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2025 DIGILAW 5 (MP)

AU Small Finance Bank Ltd. v. State of M. P.

2025-01-06

GAJENDRA SINGH, VIVEK RUSIA

body2025
ORDER Per: Justice Vivek Rusia 1. The petitioner has filed the present petition under Article 226 of the Constitution of India seeking direction to the respondents to comply with the order dated 17.7.2023 and restore the physical possession of the mortgaged property. 2. The petitioner, being a finance company extended loan to M/s Shivansh Enterprises. In default of payment of the EMI, a notice under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short 'the SARFAESI Act') was issued on 27.4.2022 for recovery of outstanding amount of Rs.87,87,869/- with interest and other charges. In order to secure the loan, the borrower mortgaged the property situated at Municipal No.52, Ward No.39 (old) Brahmano Ka Vas Ratlam, Tehsil & District - Ratlam in the name of Shri Madhusudan Trivedi. 3. When the aforesaid outstanding amount was not cleared, the petitioner approached the District Magistrate / Collector under section 14 of the SARFAESI Act in order to secure the possession of the aforesaid secured assets. Vide order dated 17.7.2023, the Additional Collector directed the Tehsildar, Ratlam to take necessary steps for handing over the possession of the secured assets to the petitioner. According to the petitioner, vide panchnama dated 13.3.2024, possession of the mortgaged property washanded over on 13.3.2024 itself. Thereafter, the petitioner sent a 30 days' notice before sale of mortgaged property. 4. According to the petitioner, on 30.5.2024, Shri Madhusudan Trivedi along with his associates, manhandled the employee of Aman Singh and Advocate Shripal and forcibly entered into the premises of mortgaged property and put the lock. A written complaint was made to the police station, but no action has been taken till date. Hence, the petitioner has approached this Court seeking direction to the respondents to again comply with the order dated 17.7.2023 by restoring the possession of the mortgaged property back to the petitioner. 5. Learned counsel for the petitioner submits that in similar facts and circumstances, the Co-ordinate Bench of this Court in the case of Capri Global Capital Limited Through Law Officer Shri Dhirendra Bhadoriya v. The State of Madhya Pradesh & Others (Writ Petition No.28359 of 2024) directed the District Magistrate, Rewa as well as Superintendent of Police to consider the prayer of the finance company in accordance with law and file a compliance report within four weeks. Learned counsel for the submits that the order dated 17.7.2023 passed under section 14 of the SARFAESI Act is still alive and the respondents are bound to restore the possession of mortgaged property to the petitioner. Learned counsel also submits that the petitioner can not initiate proceeding afresh under section 14 of the SARFAESI Act by filing application before the District Magistrate to seek assistance in order to take possession of the secured assets by virtue of proviso to sub-section (1) of section 14 of the SARFAESI Act. Heard. 6. CHAPTER - III of the SARFAESI Act deals with the Enforcement of Security Interest. As per section 13(1), any security interest created in favour of any secured creditor may be enforced, without the intervention of the Court and Tribunal, by such creditor in accordance with the provisions of the SARFAESI Act. Under sub-section (2), the secured creditor after classifying account as non-performing asset may require the borrower by issuing a notice in writing to discharge in full his liabilities within sixty days. In case the borrower fails to discharge his liability within the period of 60 days, the secured creditor may take recourse to take possession of the secured asset of the borrower under sub-section (4)(a) or take over the management of the business of the borrower under sub-section (4)(b). 7. For taking over the possession, the secured creditor may request in writing to the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction such secured assets or other documents relating thereto may be situated. As per proviso to Section 14(1) of the SARFAESI Act, any application of the secured creditor shall be accompanies by an affidavit duly affirmed by the authorized officer of the secured creditor giving declaration as per (i) to (ix) and on receipt of such affidavit, the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, shall after satisfying the contents of the affidavit shall pass suitable orders for the purpose of taking possession of the secured assets within a period of 30 days from the date of application. As per condition No.(vi), before filing an application, notice under section 13(2) was required to be given to the borrower by the secured creditor, therefore, counsel for the petitioner is right is making the submission that now fresh application under section 14 of the SARFAESI Act cannot be filed without resorting the procedure available under section 14 of the SARFAESI Act. 8. The petitioner is making allegations against the borrowers that they illegally entered into the secured asset on 30.5.2024 without impleading them as respondents in the writ petition. The petitioner has also not persuaded the remedy for registration of FIR against the borrower after submitting a written complaint on 30.5.2024. Therefore, in absence of borrower as respondent in the writ petition, no direction can be given. The petitioner may resort the remedy available under the law for recovery of loan against the borrower. The order dated 17.7.2023 had already been complied with by the respondents by handing over the possession to the petitioner on 13.3.2024. Therefore, no fresh direction can be issued to the respondents again for compliance of the said order. It was for the petitioner to protect the possession of the said property. If the borrower has violated the law, the petitioner is free to take the action in accordance with law. 9. In similar facts and circumstances, this Court in the case of Shivalik Small Finance Bank v. The State of Madhya Pradesh & Others (Writ Petition No.30811 of 2024) had already taken a view that the proceedings under section 13(2) of the SARFAESI Act will come to an end once the order passed by the Collector / District Magistrate has been given effect. Hence, no case for interference is called for. 9. In view of the above, Writ Petition stands dismissed.