TMI Blog2016 (2) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... tal effect on the adjudication of the petition. Further, in view of the implementation of the impugned order under Section 14 of the SARFAESI Act, the petitioner cannot seek to undo the auction and its legal consequences, without even raising a challenge to it. For the aforestated reasons, this Court does not consider it necessary to deal with the submissions regarding the availability of an alternative remedy under Section 17 of the SARFAESI Act.Similarly, the issue regarding the jurisdiction, or the lack of it, of the Additional District Magistrate to pass an order under Section 14 of the SARFAESI Act, as contended by the petitioner, is not required to be dealt with as the said order has already been implemented. For similar reasons, it is not necessary to examine whether, or not, the petitioner is/ was a lessee of the secured asset. For the reasons indicated hereinabove, this Court considers the present petition to be devoid of merit. - SPECIAL CIVIL APPLICATION NO. 8852 of 2015 - - - Dated:- 5-10-2015 - SMT. ABHILASHA KUMARI, J. FOR THE PETITONER : MR JAL SOLI UNWALA, ADVOCATE, MS TEJAL A VASHI, ADVOCATE FOR THE RESPONDENT : MS SHRUTI PATHAK, ASSISTANT GOVERN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a guarantor. 2.4 It is the case of the petitioner that somewhere in the month of December 2011, the petitioner intended to occupy the disputed property for the purpose of its business in the nature and style of a Mall, by taking the disputed property on hire. According to the petitioner, sometime around December, 2011, a sum of ₹ 2 lakhs was paid by the petitioner to the original owner towards the lease between the original owner and the petitioner. 2.5 On 07.02.2012, the petitioner and the original owner completed the formality of signing the lease deed of the disputed property, for a period of ten years. The petitioner had also undertaken the exercise of renovating the disputed property and incurred expenses towards the same. 2.6 Thereafter, due to the default in the repayment of the installments of the cashcredit facility availed of by the original owner, who was running the business in the name and style of M/s.B.G.Enterprises, the respondentBank issued a notice under the provisions of Section 13(2) of the SARFAESI ACT to M/s.B.G.Enterprises, on 28.10.2013. 2.7 On 13.02.2014, the respondent Bank, through its authorised officer, issued a statutory notice und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve a proposal for a OneTime Settlement to the respondentBank on 18.06.2014 and also paid an amount of ₹ 10 lakhs. 2.12 On 19.06.2014, the application for interim relief at Ex.5, preferred by the petitioner in the suit, was partlyallowed. The defendantBank was ordered to unlock and remove the seal from the suit premises after observing the necessary formalities. The defendantBank was further restrained from obstructing the use and occupation of the petitioner as a tenant of the suit premises, till the final decision of the suit. 2.13 Being aggrieved by the said order passed below Ex.5, the respondentBank preferred Miscellaneous Civil Appeal No.19 of 2014. The appeal was allowed by the Principal District Judge, Valsad, by an order dated 31.07.2014, and the order below Ex.5 was quashed and set aside. 2.14 In the meanwhile, on 10.07.2014, the respondentBank issued an auction notice regarding the disputed property in the newspaper. According to the petitioner, this notice did not mention that the possession of the disputed property was with the petitioner and the goods of the petitioner were lying in the premises. 2.15 The original owner gave a public notice dated 05.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Code of Civil Procedure, 1908, on 29.09.2014, which was allowed by the Trial Court vide its order dated 13.01.2015. 2.19 The petitioner, thereafter, preferred another civil suit on 10.12.2014, being Regular Civil Suit No.161 of 2014, under the provisions of Section 6 of the Specific Relief Act, 1963. 2.20 On 10.03.2015, the respondentBank gave a final notice to the petitioner to come and take possession of its goods, to which the petitioner replied vide communication dated 03.04.2015. The petitioner alleges that its goods were to be auctioned by the respondentBank vide auction notice on 02.06.2015, but for the said purpose the petitioner has already filed a separate petition in the Court. 3. In the background of the above factual scenario, the petitioner challenges the order dated 09.05.2014, passed by respondent No.2 Additional District Magistrate, under Section 14 of the SARFAESI Act. 4. Mr.Jal Soli Unwala, learned advocate for the petitioner has made elaborate submissions, as follows: 4.1 That the impugned order dated 09.05.2014, is without jurisdiction, since it has been passed by the Additional District Magistrate and not by the District Magistrate, as contem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner is in possession of the secured asset under a lease agreement with the borrower. Nor has the District Magistrate inquired into this aspect, therefore, the petitioner has been deprived of an opportunity of hearing. In support of the above submission, reliance has been placed upon the judgment of the Supreme Court in Harshad Govardhan Sondagar v. International Assets Reconstruction Company Limited And Others (supra). 4.5 That the application under Section 14 of the SARFAESI Act, preferred by the respondentBank, is premature. It could only have been preferred after the lessee became aware that the possession of the secured asset is sought to be taken by the secured creditor. This was revealed by the possession notice which was affixed on the premises on 11.06.2014. It is only when the lessee resists the attempt on the part of the secured creditor in taking possession of the secured asset that the application under Section 14 ought to be filed. In the present case, the notice was affixed on 11.06.2014, and the petitioner came to know for the first time about the possession being taken on that date. The petitioner immediately resisted by submitting objections on 11.06.2014 its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he filing of the present petition. This fact is known to the petitioner but has not been disclosed. Hence, the petitioner has not come with clean hands. This Court may, therefore, not entertain the petition and dismiss it without entering into the merits, as the petitioner is not entitled to any relief. In support of this submission, reliance has been placed upon the judgment of the Supreme Court in Prestige Lights Ltd. v. State Bank of India (2007)8 SCC 449. 7.2 That the petition is not maintainable in view of the fact that the petitioner has challenged the order dated 09.05.2014, passed by respondent No.2, but has not challenged the concluded auction proceedings and the auction sale which has been completed and concluded by the authorised officer of the respondentBank, in exercise of statutory powers under Section 13(4) of the SARFAESI Act. The order dated 09.05.2014, passed by respondent No.2, has already been implemented by the respondentBank which is the secured creditor of the secured asset. It is not open to the petitioner to challenge the said order at this stage. The present petition is not maintainable in the eye of law, and may not be entertained. In support of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SARFAESI Act. 7.5 That the decision in the case of Harshad Govardhan Sondagar v. International Assets Reconstruction Company Limited And Others (supra) turns on its own facts and would have no application when the person aggrieved is someone who is not a premortgage lessee or a lessee to whom Section 65A of the T.P.Act applies. In support of this submission, reliance has been placed upon the judgment of High Court of Calcutta in Jawahar Singh and Ors. v. The United Bank of India and Ors. W. P. Nos.11828(W), 12210(W), 11993(W), 11787(W), 5651(W) and 10048(W) of 2015 decided on 06.08.2015. 7.6 That the ratio of the judgment in the case of Harshad Govardhan Sondagar v. International Assets Reconstruction Company Limited And Others (supra) would not apply to the facts of the present case. In the said judgment, the situation post Section 13(4) measures were not examined by the Supreme Court, which only examined the right of a tenant to challenge an order passed under Section 14 of the SARFAESI Act. In the present case, the order passed by respondent No.4 under Section 14 of the SARFAESI Act has already been implemented by the respondentBank and the secured asset has been dispos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s totally misconceived and of no avail to the respondentBank, as the auction proceedings are not under challenge in the petition. The fact that the petitioner had participated in the auction proceedings is not a material fact, as the petitioner has not derived any benefit from not disclosing it. By not mentioning this fact in the petition, the merits of the case would not be affected as it does not go to the root of the matter. In support of this submission, reliance has been placed upon a judgment of the Supreme Court in S.J.S.Business Enterprises (P) Ltd. v. State of Bihar And Others ( 2004)7 SCC 166. 10.2 The petitioner has no alternative remedy available to it, as the relief claimed in the present petition is for the quashing of the order passed under Section 14 of the SARFAESI Act and the consequential relief of putting the petitioner back into possession of the secured asset, which cannot be granted by the Debt Recovery Tribunal. However, this Court, under its extraordinary jurisdiction can always restore the possession of the secured asset to the petitioner. 10.3 That the judgments in the case of Padam Motors Pvt. Ltd. v. District MagistratecumDeputy Commissioner an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in Harshad Govardhan Sondagar s case. It is the case of the petitioner that no notice was issued to it, or an opportunity of hearing granted, by the Additional District Magistrate before deciding the application. It has been submitted that the lease in favour of the petitioner was executed on 07.02.2012, which is before the issuance of the notice under Section 13(2) of the SARFAESI Act, on 28.10.2013, therefore, as per the provisions of Section 13(13) of the SARFAESI Act, the lease is valid. In view of the provisions of Section 35 of the SARFAESI Act, there is an overriding effect over the provisions of Section 65A of the T.P.Act. The petitioner, therefore, could not have been dispossessed from the disputed property by the respondentBank. It has further been submitted that the petitioner came to know, for the first time on 11.06.2014, when the notice was affixed on the premises regarding the possession of the property being taken over by the respondentBank. 13. After hearing the learned counsel for the respective parties and perusing the documents on record, this Court is of the view that the facts obtaining in the present case would have to be examined in the first instance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05 thus provides that a lessee of an immovable property has a right to enjoy such property, for a certain time or in perpetuity when a lessor leases an immovable property transferring his right to enjoy such property for a certain time or in perpetuity. Section 111 of the Transfer of Property Act, 1882 provides the different modes by which a lease gets determined. Thus, so long as a lease of an immovable property does not get determined, the lessee has a right to enjoy the property and this right is a right to property and this right cannot be taken away without the authority of law as provided in Article 300A of the Constitution. As we have noticed, there is no provision in Section 13 of the SARFAESI Act that a lease in respect of a secured asset shall stand determined when the secured creditor decides to take the measures mentioned in Section 13 of the said Act. Without the determination of a valid lease, the possession of the lessee is lawful and such lawful possession of a lessee has to be protected by all courts and tribunals. ... ... ... 25. ....We have already held that Section 13 of the SARFAESI Act does not provide that the lease in respect of a secured asset w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve position of law, on the peculiar facts of the present case, or not? 16. The decision on this aspect would entail dealing with the objection raised by the learned advocate for the respondentBank, regarding suppression of material facts on the part of the petitioner. It has been stated on behalf of the respondentBank that the petitioner has suppressed the material fact that after the passing of the impugned order dated 09.05.2014, by the Additional District Magistrate, the disputed property had been auctioned. The petitioner had unsuccessfully participated in the auction. It has been urged on behalf of the respondentBank that the impugned order passed by the Additional District Magistrate has already been implemented and the petitioner was very well aware of this fact as it had participated in the auction. These facts have not been disclosed in the petition, and the order under Section 14 of the SARFAESI Act has been challenged after the auction proceedings are over and the possession of the secured asset has been handed over to respondent No.5 on 01.10.2014. 17. On the other hand, the learned advocate for the petitioner has stated that the nondisclosure of the participation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omes to the Court to obtain relief on an ex parte statement he should made a full and fair disclosure of all the material facts facts, not law. He must not misstate the law if he can help it the court is supposed to know the law. But it knows nothing about the facts, and the applicant must state fully and fairly the facts, and the penalty by which the court enforces that obligation is that if it finds out that the facts have not been fully and fairly stated to it, the court will set aside, any action which it has taken on the faith of the imperfect statement . 35. It is well settled that a prerogative remedy is not a matter of course. In exercising extraordinary power, therefore, a writ court will indeed bear in mind the conduct of the party who is invoking such jurisdiction. If the applicant does not disclose full facts or suppresses relevant materials or is otherwise guilty of misleading the court, the court may dismiss the action without adjudicating the matter. The rule has been evolved in larger public interest to deter unscrupulous litigants from abusing the process of court by deceiving it. The very basis of the writ jurisdiction rests in disclosure of true, complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their accounts in respect of such debts were classified as NPAs. Proceedings under Section 13(2) of the SARFAESI Act commenced and the borrowers failed to discharge their liability in full within the statutory period of sixty days from the date of the notice under Section 13(2). The secured creditors exercised their rights under subsection 4 of Section 13 of the SARFAESI Act to take possession of the secured assets of the borrowers. The secured assets were under the possession of the appellants who claimed that they were not the borrowers but were the lessees of the borrowers and entitled to remain in possession of the secured assets. Threatened by dispossession of the premises under their possession by the Chief Metropolitan Magistrate, Mumbai, under Section 14 of the SARFAESI Act, they approached the Apex Court. 24. In Harshad Govardhan Sondagar s case, the Supreme Court has not dealt with a situation that would arise after the secured asset has been disposed of by a public auction and the auction sale confirmed and concluded in favour of the auction purchaser. In the case before the Supreme Court, the lessees were in possession of the secured assets, whereas, in the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra), in the firm view of this Court, the petition deserves to be rejected on this ground alone. 28. In addition to the suppression of material facts, the petitioner is seeking to regain the possession of the disputed property in which thirdparty rights have been created, as is revealed from the prayerclause. The judgment of the Supreme Court in Harshad Govardhan Sondagar s case does not envisage the granting of relief in a situation where the property has already been auctioned and its possession delivered to the successful auction purchaser. The petitioner has participated in the auction, which amounts to acquiescence to the order dated 09.05.2014 under Section 14 of the SARFAESI Act. It is deemed to have waived its objections to the said order. An opportunity was available to the petitioner to challenge the order after it was passed but it chose not to do so. Once the order has been implemented, statusquo ante cannot be directed, which is exactly what the petitioner is demanding. 29. It is a settled position of law that under Section 14 of the SARFAESI Act, the Chief Metropolitan Magistrate or the District Magistrate, acts in assistance of the secured creditor in taking p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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