TMI Blog2016 (1) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... d not be maintainable [(Re: Kanaiyalal Lalchand Sachdev & Ors. v. State of Maharashtra & Ors. (2011 (2) TMI 1277 - SUPREME COURT OF INDIA)]. It would be open for the petitioner to raise all his objections before the DRT in the petition under Section 17(1) which is pending being SA 43/2015. The concerned Tribunal may deal with the said petition of the petitioner in accordance with law. Keeping in view the above facts it would be in the interest of justice that adjudication takes place on the contentions of the petitioner before any adverse steps are taken against the property. We accordingly direct that parties will continue to maintain status quo as on 4.8.2015 when interim orders were passed by this Court till adjudication of S.A.43/2015 filed under section 17 of the Act by the petitioner which is pending before DRT. However, respondent No. 1 is given liberty to approach DRT with an appropriate application for vacation/modification of the present directions passed by us in case it so desires. - W.P.(C) 7344/2015 - - - Dated:- 6-11-2015 - MR. JAYANT NATH, J. For The Appellant : Mr.M.K.Ghosh, Advocate. For The Respondent : Mr. S.N.Relan, Mr. Puneet Relan and Mr. Abh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner was shocked to see the said notice as the petitioner had not taken any loan on the said property in question nor mortgaged the property to respondent No.1 Federal Bank Limited. It is urged that the petitioner is not an overnight inductee, inducted by the borrower to defeat the rights of respondent No.1. The petitioner aggrieved by the notice dated 19.2.2015 filed an appeal under section 17 of SARFAESI Act before the Debt Recovery Tribunal, Delhi (hereinafter referred to as DRT‟), on 23.03.2015. It was urged that all the original documents regarding the property are in possession of the petitioner and that the respondent No.1 Bank does not have any valid equitable mortgage in its favour. Interim relief was also prayed for. Some hearings took place before the DRT. Notice was also issued to respondent Federal Bank Ltd. It is further averred that on 22.7.2015 the petitioner was surprised to see a notice of the same date affixed on the property in question mentioning that receiver Shri Prashant Verma respondent No.2 appointed by the Court of Chief Metropolitan Magistrate would take possession of the property in question with police aid after 15 days of the notice i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the orders of CMM passed under section 14 of the SARFAESI Act could also have been challenged by the petitioner before DRT. It is stated that as the petitioner has an alternate remedy the present writ petition would not lie. 5. Respondent No.3/UOI has also filed a short affidavit opposing the writ petition. It is urged that the present writ petition is not maintainable on account of the petitioner having an alternate remedy by way of an appeal under section 18 of the SARFAESI Act before the Appellate Tribunal. Reliance is also placed on the judgment of the Supreme Court to support this submission in the case of United Bank of India vs.Satyawati Tondon, (2010) 8 SCC 110. It is further urged that even if the contention of the petitioner is taken on merits, respondent No.1 had filed a suit for recovery of its dues and foreclosure of mortgage before this Court in 1997. The petitioner claims to have bought the suit property sometimes in 2011. Hence it is urged that doctrine of lis pendens would apply as provided under section 52 of the Transfer of Property Act and the alleged sale in any case would be subject to directions passed by the appropriate court. 6. We have heard learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or sale for realising the secured asset: Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt: provided further that where the management of whole, of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security or the debt; (c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor; (d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt. 14. Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset- (1) Where the possession of any secured assets is required to be taken by the secured creditor or if any of the secured asset is required to be sold or trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. (ix) That the provisions of this Act and the rules made thereunder had been complied with: Provided further that on receipt of the affidavit from the Authorised Officer, the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, shall after satisfying the contents of the affidavit pass suitable orders for the purpose of taking possession of the secured assets: Provided also that the requirement of filing affidavit stated in the first proviso shall not apply to proceedings pending before any District Magistrate or the Chief Metropolitan Magistrate, as the case may be, on the date of commencement of this Act. (1A) The District Magistrate or the Chief Metropolitan Magistrate may authorize any officer subordinate to him- (i) to take possession of such assets and documents relating thereto; and (ii) to 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. (3) No act of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the secured assets to the borrower. 11. While dealing with the various provisions of the SARFAESI Act, and with regard to challenge to the SARFAESI Act, the Supreme Court in Mardia Chemicals Ltd. Ors. vs. Union of India Ors., (supra) stated the procedure to be followed as stipulated in the Act as follows:- 80. Under the Act in consideration, we find that before taking action a notice of 60 days is required to be given and after the measures under Section 13(4) of the Act have been taken, a mechanism has been provided under Section 17 of the Act to approach the Debt Recovery Tribunal. The above noted provisions are for the purposes of giving some reasonable protection to the borrower. Viewing the matter in the above perspective, we find what emerges from different provisions of the Act, is as follows:- 1. Under sub-section (2) of Section 13 it is incumbent upon the secured creditor to serve 60 days notice before proceeding to take any of the measures as provided under sub-section (4) of Section 13 of the Act. After service of notice, if the borrower raises any objection or places facts for consideration of the secured creditor, such reply to the notice must be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r deal and opportunity to get the matter adjudicated upon before the Debts Recovery Tribunal. The effect of some of the provisions may be a bit harsh for some of the borrowers but on that ground the impugned provisions of the Act cannot be said to be unconstitutional in view of the fact that the object of the Act is to achieve speedier recovery of the dues declared as NPAs and better availability of capital liquidity and resources to help in growth of economy of the country and welfare of the people in general which would subserve the public interest. 82. We, therefore, subject to what is provided in paragraph 80 above, uphold the validity of the Act and its provisions except that of sub-section (2) of Section 17 of the Act, which is declared ultra vires Article 14 of the Constitution of India. 13. Clearly, the constitutional validity of the Act has been upheld by the Supreme Court and the contention of the petitioner to the contrary cannot be accepted. The subsequent judgments of the Supreme Court on interpretation of section 14 of the Act may also be looked into. 14. Reference may be had to the judgment of the Supreme Court in the case of United Bank of India vs. Satyaw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore management of the business of the borrower. Therefore, the scheme of Section 13(4) read with Section 17(3) shows that if the borrower is dispossessed, not in accordance with the provisions of the Act, then the DRT is entitled to put the clock back by restoring the status quo ante. Therefore, it cannot be said that if possession is taken before confirmation of sale, the rights of the borrower to get the dispute adjudicated upon is defeated by the authorised officer taking possession. As stated above, the NPA Act provides for recovery of possession by non-adjudicatory process, therefore, to say that the rights of the borrower would be defeated without adjudication would be erroneous. ...... 16. In the case of Standard Chartered Bank v. V. Noble Kumar Ors., (2013) 9 SCC 620 the Supreme Court noted the procedure to be followed by the CMM while dealing with a petition under Section 14 of the Act. The Court stated as follows: 24. Under the scheme of Section 14, a secured creditor who desires to seek the assistance of the State's coercive power for obtaining possession of the secured asset is required to make a request in writing to the Chief Metropolitan Magistrate or D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is taken the assets and documents will be forwarded to the secured creditor. (iii) The third situation will be one where the secured creditor approaches the Magistrate concerned directly under Section 14 of the Act. The Magistrate will thereafter scrutinize the application as provided in Section 14, and then if satisfied, authorise a subordinate officer to take possession of the assets and documents and forwards them to the secured creditor as under Clause (ii) above. 17. Reference may also be had to judgment of the Supreme Court in the case of Kanaiyalal Lalchand Sachdev Ors. v. State of Maharashtra Ors., (2011) 2 SCC 782. This was a case in which the secured creditor issued notice under Section 13 (2) of the Act. On the receipt of reply, the secured creditor communicated its reasons for not accepting the reply. Thereafter, the secured creditor approached the CMM under Section 14 of the Act for taking possession of the secured assets. The Magistrate allowed the application. The borrower filed a Writ Petition which was dismissed on the ground that an alternative remedy was available to the borrower under Section 17 of the Act. The Supreme Court in those facts in appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to issue notice to the petitioner before disposing off the petition under Section 14 of the Act. In the case of Standard Chartered Bank vs. V. Noble Kumar Ors. (supra) the Supreme Court held that the Magistrate while dealing with an application under section 14(1) is only required to examine the factual correctness of the assertion made in the affidavit accompanying the application. After recording his satisfaction the Magistrate can pass appropriate orders regarding taking possession of the secured assets. 20. Further, in United Bank of India vs.Satyawati Tondon (supra) the Supreme Court held that in case any person has a grievance against an action taken under section 13(4) or section 14 of the Act, the remedy is to file an application under section 17(1) before DRT. To the same effect is the judgment of the Supreme Court in Kanaiyalal Lalchand Sachdev Ors. v. State of Maharashtra Ors. (supra) and the full bench of this High Court in Amish Jain vs. ICICI Bank Ltd. (supra). 21. The reliance of the petitioner on the judgment of the Supreme Court in the case of Harshad Govardhan Sondagar vs. International Assets Reconstruction Company Limited and Others.(supra) is mispla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooked into the facts of the case, as pleaded on record. Respondent No.1 has issued the appropriate notice under Section 13(4) of the SARFAESI Act on 19.02.2015. The petitioner aggrieved by the said notice filed an appeal being SA No. 43/2015 under Section 17 of the Act before DRT on 23.03.2015. No interim orders have been passed in favour of the petitioner by DRT. 25. It appears that simultaneously respondent No.1 has on 09.03.2015 initiated action under Section 14 of the SARFAESI Act before the CMM, Saket, New Delhi with a prayer for taking vacant possession of the said property. There is no mention in the said petition about the petitioner. This petition under Section 14 filed by respondent No. 1 has been disposed of by the CMM vide order dated 06.07.2015 appointing respondent No.2 as a Receiver to take possession of the property. The Receiver has thereafter on 22.07.2015 issued notice to the borrowers which is also pasted on the concerned property which is a 15 days‟ notice stating that the possession would be taken over on or before 06.08.2015. Copy of the notice has also been sent to the petitioner though the petitioner was not a party before the CMM. The notice of re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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