Shriram Housing Finance Limited v. District Magistrate, Bhavnagar
2022-01-12
BHARGAV D.KARIA
body2022
DigiLaw.ai
JUDGMENT : Bhargav D. Karia, J. 1. Heard learned Advocate Ms. Khyati A. Chug for the petitioner and learned AGP Mr. Dhawan Jayswal for Respondent No. 1. Though served, none appears for Respondent Nos. 2 to 4. 2. Rule. Learned AGP waives service of notice of rule for Respondent No. 1. 3. This is a petition under Article 226 of the Constitution of India seeking following reliefs: "18.... A. The Hon'ble Court may be pleased to issue a writ of certiorari or any other appropriate writ, direction or command in the nature of writ of certiorari, quashing and setting aside the order dated 06.08.2021 passed by the Respondent No. 1-the District Magistrate, Bhavnagar in SARFAESI Case No. 12/2021; B. Pending admission and final hearing of the present petition, the Hon'ble Court be pleased to stay the implementation and execution of the order dated 06.08.2021, passed by Respondent No. 1-the District Magistrate, Bhavnagar in SARFAESI Case No. 12/2021; C. Ex-parte ad interim relief in terms of Paragraph (B) above be granted; D...." 4. The petitioner preferred an application along with affidavit of the authorized person of the petitioner before Respondent No. 1-District Magistrate, Bhavnagar, under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in brief 'SARFAESI Act') being SARFAESI Case No. 12 of 2021 on 9th March, 2021 against Respondent Nos. 2 to 4 for getting assistance for taking possession of the mortgaged property to recover the outstanding dues of the petitioner amounting to Rs. 11,07,029/- as per the notice dated 20th February, 2020 issued under Section 13(2) of the SARFAESI Act. 5. However, Respondent No. 1 rejected the application filed by the petitioner on the ground that Respondent Nos. 2 to 4 have paid the installment after the notices were issued by the petitioner under Sections 13(2) and 13(4) of the SARFAESI Act and also directed the petitioner to permit Respondent Nos. 2 to 4 to regularize their account and Respondent Nos. 2 to 4 were directed to pay regular installments to the petitioner. 6. Learned Advocate Ms.
2 to 4 have paid the installment after the notices were issued by the petitioner under Sections 13(2) and 13(4) of the SARFAESI Act and also directed the petitioner to permit Respondent Nos. 2 to 4 to regularize their account and Respondent Nos. 2 to 4 were directed to pay regular installments to the petitioner. 6. Learned Advocate Ms. Chug appearing for the petitioner submitted that Respondent No. 1 has passed the impugned order contrary to the provisions of Section 14 of the SARFAESI Act, as Section 14 of the SARFAESI Act only permits Respondent No. 1 to provide assistance to the secured creditor to take the possession of the mortgaged property of the borrower who failed to pay the money to the secured creditor. 7. It was submitted that Respondent No. 1 could not have passed the impugned order rejecting application under Section 14 of the SARFAESI Act by directing the petitioner to consider the installment paid by Respondent Nos. 2 to 4 for repayment of the outstanding dues of the petitioner. 8. It was submitted that Respondent No. 1 has traveled beyond the scope and ambit of Section 14 of the SARFAESI Act by passing the impugned order which contrary to the said provisions of law. 9. It was further submitted that Section 14 of the SARFAESI Act stipulates for taking possession of the property by the secured creditor of the assets and Respondent No. 1 has no power to direct the petitioner to regularize the loan account of the defaulter. 10. It was also submitted that for the defaulters-borrowers ought to have approached the-Debts Recovery Tribunal under Section 17 of the SARFAESI Act if aggrieved by the action taken by the secured creditor under Section 13 of the SARFAESI Act. 11. On the other hand learned AGP Mr. Jayswal tried to defend the action of Respondent No. 1 but without any force. 12. Having heard the learned Advocates for the parties it appears that Respondent No. 1 has traveled beyond the scope and ambit of Section 14 of the SARFAESI Act. 13. Section 14 of the SARFAESI Act reads as under: "14.
Jayswal tried to defend the action of Respondent No. 1 but without any force. 12. Having heard the learned Advocates for the parties it appears that Respondent No. 1 has traveled beyond the scope and ambit of Section 14 of the SARFAESI Act. 13. Section 14 of the SARFAESI Act reads 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; and (b) forward such asset and documents to the secured creditor: 1 [Provided that any application by the secured creditor shall be accompanied by an affidavit duly affirmed by the authorized 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 of 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 Authorized 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 Authorized 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 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.
Provided also that if no order is passed by the Chief Metropolitan Magistrate or the 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 no exceeding in aggregate sixty days. [(1A) The District Magistrate or the Chief Metropolitan Magistrate may authorize 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 authorized by 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." 14. On perusal of the aforesaid provisions it is clear that the District Magistrate or the Metropolitan Magistrate as the case may be is required to provide the assistance to the secured creditor to take possession of the secured assets on an application to be filed by the secured creditor as per the provisions of Section 14 of the SARFAESI Act. Section 14 of the SARFAESI Act provides that on receipt of an application along with an affidavit the District Magistrate or the Chief Metropolitan Magistrate as the case may be after being satisfied with the contents thereof SHALL pass a suitable order to take possession of the mortgaged property within the period of 30 days from the date of such application. 15. However in the facts of this case Respondent No. 1 has passed the impugned order rejecting the application filed by the petitioner under Section 14 of the SARFAESI Act contrary to the provisions of Section 14 of the SARFAESI Act and therefore the impugned order is hereby quashed and set aside and Respondent No. 1 is directed to pass a fresh order on the application filed by the petitioner being Securitization Application No. 12 of 2021 within the period of thirty days from the date of receipt of this order. 16. This petition is accordingly allowed.
16. This petition is accordingly allowed. Rule is made absolute to the aforesaid extent. No order as to costs.