IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 30200 of 2009(T)
1. UCO BANK, REPRESENTED BY ITS
... Petitioner
Vs
1. K.H.ABDUL MAJEED,
... Respondent
2. K.H.MUHAMMAD ALI, PROPRIETOR,
3. M/S.R.F.MOTORS (P) LTD.,
4. KALAMASSERY MUNICIPALITY,
For Petitioner :SRI.KODOTH SREEDHARAN
For Respondent : No Appearance
The Hon'ble MR. Justice C.K.ABDUL REHIM
Dated :26/10/2009
O R D E R
C.K. ABDUL REHIM, J.
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W.P.(C)No.30200 of 2009
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Dated this the 26th day of October, 2009
J U D G M E N T
1. Petitioner is a Bank which had allowed loan
facility to respondents 1 & 2. Immovable properties
belonging to the respondents 1 & 2 was proceeded against
under the provisions of the Securitization and
Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 (SARFAESI Act) consequent to
default committed in repayment. It is submitted that the
proceedings are under the stage of Section 13 (4) and
notice for taking over possession of the property has
already been published. The Bank had also proclaimed sale
of the immovable property. At this stage, without
intimation to the Bank, the defaulters who are the owners of
the secured assets, had entered into a lease with the
3rd respondent whereby the 3rd respondent is permitted to
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install a Motor Workshop in the property. The
3rd respondent had approached the 4th respondent
Municipality for getting installation permission. The
petitioner Bank as well as a neighboring 3rd party had
opposed granting of installation permission. The matter
was once taken up to the Tribunal for Local Self
Government Institutions at the instance of the neighboring
resident. The Tribunal directed the Municipality to hear
objections of the parties, including the petitioner Bank,
before taking a decision. Now the 4th respondent
Municipality, had adopted a resolution as evidenced by
Ext.P4 whereby it is decided to grant installation permission
to the 3rd respondent. Petitioner is challenging Ext.P4
decision of the Municipality on the ground that the lease
created subsequent to initiation of proceedings under the
SARFAESI Act is totally illegal and invalid. Contention is
that, since the 3rd respondent is not getting any right by
virtue of the lease so created, the Municipality ought not
have granted installation permission.
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2. Going by provisions of Section 13 (13) of the
SARFAESI Act, the borrower is prevented from transferring
the secured assets by way of sale, lease or otherwise with
respect to any of his assets referred to in the notice, after
receipt of the notice under Section 13 (2), without prior
written consent of the secured creditor. Therefore as far as
the secured creditor is concerned, the lease agreement
created by the borrower can be considered as a nullity and
further steps under the Act can be persued ignoring
creation of any such lease.
3. As far as the impugned resolution adopted by the
Municipality is concerned, noticed that the Municipality had
observed that the 3rd respondent is entitled to get
installation permission since they had complied with all the
requirements stipulated under the Municipality Act as well
as the relevant Rules framed thereunder. I am not entering
into the merits of the decision and deciding the question
regarding sustainability of the resolution, because there is
an alternate remedy provided under the Act against such
W.P.(C)No.30200 of 2009
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decision by way of appeal to the Tribunal for Local Self
Government Institutions. Further, counsel appearing for
the 2nd respondent had brought to my notice that against
Ext.P4 decision the 3rd party (neighbouring resident) who
was objecting such grant of installation permission, had
already approached this court by writ petition No.W.P.(C)
No.29317/09. The petitioner Bank is a respondent in that
writ petition and was represented by counsel. In the
judgment rendered by this court in that case, W.P.(C)
No.29317/09, dated 21.10.2009, this court had relegated
the parties to approach the Tribunal against Ext.P4 order by
resorting to the appellate remedy. Therefore the petitioner
if aggrieved by Ext.P4 can resort to remedy by way of
appeal.
4. However it is made clear that Ext.P4 will not
stand in the way of the petitioner Bank proceeding with
further steps under the SARFAESI Act and from taking over
possession of the secured assets resorting to procedures
contemplated therein.
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5. Under the above circumstances the writ petition
is dismissed without prejudice to the rights of the petitioner
Bank to invoke the appellate remedy available against the
impugned decision under Ext.P4.
C.K. ABDUL REHIM
JUDGE
shg/