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2024 DIGILAW 1808 (GUJ)

Kalupur Commercial Cooperative Bank Ltd v. Raj Silk Mills

2024-09-03

VAIBHAVI D.NANAVATI

body2024
ORDER : Vaibhavi D. Nanavati, J. 1. Issue Rule, returnable forthwith. Mr. Nandish H. Thackar, learned advocate waives service of notice of rule for and on behalf of the respondent Nos.1 and 2, Ms. Delshad A. Kapadia, learned advocate waives service of notice of rule for and on behalf of the respondent No.5 and Ms. Suman Motla, learned AGP waives service of notice of rule for and on behalf of the respondent Nos.6, 7 and 8. 2. The petitioner herein is a Multi State Cooperative Society registered under the Multi State Cooperative Societies Act, 2002. The petitioner herein served a notice upon the respondent on 04.02.2014 under Section 13(2) of the Securitization Act for recovery of an amount of Rs.48,92,488/-. Notice under Section 13(4) of the Securitization Act came to be issued by the petitioner herein on 21.05.2014. 2.1 The petitioner preferred application before the respondent No.6 under Section 14 of the Securitization Act on 20.10.2015 for possession of the secured asset being Plot No.61/A and 61/B admeasuring 85 square yard (800 sq. mtr. area) situated at Atopnagar Cooperative Housing Society Limited, Bhatar, bearing survey No.154, 155, Moje Village : Majura, Surat City as per the mortgage deed being MAG/SARFAESI/Case No.1165/2019. The said application under Section 14 of the Act, came to be allowed/granted by order dated 11.12.2019 duly produced at Annexure – C. 2.2 The petitioner herein approached the respondent No.7 for execution and compliance of the order passed by the respondent No.6 dated 11.12.2019 under Section 14 of the Act and for issuance of the 14 days notice. It was intimated to the petitioner that on 15.01.2024, the respondent No.7 issued notice to the respondents intimating that after 14 days from service of notice, the proceedings will be taken to handover the possession of the secured assets to the secured creditors. The petitioner again addressed a communication dated 01.02.2024 to the respondent No.7. The respondent No.6 also once again addressed a communication dated 08.02.2024 to the respondent No.7. 2.3 The petitioner herein once again applied to the respondent No.7 on 28.02.2024 to take appropriate actions for the possession of the secured assets. The petitioner addressed a communication once again with respect to the report of action taken by the respondent No.7. The aforesaid exercise was repeated by the petitioner herein on 01.03.2024. 2.3 The petitioner herein once again applied to the respondent No.7 on 28.02.2024 to take appropriate actions for the possession of the secured assets. The petitioner addressed a communication once again with respect to the report of action taken by the respondent No.7. The aforesaid exercise was repeated by the petitioner herein on 01.03.2024. In absence of any action taken by the respondent No.7 to comply with the order passed by the respondent No.6 dated 11.12.2019, the petitioner herein is constrained to approach this Court seeking the following reliefs: “A) Your Lordship be pleased to issue a writ of mandamus. B) Your Lordship be pleased to issue a writ of mandamus or certiorari or any other writ, direction, order in the nature of Mandamus or Certiorari directing the respondent no.7 Executive Magistrate Majura to comply with the order passed by the District Magistrate dated 11- 12-2019 Annexed herewith and marked as ‘Annexure C’ to the petition under Section 14 of the Securitization Act, forthwith and Handover the possession of the secured asset to the petitioner. (C) Your Lordship be pleased to grant any other further reliefs your lordship deems fit, just and proper in the interest of Justice.” 3. Heard Mr. J.B. Dastoor, learned advocate appearing for the petitioner, Mr. Nandish H. Thackar, learned advocate appearing for the respondent Nos.1 and 2, Ms. Delshad A. Kapadia, learned advocate appearing for the respondent No.5 and Ms. Suman Motla, learned AGP appearing for the respondent Nos.6, 7 and 8. 4. Mr. J.B. Dastoor, learned advocate appearing for the petitioner, submitted that the respondent No.7 is required to comply with the directions of the order dated 11.12.2019 passed by the respondent No.6 under Section 14 of the Act whereby, the recital of the property in the said order is required to be complied with by the respondent No.7. The respondent No.7 is delegated the power to execute the order under Section 14 of the Act. It is submitted that the respondent No.7 is a complying authority and it is not open for the respondents herein to object with respect to the same. It is submitted that the prayers, as prayed for by the petitioner in the present petition, be allowed. 4.1 Reliance is placed on the ratio laid down in case of IDBI Bank Ltd. vs. Hytaisun Magnetics Ltd. & Ors. It is submitted that the prayers, as prayed for by the petitioner in the present petition, be allowed. 4.1 Reliance is placed on the ratio laid down in case of IDBI Bank Ltd. vs. Hytaisun Magnetics Ltd. & Ors. reported in 2011 (2) GLR 1438 wherein, it is held that Section 14 does not empower the authorities to adjudicate a dispute nor empower it to decide the question whether the claim of the secured creditor is genuine or not. 5. Mr. Nandish H. Thackar, learned advocate appearing for the respondent Nos.1 and 2, submitted that the respondents herein has challenged the action taken by the petitioner bank under Section 13(4) and the order passed by the respondent No.6 dated 11.12.2019 before the Debts Recovery Tribunal (DRT), Ahmedabad in the month of January, 2024 being Securitization Applications No.83 of 2024 which is pending adjudication. It is submitted that the parties be relegated to the Tribunal where the dispute is pending. 6. Ms. Suman Motla, learned AGP appearing for the respondent Nos.6, 7 and 8, placed reliance on the affidavit-in- reply filed by the respondent No.7 duly produced at page 51. Placing reliance on paragraphs 7 and 8 of the said reply, it is submitted that the land-in-question concerns two survey numbers i.e. survey No.154+155 paiki, Plot Nos.61/A and 61/B admeasuring 800 sq. feet at Village : Majura, Taluka : Surat City, District : Surat. It is submitted that there are two separate sale deeds for Plot No.61/A and 61/B registered with the Sub- Registrar. The area of Plot No.61/A is shown in the sale deed as 37.25 sq. mtrs. and the area for Plot No.61/B is shown in the sale deed as 37.25 sq. mtrs. It is further submitted that while entering into the mortgage, the petitioner bank has mortgage the property being Plot No.61/A, which is admeasuring 85 sq. meters and the said mortgage deed came to be registered on 31.08.2010. 6.1 Ms. Motla, learned AGP, submitted that the order under Section 14 of the Act, dated 11.12.2019, came to be passed directing to take over the possession only with respect to Plot No.61/A as mentioned in the mortgage deed. meters and the said mortgage deed came to be registered on 31.08.2010. 6.1 Ms. Motla, learned AGP, submitted that the order under Section 14 of the Act, dated 11.12.2019, came to be passed directing to take over the possession only with respect to Plot No.61/A as mentioned in the mortgage deed. It is submitted that the situation has arisen to the extent that the respondent No.7 is unable to execute the order dated 11.12.2019 and is unable to take over the possession of the land-in-question in light of the aforesaid disputed questions of fact with respect to the sale deed and the mortgage deed. 7. Ms. Delshad A. Kapadia, learned advocate appearing for the respondent No.5, placed reliance on the affidavit-in-reply duly produced at page 225 and submitted that the respondent No.5 has not signed any guarantee deed or any document whereby, the respondent No.5 stood as guarantor. Any signature contained on any document/guarantee deed purporting to be the signature of respondent No.5, is in fact not the signature of the respondent No.5 and the same is forged and fabricated. It is submitted that the respondent No.5 has also filed written complaint dated 30.12.2011 to the Police Inspector, DCB, Surat, upon knowing about such documents on which the signature of the respondent No.5 is fabricated. It is submitted that no relief is sought for against the respondent No.5 in the present petition. It is also submitted that the respondent No.5 is in no way concerned with the grant of any relief as sought for by the petitioner in the present petition. 8. Heard the learned advocates appearing for the respective parties. It is not in dispute that the petitioner herein is a secured creditor; having issued the Notice under Section 13(2) of the Securitization Act on 04.02.2014, Notice under Section 13(4) of the Securitization Act on 21.05.2014 and having approached the respondent No.6 under Section 14 of the Securitization Act wherein, the application of the petitioner seeking physical possession of the property under Section 14 of the Act, came to be allowed/granted by order dated 11.12.2019 duly produced at page 27. The respondent No.7 herein is required to comply with the order dated 11.12.2019 passed under Section 14 of the Act. 9. The respondent No.7 herein is required to comply with the order dated 11.12.2019 passed under Section 14 of the Act. 9. The respondent No.7 is the Executing Authority and it is not open for the respondent No.7 to raise such disputed questions of fact considering the fact that Section 14 provides that the respondent authorities are required to assist the secured creditor to take action under the SARFAESI Act, 2002 for possession of the property-in-question. It is not open for the respondent No.7 to raise any dispute with respect to the subject property. 9.1 In the facts of the present case, the order passed by the respondent No.6 dated 11.12.2019 clearly recites the property as Plot No.61/A, the said order is required to be executed. 10. In light of the aforesaid, it is apposite to refer to the ratio laid down in case of IDBI Bank Ltd. vs. Hytaisun Magnetics Ltd. & Ors. reported in 2011 (2) GLR 1438 . Relevant paragraphs of the said decision read thus: “17. When Section 14 of the Securitization Act fell for consideration before a Division Bench of this Court in the case of Union Bank of India vs. Chief Metropolitan Magistrate, by its decision dated 6.7.2010 in Special Civil Application No. 6753 of 2010, the Division Bench held as follows :- “As the Chief Metropolitan Magistrate and the District Magistrate under Section 14 is not empowered to decide the question of legality and propriety of any of the actions taken by the secured creditor under Section 13(4), which can be assailed under Section 17 of the Act by the aggrieved person, under sub-section (3) of Section 14, the act of the Chief Metropolitan Magistrate or District Magistrate done in pursuance of the said Section cannot be called in question in any Court or before any authority. From the aforesaid provisions of law and observations made by us, it will be evident that Chief Metropolitan Magistrate or District Magistrate while bound to assist the secured creditor in taking possession of the secured asset and to take possession of the documents relating thereto and forward such assets and documents to the secured creditor, he is not empowered to decide the question of genuinety or propriety of such document including the documents signed or agreed between the borrower and the secured creditor.” 18. A Division Bench of this Court in the case of Bharatbhai Ramniklal Sata, Prop. of Satyajeet Trading Co. vs. Collector & District Magistrate, reported in 2010 (2) GLR 985 , relying on the decision of the Supreme Court in the case of Transcore vs. Union of India, reported in (2008) 1 SCC 125 , held and observed as follows :- “11. From the aforesaid provisions of law and the decision of the Supreme Court, it will be clear that for taking possession, one of the measures for recovery of secured debts under subsection (4) to Section 13 of the Act includes the measures taken by secured creditor under Section 14 and therefore, if any order is passed under Section 14, though it cannot be challenged before any Court of law in view of sub-section (3) to Section 14, but one can raise the legality and propriety of such measures of taking possession under Section 17, if such measure is against the Securitisation Act or Rules framed thereunder.” 19. Another Division Bench of this Court in the case of Bombay Mercantile Co-op. Bank Ltd. vs. Bharatkumar Nyalchand Shah, Partners of Western Enterprise, by its judgment dated 18.10.2010 passed in Special Civil Application No. 9623 of 2010 and an analogous case, held as follows :- “7. From the above it can be seen that with limitation of powers, the Magistrate had under Section 14 of the Securitisation Act, it was not open for him to take into account rival claims and to come to the conclusion that since tax dues of the Corporation of the property were also outstanding, application of the bank under Section 14 of the Securitisation Act was required to be rejected. If at all, Municipal Corporation should have been left to avail its legal remedies. It was not open to the learned Magistrate to adjudicate on such rival claims particularly, the Municipal Corporation did not claim to be a secured creditor as no security interest was created in its favour.” 20. In view of the Division Bench decisions as referred to above, the provisions of law as already cited and the observations already made by us, we hold as follows :- (I) Under Chapter III of the Securitization Act, a secured creditor has right to enforce security interest without the intervention of the Court or Tribunal in accordance with the provisions of the said Act. [Section 13(1)] (ii) The borrower, who is under liability to the secured creditor under a secured agreement, is entitled to take a notice under Section 13(2) of the said Act. (iii) The secured creditor who intends to enforce the secured asset is bound to give details of amount payable by the borrower and the secured assets intended to be enforced. [Section 13(3)] (iv) Under Section 13(3A), the borrower has right to make representation or raise objection. If any objection is there with regard to the secured asset, that can be raised only at the stage of Section 13(3A). Under the said provision, only the secured creditor will determine the objection and not any Court or Tribunal. (v) No cause of action takes place even after the decision taken by the secured creditor under Section 13(3A) till the secured creditor takes recourse of one or more measures including the measure to take possession of the secured asset of the borrower under Section 13(4) of the Act. (vi) The secured creditor is competent to take possession of all the secured assets of its own following the procedure laid down under Rule 8 of the Security Interest (Enforcement) Rules, 2002. (vii) Only when the secured creditor finds difficulty to take possession of the secured asset, it may take assistance of the Chief Metropolitan Magistrate or the District Magistrate under Section 14 of the Act. (viii) The measures taken under Section 14 amounts to measures taken under Section 13(4) of the Act. (ix) As the measures taken under Section 14 amount to measures taken under Section 13(4) of the Act, under Section 14(3) such measures cannot be called in question before any Court or Tribunal. (x) If such measures taken under Section 14 which amount to measures taken under Section 13(4) is not in accordance with the Securitization Act or the Rules framed thereunder, including the objection, if any, raised that the asset is not a secured asset to be taken under Section 13(4), the aggrieved person has a remedy under Section 17 before the Debts Recovery Tribunal to show that the measures taken are against the Act [Section 13(4)] or the Rules framed thereunder. (xi) All such determination is to be made by the Debts Recovery Tribunal including the question whether the asset is a secured asset or not and the Chief Metropolitan Magistrate or the District Magistrate has not been empowered to adjudicate such dispute, but is directed only to assist the secured creditor in taking possession of the secured asset. If they are not empowered to adjudicate the dispute, they cannot also call for the secured creditor to produce any document to decide whether the asset is secured asset or not, which will be futile exercise in absence of power to adjudicate such issue. Under Clauses (a) and (b) of Section 14(1), the Chief Metropolitan Magistrate or the District Magistrate and on request, are bound to take possession of the secured assets as also the documents relating thereto. If the documents are to be obtained by them, the question of asking the secured creditor to produce the document in all cases does not arise. Therefore, they do not have jurisdiction even to call for the documents. 21. In view of the aforesaid findings, we hold that the judgments delivered by the learned Single Judge in the case of Authorized Officer, Canara Bank vs. Sulay Traders through Bipin Kantilal Vakta, reported in 2010 (1) GLR 770 and the unreported decision dated 3.3.2008 in the case of Dena Bank vs. The District Magistrate in Special Civil Application No. 3943 of 2008 do not lay down good law. 22. For the reasons aforesaid, the District Magistrate, Mehsana having no jurisdiction to call for the record or to adjudicate the matter, we hold that the order passed by the District Magistrate, Mehsana dated 21.9.2010 in MCC Case No. 1 of 2001 is illegal. We set aside the same. The case is remitted to the District Magistrate, Mehsana to assist the petitioner – bank in taking possession of the secured assets and documents thereto. It must be made within a fortnight. However, the findings on this case will not affect the case preferred by the respondent – borrowers before the Debts Recovery Tribunal, Ahmedabad under Section 17 of the Securitization Act.” 11. Considering the facts of the present case and the position of law, as referred above, the issue is no longer res-integra. It is also pointed out by Mr. However, the findings on this case will not affect the case preferred by the respondent – borrowers before the Debts Recovery Tribunal, Ahmedabad under Section 17 of the Securitization Act.” 11. Considering the facts of the present case and the position of law, as referred above, the issue is no longer res-integra. It is also pointed out by Mr. Thackar, learned advocate appearing for the respondent Nos.1 and 2, that the respondents have also filed Securitization Application No.83 of 2024 before the Debts Recovery Tribunal (DRT), Ahmedabad. In light of the aforesaid, it is also open for the respective parties to agitate their grievance before the Tribunal where the dispute-in-question is pending. However, in the considered opinion of this Court, it is not open for the respondent No.7 to dispute with respect to the boundaries-in-question. The respondent No.7 is required to execute the order dated 11.12.2019 passed by the respondent No.6 in accordance with law. 12. For the foregoing reasons, the present petition is allowed. The respondent No.7 to execute the order passed by the respondent No.6 dated 11.12.2019 in accordance with law. Rule is made absolute. 13. After the order is passed, Mr. Nandish H. Thackar, learned advocate appearing for the respondent Nos.1 and 2, the respondents herein may approach the Tribunal seeking early hearing. If such an application seeking early hearing is filed, the same be considered by the Tribunal. Parties to cooperate in the proceedings, which are pending before the Debts Recovery Tribunal.