2021 (3) TMI 1464 - HC - Indian Laws

Taking over the possession of flat under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 ( SARFAESI Act 2002) - challenge to action of the Magistrate under Section 14 of the SARFAESI Act 2002 - HELD THAT - It is by now well settled that the Magistrate under Section 14 of the SARFAESI Act 2002 basically aids and assists the Banks to attach and take possession of secured assets. Section 13 (4) of the SARFAESI Act 2002 empowers the Banks to take possession of the secured assets without the intervention of the Courts or by seeking the assistance of the Magistrate under Section 14 of the SARFAESI Act 2002. It is by now well settled that the Bank by applying to the Magistrate to take action under Section 14 of the SARFAESI Act 2002 is taking one of the measures as contemplated by Section 13 (4) of the SARFAESI Act 2002. There is also no dispute that as against the measures under Section 13 (4) of the SARFAESI Act 2002 any person including the borrower if aggrieved by any of the measures under Section 13 (4) of the SARFAESI Act 2002 by the secured creditor can make an application to the Debt Recovery Tribunal (DRT) within 45 days from the date on which such measures have been taken. Now that the interim orders were operating since 3rd November 2014 there are no difficulty in the peculiar circumstances of the present case to extend such interim orders for three months from today. If within this period of three months the Petitioners do not take out the proceedings before the DRT and secure any interim order therein the Respondents will be at liberty to proceed with their action under the SARFAESI Act 2002. This petition is dismissed but liberty granted to the Petitioners to take out the appropriate proceedings before the DRT. The DRT may take into consideration the fact that this petition was pending in this Court from 3rd November 2014 till date. Further the interim order granted on 3rd November 2014 extended for three months from today. Petition dispsoed off.

Summary

Issues:
Challenge to order under SARFAESI Act, 2002 by District Magistrate without hearing petitioners; Claim of acquired interest in premises through agreements for sale; Dispute over possession of mortgaged premises under SARFAESI Act, 2002; Availability of alternate remedy before Debt Recovery Tribunal (DRT); High Court's jurisdiction under Articles 226 and 227 of the Constitution to entertain SARFAESI Act matters.

Analysis:
The petition challenges an order by the District Magistrate under the SARFAESI Act, 2002 regarding possession of certain premises without hearing the petitioners, who claim interest through agreements for sale. Respondent No.4, the Bank, asserts its right to take possession due to default by Respondent No.5, the borrower. The Bank argues that prior agreements for sale do not defeat the mortgage. The Bank and Additional Government Advocate argue that the petitioners have an alternate remedy before the DRT under the SARFAESI Act, 2002, and thus, the High Court should not entertain the petition.

The High Court explains that actions under Section 14 of the SARFAESI Act, 2002 by the Magistrate assist banks in securing assets, and aggrieved parties can seek redressal before the DRT within 45 days. Referring to Supreme Court judgments, the High Court emphasizes that matters under the SARFAESI Act should be dealt with by the DRT, and High Courts should not entertain such cases under Articles 226 and 227 of the Constitution. The petitioners are directed to approach the DRT, and the interim order is extended for three months to facilitate this process.

The High Court dismisses the petition but grants liberty to the petitioners to approach the DRT. The Court clarifies that it has not examined the merits of the case, leaving all contentions open for determination by the DRT. The petition and related application are disposed of with no order as to costs, instructing all parties to act based on the court's order.