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2017 DIGILAW 486 (KAR)

AVLN RAJU v. STATE BANK OF INDIA, VISHAKHAPATNAM

2017-02-14

A.S.BOPANNA

body2017
ORDER : A.S. Bopanna, J. The petitioners in W.P. No. 21891/2013 and the petitioners in are assailing the order dated 06.04.2013 passed in Crl. Misc. No.225/2008. In addition, the petitioner-bank in W.P.Nos.49374 - 75/2013 is also assailing the order dated 06.04.2013 passed in ASA No.138/2007 by the Debt Recovery Tribunal, Bengaluru (hereinafter referred to as the DRT for short). Considering that the case as put forth by the petitioners as also the respondents relate to the very same subject-matter, these petitions have been considered together and are being disposed of by this common order. 2. At the outset, since the order dated 06.04.2013 passed in ASA No.138/2007 is also assailed, the issue for consideration at this juncture would be as to whether the same would arise for consideration in the present context in this writ petition, keeping in view the earlier proceedings and the manner in which the matter had been remitted to the learned Magistrate to reconsider the proceedings in Crl. Misc. No.225/2008. Learned counsel for the petitioner-bank would contend that the said order requires interference in the instant petition inasmuch as the bank did not have an opportunity to take part in the proceedings in ASA No.138/2007 since the address indicated therein is incomplete and notice was not served, opportunity was also not granted. 3. Though such contention is put forth at this point in time, the same cannot be accepted for the reason that it is seen that in the earlier writ petitions, more particularly in W.P.No.29978/2009, the statement of objection filed therein and produced as Annexure-R.4 to the objection statement in W.P. Nos.49374-75/2013 would disclose that the said order was known to the bank and despite that no grievance was made earlier. That apart when the order dated 29.03.2008 was passed by the learned Magistrate and the same was the subject-matter in W.P.No.38398/2012, the bank was a party to the said writ petition and was represented. Thereafter the order dated 14.12.2012 was passed therein. The said order was the subject-matter in Writ Appeal No.320/2013 wherein the bank was the respondent and the Hon'ble Division Bench through the order dated 05.03.2013 on taking note of the submission made by the learned counsel for the parties had set aside the order and remitted the matter in Crl.Misc.No.225/2008 for reconsideration. The said order was the subject-matter in Writ Appeal No.320/2013 wherein the bank was the respondent and the Hon'ble Division Bench through the order dated 05.03.2013 on taking note of the submission made by the learned counsel for the parties had set aside the order and remitted the matter in Crl.Misc.No.225/2008 for reconsideration. In that circumstance, when the matter has been remitted to the learned Magistrate for reconsideration in the teeth of the order passed in ASA No.138/2007, at this point in time the correctness or otherwise of the said order would not arise for consideration in this writ petition when that order has already taken its effect and reconsideration was already made by the learned Magistrate. 4. In the above background, in both these petitions what arises for consideration is the correctness or otherwise of the order dated 06.04.2013 passed in Crl. Misc. No.225/2008. Learned Magistrate while arriving at the conclusion has mainly relied on the observations made in the order dated 10.03.2008 passed in ASA No.138/2007. Having taken note of the said order, the learned Magistrate has restricted the right of the bank to take possession of the property under Section 14 of the SARFAESI Act to the description as contained in the said order by excluding the portion as claimed by the third party/applicant. Apart from the bank being aggrieved by such order as it would be in derogation of the right over the entire extent of mortgaged property, the petitioners in W.P.No.21891/2013 viz., the borrower is also aggrieved by the fact that through the said order exclusion as made is to be detrimental as according to them the third party applicant in Crl.Misc. No.225/2008, had no right over the said property. Learned counsel for the third party applicant would however contend that the order passed by the DRT in ASA No.138/2007 would bind the parties inasmuch as the said forum is the only forum wherein the right relating to the subject-matter under the Securitisation Act could be adjudicated. In that direction, learned counsel has relied on the decision of this Court in Vijaya Bank, SD Road Branch v. Shameem Transport (ILR 2006 Kant 4633) : (2007 (1) AIR Kar R 337) and also the judgment of the Hon'ble Supreme Court in the case of Jagdish Singh v. Heeralal and others [ (2014)1 SCC 479 ] : ( AIR 2014 SC 371 ). 5. 5. Having taken into consideration the said decisions, there can be no quarrel with the position of law that the DRT in the appeal as provided under Section 17 of the Act has been bestowed with the power to look into the correctness or otherwise of the action initiated by the bank under Sections 13 and 14 of the SARFAESI Act, but in any event the right of the party as claimed to the mortgaged property cannot be independently adjudicated as in the civil suit for declaration either by the learned Magistrate in the proceedings under Section 14 or by the DRT while examining the correctness or otherwise of the order in an appeal under Section 17 of the Act. On the other hand the learned Magistrate while taking note of the claim made by the bank to exercise its right under Section 14 of the SARFAESI Act to take possession of the mortgaged property, if any third party claims right over such property, the pre-existing right which is evident to that Court should alone be looked into based on the judgment and decree, if any of the Competent Courts as available or such right that would on the face of it indicate that the mortgaged property is a property which belongs to the third party who has right over the same as otherwise the mortgage should prevail and the party claiming should avail the remedy in the appropriate forum. 6. In such circumstance, when in the instant case the third party applicant is claiming right over the property and the borrower who has mortgaged the property is also claiming right to such property and at the first instance when in the earlier instance this Court through the order dated 05.03.2013 passed in W.A.No.320/2013 had remitted the matter to the learned Magistrate to reconsider after providing opportunity to all the parties, certainly the petitioners in W.P.No.21891/2013 were also required to be heard in the proceedings and thereafter a decision ought to have been taken. Firstly for lack of opportunity to the persons claiming right to the property not being taken note by the learned Magistrate, more particularly in a circumstance when this Court had remitted the matter to the learned Magistrate to reconsider after hearing all parties, such order would not be sustainable. 7. Firstly for lack of opportunity to the persons claiming right to the property not being taken note by the learned Magistrate, more particularly in a circumstance when this Court had remitted the matter to the learned Magistrate to reconsider after hearing all parties, such order would not be sustainable. 7. That apart, presently in the instant petition the applicant in IA-I/2014 has also sought to claim certain right in respect of the said property based on the documents that is produced along with the application. Though contentions are urged with reference to the documents to indicate that the extent of the property which is claimed as the mortgaged property cannot be taken possession by the bank, in view of the fact that as per the documents relied on by the applicant, the measurement would vary that aspect of the matter is also to be examined in the background of the pre-existing right if any to the property which is claimed to have been mortgaged and in that light the learned Magistrate would either grant permission as sought by the bank for taking possession. 8. Therefore, in such circumstance, when the learned Magistrate had merely relied on the observations made by the DRT in ASA No.138/2007, that by itself would not be justified. The observations as made in ASA No.138/2007 by the DRT at the first instance is only to take note of the contentions of the parties and to require a reconsideration by the learned Magistrate and the very fact that such reconsideration had been ordered would indicate that the conclusion as reached by the DRT alone could not form the basis for the conclusion to be made by the learned Magistrate. If the observations of the DRT was to be treated as conclusion and binding them, there would have been no need to remand the matter to the learned Magistrate. 9. Therefore in that circumstance, the order impugned dated 06.04.2013 will have to be set aside and the matter be remitted to the learned Magistrate to restore Crl.Misc.No.225/2008. If the observations of the DRT was to be treated as conclusion and binding them, there would have been no need to remand the matter to the learned Magistrate. 9. Therefore in that circumstance, the order impugned dated 06.04.2013 will have to be set aside and the matter be remitted to the learned Magistrate to restore Crl.Misc.No.225/2008. In that light, on providing opportunity to the bank, the borrower, guarantor, the third parties including the applicant in IA No.1/2014 claiming right in respect of the property regarding which the bank seeks to take possession under Section 14 of the SARFAESI Act to take note of the pre-existing right if any claimed by the parties to the mortgaged property and only if such right is established by the third parties on the face of it, the learned Magistrate would interfere with the right of the bank to act as the mortgagee for exercising its right. The learned Magistrate would thereafter consider the application and pass appropriate orders in accordance with law. It is made clear that the consideration to be made by the learned Magistrate would not be to determine the rights of the parties by adjudicating their rival claims to the extent as done in a civil suit seeking declaration but only to take note of the pre-existing rights if any as claimed under the documents where any Court having jurisdiction decided such right or the existing document and thereafter come to the conclusion in accordance with law. 10. In that view, the order dated 06.04.2013 passed in Crl.Misc.No.225/2008 is set aside and the learned Magistrate is directed to restore the Crl.Misc.No.225/2008 on file. All the parties to these petitions shall appear before the learned Magistrate on 18.03.2017 at 3.00 p.m. as the first date for appearance without notice being expected. The learned Magistrate shall thereupon regulate the proceedings and conclude the same as expeditiously as possible in accordance with law but not later than three months from the date of first appearance. 11. These petitions stand disposed of in the above terms.