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2020 DIGILAW 141 (CHH)

DCB Bank Limited v. State of Chhattisgarh

2020-02-05

P.SAM KOSHY

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ORDER : P. Sam Koshy, J. 1. The relief sought for in the present writ petition is for an appropriate direction to the respondent No. 2 to take an appropriate decision under Section 14 of the SARFAESI Act of 2002 at the earliest. 2. According to the petitioner they are secured creditor in respect of the industrial property that situates in a portion of Khasra No. 401/8, Old PH No. 6 and PH No. 19 measuring 99138 square feet at Sinodha RNM Tilda Distt-Raipur, Residential property located at Khasra No. 248 PH15, Sheet No. 3, Plot No. 92, measuring 2430 sqft., Gandhi Chowk, Bazarpara, Tilda Distt. Raipur, Residential property located at Khasra No. 247/2, PH No. 18, Sheet No. 3 Plot Nos. 64 and 65 measuring 2772 sqft. Near Gandi Chowk, Bazarpara, Tilda Distt. Raipur. According to the petitioner they had already issued a notice under Section 13(2) and Section 13(4) to the borrowers and subsequently they had moved an application under Section 14 along with an affidavit with 9 points as is required under proviso Clause 2 Section 14(1) on 28.03.2019. But till date respondent No. 2 as not passed any final order on the said application. Further grievance of the petitioner is that petitioners having moved an application under Section 14 the Magistrate has issued notice to the borrower which is not otherwise required as per the Proviso of Section 14 and by issuance of notice to the borrowers the matter is getting lingered on unnecessarily, and therefore an appropriate direction be given to respondent No. 2 to decide the matter at the earliest. 3. To this limited grievance that petitioner has raised counsel for the State does not have any objection. 4. So far as the proceedings drawn by respondent No. 2 under Section 14 of the Sarfaesi Act is concerned, particularly on the issue whether notice has to be issued under Section 14 or not, it would be relevant at this juncture to refer to a recent Division Bench Judgment of the Madhya Pradesh High Court in the case of Aditya Birla Finance Limited v. Shri Carnet Elias Femandes Vermalayam decided on 13.07.2018 (Reported in AIR 2018 MP 209 ) wherein the Division Bench in very categorical terms in paragraphs 27 to 29 have held as under:- "27. We do not find any merit in the said argument as well. We do not find any merit in the said argument as well. The issue raised was a question of fact as to whether the petitioner is in possession of the W.A. No. 784/2018 property in question on the basis of lease agreement. The said judgment refers to the Supreme Court judgment reported as (2014) 6 SCC 1 : (AIR Online 2014 SC 301) (Harshad Govardhan Sondagar v. International Assets Reconstruction Company Limited and others) to hold that such question is required to be decided while considering an application under Section 14 of the Act. But, present is not a case where any such question is required to be decided. The property in question is mortgaged in favour of the appellant; therefore, it is a secured asset. In respect of secured assets, the District Magistrate is duty bound to hand over physical possession to the secured creditor in terms of Section 14 of the Act. Therefore, such judgment provides no assistance to the argument raised. 28. Coming to the argument that opportunity of hearing was not granted to the writ-petitioners and that the order passed by the District Magistrate violates the principles of natural justice is again not tenable. The Bombay High Court in a judgment reported as 2007 Cri LJ 2544 (Bom.): (AIR 2007 Bom 1634) (Trade Well v. Indian Bank) has held that the District Magistrate is not required to give notice either to the borrower or to the third party.. He is only to verify from the Bank whether notice under Section 13(2) of the Act has been issued or not. The said judgment has been quoted with approval by the Supreme Court in a judgment reported as (2013) 9 SCO 620 (Standard Chartered Bank, etc. v. V. Noble Kumar and others, etc), wherein it was held as under:- "22. However, the Bombay High Court in Trade Well v. Indian Bank [2007 CriLJ 2544 (Bom): (AIR 2007 Bom 1634)] opined; "2...CMM/DM acting under Section 14 of the NPA Act is not required to give notice either to the borrower or to the third party. 3. He has to only verify from the bank or financial institution whether notice under Section 13(2) of the NPA Act is given or not and whether the secured assets fall within his jurisdiction. There is no adjudication W.A. No. 784/2018 of any kind at this stage. 4. 3. He has to only verify from the bank or financial institution whether notice under Section 13(2) of the NPA Act is given or not and whether the secured assets fall within his jurisdiction. There is no adjudication W.A. No. 784/2018 of any kind at this stage. 4. It is only if the above conditions are not fulfilled that the CMM/DM can refuse to pass an order under Section 14 of the NPA Act by recording that the above conditions are not fulfilled. If these two conditions are fulfilled, he cannot refuse to pass an order under Section 14." (Emphasis supplied) The said judgment was followed by the Madras High Court in Indian Overseas Bank v. Sree Aravindh Steels Ltd. [AIR 2009 Mad 10]. Subsequently, Parliament inserted a proviso to section 14(1) and also sub-section (1-A) by Act 1 of 2013. xxxxxxxxxxx 25. The satisfaction of the Magistrate contemplated under the second proviso to section 14(1) necessarily requires the Magistrate to examine the factual correctness of the assertions made in such an affidavit but not the legal niceties of the transaction. It is only after recording of his satisfaction the Magistrate can pass appropriate orders regarding taking of possession of the secured asset." 29. Thus, the proceedings under Section 14 of the Act are not proceedings to adjudicate the rights of the parties; Therefore, no notice is contemplated to be served upon the debtor, as such proceedings are taken only after serving notice under Section 13 of the Act." 5. The said view of the Division Bench was further reiterated by the Division Bench of the Madhya Pradesh High Court again in the case of DCB Bank Limited v. State of M.P. and other, WPC 22260/18 decided on 10.10.2018 wherein the judgment of the Supreme Court in the case of Standard Chartered Bank, etc. v. V. Noble Kumar and others etc.); (2013) 9 SCC 620 and also in the case of Aditya Birla Finance Limited (supra) was relied upon and held as under:- "We find that the order passed by the District Magistrate is unsustainable, for the reason that no notice to the borrower is contemplated. The petitioner has filed an application under Section 14 on 16.10.2017 and many opportunities were granted to the parties before passing the impugned order on 2nd August, 2018. The allegation of payment of Rs. The petitioner has filed an application under Section 14 on 16.10.2017 and many opportunities were granted to the parties before passing the impugned order on 2nd August, 2018. The allegation of payment of Rs. 10 Lakhs seems to be an effort made by the borrower without any proof or supportive document thereof. Therefore, we find that the District Magistrate was not justified in rejecting the claim of the petitioner for providing assistance to take possession of the secured assets in terms of Section 14 of the Act" 6. In view of the aforesaid decisions and also considering the provisions of Section 14, this Court has no hesitation to hold that the need to notice the borrowers was not necessary or justified. However, since notice have been issued that present writ petition also therefore can be disposed of directing the respondent No. 2 to decide the application of the petitioner at the earliest preferably within a period of 60 days from the date of receipt of copy of this order. 7. With the aforesaid observations, the writ petition stands disposed of.