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SCA/215/2011 13/ 13 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 215 of 2011
For
Approval and Signature:
HONOURABLE
THE CHIEF JUSTICE MR. S.J. MUKHOPADHAYA
HONOURABLE
MR.JUSTICE J.B.PARDIWALA
=========================================================
1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To be
referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge ?
=========================================================
I
D B I BANK LTD - THROUGH AUTHORIZED SIGNATORY - Petitioner(s)
Versus
DISTRICT
MAGISTRATE & 1 - Respondent(s)
=========================================================
Appearance
:
MR
PM DAVE for
Petitioner(s) : 1, MR ASIT B
JOSHI for Petitioner(s) : 1,
MS KRINA CALLA, AGP for Respondent(s)
: 1,
MR SK PATEL for Respondent(s) :
2,
=========================================================
CORAM
:
HONOURABLE
THE CHIEF JUSTICE MR. S.J. MUKHOPADHAYA
and
HONOURABLE
MR.JUSTICE J.B.PARDIWALA
Date
: 18/02/2011
ORAL
JUDGMENT
(Per
: HONOURABLE MR.JUSTICE J.B.PARDIWALA)
1. This
petition has been preferred by IDBI Bank Limited, a company
incorporated under the provisions of the Companies Act, 1956, through
its authorized signatory with the following prayers :-
“(A)
Your Lordships be pleased to issue a writ or any other appropriate
writ, order or direction, by quashing and setting aside
order/communication dtd.09/06/2009 of the respondent authority and
further be pleased to direct the respondent authority to pass an
order for providing assistance to maintain law and order while taking
over the possession of the secured assets of the principal borrower
for implementation of sec 14(1) and the said secured asset is to be
forwarded to the petitioner in accordance with law in the interest of
justice and equity forthwith;
(B)
Your Lordships be pleased to direct the respondent authority to
forthwith re-consider the application of the petitioner bank
submitted u/s.14 of the Securitization considering the ratio laid
down in various decisions of this Hon’ble Court as well as
considering the provisions of section 14 of the Act and pass the
appropriate order within such time as may be deemed fit by this
Hon’ble Court in the interest of justice and equity.”
2. The
factual background under which this petition has been preferred is
that respondent no.2 availed of a housing loan of Rs.2 lakhs from the
petitioner Bank and executed necessary documents in favour of the
petitioner Bank. It is not in dispute that the loan was sanctioned in
favour of respondent no.2, who is the principal borrower. At the time
of availing the loan amount respondent no.2, as the principal
borrower, mortgaged his immovable residential property towards the
security with the petitioner Bank by executing necessary documents.
The description of the mortgaged immovable residential property is as
under :-
“A
residential property situated on Revenue Survey No.288/p, Mouje : Gam
Chhapra, District – Sub District: Navsari, Plot area 116.26
sq.meters (660 sq.ft.), constructed area 540 sq.ft., House No.36/H,
Panchvati Society, Chhapra Road, Chhapra, Navsari”
Thus,
respondent no.2 is a borrower under Section 2(f) of the
Securitisation and Reconstruction of Financial Assets and Enforcement
of Security Interest Act, 2002 (for short, ‘the Securitisation Act’)
and the petitioner Bank is a secured creditor under Section 2(zd) of
the Securitisation Act. It is also not in dispute that respondent
no.2 failed in making payment of installments and as on 10th
December 2006 the total outstanding dues payable by him to the Bank
was Rs.1,55,595=00.
3. The
petitioner Bank required police assistance for taking over the
physical possession of the property in question. The Bank, therefore,
applied to the District Magistrate, Navsari, by filing application
dated 26th February 2009. The grievance made by the Bank
is to the effect that an application which was preferred with the
District Magistrate, Navsari under Section 14 of the Securitisation
Act, praying that necessary protection be afforded to the Bank for
taking over possession of the property in question, which has been
mortgaged, has been wrongly rejected. The application preferred by
the Bank is at Annexure-‘F’. Collector, Navsari i.e. respondent no.1
informed the Bank that the request which has been made cannot be
acceded under Section 14 of the Securitisation Act for the reason
that the defaulter i.e. principal borrower – respondent no.2
has made construction of 540 sq.feet in a plot area of 660 sq.feet in
the land bearing Revenue Survey No.288/p situated at Mouje Chhapra,
which is not in accordance with law. Respondent no.1 further informed
the Bank that it would not be proper to get the possession of the
property having unauthorized construction to submit to the Bank.
4. The
principal contention on behalf of the petitioner Bank is that
respondent no.1 as a District Magistrate has no power under Section
14 of the Securitisation Act to adjudicate any issue on merits. It is
also submitted that the District Magistrate cannot refuse to assist
the Bank in taking over possession on any other grounds. Per contra,
it has been submitted by learned counsel appearing for respondent
no.2 that he is ready and willing to make the payment to the Bank
whatever is due and outstanding as on today if he is given an
opportunity by the Bank for the same.
5. So
far as the first principal contention of the petitioner is concerned,
the same merits consideration because the Chief Metropolitan
Magistrate and the District Magistrate, under Section 14 of the
Securitisation Act are 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 Securitisation 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, it is evident that Chief Metropolitan
Magistrate or District Magistrate is bound to assist the secured
creditor in taking possession of the secured assets.
6. The
Authority who is called upon to act under Section 14 of the
Securitisation Act can only assist, nay, is bound to assist the
secured creditor in taking possession of the secured asset. As the
Chief Metropolitan Magistrate and 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 may be assailed under Section 17 of the Act by the
aggrieved person, under sub-section (3) of Section 14 of the
Securitisation Act, the act of the Chief Metropolitan Magistrate or
District Magistrate done in pursuance of said Section cannot be
called in question in any court or before any authority. It is
evident from the provisions of law that the District Magistrate while
bound to assist the secured creditor in taking possession of the
secured assets and to take the 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 genuinity or
propriety of such documents, including the document signed or agreed
between the borrower and the secured creditor.
7. Division
Bench of this High Court has, in Special Civil Application
No.15084/2010, in the matter between IDBI Bank Limited v/s. Hytaisun
Magnetics Limited and others (unreported decision dated 9th
February 2011) settled the entire position of law so far as the
subject matter of the present petition is concerned.
8. In
paragraph 20 of the unreported judgment, the Hon’ble Division Bench
held as under :-
“(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.”
9. In
view of the settled position of law, under Section 14(2) of the
Securitisation Act, 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.
10. We
are of the view that the District Magistrate has failed to discharge
his statutory duties as he is obliged under Section 14(2) of the
Securitisation Act and was not right in rejecting the application
preferred by the petitioner Bank under Section 14 of the
Securitisation Act.
11. For
the reasons stated above, we quash and set-aside the communication
dated 22nd
October 2010 (page 42
dated 9th
June 2009) and we direct respondent no.1 to fully comply with the
provisions of Section 14(2) of the Securitisation Act and to provide
the necessary assistance and protection to the petitioner Bank for
taking over possession of the secured assets of
the principal borrower.
12. At
this stage, we deem it fit to clarify that the order which we have
passed shall not come in the way of respondent no.2 if he is ready
and willing to make the payment to the Bank as per his liability.
13. Under
Section 13(8) of the Securitisation Act, if the dues of the secured
creditor together with all costs, charges and expenses incurred by
him are tendered to the secured creditor at any time before the date
fixed for sale or transfer, the secured assets shall not be sold or
transferred by the secured creditor and no further steps shall be
taken by him for transfer or sale of the secured assets. If
respondent no.2 wants to avail of the benefit of Section 13(8), it
shall be open for him to make the necessary payment to the Bank as
per Section 13(8) of the
Securitisation Act.
14. We
also like to clarify that we have not expressed any opinion so far as
the measures taken by the petitioner Bank under Section 13(4) of the
Securitisation Act are concerned. If respondent no.2 is aggrieved in
any manner for non-compliance of the Act or rules thereunder, it will
be open for him to proceed under Section 17 of the Securitisation
Act, which provides for an appeal before the Debts Recovery Tribunal.
15. With
these observations, the petition stands disposed of.
Direct
service is permitted.
(S.J.Mukhopadhaya,
CJ.)
(J.B.Pardiwala,
J.)
/moin
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