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2018 DIGILAW 856 (BOM)

J. M. FINANCIAL CO. v. DIST. MAGISTRATE

2018-03-23

SWAPNA JOSHI, VASANTI A.NAIK

body2018
JUDGMENT : MRS. SWAPNA JOSHI, J. : Rule. Rule made returnable forthwith. At the stage of admission, heard the petition with the consent of the learned counsel for the respective parties. 2. The petitioner-Company has challenged the order dated 20th January, 2017 passed by the learned District Magistrate, Gadchiroli/respondent No. 1 rejecting the Application filed by the petitioner under section 14 of the Securitization and Reconstruction of Financial Asset and Enforcement of Security Interest Act, 2002 ( hereinafter referred to as “the SARFAESI Act”), to secure the possession of the lands mortgaged with the petitioner, by declaring that the properties of which possession is to be taken, is an agricultural land and closing the case, in view of the provisions of section 31(1) of SARFAESI Act. 3. The respondent No. 2 is the principal borrower who was granted credit facility by United Commercial Bank (in short “the UCO Bank”). The respondent No. 2 had mortgaged its properties for securing the credit facility granted to it by the UCO Bank. The respondent No. 2 has availed credit facilities to the tune of crores of rupees from UCO Bank. Since the respondent No. 2 defaulted in making the payment, the UCO Bank invoked the provisions of the SARFAESI Act by issuing the demand notice dated 24-5-2013 under section 13(2) of the SARFAESI Act. By the said notice, the borrowers were directed to repay a sum of Rs. 7,92,90,528.17 to UCO Bank along with interest till 17-5-2013 i.e. within a period of sixty days, as contemplated under SARFAESI Act. However the borrowers did not comply with the said demand notice and dues of UCO Bank remained unpaid. The notice under section 13(4) of the Act was served on the respondent No. 2. The petitioner approached the respondent No. 1 for obtaining assistance for taking over the physical possession of the mortgaged properties under section 14 of the SARFAESI Act. On 20-1-2017 the respondent No. 1 passed the order which is impugned in the present Writ Petition. 4. The learned counsel for the petitioner vehemently argued that the law laid down under the provisions of section 14 of the SARFAESI Act stipulates that the District Magistrate is only required to verify as to whether the demand notice u/s 13(4) of the SARFAESI Act has been issued or not and whether the secured assets fall within the jurisdiction of the District Magistrate. It is submitted that in the case in hand, record before the District Magistrate reveals that the demand notice u/s 13(2) of the SARFAESI Act has been issued and secured assets fall within the jurisdiction of the respondent No. 1. In these circumstances, the respondent No. 1 ought to have passed an order in the favour of the petitioner. The learned counsel further submitted that the respondent No. 1 grievously erred in observing that the property in question was an agricultural property. The said aspect was not within the jurisdiction of the respondent No. 1, still he concluded that the property was agricultural property. The main contention of the learned counsel for the petitioner is that the issue involved in this case is no more res integra and is squarely covered by the Division Bench judgment of this Court, in the case of Bank of Maharashtra vs. Additional District Magistrate, Nagpur and others, reported in 2017(1) Mh.L.J. 480 . 5. The learned counsel for the respondents have contended that the respondent No. 1/District Magistrate has rightly passed the impugned order. 6. On a perusal of the order passed by the District Magistrate, it is crystal clear that the District Magistrate has come to the conclusion that the mortgaged property is an agricultural land and hence the possession of the said land cannot be taken under the provisions of section 31(1) of the SARFAESI Act. The said observation of the District Magistrate is without jurisdiction under the provisions of section 14(1A) of the SARFAESI Act. The District Magistrate could not have decided the question whether the property is agricultural property or not. Under the said provision, the District Magistrate has to simply verify whether the contents in the affidavit tendered by the petitioner are in accordance with the provisions of section 14(1A) and the secured asset is situated within the territorial jurisdiction of the District Magistrate. The District Magistrate has no powers to adjudicate the dispute but has to verify whether the declarations are made in the affidavit, tendered by the petitioner, as per the provisions of section 14(1A) and then pass an order, after taking actual possession of the secured assets. 7. In the case in hand, the learned District Magistrate has exceeded his jurisdiction and has passed the impugned order which is contrary to the provisions of section 14 of the Act. 7. In the case in hand, the learned District Magistrate has exceeded his jurisdiction and has passed the impugned order which is contrary to the provisions of section 14 of the Act. The question is decided in favour of the petitioner by the judgment reported in 2017(1) Mh.L.J. 480 (supra). Hence it is held that the impugned order dated 20th January, 2017 is an illegal order, without jurisdiction and cannot be sustained in law. In view of the above facts and circumstances, the following order is passed :— ORDER (a) Writ Petition No. 4696/2017 is allowed. (b) The impugned order dated 20th January, 2017 passed by the learned District Magistrate, Gadchiroli, is hereby quashed and set aside. (c) The learned District Magistrate, Gadchiroli may immediately direct the Tahsildar to take steps for securing the possession of secured assets. (d) Rule is made absolute in the aforesaid terms. No costs. Petition allowed.