vs. R.Shiva Subramaniyan and another reported in (2013)9SCC 620, it is held that the satisfaction of the Magistrate contemplated under second proviso to Section 14(1) necessarily requires the Magistrate to examine the factual correctness of the Page 8 of 20 Downloaded on : Fri Oct 11 04:00:40 IST 2019 R/SCR.A/9975/2018 ORDER assertions made in such an affidavit but not the legal niceties of the transactions. It is only after recording of his satisfaction the Court can pass appropriate orders regarding taking of possession of the secured assets.
9.2. Yet another decision has also relied on the findings and observations of this Court in Special Civil Application NO.7150 of 2018 reliance is placed the decision reported in (2014) 10 SCC 754 rendered in the case of Abdul Basit Alias Raju and Others Vs. Mohd. Abdul Kadir Chaudhary and another, the High Court granting the bail to petitioners herein. Later, respondents herein filing petition before the High Court to seek cancellation of the bail on the grounds that it was obtained by gross misrepresentation of facts, misleading the Court and indulging in fraud. The Apex Court held that the High Court could not have entertain said petition and cancelled the bail on the ground of it being perverse in law. There is impressibility Page 9 of 20 Downloaded on : Fri Oct 11 04:00:40 IST 2019 R/SCR.A/9975/2018 ORDER of, in absence of any express provision in the statute concerned before the Court to review its own order, the same can be determined only by the Court superior to the Court which granted the bail.
9.3. It is an accepted principle of law that when a matter has been finally disposed of by a court, the court is, in the absence of a direct statutory provision, functus officio and cannot entertain a fresh prayer for relief.
10. Learned advocate Mr.JR Shah appearing for the respondent No.1 has urged that all the procedures have been duly complied with. He has drawn the attention of this Court the affidavit filed by the authorised Officer of the respondent-Bank, who points out that all requirements as are necessary as per the provision of law being sub- section (2) of section 13 have been duly complied with. He has also urged that if there is wrong reference of one M/s Sharda Metal Industries- Page 10 of 20 Downloaded on : Fri Oct 11 04:00:40 IST 2019
R/SCR.A/9975/2018 ORDER Prop.Gautambhai Shantilal Shah, it is a clear
mistake, while challenging earlier order of the Chief Metropolitan Magistrate dated 10.04.2018, this has not been taken as averment. It is also further urged that on account of the consent terms, the order of the Court was not implemented. However, the applicant failed to abide by all those terms and the Bank needed to once again move before the Court concerned. He has also emphasised that there is no need for limiting the order to 90 days, somehow, the Court held that due to the breach made by the petitioner the cause has arisen for getting the period extended.
11. The learned APP Ms. Jhaveri appearing for the State has adopted the submissions made by Mr.Shah learned advocate appearing for respondent No.1.
12. Having thus heard both the sides and also on closely perusing the material on the record, firstly the averment made by the Page 11 of 20 Downloaded on : Fri Oct 11 04:00:40 IST 2019 R/SCR.A/9975/2018 ORDER petitioner with regard to the subjective satisfaction of the learned Magistrate deserves consideration as Standard Chartered Bank Vs. V. Noble Kumar and others with Senor Manager, State Bank of India and another vs. R.Shiva Subramaniyan and another, (Supra) the Honurable Court has held as under :
"25. The satisfaction of the Magistrate contemplated under the second proviso to Section 14(1) necessarily requires the Magistrate to examine the factual correctness of the assertions made in such an affidavit but not the legal niceties of the transaction. It is only after recording of his satisfaction the Magistrate can pass appropriate orders regarding taking of possession of the secured asset."
13. In this background, the conclusion arrived at by the Court concerned in the first order is to be examined. This Court notices that the learned Chief Metropolitan Magistrate has taken into consideration all the averments set out in the application and took note of the fact that the Bank had granted various credit limits for an aggregate amount of Rs.1,55,00,000/- by way of cash credit facilities on 17th March 2015 to the present petitioner, which had executed Page 12 of 20 Downloaded on : Fri Oct 11 04:00:40 IST 2019 R/SCR.A/9975/2018 ORDER certain documents in favour of the bank. It has also taken note of the fact that the petitioner No.1 is the borrower and other respondents were guarantors whereas the respondent No.1-Bank is secured creditor in equitable mortgage have been created, which was registered on 27th March 2015. The Court also noted the fact that in respect of very payment of the installment, the account has been classified as non performing account.The factum of the notice having been issued under Section 13(2) of the SARFAESI Act,2002 for discharging in full liabilities also, has been taken note of and noticing the fact that the petition not having fulfilled the demand as per the notice and taking note of the description of the immovable properties, as has been stated in the affidavit, the Court deemed it appropriate to direct the Bank to take possession of the secured property. Accordingly,the reasoned order came to be passed after a detailed consideration. It would be profitable to reproduce the order herein below: Page 13 of 20 Downloaded on : Fri Oct 11 04:00:40 IST 2019
R/SCR.A/9975/2018 ORDER "1) The Application of the applicant is hereby granted.
2) I authorize Mr. D.B. Shah, Assistant Superintendent, of this court, as Court Commissioner U/s.14 (1-A) of the Securitisation and and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002. (in short SARFAESI ACT).
3) Court Commissioner is directed to take possession of property mentioned on Para No.6 of the present application, under the heading DESCRIPTION OF THE IMMOVABLE PROPERTY(IES) The Description of the Secured Assets is as under :-
Immovable Property situated in Ahmedabad Dist. Sub Dist. Ahmedabad-6, Naroda Section, Dariyapur-Kajiur Seem, Behind Bardolpura, Survey No.34/2/1 & 34/2/2, T.P. Scheme no.14, Final Plot no. 30, Paiki "Amarapura Chali" Paiki Municipal Census No.1628/26 paiki Private Room No. 34 Area Approx. 28/00 Sq.Yards acquired vide Reg. Sale-deed No.1442 dtd. 30/04/1997 in the name of Shri Radheshyam Sukhlal Maliwal and bounded as under :
North : Adjoining Wall with Municipal Census No.1628/25 Room.
South : Vaghari Vali Chali's Road; East : Common Wall with Chunilal Vaghri. West : Main Road.
4) If the secured assets is found in closed condition, the court commissioner may take possession of this secured assets by breaking / opening the lock or may take any other steps he may think fit.
5) After taking the possession of the secured assets, Court Commissioner shall prepare the inventory of any item, Documents relating to the assets if found in secured Assets and handover the same to the applicant.
6) The Court Commissioner may take assistance of the concerned police station and 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.
7) Applicant shall bear the expenses incurred in Page 14 of 20 Downloaded on : Fri Oct 11 04:00:40 IST 2019 R/SCR.A/9975/2018 ORDER
taking possession of the secured assets and shall provide all necessary assistance to the court commissioner in taking possession of the secured assets.
8) Applicant is hereby directed at present to deposit lumpsum amount of Rs. 20,000/- towards the expenses and remuneration of court commissioner. On depositing the above said amount in the court, the Court Commissioner is directed to complete the said procedure within 90 days or within the time limit extended by the court and submit the compliance report of completion of proceedings.
9) The court commissioner shall carry out the said proceedings on public holidays or except court working hours.
Pronounced in the open court today i.e. on 10/04/2018."
14. The appeal came to be preferred challenging this very order as mentioned herein above being Second Appeal No. 68 of 2018 and at the behest of the present petitioner, the Debt Recovery Tribunal had noted the manner in which the petitioner agreed to repay the outstanding dues, it is vital to emphasise and reproduce once again clause vii :
"If this is complied with bank will not take any coercive measures against the security. However, in case of default and even non-deposit of Rs.10,00,000/-, the bank will be able to proceed to take possession in accordance with law." Page 15 of 20 Downloaded on : Fri Oct 11 04:00:40 IST 2019
R/SCR.A/9975/2018 ORDER 15. No amount has been paid, it appears & therefore, thereafter, once again an application
came to be moved by the Bank seeking extension of the order. It has also relied on the consent terms entered into by and between the parties in Second Appeal No. 68 of 2018 before the Debt Recovery Tribunal. One of the terms since was for the Bank to proceed to take possession if any default is made, the Court noted that fact and granted extension of 90 days.
16. This Court notices that in decision of Abdul Basit Alias Raju and Others Vs. Mohd. Abdul Kadir Chaudhary and another (supra), it was the case of grant of bail where later on due to certain factual assertions, the High Court had cancelled the bail reviewing its own order terming the same as illegal or contrary to law. In such circumstances, the Apex Court held that it was prerogative of the High Court and Court concerned become functus officio, once the order is passed. This cannot be read in abstract and also it has Page 16 of 20 Downloaded on : Fri Oct 11 04:00:40 IST 2019 R/SCR.A/9975/2018 ORDER to be considered from the factual matrix that emerges in the matter on hand.
17. This Court is dealing with the provisions of SARFAESI Act and it is a matter of record that after complying with the requirements of Sub- section(2) of Section 13 as also the Court having been satisfied under Section 14 had passed the order permitting the Bank to take possession of the mortgaged property. It is only because the consent terms moved at the instance of the present applicant that the Bank did not execute the order passed on 10th April 2018. It is given to understand that not a single installment has been paid nor the initial amount of Rs.10,00,000/-as had been ensured and promised as per the same consent terms, has been deposited with the Bank. It clearly appears to be the compromise without any intent to fulfill the terms and conditions, only with a view to buy the time and to delay the taking over of possession by the Bank and hence, the only option possibly Page 17 of 20 Downloaded on : Fri Oct 11 04:00:40 IST 2019 R/SCR.A/9975/2018 ORDER left with the Bank was to seek extension, which has been done and the Court of learned Chief Metropolitan Magistrate, Ahmedabad after once again applying its mind, granted such extension. Contention raised before this Court is that technically this could not have been done and all that the bank could have done, was to move once again afresh by way of an application under Section 14 of SARFAESI Act. This Court does not find this contention sustainable. Had any delay occurred on account of non action of the Bank or any default on its part possibly, this submission could have been examined by this Court. Here, that is not the case. In fact, the bank was unable to execute the order passed on 10th April 2018, for being ensured by the promise made before the Debt Recovery Tribunal and reduced into writing as consent terms and thereafter, if the petitioner has deliberately or otherwise has chosen not to fulfill those terms, it must not have an audacity to challenge the order of 26th Page 18 of 20 Downloaded on : Fri Oct 11 04:00:40 IST 2019 R/SCR.A/9975/2018 ORDER October 2018 terming the same to be contrary to law for having been passed by the Court after becoming functus Officio, & such a challenge is not to be sustained in this petition.
18. This Court notices that, the huge outstanding amount of the Bank, has not been paid after the same having been declared as NPA in the year 2016. There has been already substantial delay in taking over possession of the properties, on account of compromise terms before the Debt Recovery Tribunal. There does not appear to be even a bona fide gesture on the part of the petitioner for any payment of installment.
19. In such circumstances, this petition needs to be termed as an another attempt on the part of the petitioner for further delaying that process and does not deserve any kind of sympathy, much less to be entertained. The petition is dismissed with cost of Rs.10,000/-(Ten thousands only) to be paid within one week from the date of receipt Page 19 of 20 Downloaded on : Fri Oct 11 04:00:40 IST 2019 R/SCR.A/9975/2018 ORDER of copy of this order by the petitioner.
20. Notice is discharged.
(SONIA GOKANI, J) KUMAR ALOK Page 20 of 20 Downloaded on : Fri Oct 11 04:00:40 IST 2019