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2018 DIGILAW 1014 (MP)

Shrikant Jain v. Additional District Magistrate (North) Bhopal

2018-12-10

S.K.SETH, VIJAY KUMAR SHUKLA

body2018
ORDER Shukla, J.--1. Invoking the writ jurisdiction under Article 226 of the Constitution of India, the petitioner has prayed for quashment of the order dated 26.10.2018, passed by the Additional District Magistrate (North) Bhopal under section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "SARFAESI Act"). 2. The contention of the petitioner is that no valid notice under sub-section (2) of section 13 of the SARFAESI Act has been issued by the respondent secured creditor. According to him, so called notice has been sent by an Advocate representing the Bank and, therefore, the said notice is without jurisdiction as he is not Authorized Officer as defined under rule 2(a) of the Security Interest (Enforcement) Rules, 2002. In support of his submissions, he referred the judgments passed by Andhra Pradesh High Court in the case of Sampoorna Battu v. I.C.I.C.I.Bank, Navi Mumbai and another (Writ Petition No. 28734/2010 decided on February 16, 2012 and also the order passed by Kerala High Court in the case of Bobby Sebastian v. The Aurthorised Officer (Writ Petition © No. 2372 of 2013(V) decided on 11th day of April, 2014. 3. The facts adumbrated in short are that the petitioner had taken credit/financial facility for housing loan from respondent no.2 Financial Institution in the year 2015. A notice dated 22.6.2018 under section 13(2) of the of the SARFAESI Act was issued to the petitioner informing that since he had failed to re-pay the loan, therefore, the same has been classified as Non-Performing Asset (NPA) on 8.5.2018 and despite several follows ups made for settlement, the petitioner failed to discharge its liability and, therefore, he was called upon by the said notice to discharge his liabilities within 60 days from the date of this notice. The liability was specified in the notice and the petitioner was directed to pay an amount of Rs. 79,38,672/- (Rupees Seventy Nine Lakhs Thirty Eight Thousand Six Hundred and Seventy Two only) due and payable as on 12.6.2018 with further interest and incidental expenses. 4. Before adverting to the availability of alternative and efficacious remedy under the SARFAESI Act, we would like to address on the contention of the counsel for the petitioner regarding the non-compliance of section 13(2) of the SARFAESI Act. 4. Before adverting to the availability of alternative and efficacious remedy under the SARFAESI Act, we would like to address on the contention of the counsel for the petitioner regarding the non-compliance of section 13(2) of the SARFAESI Act. In the case of Asset Reconstruction Company India Ltd. v. M/s.Amit Ventures Private Ltd. and others, AIR 2007 Cal. 49 and in the case of Kailash Chandra Sharma v. ICICI Bank Limited and others, AIR 2013 Rajasthan 163, word "issue" has been considered and it has been held that the notice of demand issued by solicitor on instructions of secured creditor is valid. Thus, there is divergent view of different High Courts on the said issue. However, we are not expressing our opinion on the aforesaid contention in the light of availability of alternative and efficacious remedy. 5. On being confronted with the availability of an alternative and efficacious remedy under section 17 of the SARFAESI Act, learned counsel for the petitioners submits that the grounds which have been canvassed in the present petition can be appreciated in writ jurisdiction without resorting to the alternative remedy. 6. To appreciate the aforesaid submissions of the counsel for the petitioners, it is apposite to refer the relevant provisions of sections 13 and 14 of the SARFAESI Act. The relevant provisions of the Act are reproduced hereunder: "13. Enforcement of security interest. - (1)........... (2).......... (3)........... 6. To appreciate the aforesaid submissions of the counsel for the petitioners, it is apposite to refer the relevant provisions of sections 13 and 14 of the SARFAESI Act. The relevant provisions of the Act are reproduced hereunder: "13. Enforcement of security interest. - (1)........... (2).......... (3)........... (4) In case the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely : (a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset; (b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset: Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt : Provided further that where the management of whole of the business or part of the business is severable, the secured creditor shall take over the management of business of the borrower which is relatable to the security for the debt. (c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor; (d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt. 14. Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured assets. 14. Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured assets. - (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 asset and documents to the secured creditor: Provided that any application by the secured creditor shall be accompanied by an affidavit duly affirmed by the authorised officer of the secured creditor, declaring that - (i) xx xx xx (ii) the borrower has created security interest over various properties and that the Bank or Financial Institution is holding a valid and subsisting security interest over such properties and the claim of the Bank or Financial Institution is within the limitation period; (iii) the borrower has created security interest over various properties giving the details of properties referred to in sub clause (ii) above, xx xx xx xx [(1-A) The District Magistrate or the Chief Metropolitan Magistrate may authorise any officer subordinate to him, - (i) to take possession of such assets and documents relating thereto; and (ii) to 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 or the Chief Metropolitan Magistrate or the District Magistrate [any officer authorized by the Chief Metropolitan Magistrate District Magistrate] done in pursuance of this section shall be called in question in any Court or before any authority." (emphasis supplied) 7. (3) No act or the Chief Metropolitan Magistrate or the District Magistrate [any officer authorized by the Chief Metropolitan Magistrate District Magistrate] done in pursuance of this section shall be called in question in any Court or before any authority." (emphasis supplied) 7. Sub-section (4) of section 13 of the Act authorizes the secured creditor to take possession of the secured assets including that the secured creditor has a right to transfer by way of lease, assignment or sale for realising the secured debts. Still further, the District Magistrate or the Chief Metropolitan Magistrate or any Officer authorised by him is competent to take possession of any secured asset. There is no distinction between symbolic and physical possession either under section 13(4) or under section 14 of the Act or for that matter in any other provisions of the Act or the Rules made thereunder. 8. The invocation of jurisdiction of the District Magistrate under section 14 of the Act is one of the modes available to the secured creditor to take possession of the secured assets. Therefore, when the District Magistrate under section 14 of the Act hands over possession to the secured creditor, it is possession as is contemplated under sub-section (4) of section 13 of the Act. Therefore, for an aggrieved person against an action taken by the secured creditor either under sub-section (4) of section 13 or under section 14 of the Act, the remedy is by way of an application under section 17 of the Act before the Tribunal. 9. The Division Bench of this Court in the case of Sunil Garg v. Bank of Baroda and others, Writ Petition No. 19028/2017, decided on 16.4. 2018 [Published in 2018(2) JLJ 585 ] examined the validity of the order passed by the Debt Recovery Tribunal in the proceedings under section 17 of the SARFAESI Act, whereby the application was dismissed on the ground that the same is not maintainable till the actual possession is taken. The Division Bench referring the various judgments of the apex Court held that the appeal under section 17 of the SARFAESI Act would be maintainable against the order passed under section 14 of the of the SARFAESI Act. 10. The Division Bench referring the various judgments of the apex Court held that the appeal under section 17 of the SARFAESI Act would be maintainable against the order passed under section 14 of the of the SARFAESI Act. 10. In a recent judgment passed by the Supreme Court in the case of Authorized Officer, State Bank of Travancore and another v. Mathew K.C. (2018)3 SCC 85 , considering a case under SARFAESI Act, held that discretionary jurisdiction under Article 226 is not absolute but has to be exercised judiciously in given facts of a case and in accordance with law. Normally a writ petition under Article 226 ought not to be entertained if alternative statutory remedies are available, except in cases falling within the well-defined exceptions. Relevant para-16 is reproduced below : "16. The writ petition ought not to have been entertained and the interim order granted for the mere asking without assigning special reasons, and that too without even granting opportunity to the appellant to contest the maintainability of the writ petition and failure to notice the subsequent developments in the interregnum. The opinion of the Division Bench that the counter-affidavit having subsequently been filed, stay/modification could be sought of the interim order cannot be considered sufficient jurisdiction to have declined interference." 11. In view of the aforesaid enunciation of law, the present petition is not maintainable as alternative and efficacious remedy is available against the impugned order passed under section 14 of the SARFAESI Act. 12. Accordingly, the writ petition is dismissed.