Writ Peition (227) No.2462 of 2010

1st July, 2010

Petitioner Counsel: SHARMILA SINGHAI
Respondent Counsel: SHASHANK THAKUR,ABHISHEK SINGH

Cases Cited:
M/s. Trade Well a Proprietorship Firm, Mumbai Vs. Indian Bank, 2007 ALL MR (Cri) 1357=(2007) Cri.L.J. 2544 (Bom) [Para 6]
Authorised Officer, Indian Overseas Bank Vs. Ashok Saw Mill, 2009(6) ALL MR 971 (S.C.)=(2009)8 SCC 366 [Para 7]

JUDGMENT

-Challenge in this petition is to the order dated 31-3-2010 (Annexure P/6) passed by the respondent No.1, i.e. Collector (District Magistrate), Durg, in Case No.22/B-121/2009-2010, in exercise of its power under the provisions of Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'the SARFAESI Act, 2002').

2. The indisputable facts, relevant for adjudication of the case is that the petitioner obtained a financial assistance to the tune of Rs.2.35 crores in the shape of cash-credit limits from the respondent No.2 Bank. A demand notice under Section 13(2) of the SARFAESI Act, 2002 was issued on 5-2-2008 (Annexure P/1) for recovery of a sum of Rs.2,49,33,035.52 p. Symbolic possession of the mortgaged three properties namely, factory, land and building including plant and machinery, open land attached to the factory and residential house at Bhilai, was taken. The petitioner, being aggrieved, preferred a writ petition being W P. (C) No.2425/2009, questioning the legality and validity of the order dated 22-4-2008 passed under the provisions of Section 13(4) of the SARFAESI Act, 2002. The said petition was dismissed on 9-7-2009 (Annexure R/2-1) holding that the writ petition was not maintainable on account of availability of statutory alternative remedy under the provisions of Section 17 of the SARFAESI Act, 2002, granting liberty to the petitioner to avail the alternative statutory remedy under the provisions of SARFAESI Act, 2002. Thereafter, the petitioner preferred an appeal being Second Appeal No.101/2009 before the Debt Recovery Tribunal (for short 'the DRT') at Jabalpur. Along with memo of appeal, an application for interim relief was also filed for restraining the respondent Bank from taking possession of the residential house and removal of the seal on the pan of the house already taken possession and further restoration of possession of the same. (Annexure R/2-2). The learned Tribunal, after having heard all the concerned parties, dismissed the application for interim relief on 17-7-2009 (Annexure A/2-2). Thereafter, according to learned counsel for the respondent-Bank, the petitioner preferred a Writ Petition No.7217/2009 in the High Court of Madhya Pradesh at Jabalpur, challenging the order dated 17-7-2009 passed by the DRT, Jabalpur. Indisputably, the said writ petition was also dismissed by the learned Division Bench reserving liberty to the petitioner to avail alternative remedy under the provisions of Section 18 of the SARFAESI Act, 2002 with a further direction that for a period of one week, status quo as obtained on that date, would be maintained in respect of the petitioner's residential house. It is not clear as to whether any appeal under Section 18 of the SARFAESI Act, 2002 was preferred or not on account of rejection of interim application by the DRT on 17-7-2009 and subsequently, dismissal of the writ petition by the High Court of Madhya Pradesh in W.P. No.7217/2009 on 27-7-2009 (Annexure A-1). The respondent Bank preferred an application under Section 14 of the SARFAESI Act, 2002 to the District Magistrate, Durg on 6-10-2009 (Annexure P/3). The District Magistrate, after having afforded an opportunity of hearing and considering the objection of the petitioner, passed the order for handing over the possession of the residence situated at plot No.11-A, Khursipar, Bhilai, to the respondent-Bank. Thus, this petition.

3. Ms. Sharmila Singhai, learned counsel appearing for the petitioner submits that the District Magistrate could not have passed the order in hurry without affording an opportunity of hearing to the petitioner. Ms. Singhai further submits that on 8-3-2001, the petitioner made an application through his agent for adjourning the matter. The same was not considered and the final order was passed. Thus, the impugned order is vitiated.

4. On the other hand, Shri. Abhishek Sinha, learned counsel appearing for the respondent Bank submits that the petitioner has filed proper response/reply to the application filed by the respondent Bank before the District Magistrate and thereafter, on the date of hearing, the agent/representative of the petitioner declined to argue the matter, thus, the District Magistrate took up the matter and passed the order after considering response of the petitioner. The provisions of Section 14 of the SARFAESI Act, 2002 is in the nature of execution of the order passed by the DRT and there is not much scope to contest the matter and get it re-agitated.

5. Having heard learned counsel for the parties, perused the pleadings and documents appended thereto, it is evident that the order under section 13(4) of the SARFAESI Act, 2002 was passed, thereafter, the statutory remedy of appeal under Section 17 of the SARFAESI Act, 2002 was resorted to by the petitioner. The petitioner, without preferring a further appeal under Section 18 of the SARFAESI Act, 2002 to the appellate Tribunal preferred to file a writ petition which was dismissed and pursuant to that, the Bank took recourse to remedy of taking over the possession of the property in dispute under the provisions of Section 14 of the SARFAESI Act, 2002. Under the provisions of Section 14 of the SARFAESI Act, 2002, the Chief Metropolitan Magistrate or District Magistrate has to arrange to take possession of such asset and documents relating thereto and forward such assets and documents to the secured creditor. There cannot be any adjudication on the nature of the land or on the question as to whether any due was payable or whether payments was made or not. Section 14 of the SARFAESI Act, 2002, reads 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 asset 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.

(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 he called in question in any Court or before any authority."

6. Learned counsel appearing for the respondent-bank relies on a decision of learned Division Bench of Bombay High Court, in M/s. Trade Well a Proprietorship Firm, Mumbai & Anr. Vs. Indian Bank & another, (2007) Cri.L.J. 2544 (Bom) : [2007 ALL MR (Cri) 1357], wherein it was observed as under :

"90. Following conclusions emerge from to the above discussion.

1. The bank or financial institution shall, before making an application under Section 14 of the NPA Act verify and confirm that notice under Section 13(2) of the NPA Act is given and that the secured asset falls within the jurisdiction of CMM/DM before whom application under Section 14 is made. The bank and financial institution shall also consider before approaching CMM/DM for an order under Section 14 of the NPA Act, whether section 31 of the NPA Act excludes the application of Sections 13 and 14 thereof to the case on hand.

2. CMM/DM acting under Section 14 of the NPA Act is not required to give notice either to the borrower or to the 3rd party.

XXX XXXXX"

I am in respectful agreement with the observations made by learned Division Bench in M/s. Trade Well (supra).

7. The Supreme Court, in Authorised Officer, Indian Overseas Bank & another Vs. Ashok Saw Mill, (2009)8 SCC 366 : [2009(6) ALL MR 971 (S.C.)] observed as under :

"37. The consequences of the authority vested in the DRT under sub-section (3) of Section 17 necessarily implies that the DRT is entitled to question the action taken by the secured creditor and the transactions entered into by virtue of Section 13(4) of the Act. The legislature by including sub-section (3) in Section 17 has gone to the extent of vesting the DRT with authority to even set aside a transaction including sale and to restore possession to the borrower in appropriate cases. Resultantly, the submissions advanced by Mr. Gopalan and Mr. Altaf Ahmed that the DRT has no jurisdiction to deal with a post Section 13(4) situation, cannot be accepted."

8. In the case on hand, the petitioner has already filed response and on the date of hearing, the agent/representative of the petitioner did not feel to argue the matter, however, there was an application for adjournment of the case. It is not clear as to whether or not the said application was pressed as response of the petitioner was already on record and it is recorded in the impugned order that no argument was advanced by the agent/representative of the petitioner. Thus, the impugned order was passed by the District Magistrate. The same does not suffer from any irregularity or illegality warranting interference by this Court.

9. For the reasons stated hereinabove, the writ petition is dismissed.

10. There shall be no order as to costs.

Petition dismissed.