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2015 DIGILAW 460 (MAD)

P. Palani v. Senior Manager Central Bank of India

2015-01-28

M.VENUGOPAL, SATISH K.AGNIHOTRI

body2015
JUDGMENT SATISH K. AGNIHOTRI, J. 1. The petitioner, by the instant petition, questions the legality and validity of the order dated 26.02.2014 passed by the learned Chief Metropolitan Magistrate, Egmore, Chennai, whereby and whereunder, the learned Chief Metropolitan Magistrate has directed to take possession of the property schedule mentioned in the order and further, seeks a direction to the respondents 1 and 2 to finalise the settlement proposal submitted by the petitioner on 21.01.2013 through their Settlement Advisory Committee by applying the Special OTS Scheme Guidelines of the Reserve Bank of India applicable to Micro Entrepreneurs. 2. The indisputable facts, in nutshell, are that the first petitioner availed cash credit hypothecation limit of Rs. 50 lakhs, working capital term loan of Rs. 1 crore and Ad hoc limit of Rs. 13.85 lakhs, thus, a total sum of Rs. 1,63,85,000/-, by executing a loan agreement on 15.12.2013. The second petitioner submitted his personal guarantee for the outstanding of Rs. 1,63,85,000/- and also created equitable mortgage of his property as security for the dues of the first petitioner. In default of payment, a demand notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (for short the Act) was issued on 30.05.2006. Thereafter, the said secured asset was classified as a Non-Performing Asset on 30.06.2005. Possession notice was issued under Section 13(4) of the Act on 06.09.2006. Challenging the possession notice, the first petitioner filed an application before the Debts Recovery Tribunal-I, Chennai, which was numbered as S.A. No. 147 of 2007. The respondent bank also preferred one application being O.A. No. 149 of 2006 on the file of the Debts Recovery Tribunal, II, Chennai, for recovery of a sum of Rs. 1,49,34,261.32 with future interest from 08.12.2006, which was, thereafter, renumbered and transferred to the Debts Recovery Tribunal-I as O.A. No. 29 of 2007. Several attempts were made at the instance of the parties to settle the dispute. Even the matter was referred by the Debts Recovery Tribunal to Lok Adalat held on 20.06.2008. However, no settlement could take place on account of the lackadaisical approach of the petitioners. The petitioners made an attempt to make some payment by way of post dated cheques which were returned on the ground that post dated cheques could not be accepted. A demand draft for a sum of Rs. However, no settlement could take place on account of the lackadaisical approach of the petitioners. The petitioners made an attempt to make some payment by way of post dated cheques which were returned on the ground that post dated cheques could not be accepted. A demand draft for a sum of Rs. 10 lakhs was also tendered along with post dated cheques. The same was also rejected as not being 25% of the tentative amount of Rs. 170 lakhs as suggested in the Lok Adalat by way of settlement. Representations were made by the petitioners without taking any serious endeavour to make payments. The application filed by the bank is still pending before the Debts Recovery Tribunal-I, Chennai. However, the application filed by the first petitioner, being S.A. No. 147 of 2007 was dismissed on 24.07.2008, reserving liberty to the first petitioner to take recourse to the appellate forum. However, it is not clear as to whether the first petitioner has preferred any appeal before the Debts Recovery Appellate Tribunal or not. 3. Challenging the legality of the impugned order dated 26.02.2014, it is contended by the learned counsel for the petitioners that the order sought to be impugned is bad in law, as required under the first proviso to Section 14(1), as per which, the application filed by the secured creditor shall be accompanied by an affidavit duly affirmed by authorised officer of the secured creditor declaring the requirements therein. The secured creditor has filed an application without the requisite affidavit. Secondly, the learned Chief Metropolitan Magistrate ought to have put off the proceedings till a decision by the Settlement Advisory Committee pursuant to the communication dated 19.11.2012, is taken. Thirdly, the petitioners ought to have been given permission to sell the properties by a private treaty to enable them to deposit the outstanding dues. 4. Per contra, the learned counsel for the respondents/bank would submit that the petitioners have been given sufficient opportunity for more than 6 years to settle the outstanding dues. The petitioners were further given liberty to make payment in instalments. However, till date, no step has been taken to make even a part payment. Thus, at this stage, the petitioners do not deserve any sympathy. The petitioners were further given liberty to make payment in instalments. However, till date, no step has been taken to make even a part payment. Thus, at this stage, the petitioners do not deserve any sympathy. It is next contended that the application filed under Section 14 of the SARFAESI Act was duly accompanied by an affidavit stating the requirements as prescribed in the said provision. 5. We have carefully examined the relevant documents and perused pleadings. 6. On a consideration of rival contentions, we find that the application under Section 14 of the SARFAESI Act was accompanied by an affidavit, as required under the proviso referred to above. The respondents have produced a certified copy of the application along with the said affidavit. Thus, the first contention of the petitioners that a proper application was not made is rejected. 7. The second contention that the learned Chief Metropolitan Magistrate ought to have put off the decision of the Settlement Advisory Committee is also noticed to be rejected. The learned Chief Metropolitan Magistrate, while exercising jurisdiction under Section 14 of the SARFAESI Act, has no jurisdiction to permit the borrower to deal with the property for the purpose of securing money as Section 14 of the SARFAESI Act is invoked only to obtain assistance for securing possession of the secured asset. The said contention merits rejection. The purpose of Section 14 of the SARFAESI Act is to assist the secured creditor in taking possession of the secured asset. The said secured asset was notified as a Non Performing Asset way back on 30.06.2005. Thereafter, even symbolic possession was also taken under Section 13(4) of the SARFAESI Act on 06.09.2006. The bank's application for recovery of money is pending consideration before the Debts Recovery Tribunal, as aforestated. Thus, we do not find any fault or error in the order passed by the learned Chief Metropolitan Magistrate, which is sought to be impugned in this writ petition. 8. However, having regard to the nature of the dispute and also the fact that the property belongs to the first petitioner, the petitioners are at liberty to raise the issue of One Time Settlement as permissible under the provisions of law before the Debts Recovery Tribunal. The Debts Recovery Tribunal has the jurisdiction to consider the prayer and take appropriate decision in accordance with law. The Debts Recovery Tribunal has the jurisdiction to consider the prayer and take appropriate decision in accordance with law. The Supreme Court in Sardar Associates and Others vs. Punjab and Sind Bank and Others, (2009) 8 SCC 257 , in that respect, has observed as under: "31. The Appellate Tribunal in terms of the provisions of the Act like the original Tribunal is interested only in recovery of the amount. While doing so, it, in our considered opinion, has the requisite jurisdiction to consider the prayer made by a debtor for one time settlement particularly in view of the fact that the same is within the purview of One Time Settlement Scheme of Reserve Bank of India." 9. Resultantly, the writ petition is dismissed, reserving liberty to the petitioners to raise all the contentions, including making a prayer for settlement in the case pending before the Debts Recovery Tribunal. Costs made easy. Connected Miscellaneous Petition is closed.