Karnataka High Court
Sri Nemichand vs The Chief Executive ... on 18 June, 2020
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 18TH DAY OF JUNE, 2020
BEFORE
THE HON'BLE MR. JUSTICE N.K. SUDHINDRARAO
WRIT PETITION No.8048/2020(GM-RES)
BETWEEN:
1 . SRI NEMICHAND
S/O SRI KISHORILAL,
AGED ABOUT 53 YEARS.
2 . SMT. GEETHA DEVI
W/O SRI NEMICHAND,
AGED ABOUT 50 YEARS.
BOTH RESIDING AT
No.22, SANKESHWAR CRYSTAL,
FLAT No. 413, No.22/16,
4TH FLOOR, NEW HIGH
SCHOOL ROAD, V V PURAM,
BENGALURU - 560 004. ...PETITIONERS
(BY SRI SUNIL SHASTRI FOR
SRI GOUTHAM CHAND S F, ADVOCATE)
AND:
1 . THE CHIEF EXECUTIVE OFFICER/ AUTHORISED
OFFICER TUMKUR GRAIN MERCHANTS
CO - OPERATIVE BANK LTD.,
B H ROAD, TUMKUR - 572 103.
2 . SRI H M NATARAJ
S/O LATE H MALLIKARJUNAIAH,
2
AGED ABOUT 60 YEARS,
R/A No.20, ADARSHA GARADI RESIDENCY,
N H S ROAD, V V PURAM,
BENGALURU - 560 004.
3 . SMT. M RAJESHWARI
W/O H M NATARAJ,
AGED ABOUT 53 YEARS,
R/A No.20, ADARSHA GARADI
RESIDENCY, N H S ROAD,
V V PURAM,
BENGALURU - 560 004.
...RESPONDENTS
THIS WRIT PETITION IS FILED UNDER ARTICLES
226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING
TO QUASH THE POSSESSION NOTICE DATED 20.05.2020
ANNEXURE-A ISSUED BY THE R-1 AND PUBLISHED IN THE
NEW INDIAN EXPRESS, BANGALORE EDITION ON
22.05.2020 AND ALL OTHER ANTECEDENT AND
CONSEQUENTIAL ACTIONS TAKEN BY THE R-1 WHILE
DECLARING THE SAME TO BE ONE WITHOUT
JURISDICTION AND ILLEGAL IN SO FAR AS IT RELATES TO
FLAT No.413 (SL.No.13)BELONGING TO THE
PETITIONERS.
THIS WRIT PETITION COMING ON FOR PRELIMINARY
HEARING THIS DAY, THE COURT THROUGH VIDEO
CONFERENCE AT BENGALURU MADE THE FOLLOWING:
ORDER
This matter is taken up through Video Conference today. Learned counsel Sri. Sunil Shastri for Sri. S.F. Goutham Chand for petitioners is present. 3
2. The writ petition is filed by the petitioners under Articles 226 and 227 of Constitution of India against the respondents seeking the following prayer:
" (a) Issue an appropriate writ, order or direction quashing the Possession Notice dated 20.5.2020 (Annexure-A) issued by the Respondent No.1 and published in 'The New Indian Express", Bangalore Edition on 22.5.2020 and all other antecedent and consequential actions taken by the Respondent No.1 while declaring the same to be one without jurisdiction and illegal in so far as it relates to Flat No.413 (Sl.No.13) belonging to the petitioners.
(b) Grant such other and further relief/s as may be just and necessary in the interest of justice and equity."
3. After having heard the learned counsel for petitioners Sri. Sunil Shastri for Sri. Goutham Chand S.F. the Court is apprised of the following facts with references to the reliefs claimed.
44. It is a case that the petitioner Nos. 1 and 2 jointly purchased a flat with 392.5 Sq.ft. undivided share in the landed property bearing Municipal No.22, New High School Road, Visweswarapuram, Bangalore, from its land owners i.e. H.M.Nataraj and M. Rajeshwari. The petitioners also became entitled to the ownership of Flat No.413 situate on 1st Floor of the building known as "Sankeshwar Crystal" by virtue of a separate Construction Agreement. On 29.1.2016 a Deed of Declaration came to be executed and submitted to the Competent Authority under the Karnataka Apartment Ownership Act, 1972. Subsequently, respondent No.1 raised an Arbitration Dispute under Section 70(1) of the Karnataka Co- operative Societies Act, before the Joint Registrar of Co-operative Societies Bengaluru, for recovery of outstanding loan amount and on 8.3.2018 the Joint Registrar of Co-operative Societies, Bengaluru passed 5 an award in Arbitration Dispute No.JRD/ UBF/427/2017-18 raised by the respondent No.1 for recovery of a sum of Rs.2,83,50,610/- from respondent Nos. 2 and 3 and another.
5. In order to avoid confusion, it is necessary to clarify, respondent No.2 is H.M.Nataraj son of H. Mallikarjunaiah and respondent No.3 is Smt. M. Rajeshwari wife of H.M.Nataraj are stated to be the spouses. The petitioners (1) Sri. Nemichand Son of Sri. Kishorilal and (2) Smt. Geetha Devi wife of Sri. Nemichand are also stated to be the spouses.
6. It is the case that petitioners purchased 392.5 sq.ft. with undivided share in the land. The petitioners were assured of quit possession and enjoyment of the schedule property. Further the property was stated to be free hold one and would be free from all encumbrances. Under these occasion, the 6 award passed by the Joint Registrar assumes significance. Copy of the order is available at Annexure-H at Page No.90.
7. This is a case wherein recovery proceedings are launched before the Joint Registrar of Co- operative Societies and by virtue of the default and also the respondents therein not contesting the petition, award was passed directing the respondent Nos. 1 to 3, namely, (1) H.M.Nataraj, (2) Smt. M. Rajeswari and (3) N. Mallikarjun to pay an amount of Rs.2,83,50,610/- being the due amount that was borrowed wherein the schedule property was offered therein as security for the repayment.
8. In the circumstances, the main grievance of the petitioners is that, recovery proceedings are launched by respondent No.1-The Chief Executive Officer/Authorised Officer, Tumkur Grain Merchants 7 Co-operative Bank Limited, incidentally, the vendors of the petitioners are arrayed as respondent Nos. 2 and 3.
9. Now the question is, the award was passed for the amount on the face of which it is beyond the pecuniary jurisdiction of Civil Courts by virtue of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2020 (for short SARFAESI Act). The main contention of the petitioners is that, the notice is stated to have been issued by respondent No.1 demanding the amount due as liability that existed on the schedule property and now that demand notices and published notices are given, as the respondents are going for executing the order and taking away the petitioners' schedule property. The petitioners who are stated to be in possession of to the property have come before this court seeking the relief against dis possession. 8
10. Learned counsel Sri. Sunil Shastri for Sri. Gautham Chand S.F. for petitioners would submit that the fact of notice has not been within the knowledge of the petitioners as it was not served, as such, considering notice under Section 13(2) of SARFAESI Act does not arise. Learned counsel also brought to the notice of this court of Annexure-A, which is a paper publication of the notice intimating possession being taken over and the present writ petitioners sought for applying brakes by appropriate writ by declaring that the respondents do not have jurisdiction to issue notice or to take possession in respect of plot No.413 Sl.No.13 belonging to the petitioners. The further averments of the petitioners as submitted by the learned counsel is, when notice is not issued, there cannot be recovery of possession disturbing the physical possession in respect of the mortgaged property. However, in the prayer column, the relief 9 sought is to declare that the respondent No.1 had no authority or no jurisdiction to issue such notice to the petitioners.
11. Learned counsel for petitioners has been fair enough to submit that it is not a case of dispute of liability. On the other hand, the petitioners grievance is in respect of the procedure followed by respondent No.1. At this stage, it is necessary to make out the following points which are amply clear:
12. The schedule property is purchased by petitioner Nos.1 and 2 from respondent Nos. 2 and 3. In other words, petitioner Nos.1 and 2 and respondent Nos. 1 and 2 are spouses. Passing of the award also is no disputed. However, the submission is, it has been exparte as reflected in the order itself.
13. The next aspect would be that respondent No.1 is proceeding in high velocity throwing the rights 10 of the petitioners to the air, insofar as without providing opportunity. In this connection, before proceeding further, a perusal of Section 13(4) of SARFAESI Act is necessary and it is better to mention the same herein as under:
Section 13(4): In case the borrower fails to discharge his liability in full within the period speci-fied in sub-section (2), the secured creditor may take recourse to one or more of the follow-ing 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;
2[(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 11 secured creditor shall take over the management of such business of the borrower which is relatable to the security or 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;
(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.
14. It is also necessary to mention Section 14 of the said Act, as under:
"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 assets is required to be sold or transferred by the secured creditor under the provisions of this Act, the 12 secured creditor may, for the purpose of taking possession or control of any such secured assets, 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 asset and documents to the secured creditor.
xxx xxx xxx xxx
xxx xxx xxx xxx
15. The petitioners have further opportunity to agitate before Debt Recovery Tribunal under Section 17(1) of the said Act, which is as under:
17. [Application against measures to recover secured debts.] 13 (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, 1[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 measures had been taken:
xxxx xxxx
16. In other words, the right has to be exercised by the persons aggrieved within 45 days by going before the Debt Recovery Tribunal, but that did not happen. The learned counsel Sri. Sunii Shastri would submit that, the Debt Recovery Tribunal was not open. Learned counsel is further fair enough to submit that they are receiving only the filing of the matter. In all the probabilities, it is not the case of the petitioners that they approached the Tribunal, agitated their right under Section 17(1) of SARFAESI Act, but could not get the remedy as the proceedings have come to a 14 grinding halt in the tribunal. SARFAESI Act provides that the matters could be agitated before the debt recovery tribunal in respect of the acts made under Sub Section (4) of Section 13 of the said SARFAESI Act. But the petitioners have approached this court for writ remedy. On the face of the facts and the nature of claim, I find the writ remedy is not available.
However, the rights of the petitioners to approach the proper forums are kept open.
The writ petition is disposed of accordingly.
Sd/-
JUDGE tsn*