ORDER
K. Gnanaprakasam, J. (Chairperson)
1. This appeal is directed as against the order dated 10.4.2006 passed by DRT-I at Chennai in SASR No. 159/2005.
2. The appellant and his mother borrowed amount from the 1st respondent-Bank and they have also deposited original title deeds of the property with the Bank. The appellant has been making payments regularly. But, however, the 1st respondent Bank invoked the provisions of SRFAESI Act, 2002 and issued notice dated 16.6.2003 under Section 13(2) of the said Act. The respondent-Bank also issued a notice under Section 13(4) of the Act. It is stated that on 5.9.2005, a group of people calling themselves as enforcement agents attempted to enter into the property, and the same was thwarted by filing W.P. No. 29431/2005 before the High Court of Madras, in which, the High Court granted stay in W.P.M.P. No. 32237/2005 and the said writ petition was dismissed. Writ Appeal No. 2255/2005 was filed and the writ appeal also came to be disposed of, directing the appellant herein to exhaust the remedy under SRFAESI Act. That thereafter, the appellant filed SRFAESI application before the DRT challenging the notice dated 5.9.2005 issued under Section 13(4), on the ground that the said notice is not valid and the 3rd respondent was not entitled to take possession of the property, as the Authorised Officer of the Bank alone is empowered to take possession. The 3rd respondent could be considered only as a watchman and they have no power of sale or management of the property. Rule 8(3) contemplates only actual possession being taken by the Authorised Officer and he is not empowered to delegate this essential statutory duty in favour of a third party. The possession said to have been taken by the 3rd respondent is not proper. The respondent also did not approach the Chief Metropolitan Magistrate or District Magistrate to take possession of the property as required under Section 14 of the SRFAESI Act. The constructive and symbolic possession said to have been taken by the respondent is not true and valid, and, therefore, sought for an order of injunction restraining the 3rd respondent from interfering with the appellant’s possession of the property.
3. The respondents 1 to 3 resisted the action of the appellant, by filing a common counter before the DRT, wherein they have contended that the notice issued under Section 13(2) of the SRFAESI Act is valid, and the respondent-Bank has got authority to appoint the 3rd respondent as its enforcement agent, in accordance with Section 13(4) of the Act, and the 3rd respondent is legally empowered to proceed against the appellant as per the provisions of the Act. It is further stated that under Section 17 of the SRFAESI Act, the appeal shall be filed before the DRT within 45 days from the date on which, measures have been taken by the secured creditor under Section 13(4) of the Act. In the instant case, notice under Section 13(2) was issued on 7.5.2005 and possession notice under Section 13(4) was given on 5.9.2005, and the appellant was served with possession notice, and notice for vacating the property on 5.9.2005 and a copy of the notice was also pasted on the property on the same day. The appellant filed the appeal beyond the period of 45 days after the issuance of the notice under Section 13(4) and hence, the application was not filed within time, and the same is liable to be dismissed. It is also stated that the appellant did not pay the amount due to the Bank, and the Bank, after issuing a notice dated 7.5.2005, had appointed the 3rd respondent on 4.7.2005. The appellant has not chosen to pay the amount within the prescribed period. On 8.12.2005, when the respondent-Bank along with the official from the enforcement agency visited the secured asset, the borrowers and his family members were not present instead their employees were present. The respondents requested them to give possession peacefully, as the notice to vacate the property was already served on 5.9.2005. But, they strongly resisted. The writ petition/appeal filed by the appellant came to be dismissed, and therefore, the petition filed by the appellant as against the measures taken under Section 13(4) of the Act is not maintainable.
4. The learned Presiding Officer of DRT-I, Chennai had considered the rival cases of the appellant and the respondents, and ultimately came to the conclusion, that the appellant has neither specifically pleaded nor proved that the action taken by the respondent-Bank to recover the amount due to them is an illegal action and further held that the respondent-Bank is entitled to proceed against the appellant for the amount due to them, and dismissed the petition filed by the appellant. Aggrieved by the same, this appeal has been filed.
I have heard the learned Advocate for the appellant and the respondents.
5. The learned Advocate for the appellant has mainly raised two points before the Tribunal:
(i) The respondent-Bank had issued the notice under Section 13(2) of the SRFAESI Act, twice and the original cause of action arose for this case got extinguished, and therefore, the action taken by the respondent pursuant to the second notice issued under Section 13(2) of the Act, is not legal, proper and valid.
(ii) The delegation of power by the respondent-Bank to the 3rd respondent to take possession of the property is not legal and proper.
Point-I
6. Appellant’s contention that the respondent-Bank issued a notice under Section 13(2) of the SRFAESI Act, 2002 on 16.6.2003 and also issued another notice under Section 13(2) of the Act on 7.5.2005. The respondent-Bank having invoked the provisions under Section 13(2) of the Act as early as in the year 2003 itself, the original cause of action arose in the year 2003 itself and necessary actions should have been taken under Section 13(4) after 60 days from the date of the said notice, but no action was taken by the Bank, and therefore, the issuance of the notice for the second time, is vitiated. The respondent-Bank has given up the original cause of action, and therefore, it is not entitled to take action for the second time. To support his contention, the appellant relied upon the case of Sadanandan Bhadran v. Madhavan Sunil Kumar . That case arose under the Negotiable Instruments Act (26 of 1881), wherein it was observed that, “a payee can present cheque any number of times during the period of its validity and on each presentation of the cheque and its dishonour, a fresh right, and not cause of action, accrues in his favour. He may therefore take peremptory action in exercise of his right under Clause (b) of Section 138, go on presenting the cheque so as to enable him to present his cheque at any point of time during the validity of the cheque…. Consequent upon the failure of the drawer to pay the money within the period of 15 days as envisaged under Clause (c) of the proviso to Section 138, the liability of the drawer for being prosecuted for the offence he has committed arises, and the period of one month for filing the complaint under Section 142 is to be reckoned with accordingly. The combined reading of the above two sections of the Act leaves no room for doubt that cause of action within the meaning of Section 142 arises and can arise only once”. The appellant is trying to submit that the cause of action arose in this case on 16.6.2003 itself, when the respondent-Bank invoked the provisions of Section 13(2) of the Act, and therefore, notice issued for the second time on 7.5.2005 is not valid, and further action taken pursuant to the said notice dated 7.5.2005 is also vitiated.
7. On the contrary, the learned Advocate for the respondent-Bank would submit that the notice under Section 13(2) of the Act is intended to put the debtor on notice about the liability and also to give an opportunity to pay the amount by giving 60 days’ time and when the debtor does not pay the amount within 60 days from the date of notice, then only the secured creditor shall be entitled to exercise all or any of the rights under Sub-section (4) of Section 13. It is submitted that there is no question of first cause of action or second cause of action in these matters. If no action is taken after 60 days, it is beneficial only to the debtor and not to the creditor. If a notice was issued for the second time, the borrower will get one more opportunity to make his representation or to raise his objections, and therefore, the borrower alone will be benefited and not the creditor. As such, the arguments advanced on behalf of the appellant that there are two cause of actions arose in this case, and the further proceedings taken by the respondent-Bank based upon the second notice is vitiated, cannot be accepted.
8. On going through the provisions of Section 13(2) of the Act, it is explicitly made clear that the said provision is intended to put the borrower on notice, calling upon him to discharge his liabilities to the secured creditor within 60 days from the date of notice, failing which the secured creditor is entitled to exercise all or any of the rights under Sub-section (4) of Section 13 of the Act. By this notice, an opportunity is given to the borrower to pay the amount, and we can call it as a pre-suit notice, which put the borrower in alert, to pay the amount due to the secured creditor. In fact, 60 days’ time is granted to the borrower to pay the amount. Further, Sub-clause (3-A) provides for representation to be made by the borrower or to raise objection to the claim made by the secured creditor, and such a representation or objection shall be considered by the secured creditor, and if the representation or objection is not acceptable or tenable, it shall be communicated within one week of receipt of such representation or objection, to the borrower. These are all certain safeguards provided to the borrower before taking any of the measures, as contemplated under Section 13(4) of the Act. If no action is taken after the expiry of 60 days from the date of issuance of the notice under Section 13(2) and the measures to be taken under Section 13(4) are postponed, it will no way affect the rights of the borrower. Likewise, if a notice under Section 13(2) is issued once again or for the second time, it would enure to the benefit of the borrower to gain one more 60 days’ time, to pay the amount and that will not militate the case of secured creditor. But, on the other hand, the issuance of the second notice under Section 13(2), indirectly helps the borrower in postponing the recovery of the amount, and it would not have any adverse impact upon the borrower, as apprehended by the appellant. Hence there is no illegality or irregularity in issuing notice under Section 13(2) of the Act, for the second time and it would not vitiate the claim of the Bank. As such, I am unable to accept the arguments advanced on behalf of the appellant and this point is answered against the appellant.
Point-II
9. It is the contention of the learned Advocate for the appellant that notice under Section 13(4) of the Act, i.e., possession was issued by the Bank only on 5.9.2005. Even before issuing the possession notice, the respondent-Bank had appointed the 3rd respondent as its enforcement agent by letter dated 4.7.2005, wherein it is stated that the 3rd respondent was appointed to act as enforcement agent under Section 13(4) of the Act, to take over possession and management of secured assets, namely land and building situated at No. 38, Kothari Road, Nungambakkam, Madras-34 including the right to transfer by way of lease, assignment or sale and realise the secured assets. It is the contention of the appellant, that neither the 1st respondent nor the 3rd respondent can take possession without of the help of Chief Metropolitan Magistrate as provided under Section 14 of the SRFAESI Act, which reads as under:
(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 asset, 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 assets and documents relating thereto; and
(b) 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.
Relying upon Section 14(1) extracted above, the appellant vehemently contended that possession of the secured asset could be taken only through the Chief Metropolitan Magistrate and not otherwise. But, whereas the respondent had appointed the 3rd respondent to take possession of the secured asset and the same is not legal, valid and proper. It is also further submitted that the respondent has not followed the procedure contemplated under Rule 8(1) of the Security Interest (Enforcement) Rules, 2002, which states:
Where the secured asset is an immovable property, the Authorised Officer shall take or cause to be taken possession by delivering a possession notice prepared as nearly as possible in Appendix IV to these rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the property.
It is the contention of the appellant, that the Authorised Officer of the Bank alone could take possession, and not a third party like the 3rd respondent in this case. The appellant also questions the notice dated 5.9.2005 issued by the 3rd respondent to the appellant, wherein they have indicated that they have taken possession of the property as the enforcement agent of the respondent-Bank. In the said notice itself, the 3rd respondent requested the appellant, to vacate the property, failing which steps would be taken to vacate him from the property. According to the appellant, the 3rd respondent has no such authority or right to issue such notice of possession, and the same is against law, and therefore, the entire proceedings taken up by the respondent-Bank are vitiated.
10. On the contrary, the learned Advocate for the respondents 1 and 2 would submit that, as the appellant committed default in payment of the amount due to the Bank, the appellant’s account was classified as non-performing Asset as on 31.3.2003. Even thereafter, the respondents made request for the payment of the amount, but the appellant has not chosen to pay the amount. That thereafter, the respondent-Bank issued notice under Section 13(2) of the SRFAESI Act dated 7.5.2005. On 4.7.2005, the respondent-Bank, in exercise of its legal right, had appointed the 3rd respondent as its enforcement agent. But, however, the respondent-Bank alone had taken possession on 5.9.2005. That in the writ petition filed by the appellant before the High Court of Madras, the respondent-Bank filed counter stating that the secured creditor alone had taken possession on 5.9.2005, and not the enforcement agent, and the same was taken note of by the High Court and disposed of the writ petition. The writ appeal filed by the appellant was also disposed of. As such, the appellant cannot once again raise the very same issue before this Tribunal.
11. The respondent further contended that they need not necessarily approach the Chief Metropolitan Magistrate for the purpose of taking over possession. Moreover, the respondents have taken only symbolical possession, for which there was no necessity for them to approach the Chief Metropolitan Magistrate, for the purpose of taking over possession. The language employed in Section 14 of the Act is only “may” i.e., the secured creditor may, for the purpose of taking possession or control of any such secured asset, request in writing to the Chief Metropolitan Magistrate. Hence, it is clear that it is not incumbent upon the Bank to approach the Chief Metropolitan Magistrate necessarily. In this connection, the respondent also relied upon the case of Chinnamarkathian @ Muthu Gounder and Anr. v. Ayyavo @ Periana Gounder and Ors. , wherein it was held that, while interpreting the statutes and the words, whether it is directory or mandatory, it was held that, the word “may” cannot normally be equated with “shall”. The respondent also relied upon the case of Rani Drigraj Kuer v. Raja Sri Amar Krishna Narain Singh , wherein also it was held that, the word “may” is only directory and not mandatory.
12. I have carefully gone through Section 14 of the SRFAESI Act and also the arguments advanced on either side, and also the judgments relied upon by the parties, and I am of the view that the secured creditor need not necessarily approach the Chief Metropolitan Magistrate, to take possession of the secured asset. As such, the arguments advanced on behalf of the appellant, cannot be countenanced. Rule 4 of Security Interest (Enforcement) Rules, 2002 states, that if the amount mentioned in the demand notice is not paid within the time specified therein, the authorised officer shall proceed to realise the amount by adopting any one or more of the measures specified in Sub-section (4) of Section 13 for taking possession of the immovable property. Rule 8 states that: whether the secured asset is an immovable property, the Authorised Officer shall take or causes to be taken possession, by delivering a possession notice prepared as nearly as possible in Appendix IV to these rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the property. The language employed in this rule is that the Authorised Officer shall take or cause to be taken possession, would mean that the Authorised Officer himself shall take possession or he is entitled to delegate his power to anyone to take possession of the property. In our case, the Authorised Officer had authorised the 3rd respondent to do and carry out the works in taking possession of the property and also to carry out other things, as provided under Section 13(4) of the Act, and in my opinion, I do not find any error in the said process, and therefore, the arguments advanced on behalf of the appellant is not proper and valid. As such, the 3rd respondent’s action cannot be faulted with. Hence, the arguments of the appellant is rejected.
IA-785/2006:
This petition was filed to decide the maintainability of the second notice issued under Section 13(2) of the SRFAESI Act dated 5.9.2005.1 have already held that there is no illegality or irregularity in issuing notice under Section 13(2) for the second time and hence this present application is not maintainable and the same is liable to be dismissed and accordingly, it is dismissed.
13. In the result, the appeal is dismissed and the IA-785/2005 is also dismissed.