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Karnataka High Court · body

2020 DIGILAW 944 (KAR)

S. Nagabhushan And Others v. Can Fin Homes Ltd.

2020-06-02

N.K.SUDHINDRARAO

body2020
JUDGMENT 1. Heard learned counsel for petitioners and respondent. 2. Substance of the petition is that twelve petitioners have filed the present writ petition under Articles 226 and 227 of the Constitution of India and the relief sought by them is for issue of writ of mandamus in the form of direction to the respondent not to take action and dispossess the petitioners 4 to 12 as provided in the notice produced at Annexure-A and direct the respondent not to proceed in execution with the order at Annexure-B and any other relief. 3. It is stated that petitioners 1 to 3 availed housing loan of Rs.73,00,000/- under Loan Account No.131205400216 and another one for a sum of Rs.18,00,000/- under loan account No.131201004759 by securing repayment by equitable mortgage by deposit of title deeds. Date of the loan not mentioned. Petitioner No.1 suffered job loss, his mother died, due to frustration and turmoil petitioner could not repay the loan installments in time. As there was default by petitioner in making payment, the respondent Can Fin Homes Limited have classified the subject loan as a Non Performing Asset (NPA) thereby issued demand notice dated 12.01.2019 demanding repayment of Rs.92,40,340/- as on 13.01.2019. 4. Respondent also claimed to have taken symbolic possession of the schedule property as contemplated under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Demand Notice dated 12.01.2019-Annexure-C is made available for perusal. Now that the writ petition is filed for a direction not to take action or precipitate the same in any manner directing the respondent not to proceed with execution. 5. Learned counsel for petitioners would submit that due to prevailing pandemic and restless situation petitioners could not have the opportunity of filing appeal before the Debt Recovery Tribunal. Thus, according to the learned counsel for petitioners as the Debt Recovery Tribunal was closed he could not file appeal and therefore preferred this writ petition. 6. Learned counsel for petitioners would submit that respondents 4 to 12 are the tenants who are in occupation of the schedule property and they will have a devastating effect in case they are evicted from the schedule property. He would further submit during the pandemic and restless situation, the petitioners only seek extension of time for clearing the arrears. 6. Learned counsel for petitioners would submit that respondents 4 to 12 are the tenants who are in occupation of the schedule property and they will have a devastating effect in case they are evicted from the schedule property. He would further submit during the pandemic and restless situation, the petitioners only seek extension of time for clearing the arrears. It was also submitted that in case the relief is not granted the situation would lead to aggravation of frustration and irreparable loss would be caused to the petitioners. 7. Learned counsel Sri Hemanth Rao for respondent would submit petitioners do not have right to prefer this writ petition in respect of the relief sought for and also would submit that the Debt Recovery Tribunal is open and is functioning since last one week which is also endorsed by learned counsel for petitioners. 8. Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is as under: '14. 8. Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is as under: '14. Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset.- (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 assets 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) the aggregate amount of financial assistance granted and the total claim of the Bank as on the date of filing the application; (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; (iv) the borrower has committed default in repayment of the financial assistance granted aggregating the specified amount; (v) consequent upon such default in repayment of the financial assistance the account of the borrower has been classified as a non-performing asset; (vi) affirming that the period of sixty days notice as required by the provisions of sub-section (2) of section 13, demanding payment of the defaulted financial assistance has been served on the borrower; (vii) the objection or representation in reply to the notice received from the borrower has been considered by the secured creditor and reasons for non-acceptance of such objection or representation had been communicated to the borrower; (viii) the borrower has not made any repayment of the financial assistance in spite of the above notice and the Authorised Officer is, therefore, entitled to take possession of the secured assets under the provisions of sub-section (4) of section 13 read with section 14 of the principal Act; (ix) that the provisions of this Act and the rules made thereunder had been complied with: Provided further that on receipt of the affidavit from the Authorised Officer, the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, shall after satisfying the contents of the affidavit pass suitable orders for the purpose of taking possession of the secured assets [within a period of thirty days from the date of application]: [Provided [also] that if no order is passed by the Chief Metropolitan Magistrate or District Magistrate within the said period of thirty days for reasons beyond his control, he may, after recording reasons in writing for the same, pass the order within such further period but not exceeding in aggregate sixty days.] Provided also that the requirement of filing affidavit stated in the first proviso shall not apply to proceeding pending before any District Magistrate or the Chief Metropolitan Magistrate, as the case may be, on the date of commencement of this Act.] [(1A) 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 of the Chief Metropolitan Magistrate or the District Magistrate [any officer authorised by the Chief Metropolitan Magistrate or District Magistrate] done in pursuance of this section shall be called in question in any court or before any authority.' 9. It is necessary to make a mention that borrowing of loan amount of Rs.73,00,000/- and Rs.18,00,000/- and mortgage is not disputed equally the default is also admitted. Further it is stated that it was due to job loss and death of mother of petitioner No.1. 10. Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is as under: '17.[Application against measures to recover secured debts].- (1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, [may make an application along with such fee, as may be prescribed,] to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken: [Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower.] 4[(1A) An application under sub-section (1) shall be filed before the Debts Recovery Tribunal within the local limits of whose jurisdiction (a) the cause of action, wholly or in part, arises; (b) where the secured asset is located; or (c) the branch or any other office of a bank or financial institution is maintaining an account in which debt claimed is outstanding for the time being.] (2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder. [(3) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section (4) of section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management or restoration of possession, of the secured assets to the borrower or other aggrieved person, it may, by order,- (a) declare the recourse to any one or more measures referred to in sub-section (4) of section 13 taken by the secured creditor as invalid; and (b) restore the possession of secured assets or management of secured assets to the borrower or such other aggrieved person, who has made an application under sub-section (1), as the case may be; and (c) pass such other direction as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub-section (4) of section 13. (4) If, the Debts Recovery Tribunal declares the recourse taken by a secured creditor under sub-section (4) of section 13, is in accordance with the provisions of this Act and the rules made thereunder, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor shall be entitled to take recourse to one or more of the measures specified under sub-section (4) of section 13 to recover his secured debt. 1[(4A) Where (i) any person, in an application under sub-section (1), claims any tenancy or leasehold rights upon the secured asset, the Debt Recovery Tribunal, after examining the facts of the case and evidence produced by the parties in relation to such claims shall, for the purposes of enforcement of security interest, have the jurisdiction to examine whether lease or tenancy, - (a) has expired or stood determined; or (b) is contrary to section 65A of the Transfer of Property Act, 1882 (4 of 1882); or (c) is contrary to terms of mortgage; or (d) is created after the issuance of notice of default and demand by the Bank under sub -section (2) of section 13 of the Act; and (ii) the Debt Recovery Tribunal is satisfied that tenancy right or leasehold rights claimed in secured asset falls under the sub -clause (a) or sub-clause (b) or sub-clause (c) or sub-clause (d) of clause (i), then notwithstanding anything to the contrary contained in any other law for the time being in force, the Debt Recovery Tribunal may pass such order as it deems fit in accordance with the provisions of this Act.] (5) Any application made under sub-section (1) shall be dealt with by the Debts Recovery Tribunal as expeditiously as possible and disposed of within sixty days from the date of such application: Provided that the Debts Recovery Tribunal may, from time to time, extend the said period for reasons to be recorded in writing, so, however, that the total period of pendency of the application with the Debts Recovery Tribunal, shall not exceed four months from the date of making of such application made under sub-section (1). (6) If the application is not disposed of by the Debts Recovery Tribunal within the period of four months as specified in sub-section (5), any party to the application may make an application, in such form as may be prescribed, to the Appellate Tribunal for directing the Debts Recovery Tribunal for expeditious disposal of the application pending before the Debts Recovery Tribunal and the Appellate Tribunal may, on such application, make an order for expeditious disposal of the pending application by the Debts Recovery Tribunal. (7) Save as otherwise provided in this Act, the Debts Recovery Tribunal shall, as far as may be, dispose of application in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and the rules made thereunder.]' 11. Petitioners had ample opportunity of moving application before the Debt Recovery Tribunal in accordance with Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and that was not availed. The demand notice according to the petitioner is dated 19.03.2020. The period under Section 17 is 45 days. Writ petition is filed on 14.05.2020 long after the effect of COVID-19 pandemic situation. The order of taking possession in accordance with law is dated 18.03.2020. 12. Office also had raised objection regarding payment of court fee. 13. In the overall circumstances, the petition is being filed for extension of time practically an intervention which is not allowed in law or in the legal proceedings. I find the equally efficacious remedy is available but not utilized so far regard being had to the fact that an appeal/application could have been moved before the Tribunal. The scope of the writ remedy in the circumstance does not cover the case presented by the petitioners. 14. In the light of non maintainability of the writ petition, the other office objections are disposed of accordingly. Writ petition is dismissed. However petitioners are directed to make good the deficit court fee of Rs.1,200/- within 30 days. Right of approaching before the Debt Recovery Tribunal is kept open in accordance with law.