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2022 DIGILAW 50 (UTT)

Narendra Kumar v. HDFC Ltd.

2022-03-23

SHARAD KUMAR SHARMA

body2022
JUDGMENT : Sharad Kumar Sharma, J. Brief facts of the present writ petition are, that the admitted position which had emerged as per the pleadings itself, is that the late father of the petitioner, who was a beneficiary of a financial assistance, which had been extended by the respondent/secured creditor, whereby he was advanced with loan facility. In lieu thereof, certain property was mortgaged for the purposes of extension of the financial assistance by the respondent. Ultimately, the father of the petitioner had met with the sad demise on 25.12.2013, hence, the petitioner, being the legal heir, he would be liable for all the assets and including the liabilities inherited of the late father, including meeting out the outstanding loan liability, which was standing against the late father of the petitioner, as against his Loan Account No. 603563997, where the amount as depicted on 23.10.2019, was assessed to be Rs. 13,30,043/-. 2. Due to commission of default, the respondent/secured creditor had initiated the proceedings under the SARFAESI Act, by issuing Notice dated 02.07.2019 under Section 13(2) of the Act, and physical possession Notice under Section 13(4) of the Act, was issued against the petitioner as back as on 22.10.2019 and consequently, sale notice was issued on 10.08.2019, which was duly served by affixation as per Rule 3 to be read with Rules 8(1), 8(2), 8(6), 8(7) and 9(1) of the Rules, framed under the Act. 3. Admittedly, the petitioner had filed an SA No. 79 of 2020, Narendra Kumar Vs. HDFC Ltd., before the Debts Recovery Tribunal, which was adjudicated on merits on 06.01.2021, whereby the learned DRT had issued the following directions:- “In case Applicant deposits the remaining dues after receiving the fresh calculation of outstanding dues by 31.01.2021, Respondent F.I. shall withdraw all its proceedings initiated against the secured asset in question and shall relese mortgaged documents to the person entitled to receive the same, if not required in any other loan account or there is no legal impediment to return the same in accordance law. However, in case after receipt of the fresh calculation of trhe outstanding dues from the Respondent F.I. the Applicant fails to liquidate the dues in the stipulated period as above; Respondent F.I. is at liberty to proceed a fresh against the secured asset under the S.A.R.F.A.E.S.I. Act, 2002 in terms of Rule 8(6) & 9(1) of Security Interest (Enforcement) Rule, 2002 in accordance with law in continuation of the current proceedings to recover its legitimate dues. In view of above S.A. is disposed of accordingly. Pending I.A.s, if any, also stand disposed of. Registry is directed to provide the copy of this order to all the parties as per rules as well as through e-mail and also upload on the official website of DRT. After due compliance, the file be consigned to record.” 4. The learned counsel for the petitioner contends, that the said directions were admittedly not complied with and the respondent had still proceeded to resort to the Tender Sale Notice, as issued on 30.12.2021, qua the petitioner, whose name was shown at Sl. No. 5, as against the property, which was shown to have been mortgaged and which was supposed to be put on an auction, which was to be held on 03.02.2022. Deriving his cause of action from the said Notice dated 30.12.2021, the petitioner had filed the present writ petition before this Court on 25.01.2022. 5. Upto this stage, there cannot be any dispute that ultimately the issuance of notice, which is now the subject matter of challenge in the present writ petition, is as a consequence of the follow up proceedings, which had flown under Rule 8(6) of the SARFAESI Act, and the Rules framed therein and in that eventuality, appropriate statutory recourse available to the petitioner would have been to approach the DRT under Section 17 of the Act. Section 17 of the SARFAESI Act reads as under:- 17. Section 17 of the SARFAESI Act reads 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,1 [may make an application along with such fee, as may be prescribed,]to the Debts Recovery Tribunal having jurisdiction in the matter within fortyfive days from the date on which such measure had been taken: [Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower.] [Explanation.—For the removal of doubts, it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under this sub-section.] [(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 subsection (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. [(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 subsection (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 part 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 the 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.]” 6. The learned counsel for the petitioner submitted that Section 17 of the DRT Act, had subsequently undergone an amendment, by Act of 44 of 2016, and the word used as ‘Right of Appeal’, has been substituted to be “an application”, as a measure which is available to the borrower, as against the action taken by the respondent/secured creditor. But, still the fact remains that irrespective of the nature of proceedings, whether an ‘Appeal’ or an ‘application’, in either of the circumstances in the un amended provision or even under the amended provision, the appropriate Forum shall remain the same i.e. the Debts Recovery Tribunal. 7. The learned counsel for the petitioner had submitted that though when Section 17, had provided for a Forum for the redressal of his grievances, the same would not be available to the petitioner in view of the amendment, which has been made by the Notification dated 06.09.2018, whereby sub Section (4) of Section 1 of the DRT Act, pertaining to the pecuniary jurisdiction of the DRT, has been amended and enhanced to Rs. 20.00 lakh. The relevant part of the Notification is extracted hereunder:- “Ministry of Finance (Department of Financial Services) Notification New Delhi, the 6th September, 2018 S.O. 4312(E) – Whereas, sub section (4) of section 1 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (51 of 1993) provides that the provisions of the said Act shall not apply where the amount of debt due to any bank or financial institution or to a consortium of banks or financial institutions is less than ten lakh rupees or such other amount, being not less than one lakh rupees, as the Central Government may, by notification specify : And whereas, the Central Government has considered it necessary to raise the pecuniary limit from ten lakh rupees to twenty lakh rupees for filing application for recovery of debts in the Debts Recovery Tribunals by such banks and financial institutions. Now therefore, in exercise of powers conferred by sub-section (4) of section 1 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993, the Central Government hereby specifies that the provisions of the said Act shall not apply where the amount of debt due to any bank or financial institution or a consortium of banks or financial institutions is less than twenty lakh rupees.” (F.No. 3/4/2018-DRT) SUCHINDRA MISHRA, JT. SECY.)” 8. This argument of the learned counsel for the petitioner that now in view of the amendment made on 06.09.2018, the Forum provided under the SARFAESI Act under Section 17, either by way of an Appeal or an Application, would not be available to the petitioner, because of the change in the pecuniary jurisdiction and the recovery, which has been sought herein, since is of a lesser, than the amount, as enhanced by the amendment 06.09.2018, the Forum of DRT is not available. 9. There are few reasons for not accepting the arguments of the learned counsel for the petitioner:- i. The amendment under sub Section (4) of Section 1 of the DRT Act of 1993, was notified to be made applicable on 06.09.2018. Meaning thereby, the alteration of the pecuniary jurisdiction was statutorily enforced w.e.f. 2018. But, for the reasons best known to the petitioner, the petitioner had already invoked Section 17, proceedings by filing SA No. 79 of 2020, which was decided on 21.09.2020 and he himself has invited the orders, which were passed on it and in that eventuality, once he has submitted to the jurisdiction before the DRT, after the enforcement of the amendment, he would be estopped to argue, that DRT will not have a jurisdiction, because the recovery sought to be made is of a lesser than the amount, than that of the pecuniary jurisdiction, which has been now vested with the DRT. ii. ii. The substitution under sub Section (4) of Section 1 under the Act of 1993, conferring a pecuniary jurisdiction on the DRT, does not have a corresponding effect of change of pecuniary jurisdiction of the DRT, as per the procedure contemplated under Section 17 of the SARFAESI Act, as both the Acts, are independent in its application, because if the legislature had any intention to effect the pecuniary jurisdiction, qua the Forum of Section 17 provided under the Act, there ought to have been a corresponding amendment under Section 17, which is not there. Hence, this argument of the learned counsel for the petitioner and as argued by Mr. Pradeep Kumar Chauhan, learned counsel for the respondent, that the amendment in the DRT Act, made in 2018, would be deemed to be within the knowledge of the petitioner, when he had himself earlier approached DRT, and now he cannot challenge the effect of the said amendment for the purposes of questioning the auction notice, which is impugned in the present writ petition and he would be still have a Forum available to him under Section 17 of the Act, by filing an appropriate application, if at all, it is tenable under law. 10. This Court is of the view, that the statement, objects and reasons for the two Acts i.e. the DRT Act of 1993 and SARFAESI Act of 2002, are divergent in their intention to be achieved with. The SARFAESI Act of 2002, is a substantive provision for recovering an amount by resorting to the recourses provided under the Act and Rules against a borrower, who is an admitted defaulter, to a secured creditor and the procedure as contemplated therein under the Rules. 11. Since the SARFAESI Act, being a self-contained provision, the provisions of the DRT Act of 1993, where there is an alteration in the pecuniary jurisdiction by the amendment of 2018, will not oust the platform, which has been provided under existing law contained under Section 17 of the SARFAESI Act, and that too, particularly, though at the cost of repetition, when the petitioner himself had approached DRT, even after the acknowledged amendment. 12. The learned counsel for the petitioner had made reference to a judgment of the Hon’ble Apex Court, as rendered in Civil Appeal No. 210 of 2007, State Bank of Patiala Vs. 12. The learned counsel for the petitioner had made reference to a judgment of the Hon’ble Apex Court, as rendered in Civil Appeal No. 210 of 2007, State Bank of Patiala Vs. Mukesh Jain and another, as decided by his lordships on 08.11.2016, and particularly, the learned counsel for the petitioner had made reference to para 26 and 27 of the said judgment, which are extracted hereunder:- “26. For the aforestated reasons, we are of the view that the application submitted by the appellant bank under Order VII Rule 11 of the CPC should have been granted by the trial Court as, according to Section 34 of the Act, a Civil Court has no jurisdiction to entertain any appeal arising under the Act. 27. Thus, we hold that the Debt Recovery Tribunal constituted under the DRT Act has jurisdiction to entertain an appeal as per Section 17 of the Act even if the amount involved is less than Rs.10 lakh. But, the said appellate jurisdiction need not be misunderstood with the original jurisdiction of the Tribunal.” 13. In fact, this adjudication, which was made by the Hon’ble Apex Court, will not have a direct applicability under the facts and circumstances of the the present writ petition for the reason being that:- (i) It was a judgment, which had been rendered prior to the amendment of 2018 i.e. when the amendment was made under the DRT Act of 1993. (ii) It was a case where the borrower has instituted a Civil Suit, where an objection was raised by the secured creditor under Order 7 Rule 11, for the purposes of attracting the embargo of Section 34 of the Act, that the Suit would not be maintainable and it is under those circumstances, that the Hon’ble Apex Court, had observed that the Suit would not be barred, because the jurisdiction of the DRT, was less than Rs. 10.00 lakh at that relevant point of time. 14. 10.00 lakh at that relevant point of time. 14. But, ultimately, if the conclusive analysis is taken into consideration and particularly, in the context of the objection raised under Order 7 Rule 11, though without accepting the arguments of the learned counsel for the petitioner, which he has sought to attract in the light of the observations made in para 26 and 27 of the said judgment, which are extracted hereinabove, even if the jurisdiction of the DRT, if at all could be presumed, that it is being opted out by an amendment of 2018, then too, it will only have an effect of eradicating the Forum, provided under Section 17 of the Act, even if at all the argument of the learned counsel for the petitioner is accepted. But, otherwise too, if this judgment is read in its totality, if the ouster of pecuniary jurisdiction of the DRT is taken into consideration, as it has been laid down in the said judgment, it will have a bearing only on an application filed under Order 7 Rule 11 in the suit. That means the logical interference would be that the suit would not be barred at least against an action taken for recovery of an amount lesser than the amount as provided under the DRT. So, under either of the circumstances, as an effect of the judgment of the Hon’ble Apex Court or as an effect of the amendment of 2018, the petitioner would have to work out his remedies, the writ petition would not be amenable to appreciate a factual determination, as it has been sought to be portrayed by the learned counsel for the petitioner. 15. In that eventuality and the reasons assigned above, I am not inclined to interfere in the writ petition. The writ petition is, accordingly, dismissed.