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2007 DIGILAW 37 (CAL)

Bharitia Traders Pvt. Ltd. v. UCO Bank

2007-01-29

JAYANTA KUMAR BISWAS

body2007
ORDER :- The four petitioners have taken out this writ petition for various reliefs, though their principal grievance is that possession of Flats 9D and 8B at premises No. 25B, Camac Street, Kolkata-700 016 was obtained by the Bank forcibly and without following the due process of law, that is, without following the process mentioned in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, S. 14, and hence a mandamus should be issued commanding restoration of possession. 2. The first petitioner owed the Bank around rupees three crore. Alleging that it was not liquidating the debt, the Bank issued notice under S. 13(2) dated August 3rd, 2005. In response the first petitioner submitted representation dated September 14th, 2005. Disposing of the representation the Bank sent its reply dated September 28th, 2005. Thereupon the bank issued a notice dated May 25th, 2006 under S. 13(4) of the Act. On the same day authorised officer took possession of the Flats. An inventory was prepared, and that was signed by the third petitioner. 3. The petitioners claim that alleging forcible dispossession they lodged a first information report with the police authority concerned on May 31st, 2006. By a letter dated June 3rd, 2006 the Bank requested the first petitioner to liquidate the debt. The fact of taking possession and preparation of inventory was mentioned in that letter. By a letter dated June 8th, 2006 the first petitioner bettered its offer. It requested the bank to settle the matter and restore possession of the Flats. By a reply dated June 15th, 2006 the Bank offered to settle the matter on the terms mentioned therein. The petitioners did not accept the proposal and took out this writ petition dated June 21st, 2006. 4. By order dated June 30th, 2006 the writ petition was admitted. Against refusal of interim relief the petitioners preferred an appeal, which was disposed of by the Division Bench by order dated July 12th, 2006. Their Lordships made an interim order that the Flats should not be disposed of by the Bank. The petitioners were given liberty to remove their movables from the Flats. A supplementary affidavit has been filed by the petitioners annexing photographs to show that possession of the Flats had been taken by applying force. 5. Their Lordships made an interim order that the Flats should not be disposed of by the Bank. The petitioners were given liberty to remove their movables from the Flats. A supplementary affidavit has been filed by the petitioners annexing photographs to show that possession of the Flats had been taken by applying force. 5. Counsel argues that on the facts of the case the petitioners were entitled at once to approach the writ Court, though they were entitled to prefer an appeal before the Debts Recovery Tribunal in terms of provisions in S. 17 of the Act. Admittedly they did not prefer any appeal. It is contended that in view of provisions of S. 14 the Bank was not empowered and entitled to take possession of the Flats unless an appropriate order was obtained from the Chief Metropolitan Magistrate or the District Magistrate. On the strength of a Division Bench decision of the Punjab and Haryana High Court in M/s. Kalyani Sales Co. v. Union of India, AIR 2006 P and H 107, counsel has contended that under S. 13(4) only symbolic possession of the Flats could have been taken. 6. It has been contended that when provisions in S. 14 cast a statutory obligation on the Bank to follow a particular process for taking actual physical possession, it was not empowered and entitled to take possession through any other process. Counsel has said that by dispossessing the petitioners without following the process mentioned in S. 14 the Bank infringed their fundamental right guaranteed by Art. 21 of the Constitution. His submission is that such criminal activities as were indulged in by the bank should be stopped, since it is not contemplated by any provision of the Act that a secured creditor would be empowered or entitled to take actual physical possession of any secured asset by applying force. 7. The Bank has categorically denied the allegation that it took possession of the Flats by applying force. In opposition it has stated that possession was taken not only in presence of independent witnesses, but also in presence of police personnel who accompanied the authorised officer, its case is that while taking possession the authorised officer duly prepared the inventory, which was signed by the representative of the first petitioner. In opposition it has stated that possession was taken not only in presence of independent witnesses, but also in presence of police personnel who accompanied the authorised officer, its case is that while taking possession the authorised officer duly prepared the inventory, which was signed by the representative of the first petitioner. Counsel for the Bank has cited to me the Apex Court decision in M/s. Transcore v. Union of India (in Civil Appeal No. 3228 of 2006 dated November 29th 2006, (reported in AIR 2007 SC 712 ). He has contented that as was held by their Lordships Section 13(4) did not contemplate taking of mere symbolic possession, but of actual physical possession. He has said that once conduct of the petitioners is taken into consideration, no person of reasonable prudence would come to a conclusion that the Bank had taken forcible possession of the property. He has pointed out that the photographs annexed to the supplementary affidavit were taken by the petitioners when they were removing the movables in terms of the order of the Division Bench, and that those photographs cannot prove the allegation that possession of the Flats had been taken by applying force. 8. Before I proceed to consider the question of law involved in the case, I say that there is absolutely no scope for me to record a finding of fact on the question whether the Bank took forcible possession of the Flats. The highly disputed questions of fact connected with the question cannot be adjudicated and decided by me in exercise of writ powers. Admittedly the authorised officer accompanied by other persons including police personnel took possession of the Flats on May 25th, 2006. If in the process any one committed any offence punishable by any law, in my view, the petitioners were at liberty to approach the appropriate criminal Court. They claim that they lodged a first information report. If the police authority concerned decided not to take any action on such report, remedy of the petitioners was before the appropriate criminal Court; and in exercise of writ powers no relief can be given to them. 9. The real question for decision is whether possession was taken in contravention of any provision of law. If the police authority concerned decided not to take any action on such report, remedy of the petitioners was before the appropriate criminal Court; and in exercise of writ powers no relief can be given to them. 9. The real question for decision is whether possession was taken in contravention of any provision of law. As to the authority cited to me by counsel for the petitioners, I find that counsel for the Bank is absolutely right in saying that in view of the Apex Court decision relied on by him the proposition stated in the Division Bench decision of the Punjab and Haryana High Court cannot be accepted as the existing legal position. The effect of the authority relied on by counsel for the petitioners is that only by following the process entioned in S. 14 of the Act the Bank could have taken the actual physical possession of the Flats. It was held in that case that under S. 13(4) a secured creditor would be entitled to take only symbolic possession of the secured asset. Such proposition was clearly negatived by the Apex Court in the decision relied on by counsel for the Bank. Their Lordships held that a secured creditor would be entitled to take actual physical possession under S. 13(4). 10. I am also of the view that the Bank was not under any statutory obligation to follow the process of S. 14. By issuing notice under S. 13(4) it was empowered and entitled to take possession of the Flats. Provisions in S. 14 entitled it to get possession through the Chief Metropolitan Magistrate or the District Magistrate concerned. Section 14 conferred a statutory right on the secured creditor, and a corresponding statutory obligation on the Chief Metropolitan Magistrate or the District Magistrate concerned, it did not create any right of the debtor, or any statutory duty or obligation of the secured creditor. I, therefore, do not see how it can be said that without following the process mentioned in S. 14 of the Act the Bank was not competent to take possession of the Flats. To my mind, there is no reason to say that possession was taken by the Bank without following the due process of law. 11. I, therefore, do not see how it can be said that without following the process mentioned in S. 14 of the Act the Bank was not competent to take possession of the Flats. To my mind, there is no reason to say that possession was taken by the Bank without following the due process of law. 11. Counsel for the Bank has rightly said that from the conduct of the petitioners no person of reasonable prudence would come to a conclusion that they have come up with a bona fide case. As I have already said, sitting in writ jurisdiction I am not in a position to decide whether the Bank obtained possession of the Flats by applying force. I only say that the Bank has not only disputed the allegation regarding application of force, but the petitioners also never alleged by making a representation to the Bank that it had taken possession of the Flats by force. In the representation dated June 8th, 2006 they did not make such allegation. 12. They took out the writ petition only on June 21st, 2006, when possession had been taken by the Bank on May 25th, 2006. The first information report was allegedly lodged on May 31st, 2006. On these facts, I am unable to see how I can entertain the contention that the Bank infringed the petitioners' fundamental right under Art. 21 of the Constitution. I do not say for a moment that the Bank is entitled to indulge in criminal activities while taking possession of secured asset by taking steps under S. 13(4) of the Act. But if any secured creditor indulges in any criminal activities, in my view, the person aggrieved should approach the appropriate criminal Court, and not the writ Court. 13. For these reasons, the writ petition is dismissed. There shall be no order for costs in it. Counsel for the petitioners prays for an interim order restraining the Bank from taking further steps for sometime. After dismissing the writ petition on merits, I do not see any reason to make an interim order. Urgent certified xerox copy of this order shall be supplied to the parties, if applied for, within three days from the date of receipt of the file by the section concerned. Petition dismissed.