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2016 (5) TMI 822 - GUJARAT HIGH COURT

2016 (5) TMI 822 - GUJARAT HIGH COURT - TMI - SARFAESI Act - alternative statutory remedy - maintainability of petition - Held that:- An action under Section 14 of the Act constitutes an action taken after the stage of Section 13(4), and therefore, the same would fall within the ambit of Section 17(1) of the Act. Thus, the Act itself contemplates an efficacious remedy for the borrower or any person 1 affected by an action under Section 13(4) of the Act, by providing for an appeal before the DRT. .....

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dismissed. However, it is clarified that if the appeal is filed under Section 17 of the SARFAESI Act, the DRT shall decide the same in accordance with law on its own merits without being influenced by the observations made by us in this order. - LETTERS PATENT APPEAL NO. 395 of 2016, SPECIAL CIVIL APPLICATION NO. 1843 of 2016, CIVIL APPLICATION NO. 4254 of 2016 - Dated:- 6-5-2016 - MR. R.SUBHASH REDDY AND MR. VIPUL M. PANCHOLI, JJ. FOR THE APPELLANT : MR AM PAREKH, ADVOCATE FOR THE RESPONDENT : .....

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It is the case of the appellant that she is not a borrower to the loan granted by the respondent-bank but is a third party in possession of the property in question. The appellant was not aware of the mortgage being created in favour of the respondent-bank by the principal borrowers. The principal borrowers executed Agreement to Sale with possession in favour of the appellant and after the Agreement to Sale has been executed, the petitioner came in possession of the property in question. While e .....

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sion of the appellant was established and thereafter the learned Civil Judge, Ahmedabad (Rural) granted stay on 26.12.2014 in favour of the appellant. 2.3 It is stated that when the officer of the respondent-bank came at the residence of the appellant for affixing the notice under Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as SARFAESI Act ) and informed the appellant that the bank will file an .....

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by the respondent-bank on 9.4.2015. 2.5 The appellant, therefore, challenged the order dated 17.10.2015 passed by the District Magistrate while exercising the powers under Section 14 of the SARFAESI Act by filing Special Civil Application No.1843 of 2016, copy of order is produced at Annexure A to the compilation. 3. Learned Single Judge, after considering the material produced on record and after considering the submissions canvassed on behalf of learned advocates, dismissed the petition and r .....

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from the respondent-bank but she has purchased the property in question under Agreement to Sale executed in favour of the Power of Attorney holder of the borrowers. The appellant was not aware about the mortgage being created in favour of the respondent-bank by the principal borrowers. The appellant is in possession of the premises in question and though the appellant issued the notice to the District Magistrate and informed about the stay granted by the Civil Court, opportunity of being heard .....

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ious alternative remedy and the present appellant who is the subsequent purchaser of the property in question cannot challenge the order passed by the District Magistrate under Section 14 of the SARFAESI Act. Further, the Tribunal cannot go into the questions which are raised before this Court in the petition and therefore the learned Single Judge ought to have considered the matter on merits and therefore the impugned order be quashed and set aside. 4.3 Learned advocate Mr.Parekh thereafter sub .....

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Court in the case of Harshad Govardhan Sondagar v/s International Assets Reconstruction Company Limited and Others, reported in (2014)6 SCC 1. 5. On the other hand, learned advocate Mr.Chokshi appearing for the respondent-bank mainly contended that the property in question was purchased by Mrs.Manjeet Kaur and Mr.Sandeep Harjit Singh from the original developer after availing loan from the respondent-bank. On 29.11.2011, Agreement to Sale was executed between the developer and Mrs.Manjeet Kaur .....

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Chudasama and Geetaba Vanrajsinh Chudasama for the property in question. It is contended that in the said document, there is a specific reference with regard to the pendency of the loan. The said document is produced at page 83 of the compilation. Thereafter, on 28.2.2014, Mrs.Manjeet Kaur and Mr.Sandeep Harjit Singh executed the Power of Attorney in favour of Jyotsnaben and Geetaba wherein also the outstanding loan is clearly mentioned. The said document is produced at page 105 of the compilat .....

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2014 i.e. within two months of execution of Agreement to Sale. On 23.9.2014, the respondentbank issued the demand notice in the newspaper qua property in question and Jyotsnaben and Geetaba replied to the said demand notice wherein they have not stated that the appellant is now holding the Agreement to Sale qua the property in question. The proceedings under SARFAESI Act was thereafter proceeded further and on 9.4.2015, the respondent-bank filed an application under Section 14 of the SARFAESI Ac .....

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mately the District Magistrate passed an order on 17.10.2015 which is impugned in the petition. 5.1. In the aforesaid background of the facts, learned advocate Mr.Chokshi mainly contended that though there is a specific reference in the Agreement to Sale and in the Power of Attorney executed by the borrowers in favour of Jyotsnaben and Geetaba and even in the Agreement to Sale which is executed in favour of the appellant she cannot now be permitted to contend that she was not aware about the mor .....

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t to file the proceedings before this Court. Agreement to Sale is required to be registered and therefore the appeal be dismissed on this ground also. 5.3. However, without going into the further details on merits of the case, learned advocate Mr.Chokshi submitted that the appellant is having statutory remedy of filing appeal under Section 17 of the SARFAESI Act before the DRT. Learned Single Judge has rightly not entertained the petition and relegated the appellant before the said forum and the .....

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ed in AIR 2010 Gujarat 72 4. In the case of Dr.K.Venkatesh and four others v/s Indian Overseas Bank, Hyderabad and two others delivered on 30.7.2015 by the Andhra Pradesh High Court. 5. Issan Overseas Limited V/s Union of India Ministry of Finance, reported in 2012(0)GLHEL-HC 228186. 6. We have considered the submissions canvassed on behalf of the learned advocates for the parties. We have also gone through the material produced on record, the impugned order passed by the learned Single Judge an .....

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in question and immediately thereafter on 28.2.2014, the said purchaser/borrower executed Power of Attorney in favour of Jyotsnaben and Geetaba. From both the aforesaid documents, it is clear that the borrowers have specifically stated in the Agreement to Sale as well as Power of Attorney about the loan taken by them from the respondentbank. When the borrowers committed default in payment of the loan amount, the respondent-bank issued notice on 27.8.2014 under Section 13(2) of the SARFAESI Act a .....

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n 13(2) on 27.8.2014. On 30.8.2014, the appellant filed the suit for specific performance of Agreement to Sale against Jyotsnaben and Geetaba. Thereafter on 23.9.2014, the respondent-bank issued demand notice in the newspaper with regard to the property in question to which Jyotsnaben and Geetaba submitted reply and in the said reply, they have not stated that the appellant is now holding an Agreement to Sale qua the property in question. The respondent-bank therefore sent a letter to Jyotsnaben .....

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ding before the District Magistrate when the notice was affixed on the conspicuous part of the property in question. In spite of that, she did not remain present. After giving sufficient opportunity, the District Magistrate has passed the impugned order. 8. Thus, from the record it is clear that the appellant was aware about the loan taken by the concerned borrowers from the respondent-bank when she entered into Agreement to Sale with Jyotsnaben and Geetaba. In spite of the aforesaid aspect, the .....

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e appellant has not joined the respondent-bank as partydefendant. In the aforesaid facts and circumstances of the case, the question which is to be decided by this Court is whether any relief is to be granted to the appellant while exercising powers under Article 226 of the Constitution of India and more particularly, when the appellant has not approached before this Court with clean hands and the conduct of the appellant is suspicious. When the alternative statutory remedy is available under Se .....

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Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken. 10. In the case of Kanaiyalal Lalchand Sachdev (supra), the Hon ble Supreme Court has held and observed in paragraphs 21 and 22 as under: 21. In Indian Overseas Bank & Anr. Vs. Ashok Saw Mill, the main question which fell for determination was whether the DRT would have jurisdiction to consider and adjudicate post Section 13(4) events or whether its scope in terms .....

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son, including the borrower, aggrieved by any of the measures referred to in subsection (4) of Section 13 taken by the secured creditor, to make an application to the DRT having jurisdiction in the matter within 45 days from the date of such measures having taken for the reliefs indicated in sub- section (3) thereof. 36. The intention of the legislature is, therefore, clear that while the banks and financial institutions have been vested with stringent powers for recovery of their dues, safeguar .....

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templated under Section 13(4) of the Act. On the other hand, the law is otherwise and it contemplates that the action taken by a secured creditor in terms of Section 13(4) is open to scrutiny and cannot only be set aside but even the status quo ante can be restored by the DRT." (Emphasis supplied by us) 22.We are in respectful agreement with the above enunciation of law on the point. It is manifest that an action under Section 14 of the Act constitutes an action taken after the stage of Sec .....

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ce against the notice issued under Section 13(4) or action taken under Section 14, then she could have availed remedy by filing an application under Section 17(1). The expression any person used in Section 17(1) is of wide import. It taken within its fold, not only the borrower but also guarantor or any other person who may be affected by the action taken under Section 13(4) or Section 14. Both the Tribunal and the Appellate Tribunal are empowered to pass interim orders under Sections 17 and 18 .....

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cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc., the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judi .....

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on, one of the measures for recovery of secured debts under sub-section (4) to Section 13 of the Act includes the measures taken by secured creditor under Section 14 and therefore, if any order is passed under Section 14, though it cannot be challenged before any Court of law in view of sub-section (3) to Section 14, but one can raise the legality and propriety of such measures of taking possession under Section 17, if such measures is against the Securitisation Act or Rules framed thereunder. 1 .....

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als that on 18th January, 2011, the Division Bench of this Court passed the following order:- "2. We have heard learned counsel appearing for the petitioner on interim relief since it is contended by the learned counsel for the petitioner that the petitioner may be dispossessed anytime pursuant to the impugned order. 3. It appears that it is not the case of the petitioner that the loan is not taken or the amount is not recoverable. It further appears from the order of the Ld. Magistrate tha .....

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r of the Ld. Magistrate under section 14 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, on condition that the petitioner deposits the amount of ₹ 3,50,32,281/- [Rupees three crore fifty lac thirty two thousand two hundred eighty one only] with the respondent- bank within a period of one week from today. 5. It is also observed and clarified that if there is failure to comply with the condition to deposit the amount of ₹ 3,5 .....

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ansfer or alienate the property in question. " 5. We would like to rely upon the observations made by the Division Bench of this Court in the case of Analkumar Rajkishore Mishra & ors. Vs. Dena Bank, reported in AIR 2011 Gujarat, 187 (to which one of us, J.B. Pardiwala, J. is a party) on the question of alternative remedy. The observations made in paragraph 9 are as under:- "9. From the aforesaid provisions of law, it will be evident that the notice for possession, preparation of p .....

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open to the Debt Recovery Tribunal to reject the appeal u/Sec.17 of the Act on the ground that it was premature or not maintainable." 14. In the case of Harshad Govardhan Sondagar(Supra), relied upon by the learned advocate for the appellant-petitioner, the Hon ble Supreme Court has held that under Articles 226 and 227 of the Constitution, the High Court can entertain the petition against the order passed by the District Magistrate under Section 14 of the SARFAESI Act. However, if the facts .....

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