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2022 DIGILAW 771 (AP)

Chandramala Enterprises Pvt. v. Punjab National Bank

2022-08-18

C.PRAVEEN KUMAR, TARLADA RAJASEKHAR RAO

body2022
ORDER : 1. The circumstances, which lead to filing of the present Writ Petition, are as under: (i) The Petitioners Company is a registered Private Limited Company incorporated under the Companies Act, and doing business in General Manufacturing Trade/Retail-Storage in wholesale and retail and trading commodities of paddy, pulses, rice, coal and all Biomassi, in the name and style of M/s. Sri Chandramala Enterprises Private Limited. The Petitioners Company took the house property, on lease, bearing No. 18-10-11 and 18-10-11/2, Marellavari Street, Bheemavaram, West Godavari District, from Respondent No. 5. (ii) It is said that, Respondent No. 1 bank initiated proceedings under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, [‘SARFAESI Act’] against Respondent No. 2. Aggrieved by the same, one of the neighbours of the subject property preferred an Appeal before the Debt Recovery Tribunal, Visakhapatnam, vide S.A. No. 144 of 2015, alleging that a part of their property is also included in the SARFAESI proceedings. The Debt Recovery Tribunal appointed an Advocate Commissioner for the purpose of demarcating the subject property. However, the said S.A. No. 144 of 2015 and I.A. No. 811 of 2018, which was filed by the Appellant therein, for issuance of warrant, were dismissed for default on 19.06.2019. Thereafter, the Appellant filed a restoration application vide M.A. No. 87 of 2020 on 29.09.2020 for restoration of S.A. No. 144 of 2015. (iii) It is said that, on an application filed under Section 14 of the SARFAESI Act, the Respondent No. 7 issued a warrant on 15.07.2015, in Crl. M.P. No. 19 of 2015, to the Advocate Commissioner, but the same was not executed. (iv) It is said that, Respondent No. 1 Bank filed a Memo before Respondent No. 7 in Crl. M.P. No. 19 of 2015 stating that S.A. No. 144 of 2015 along with I.A. No. 811 of 2018 before the Debt Recovery Tribunal, Visakhapatnam, were dismissed for default on 19.06.2019. Acting upon the said memo and since a Commissioner was appointed in the year 2015 itself, Respondent No. 7 re-entrusted the warrant to Respondent No. 8 (Sri T. Nageswara Rao) on 23.03.2022. However, Respondent No. 1 Bank did not bring to the notice of Respondent No. 7 that a restoration petition filed in S.A. No. 144 of 2015 is pending consideration before the Debt Recovery Tribunal, Visakhapatnam. However, Respondent No. 1 Bank did not bring to the notice of Respondent No. 7 that a restoration petition filed in S.A. No. 144 of 2015 is pending consideration before the Debt Recovery Tribunal, Visakhapatnam. (v) Pursuant to the Order, dated 23.03.2022, passed by Respondent No. 7, the Advocate Commissioner visited the premises of the Petitioners Company. As the premises was locked, he broke open the same without any permission from the Court. After coming to know about the said incident, the Petitioners filed an objection Petition, dated 04.05.2022, before Respondent No. 7, narrating all the facts along with supporting documents. Respondent No. 7 returned the said objection Petition, vide Order, dated 06.05.2022, on the ground that the same is not maintainable under Section 17 (4A) of SARFAESI Act. Even though a detailed explanation was submitted, the same was not accepted and returned on 09.05.2022. This action of the Respondents is sought to be questioned in this Writ Petition. The learned counsel relied upon the judgment of the Hon’ble Supreme court in Harshad Govardhan Sondagar vs. International Assets Reconstruction Company Limited, (2014) 6 SCC 1 in support of his plea. 2. Sri. Hanumantha Rao Bachina, learned Counsel appearing for the Respondents/Bank, sought time to file counter, but no counter is filed. However, he submits that, as the Petitioners are lessees to the Schedule Property and third parties to the lis, they have no locus-standi to file the present Writ Petition. 3. The point that arises for consideration is, whether the action of the authorities in trying to take possession of the property is permissible under law? 4. Section 14 of the SARFAESI Act deals with secured creditor taking possession of secured asset. It states that, where possession of any secured assets 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 SARFAESI Act, the secured creditor may request in writing, the Chief Metropolitan Magistrate or the District Magistrate, within whose jurisdiction any such secured asset or other documents relating thereto are situated or found, to take possession thereof. The Chief Metropolitan Magistrate or as the case may be, the District Magistrate shall, on such request being made to him to take possession of such asset, forward such asset and documents to the secured creditor, provided the conditions specified in Section 14 are satisfied. 5. Therefore, Section 14 of the SARFAESI Act is an enabling provision through which the secured creditor may seek the assistance of the C.M.M. in taking physical possession of the secured asset. It is to be noted that, Section 14 is silent with regard to time limit for taking possession. The only limit contemplated in Section 14 is that, C.M.M. is required to pass an order within thirty days from the date of application by the secured creditor. The second proviso to Section 14 postulates that the said period of thirty days is extendable by another 30 days. 6. Dealing with the issue involved in the present case, namely as to fixing of time limit for execution of warrant and its consequences, if the warrant for taking possession is not executed within the time limit, a Division Bench of this Court in M/s. Mangalagiri Textile Mills Pvt. Ltd. vs. State Bank of India after considering the judgments on the subject and distinguishing the view expressed in Housing Development Finance Corporation Ltd. vs. Rakesh Kumar, 2021 SCC Online Del. 5209 held as under: “31. An essential component of judicial orders is certainty. If a CMM imposes a time-limit for taking over possession, such stipulated time has to be mandatorily adhered to. If the same is not done, be it for whatever reason, the appropriate course of action is to re-approach the CMM concerned for extension of time. We are of the clear view that a reasonable time limit should be imposed by the CMMs, in their wisdom and discretion. Although in the context of recovery of excise duties, the Hon’ble Supreme Court in Government of India vs. Citedal Fine Pharmaceuticals, Madras, (1989) 3 SCC 483 , had held that, in the absence of any period of limitation it is settled that every authority is to exercise the power within a reasonable period. What would be reasonable period would depend upon the facts of each case... No hard and fast rules can be laid down in this regard as the determination of the question will depend upon the facts of each case. 32. What would be reasonable period would depend upon the facts of each case... No hard and fast rules can be laid down in this regard as the determination of the question will depend upon the facts of each case. 32. In judging what is to be a reasonable period for reopening an order of assessment under the Punjab General Sales Tax Act, 1948, in State of Punjab vs. Bhatinda District Cooperative Milk Producers Union Ltd. (2007) 11 SCC 363 , the Hon’ble Supreme Court observed that, it is trite that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. What, however, shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder and other relevant factors.’ 33. The same principle would hold the field. We would, thus, hold and direct that the CMMs shall, when passing orders under Section 14 of the Act, mandate a reasonable time-limit for taking over possession of the secured asset in question. This, to our mind, appropriately secures the interests of all concerned parties. Needless to state, it will be open to the bank or financial institution to approach the CMM for extension of time, if need be.” 7. From the above paragraphs, it stands established that once a time limit is fixed and when the said period has expired/lapsed, possession of property in question cannot be taken under the same warrant. In the facts of the said case, warrant was executed 10 months after it has elapsed. The Court declared the action of the Advocate Commissioner in taking possession of the property as illegal and, accordingly, directed Status-Quo Ante to be restored. Thereafter, the Respondent Bank was given liberty to file fresh application before the C.M.M. seeking extension of time for taking possession of the secured asset. 8. At this stage, it would be appropriate to refer to another Division Bench judgment of this Court in Korada Rajababu vs. State of Andhra Pradesh, Writ Appeal Nos. 703 and 748 of 2021 dated 26.04.2022. 8. At this stage, it would be appropriate to refer to another Division Bench judgment of this Court in Korada Rajababu vs. State of Andhra Pradesh, Writ Appeal Nos. 703 and 748 of 2021 dated 26.04.2022. In the said case, the Court was dealing with a warrant issued under Section 70(2) of Cr.P.C. The main contention before the Division Bench in a batch of Appeals was that, warrants are deemed to be dead or lapsed, if they are not executed within the time specified in the warrants or by the next date of adjournment. This aspect, which was not considered by the learned Single Judge, came to be challenged in W.As. It is to be noted that, the Court was dealing with the warrants issued under Section 70(2) of Cr.P.C. After referring to catena of judgment starting from Emperor vs. Alloomiya Husan, ILR 1904 28 Bom. 129, Dickinson vs. Brown, (1791) 1 Peak N.P. 307, Ranshan Singh and Others vs. Emperor, 4 Ind. Cas. 31, King Emperor vs. Binda Ahir, 112 Ind. Cas. 223 and also the Judgment of Hon’ble High Court in Raghuvansh Dewanchand Bhasin vs. State of Maharashtra, AIR 2011 SC 3393 the Division Bench of this Court held as under: “From bare reading of Guideline No. (d), the Court must issue direction for return of the Warrant whether executed or unexecuted on or before the specified date. When the Warrant of arrest was issued under Section 70(2) of Cr.P.C. it shall remain in force till it is executed by the authority executed or cancelled by the competent court or returned unexecuted by the police officer or authority to whom the Warrant was entrusted. But, in the instant case, the Warrants appears to have been open ended and no direction was issued for return of the Warrants on or before the specified date, but directed the police to execute Warrants to produce the accused on or before the particular date. Thus, the date was fixed for execution of Warrants, but not for return of the Warrants, if not executed. Thus, the date was fixed for execution of Warrants, but not for return of the Warrants, if not executed. Therefore, the Warrants issued in C.C. No. 350 of 2014 on the file of I Additional Judicial First Class Magistrate at Anakapalli, Visakhapatnam and C.C. No. 263 of 2018 on the file of III Additional Metropolitan Magistrate, Visakhapatnam, are said to be open ended Warrants without any direction for return of the Warrants, if unexecuted on or before a specified date. Therefore, we have no hesitation to hold that, Warrants will never become dead or lapsed and they will remain in force till they are executed or returned by the police officers or the authority to whom they are entrusted or they are cancelled/withdrawn by the competent court. In the instant case on hand, the Warrants of Arrest were neither cancelled nor withdrawn by a competent court nor returned unexecuted by the police officers or the authority to whom the Warrants were entrusted. In those circumstances, the Warrants are deemed to be alive and it can be executed at any time till they are cancelled or withdrawn or till they are returned on execution or returned unexecuted. Accordingly, the point is held against the petitioners and in favour of the respondents.” 9. From the above findings, it is clear that the warrants will never become dead or lapsed and they will remain in force till they are returned by the police officers or the authority to whom they are entrusted or they are cancelled/withdrawn by the competent court. The court also held that, if any date is fixed for execution of Warrants, but not for return of the Warrants, if not executed, there is no bar in returning the warrant even after lapse of sometime. Thus categorized “warrants” as open ended Warrants, which do not contain any direction for return of the Warrants, if unexecuted on or before a specified date or a close ended warrant, which specifies the date on which the warrant is required to return after its execution or otherwise. 10. In the instant case, the Principal Assistant Sessions Judge Court, Eluru, passed an Order, on 15.07.2015 in Crl. M.P. No. 19 of 2015 in S.R. No. 5237 of 2015, appointing Sri. 10. In the instant case, the Principal Assistant Sessions Judge Court, Eluru, passed an Order, on 15.07.2015 in Crl. M.P. No. 19 of 2015 in S.R. No. 5237 of 2015, appointing Sri. T. Nageswara Rao as an Advocate Commissioner, for taking physical possession of the Petition Schedule Property, make inventory of the articles under a panchanama and handover possession of the schedule property to the Petitioner Bank therein. The Advocate Commissioner was directed to execute the warrant within one month from the date of receipt of warrant, failing which, the authority to execute the warrant stands cancelled. The Commissioner was further directed to file his report forthwith after execution of the warrant. 11. At this stage, it would be appropriate to refer to the Order, dated 04.03.2022, passed in Crl. M.P. No. 19 of 2015 in S.R. No. 5237 of 2015, by the Principal Assistant Sessions Judge Court, Eluru, which reads as under: “DOCKET ORDER DATED 04-03-2022 Memo filed by the Counsel for Petitioner stating that S.A. 144/2015 along with I.A. No. 811/2018 on the file of Debts Recovery Tribunal, Visakhapatnam, are dismissed for default on 19-06-2019. Memo recorded. Hence, Commissioner warrant re-entrusted to the same Advocate Commissioner for execution. For filing report call on 04-05-2022.” 12. A reading of the above order would show that, pursuant to orders passed in S.A. No. 144/2015 on the file of the Debts Recovery Tribunal, Visakhapatnam, the Commissioner’s Warrant was re-entrusted to the same Commissioner for its execution. The order is silent as to what happened from the date of Order passed on 15.07.2015 till a fresh warrant was re-entrusted on 04.03.2022. In-fact, the Order, dated 15.07.2015 clearly indicate that warrant has to be executed within one month from the date of receipt of warrant, failing which, the authority to execute the warrant stands cancelled and the Commissioner was further directed to file his report forthwith after execution of the warrant, meaning thereby that it lapses if not executed within one month. 13. If the warrant is not executed/returned within the time fixed by the Court, the Magistrate cannot automatically postpone the same by giving another date. But, there has to be an application either by the secured creditor or Advocate Commissioner, seeking extension of time for execution of the warrant. 13. If the warrant is not executed/returned within the time fixed by the Court, the Magistrate cannot automatically postpone the same by giving another date. But, there has to be an application either by the secured creditor or Advocate Commissioner, seeking extension of time for execution of the warrant. The said application should also contain an explanation/reason as to why it could not be executed within the time fixed by the Court. On being satisfied with the reasons mentioned therein, the Chief Metropolitan Magistrate/District Magistrate can extend the time for executing the warrant or issue a fresh warrant. 14. In the instant case, we find no such application being made and, in a routine manner, re-entrustment of warrant was made seven years later, basing on a memo, which do not disclose any reasons for re-entrustment of warrant, which cannot be accepted. Even assuming for the sake of argument that the earlier warrant issued in the year 2015 is silent as to when it has to be returned, the Petitioners herein cannot be put to such disadvantage position by not executing the warrant for seven years. 15. We are not in agreement with the procedure followed by the Court. As stated earlier, there has to be an application seeking extension of time, giving reasons as to why it could not be executed within the time fixed by the Court. Of course, this procedure, in our view, will not apply to cases where no time limit is not fixed for execution of the warrant. 16. At this stage Sri. Hanumantha Rao Bachina, learned Counsel appearing for the Respondents/Bank, would submit that, since the Petitioners are lessees to the Schedule Property and being third parties to the lis, have no locus standi to file the Writ Petition. Countering the same, the learned Counsel for the Petitioners would submit that, the Hon’ble Supreme Court in Harshad Govardhan Sondagar vs. International Assets Reconstruction Company Limited, (2014) 6 SCC 1 while dealing with the remedies available to the lessee where he is threatened to be dispossessed by any action taken by the secured creditor under Section 13 of the SARFAESI Act, held as under: “22. Sub-Section (3) of Section 14 of the SARFAESI Act provides that no act of the Chief Metropolitan Magistrate or the District Magistrate or any officer authorised by the Chief Metropolitan Magistrate or District Magistrate done in pursuance of Section 14 shall be called in question in any court or before any authority. The SARFAESI Act, therefore, attaches finality to the decision of the Chief Metropolitan Magistrate or the District Magistrate and this decision cannot be challenged before any court or any authority. But this Court has repeatedly held that statutory provisions attaching finality to the decision of an authority excluding the power of any other authority or Court to examine such a decision will not be a bar for the High Court or this Court to exercise jurisdiction vested by the Constitution because a statutory provision cannot take away a power vested by the Constitution. To quote, the observations of this Court in Columbia Sportswear Company vs. Director of Income Tax, Bangalore, (2012) 11 SCC 224 : “17. Considering the settled position of law that the powers of this Court under Article 136 of the Constitution and the powers of the High Court under Articles 226 and 227 of the Constitution could not be affected by the provisions made in a statute by the Legislature making the decision of the tribunal final or conclusive, we hold that subsection (1) of Section 245S of the Act, insofar as, it makes the advance ruling of the Authority binding on the applicant, in respect of the transaction and on the Commissioner and income-tax authorities subordinate to him, does not bar the jurisdiction of this Court under Article 136 of the Constitution or the jurisdiction of the High Court under Articles 226 and 227 of the Constitution to entertain a challenge to the advance ruling of the Authority.” In our view, therefore, the decision of the Chief Metropolitan Magistrate or the District Magistrate can be challenged before the High Court under Articles 226 and 227 of the Constitution by any aggrieved party and if such a challenge is made, the High Court can examine the decision of the Chief Metropolitan Magistrate or the District Magistrate, as the case may be, in accordance with the settled principles of law. 17. 17. For the aforesaid reasons, as no report is filed till date and since S.A. No. 144 of 2015 was dismissed for default, in respect of which an application for restoration is still pending, the Respondents are at liberty to make a fresh application under Section 14 of the Act, and then proceed in accordance with law after restoring possession of the property in dispute to the Petitioner, if required. 18. With the above direction, the Writ Petition is disposed of. No order as to costs. 19. As a sequel, interlocutory applications, if any, pending shall stand closed.