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2022 DIGILAW 501 (AP)

True Well E Pipe Industries v. State of Andhra Pradesh

2022-05-05

C.PRAVEEN KUMAR, V.SUJATHA

body2022
ORDER : 1. The present writ petition is filed seeking issuance of writ of certiorari calling for records pertaining to orders in File No. Rc.D1.1530/2021, dated 06.11.2021 allegedly passed by one Chinna Obulesu on behalf of the District Collector, SPSR Nellore and not by the District Magistrate as illegal, arbitrary and lack of jurisdiction under Section 14 (1) of the Securitisation and Reconstruction of Financial Assets and Enforcement Act, 2002. 2. The facts in issue are that the 3rd petitioner is the proprietor of the 1st petitioner and the Managing Partner of the 2nd petitioner and they are the borrowers of the 3rd respondent bank. The 3rd respondent bank filed a petition before the District Collector, SPSR Nellore District for taking physical possession of the schedule properties, pursuant thereto, the District Collector, SPSR Nellore District, passed orders dated 06.11.2021, which was signed by one Mr. B. China Obulesu for Collector. Thereafter, the petitioner made an application for furnishing certified copies of the petition, affidavit and the list of documents, but, the authorities concerned refused to furnish the same. Aggrieved by the same, the present writ petition came to be filed. 3. The 2nd respondent filed his counter, while denying the allegations made in the writ affidavit, contended that the Authorised Officer, M/s. HDFC Bank Limited, Ramalingapuram Branch, Nellore Town, who is the 3rd respondent herein, filed a petition before the 2nd respondent stating that the petitioners have availed WC terms loans, WC Droline over draft and cash credit facilities vide Loan Account No. 7120970 and 7120271 and failed to repay the loan amount and the Authorised Officer issued demand notice to borrowers and guarantors under Section 13 (2) of the SARFAESI Act and possession notice under Section 13 (4) of the Act was served on them. It is stated that the as per Section 14 of the SARFAESI Act, the Chief Metropolitan Magistrate or the District Magistrate is competent to assist secured creditor in taking possession of secured assets and as per Section 14 (1A) of the Act, the District Magistrate or the Chief Metropolitan Magistrate may authorise any officer subordinate to him. It is stated that the as per Section 14 of the SARFAESI Act, the Chief Metropolitan Magistrate or the District Magistrate is competent to assist secured creditor in taking possession of secured assets and as per Section 14 (1A) of the Act, the District Magistrate or the Chief Metropolitan Magistrate may authorise any officer subordinate to him. It is further stated that the Collector and the District Magistrate, after perusal of the records and powers conferred under Section 14 of the Act, directed the Tahsildar, Nellore Rural, Nellore Urban and TP Gudur to take over possession of the property of the defaulted borrower and handover the same to the authorised officer of the bank and the District Collector and District Magistrate has initiated action strictly in accordance with Section 14 of the SARFAESI Act. It is further stated that the orders dated 06.11.2021 of the District Collector was issued by one Mr. B. Chinna Obulesu, for Collector, SPSR Nellore District, who is none other than the District Revenue Officer and who issued the impugned proceedings under the orders of the District Collector and the decision making process is taken by the District Collector, as contemplated under Section 14 of the SARFAESI Act 4. The 3rd respondent also filed separate counter, denying the allegations made in the writ petition. 5. Heard Sri K. Sarvabhouma Rao, learned counsel for the petitioner and Sri C.V.R. Rudra Prasad, learned counsel appearing on behalf of the respondent bank and the learned Government Pleader for Revenue. 6. Learned counsel for the petitioner would submit that the person Sri China Obulesu, who signed the proceedings for the Collector, is not a competent authority to issue the proceedings impugned, as such, he has not authority to take possession of the schedule property in accordance with Section 14 of the SARFAESI Act. 7. On the other hand, the learned Government Pleader would contend that the said B. China Obulesu is none other than the District Revenue Officer and he is authorised by the District Collector to sign the proceedings dated 06.11.2021 and as such, there is no illegality in passing the impugned proceedings dated 06.11.2021. In support of his contention, the learned Government Pleader placed a reliance on the office note signed by the District Collector. 8. In support of his contention, the learned Government Pleader placed a reliance on the office note signed by the District Collector. 8. Keeping in view the rival contentions of the parties, the points that arise for consideration is whether Sri China Obulesu, who is said to be the District Revenue Officer, has authority to issue the impugned proceedings; and whether a proper application under Section 14 of the SARFAESI Act was made by the respondent-bank before the District Collector as required under Section 14 of the SARFAESI Act? 9. Before proceeding further, it would be appropriate to refer to Section 14 of the SARFAESI Act, which 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 assets is required to be taken by the secured creditor or if any of the secured assets 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 assets, 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. (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) 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. (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 nonperforming 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.............. Provided also.............. (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. (ii) To forward such assets and documents to the secured creditor.........” (2) For the purpose of securing compliance with the provisions of subsection (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 done in pursuance of this section shall be called in question in any court or before any authority. 10. (3) No act of the Chief Metropolitan Magistrate or the District Magistrate done in pursuance of this section shall be called in question in any court or before any authority. 10. A reading of the above provision makes it clear that the District Magistrate or the Chief Metropolitan Magistrate may authorise any officer subordinate to him to take possession of such assets and documents relating thereto; and to forward such assets and documents to the secured creditor. 11. In the case on hand, it is the contention of the learned Government Pleader for Revenue that Sri B. China Obulesu, who signed the impugned proceedings dated 06.11.2021, is the authorised person to issue proceedings on behalf of the District Collector and he is authorised to issue such proceedings. In support of his contention, the learned Government Pleader for Revenue placed reliance on the Office Note dated 03.11.2021 wherein it is stated as under: “...........Hence, if the District Collector pleases, the Tahsildar, Nellore Urban, the Tahsildar, Nellore Rural and the Tahsildar, T.P. Gudur may be directed to take over the above said properties of the defaulted borrower and handover the same to the Authorised Officer, M/s. HDFC Bank Limited, Ramalingapuram Branch, Nellore, under Section 14 of the SARFAESI Act, 2002.” 12. Learned Government Pleader for Revenue vehemently contended that the office note was signed by the District Collector, which amply establishes that he has directed the Tahsildar, Nellore Urban, the Tahsildar Nellore Rural and the Tahsildar, T.P. Gudur to take over the possession of the properties of the defaulted borrowers and handover the same to the 3rd respondent herein. 13. A perusal of the impugned proceedings dated 06.11.2021 would show that though the head note of the proceedings was shown as Proceedings of the District Collector and District Magistrate, but it was signed by one B. China Obulesu, for Collector, SPSR Nellore. The impugned proceedings also further show as under: “Under the above circumstances and in exercise of the powers conferred under Section 14 of the Securitisation Act, the Tahsildar, Nellore Rural, the Tahsildar, Nellore Urban and the Tahsildar T.P. Gudur are hereby directed to take over the possession of the above mortgaged property of the defaulted borrower and hand over the same to Authorised Officer, M/s. HDFC Bank Limited, Ramalingapuram Branch, Nellore.” (Under the orders of the District Collector, Nellore) 14. From the above, it is clear that though the head note of the proceedings shown as “proceedings of the District Collector and District Magistrate”, but the same was signed by one B. China Obulesu, who is said to be District Revenue Officer, for Collector, SPS Nellore, without there being any powers delegated on him to do so. 15. As contended by the learned Government Pleader that the said B. China Obulesu was authorised by the District Collector to take possession of the properties of defaulted borrowers and hand over the same to the authorised officer of M/s. HDFC Bank Limited. The office note relied upon by the learned Government Pleader does not indicate any authorisation to take possession of the properties or to issue the proceedings. The office note only says that “if the District Collector pleases the Tahsildar, Nellore Urban, the Tahsildar, Nellore Rural and the Tahsildar, T.P. Gudur may be directed to take over the above said properties of the defaulted borrower and handover the same to the Authorised Officer, M/s. HDFC Bank Limited, Ramalingapuram Branch, Nellore, under Section 14 of the SARFAESI Act, 2002.” 16. A perusal of the office note referred to above does not indicate that the District Collector has authorised the District Revenue Officer to issue the said proceedings. If that was so, the wordings used therein would have been different. On the other hand, a reading of the same would show as if it was issued by someone else stating that if the District Collector pleases, the Tahsildar may be directed to take over the said properties. Hence, by no stretch of imagination, it can be said that the said proceedings was issued by the Tahsildar. 17. In the absence of any authorisation to issue proceedings or to take possession of the properties, and since no explanation is forthcoming as to why such person has signed the proceedings on behalf of the District Collector, this court is of the view that the issuance of the impugned proceedings is nothing but illegal, arbitrary and violative of the provisions of Section 14 of the SARFAESI Act and hence, the same is liable to be set aside. 18. 18. Though the learned counsel for the petitioner contended that the mandatory requirements as provided under the proviso to sub-section (1) of Section 14 of the SARFAESI Act have not been complied with while making such application, a perusal of the writ affidavit does not anywhere indicate such a pleading being taken. In the absence of such pleadings, it may not be necessary for us to go into all these details. 19. In the facts and circumstances stated above and the law laid down by the Apex Court in the judgments referred to above, since the issuance of the proceedings dated 06.11.2021 is contrary to the mandatory provisions of Section 14 of the SARFAESI Act, the same is liable to be set aside on this count also. 20. Accordingly, the writ petition is allowed by setting aside the proceedings in File Rc.D1.1530/2021, dated 06.11.2021 issued by the 2nd respondent-District Collector, SPS Nellore District, leaving it open to the respondent-bank to proceed, if necessary, in accordance with law. There shall be no order as to costs. 21. As a sequel thereto, miscellaneous petitions, if any, shall stand closed.