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2011 DIGILAW 1712 (RAJ)

Sunita Ajmera v. Authorised Officer, Canara Bank

2011-08-12

ARUN MISHRA, BELA M.TRIVEDI

body2011
Hon'ble TRIVEDI, J.—The petitioner after having lost in D.B. Civil Special Appeal (W) 1054/11 has filed the present writ petition under Article 226 and 227 of the Constitution, challenging the constitutional validity of Rule 13 of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as "the said Rules"), framed under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter to be referred to as "the SARFAESI Act"), 2. Heard Miss Anita Aggarwal, learned counsel for the petitioner on admission of the petition. 3. The petitioner earlier had filed CWP being No. 7370/11 challenging the action of the concerned respondent-Bank in issuing notice under Section 13(4) of the SARFAESI Act to the principal borrower. The petitioner being the guarantor mortgagor was aggrieved by the said action taken under the SARFAESI Act and, therefore, had filed the said petition. The learned Single Judge vide order dated 26th May, 2011 dismissed the said petition by holding that the petitioner had an alternative remedy of filing appeal under Section 17 of SARFAESI Act. Being aggrieved by the said order, the petitioner had preferred the DBCSA No. 1054/11, which was dismissed by this Court vide order dated 27.7.2011. It appears that thereafter the petitioner approached the Debt Recovery Tribunal, Jaipur by filing SA challenging the auction notice dated 8.7.2011 issued by the respondent-Bank on various grounds and also seeking other reliefs. It further appears that since the Registry of Debt Recovery Tribunal demanded fees on the said appeal on the full amount of debt to be recovered from the borrower and the guarantors, as per Rule 13 of the said Rules, the petitioner has again approached this Court by way of filing the present petition challenging the vires of Rule 13 of the said Rules. 4. It has been sought to be submitted by learned counsel Miss Aggrawal for the petitioner that the valuation of the property sought to be auctioned by the respondent-Bank was shown at the reserve price of Rs. 40 lacs in the auction notice dated 8.7.2011, whereas the Registry of the Debt Recovery Tribunal has demanded the fees on the entire amount of debt to be recovered from the borrower and the guarantors, i.e. on the amount of Rs. 2,84,14,821.51/-. 40 lacs in the auction notice dated 8.7.2011, whereas the Registry of the Debt Recovery Tribunal has demanded the fees on the entire amount of debt to be recovered from the borrower and the guarantors, i.e. on the amount of Rs. 2,84,14,821.51/-. Referring to the provisions contained in Rule 13(2) (1) of the said Rules, the learned counsel has submitted that the demand of fees on the entire amount of debt due is arbitrary and exorbitantly high. According to her the fees should not be charged at such a high rate which would practically penalise the borrower and guarantors and prevent them from approaching the court of law seeking justice. She also submitted that the levy of fees is disproportionate to the services rendered to the borrowers and, therefore the said Rule 13 deserves to be declared ultra-vires to the Constitution of India. 5. As stated herein above, this is second round of litigation at the instance of the present petitioner. The petitioner had already challenged the action of the respondent-Bank taken under Section 13(4) of the SARFAESI Act by filing writ petition before the learned Single Judge. The same having been dismissed the petitioner had filed the intra court appeal before this court, which was also dismissed. Now the present writ petition has been filed by the petitioner for challenging the vires of Rule 13 of the said Rules and also seeking consequential relief against the said action of the respondent-Bank taken under Section 13(4) of the SARFAESI Act indirectly seeking the same relief which was not granted by this Court earlier, and hence the petition deserves to be dismissed on that ground alone. 6. So far as the challenge with regard to the validity of Rule 13 of the said Rules is concerned, it may be stated that the said Rules have been made by the Central Government in exercise of the powers conferred by sub-section 1 and clause (b) of Section 2 of Section 38 read with sub-sections 4, 10, 12 of Section 13 of the SARFAESI Act. It is not contended by the learned counsel for the petitioner that the Central Government was not competent to frame the said rules, nor has it been contended that the said rules were framed in colorable exercise of the powers. It is not contended by the learned counsel for the petitioner that the Central Government was not competent to frame the said rules, nor has it been contended that the said rules were framed in colorable exercise of the powers. The only contention raised by the learned counsel was with regard to the rate of fees inasmuch as according to her, when the applicant is a borrower and the amount of debt due is Rs. 10 lacs and above, the amount of fee payable is Rs. 5,000/- plus Rs. 250/- for every Rs. 1 lac or part thereof in excess of Rs. 10 lacs, subject to a maximum of Rs. 1 lac and that the said fee payable by the borrower is very exorbitant. There is hardly any substance in the said contention raised by the learned counsel for the petition. As per the provisions contained in Section 17(1), the aggrieved person is required to make an application alongwith the fees as may be prescribed and the said amount of fees has been prescribed in Rule 13(2) of the said Rules. 7. In the instant case the petitioner being the guarantor is included in the definition of the "borrower" as contained in Section 2 (f) of the said Act, and is required to pay the prescribed fees on the amount of the debt due to the borrower. At this juncture a very pertinent observation made by a Constitutional Bench of the Apex Court in case of Government of Madras vs. Zenith Lamps ( AIR 1973 SC 724 ) are required to be reproduced, in which the Apex Court while taking the view that the fees, taken in the courts cannot be equated with the taxes, observed that "While levying fees the appropriate legislature is competent to take into account all relevant factors, the value of the subject matter of the dispute, the various steps necessary in the prosecution of a suit or matter, the entire cost of the upkeep of Courts and officers administering civil justice, the vexatious nature of a certain type of litigation and other relevant matters. It is free to levy a small fee in some cases, a large fee in others, subject of course to the provisions of Article 14." 8. In view of the above, it cannot be gainsaid that levy of fees as prescribed in Rule 13 is exorbitant or unreasonable. It is free to levy a small fee in some cases, a large fee in others, subject of course to the provisions of Article 14." 8. In view of the above, it cannot be gainsaid that levy of fees as prescribed in Rule 13 is exorbitant or unreasonable. It is also settled legal position that it is not necessary to ascertain with mathematical exactitude for finding out the relationship between the amount collected by way of fees and the expenses incurred for providing services. There being existence of broad co-relationship with the fees collected and the services rendered by the Tribunal, the contention raised by the learned counsel for the petitioner that the fees at such a high rate could not be collected from the guarantor for the debt due of the borrower, has no substance. 9. In that view of the matter it is held that Rule 13 of the said Rules could not be said to be unreasonable, ultravires or unconstitutional. There being no merit in the present petition, the same deserves to be dismissed and is accordingly dismissed.