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2015 (8) TMI 1304 - CALCUTTA HIGH COURT

2015 (8) TMI 1304 - CALCUTTA HIGH COURT - TMI - Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - rights of secured creditor - Held that:- While sub-section (2) of section 14 permits the CMM/DM to take or cause to be taken such steps and use or cause to be used such force as may, in his opinion, be necessary, sub-section (4) of section 13 or any other sub- section thereof does not authorise a secured creditor to barge into th .....

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ase may be, in the sound exercise of his discretion under sub-section (2) of section 14. - If on a request made by the authorised officer to vacate the secured asset the borrower or any person in occupation thereof does not voluntarily surrender possession, the secured creditor would have no other option but to seek the assistance of the CMM/DM under section 14 in the manner prescribed. - W.P. No. 11828 (W) of 2015, W.P. No. 12210(W) of 2015, W.P. No. 11993(W) of 2015, W.P. No. 11787(W) of 2 .....

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erjee, Mr. Shambhu Nath Ray, Ms. Rupsa Chakraborty, Ms. Amrita Tewari, ,Mr. Suman Jaiswal, Mr. Rajsekhar Mantha, Ms. Gopa Chakraborty, Mr. Joy Saha, Ms. Mekhla Kanji, Mr. Shamit Sanyal, Mr. Anirban Das, Ms. Sahana Nazim, Mr. Soumitra Mukherjee, Mr. Samrat Sen, Ms. Iti Dutta JUDGEMENT 1. Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereafter the SARFAESI Act) is at the centre of controversy in all but one of these writ pet .....

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s a matter of necessity, these writ petitions shall be governed by this common judgment and order. 2. Making a departure from the usual course of ascertaining the factual matrix of each writ petition first, I propose to record the submissions advanced in regard to the scope, effect and import of section 14 of the SARFAESI Act, the issues that would emerge for decision based thereon and my understanding of the law, and then I shall apply the law to each case separately. 3. While arguing W.P. 1182 .....

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as requested to assist the Bench as amicus curiae. Elaborate submissions have been advanced by Mr. Saha and I record my appreciation for the efforts put in by him. 4. According to Mr. Saha, prior to amendment of section 14, law was fairly well- settled that the CMM/DM was under no obligation to give any notice either to a borrower or to any third party and that an order passed thereunder followed a non-adjudicatory process, which was purely executionary in nature. Reference was made by him to th .....

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urged that the Supreme Court in such decision while holding that the district magistrate is to give an opportunity of hearing to the lessees and to pass orders in conformity with the principles of natural justice has not indicated that such right of hearing is available only to the lessees/tenants and it would be to the exclusion of all other categories of aggrieved persons. To put it differently, Harshad Govardhan Sondagar (supra) does not make any classification between a pre-mortgage lessee .....

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at, if it is held that only lessees/tenants would be entitled to approach the High Court either under Articles 226 or 227 while other categories of aggrieved persons must challenge the order of the CMM/DM before the tribunal under section 17, it would create an anomalous situation : one category of persons aggrieved by the same order would have to challenge the same under section 17 and if unsuccessful, by preferring an appeal under section 18, and if further aggrieved, by challenging the appell .....

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e read to include hearing of a borrower, particularly when power is conferred on the CMM/DM to decide whether taking over possession of the secured asset, on the basis of the affidavit filed by the secured creditor, ought to be ordered or not. 6. Referring to the point that a hearing ought to be granted by the CMM/DM before passing an order under section 14 of the SARFAESI Act, Mr. Saha adverted to the well-settled principle of law that unless a statute expressly or by necessary implication excl .....

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d AIR 1967 SC 1269 (State of Orissa v. Binapani Devi). 7. The decision reported in AIR 1978 SC 597 (Maneka Gandhi v. Union of India & ors.) was further referred to by Mr. Saha for the proposition that if the duty to give reasonable opportunity could be implied from the nature of functions being performed by the authority, fairness would demand that an opportunity to show cause ought to be extended. 8. The decisions reported in AIR 1966 SC 81 (Dwarka Nath v. Income Tax Officer), (1990) 2 SCC .....

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decision reported in (2008) 15 SCC 517 (N. Padmamma v. S. Ramakrishna Reddy), Mr. Saha argued that the procedures laid down for deprivation of a person's right to property must be scrupulously followed. 10. It was also argued relying on Harshad Govardhan Sondagar (supra), where sub-section (3) of section 14 had been considered in extenso, that an order passed by the CMM/DM under sub-section (1) of section 14 cannot be challenged before the tribunal under section 17 and the only remedy availa .....

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contended by Mr. Saha referring to Appendix IV appended to the Security Interest (Enforcement) Rules, 2002 (hereafter the 2002 Rules) that even before the amendments were effected in section 14, a person aggrieved had the right of approaching the relevant tribunal under section 17 before physical possession of the secured asset was taken. Measures under section 13(4) (excluding proceedings under section 14), according to him, commence with the issuance of a notice under Rule 8(1) of the 2002 Ru .....

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11) 2 SCC 782 (Kanaiyalal Lalchand Sachdev vs State of Maharashtra). In both the cases, orders of the concerned district magistrates were challenged before possession was actually taken and the Supreme Court held that the person aggrieved has a right to approach the tribunal under section 17 of the Act. Thus, the observation in the decision reported in (2013) 9 SCC 620 (Standard Chartered Bank v. V. Noble Kumar) that an application could be made under section 17 only after physical possession ha .....

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o section 14. 14. Mr. Basu, learned advocate for the petitioner in W.P. No. 11828(W) of 2015, Mr. Ray, learned advocate for the petitioner in W.P. No. 12210(W) of 2015, Mr. Kali, learned advocate for the petitioner in W.P. No. 11993(W) of 2015 and Mr. Bardhan, learned advocate for the petitioner in W.P. No. 11787(W) of 2015 have echoed the submissions of Mr. Saha without raising any substantial additional point. 15. Mr. Mantha, learned senior advocate for Andhra Bank in W.P. No. 11787 (W) of 201 .....

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ep in mind the objects thereof. It was further argued by him that the amendments introduced in section 14 are clarificatory in nature and without any clear contra intention being expressed, neither the amendments change the nature and purpose of the parent statute nor can the same be read in a manner to cut down the rigours envisaged in the SARFAESI Act. 16. Citing the Constitution Bench decision reported in (2005) 2 SCC 409 (Prakash Kumar v. State of Gujarat) and reading paragraph 14 thereof, M .....

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o achieve the objectives. 17. The decision reported in (2007) 2 SCC 230 (Raghunath Rai Bareja v. Punjab National Bank) was relied on for the proposition that should there be a conflict between law and equity, it is the law which must prevail in accordance with the Latin maxim 'dura lex sed lex'. 18. Citing the decision reported in (2002) 4 SCC 275 (Union of India v. Delhi High Court Bar Association), wherein the Recovery of Debts due to Banks and Financial Institutions Act, 1993 was held .....

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ons of the secured creditors could apply for redress of their grievance, the High Court in exercise of 226 jurisdiction ought not to interfere unless of course grave miscarriage of justice committed in course of the secured creditor proceeding against the borrower under section 13 and/or section 14 is manifest. 19. Mr. Mantha also relied on a Division Bench decision of the Bombay High Court in W.P. No. 11459 of 2014 (Kamal Jajoo v. Oriental Bank of Commerce) dated February 23, 2015 and a Full Be .....

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proceedings for the purpose of assisting the magistrate. In the latter decision, it was observed in paragraph 18 that no adjudication of rights is involved while the CMM/DM considers a request for assistance under section 14 of the SARFAESI Act. 20. The decision reported in AIR 2014 SC 525 (Arasmeta Captive Power Company Private Limited and anr. v. Lafarge India Private Limited) was cited by Mr. Mantha to remind the Court as to what constitutes the ratio decidendi of a decision and the ratio dec .....

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at even though an administrative order under section 14 would have the potential of visiting a borrower with civil consequences, the law takes sufficient care of the situation by providing a remedy before the tribunal under section 17 where such order could be challenged in accordance with law. 22. However, Mr. Mantha agreed that possession of a secured asset cannot be taken by the secured creditor by employing force, when faced with resistance from the borrower/occupant of the secured asset, ei .....

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ranscore v. Union of India), where recovery of possession without an adjudicatory process has been highlighted. According to him, despite the amendments in section 14, there has been no fundamental change in the scheme of the SARFAESI Act and the contention of Mr. Saha that section 14 contemplates a hearing, may not be correct. Referring to the decision in V. Noble Kumar (supra), wherein the amendments in section 14 were noticed, it was contended that the Supreme Court did not consider hearing t .....

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e. 24. Regarding the aspect of applicability of force by the authorised officer to take over possession of a secured asset when faced with resistance, Mr. Rai enlightened me that even the Reserve Bank of India (hereafter the RBI) had issued guidelines after the decision in Prakash Kaur (supra) vide circular dated April 24, 2008 expressing concern about the number of litigations filed against the banks in the recent past for engaging recovery agents who have purportedly violated the law. The bank .....

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area of ban. 25. Mr. Rai further brought to my notice a master circular issued by the RBI on July 1, 2014. A paragraph therefrom was referred to by him to emphasise that possession of a secured asset can only be taken over in accordance with the rule of law and not by brute force. The paragraph reads as follows: "Taking possession of property mortgaged/hypothecated to banks (xii) In a recent case which came up before the Honourable Supreme Court, the Honourable Court observed that we are go .....

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fter enforcing the security interest. It is therefore desirable that banks rely only on legal remedies available under the relevant statutes while enforcing security interest without intervention of the Courts." 26. My attention was further drawn by Mr. Rai to the decisions of the Supreme Court reported in (2008) 7 SCC 532 (ICICI Bank v. Shanti Devi Sharma) and (2012) 1 SCC 1 (Citicorp Maruti Finance Ltd. v. S. Vijayalaxmi). In the former decision, the Court considered it appropriate to rem .....

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ruck down. 27. Before concluding, Mr. Rai also cited the decision of a learned judge of the Kerala High Court reported in AIR 2009 Kerala 85 (Sundaram BNP Paribas Home Finance Ltd. v. State of Kerala) and relied on the following passage therefrom: "4. Section, 14 of the Act contains the provisions, by which, a secured creditor may invoke the police power of the State, to lawfully evict persons who continue in possession in spite of measure taken under Section 13 (4), following notice under .....

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possess is also expressly conferred. That such a power has not been conferred by the Parliament on a secured creditor under the Act and that it is never so intended, are explicit from the very making of Section 14." 28. Mr. Samrat Sen, learned senior advocate for the State in W.P. No. 10048(W) of 2015 referred to paragraph 20 of the decision in V. Noble Kumar (supra) where it has been observed that "visualising the possibility of resistance for such action, Parliament under Section 14 .....

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h 21 thereof where the Court observed that the language of section 14 "originally enacted purportedly obliged the Magistrate receiving a request under Section 14 to take possession of the secured asset and documents, if any, related thereto in terms of such request without any further scrutiny of the matter", Mr. Sen stressed on the word 'purportedly' and while citing Black's Law Dictionary for tracing its meaning, submitted that the amendments in section 14 definitely conv .....

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14 Calcutta 161 (M/s. Vision Comptech Integrators Ltd. v. State Bank of India & ors.) was also cited by Mr. Sen to contend that that section 14 proceedings were held to have partaken the character of quasi-judicial proceedings in view of Harshad Govardhan Sondagar (supra). 32. Based on the aforesaid, Mr. Sen expressed the view that a hearing before the CMM/DM would only be fair, proper and just. 33. Next, Mr. Sen sounded in agreement with Mr. Saha, Mr. Mantha and Mr. Rai with regard to the i .....

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r evicting people in unauthorised occupation of lands/premises, if the conditions therefor were satisfied. He also referred to the decisions of the Supreme Court reported in (2002) 4 SCC 134 (State of West Bengal v. Vishnu Narayan & Associates Pvt. Ltd.), (2013) 4 SCC 280 (State of Uttar Pradesh v. Hari Ram) and (2013) 12 SCC 631 (S.D. Bandi v. Divisional Traffic Officer, Karnataka State Road Transport Corporation) for the proposition of law that a person may be evicted by force by the State .....

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has no power to evict a borrower/occupant from the secured asset by employing recovery agents and/or by using force. 35. Mr. Bhattacharya, learned advocate for the petitioner in W.P. No. 10048(W) of 2015 adopted the submissions of Mr. Mantha and Mr. Rai that section 14 of the SARFAESI Act does not envisage hearing to a defaulting borrower who resists the attempt of the secured creditor to take peaceful possession of the secured asset and drives him to seek assistance of the CMM/DM. He placed the .....

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relied on the Division Bench decision of the Gujarat High Court, reported in AIR 2011 Gujarat 147 (IDBI Bank Limited v. District Magistrate, Navsari). It was also submitted relying thereon that measures taken under section 14 though amount to measures taken under section 13(4) of the Act, in view of sub-section (3) of section 14 such measures cannot be called in question before any court or tribunal and hence, an order under section 14 can only be challenged before the High Court under Article 2 .....

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d Ashraf & anr. v. Union of India & ors.) was cited by him, where the scope of jurisdiction of the magistrate exercising power under section 14 of the SARFAESI Act had been clearly explained. 39. The decision reported in (2010) 8 SCC 24 [Afcons Infrastructure Ltd. v. Cherion Varkey Construction Co. (P) Ltd.] was relied on by Mr. Bhattacharya to contend that interpretative tools could be used to set right the situation by adding or omitting or substituting the words in the statute when th .....

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he decision in Kamal Jajoo (supra) submitted that the same ought not to be relied upon for diverse reasons. First, it is based entirely on two earlier decisions of the Supreme Court reported in (2004) 4 SCC 311 (Mardia Chemicals Limited vs. Union of Inia) and Transcore (supra). Both were rendered prior to the amendments in section 14 of the SARFAESI Act and thus cannot be relied upon to decide the effect of such amendments or whether section 14 was amended to afford an opportunity of hearing to .....

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rrower has a right of hearing under section 17 of the SARFAESI Act even before physical possession of the secured asset is taken. 42. Insofar as K. Arockiyaraj (supra) is concerned, it was submitted by Mr. Saha that the issue involved there was entirely different. The matter was referred to the Full Bench to decide whether reference to chief metropolitan magistrate in section 14 of the SARFAESI Act would include a chief judicial magistrate or not. The observations made in paragraphs 15, 16 and 1 .....

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ari. According to him, this reasoning is erroneous. Section 14(1-A) does not permit any delegation of the order to be passed by the CMM/DM in terms of section 14(1), and what is permitted to be delegated is only the execution of the order and/or decision arrived at by the CMM/DM; thus, in terms of section 14(1-A), there is no delegation of the decision making process or the order to be passed and the only delegation is in respect of execution of the order passed or decision arrived at by the CMM .....

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distinguished from a non-adjudicatory process prevalent earlier? b. Is an order passed under section 14(1) of the SARFAESI Act not amenable to challenge in an application under section 17 in view of section 14(3) and the decision in Harshad Govardhan Sondagar (supra)? 44. One other question that would engage my consideration is, does section 13(4)(a) or any other provision of the SARFAESI Act confer power on the authorised officer/secured creditor to take possession of a secured asset by dispos .....

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t;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 transferred by the secured creditor under the provisions of this Act, the secured creditor may, for the purpose of taking possession or control of any such secured assets, request, in writing, the Chief Metropolitan Magist .....

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anied by an affidavit duly affirmed by the authorised officer of the secured creditor, declaring that- (i) the aggregate amount of financial assistance granted and the total claim of the Bank as on the date of filing the application; (ii) the borrower has created security interest over various properties and that the Bank or Financial Institution is holding a valid and subsisting security interest over such properties and the claim of the Bank or Financial Institution is within the limitation pe .....

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ons of sub-section (2) of Section 13, demanding payment of the defaulted financial assistance has been served on the borrower; (vii) the objection or representation in reply to the notice received from the borrower has been considered by the secured creditor and reasons for non-acceptance of such objection or representation had been communicated to the borrower; (viii) the borrower has not made any repayment of the financial assistance in spite of the above notice and the Authorised Officer is, .....

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of taking possession of the secured assets: Provided also that the requirement of filing affidavit stated in the first proviso shall not apply to proceeding pending before any District Magistrate or the Chief Metropolitan Magistrate, as the case may be, on the date of commencement of this Act. (1-A) The District Magistrate or the Chief Metropolitan Magistrate may authorise any officer subordinate to him,- (i) to take possession of such assets and documents relating thereto; and (ii) to forward s .....

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of this section shall be called in question in any court or before any authority." 46. Earlier to the amendments effected in section 14, what was required of the CMM/DM upon receiving an application from a secured creditor has been laid down in several decisions of the high courts of the country; I need not refer to all but two of them. 47. The first is the one reported in 2007 Cri. L.J. 2544 (M/s. Trade Well v. Indian Bank). There, the High Court of Bombay was concerned with the question w .....

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confirm that notice under Section 13(2) of the NPA Act is given and that the secured asset falls within the jurisdiction of CMM/DM before whom application under Section 14 is made. The bank and financial institution shall also consider before approaching CMM/DM for an order under Section 14 of the NPA Act, whether Section 31 of the NPA Act excludes the application of Sections 13 and 14 thereof to the case on hand. 2. CMM/DM acting under Section 14 of the NPA Act is not required to give notice e .....

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are fulfilled, he cannot refuse to pass an order under Section 14. 5. Remedy provided under Section 17 of the NPA Act is available to the borrower as well as the third party. 6. Remedy provided under Section 17 is an efficacious alternative remedy available to the third party as well as to the borrower where all grievances can be raised. 7. In view of the fact that efficacious alternative remedy is available to the borrower as well as to the third party, ordinarily, writ petition under Articles .....

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g an interim order which will protect the secured assets. Adjudication and final order should be left to the DRT as far as possible." 48. The other one is Mansa Synthetic Pvt. Ltd. (supra), cited by Mr. Sen, where the constitutional validity of section 14 was in question before the Division Bench of the Gujarat High Court. While declaring section 14 intra vires, the Court had the occasion to observe as follows: "15.2. ***** Thus, it is apparent that the role envisaged by the legislatur .....

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approached by a secured creditor, can undertake adjudication of any dispute between the secured creditor and the debtor or the person whose property is the secured asset of which possession is to be taken. If such adjudicatory powers were to be vested in the Authority, the Securitisation Act would have made a specific provision in this regard." "15.3. ***** under the guise of acting under Section 14 of the Securitisation Act the Authority cannot be permitted to usurp statutory powers .....

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s only rendering assistance to the secured creditor in exercising the right given to the creditor under section 13(4) and remedy of the aggrieved party is to file an appeal before the Debts Recovery Tribunal under section 17. It is clear that under sub-sections (2), (3) and (4) of section 17 of the Securitisation Act, the statute has provided a complete code, including the powers to the Tribunal to declare any of the measures taken by the secured creditor under section 13(4) of the Securitisatio .....

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n 13(4) of the Act. After 60 days' notice as prescribed under Section 13(2), secured creditor can approach the Magistrate for taking possession of the land. Reading Section 13(4) and Section 14 of the Act in conjunction with each other makes it clear that the source of power to take possession of the secured assets of the borrower can be traced in Section 13(4) of the Act and not under Section 14 of the Act, which has been indicated as an aid for execution of the decision taken by the secure .....

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the constitutionality of various provisions of the SARFAESI Act were under challenge till the decision in V. Noble Kumar (supra), the law has clearly been laid down that the enactment in question envisages enforcement of security interest created in favour of a secured creditor without the intervention of courts and tribunals and an adjudicatory process qua the points raised by the borrower against the secured creditor taking possession of the secured asset could commence only after possession .....

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he same is relatable to assistance to be rendered by the CMM/DM to a secured creditor in taking possession of a secured asset. The marginal note as in the original text of section 14 exists even after the amendment thereof. I shall refer to some decisions of the Supreme Court at a later part of this judgment as to whether the 'marginal note' of a section can be referred to as an aid for interpreting the section, should any difficulty arise because of ambiguity. 53. An effort was made to .....

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ficer of a secured creditor to file an affidavit. That the affidavit must touch upon the 9 (nine) points indicated in clauses (i) to (ix) of the first proviso and the satisfaction of the CMM/DM in regard to the contents of such affidavit is condition precedent before passing suitable order, as ordained by the second proviso, is clearly intended to prevent unscrupulous secured creditors wreaking havoc by applying under section 14 for taking possession of a particular property identifying it as a .....

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of an order under section 14 the authorised officer is found to have filed a false affidavit, he may be exposed to prosecution under section 340, Criminal Procedure Code. Permitting the CMM/DM to delegate the power of taking possession of the secured asset seems to me to be the other reason for incorporating an additional sub-section, i.e. (1-A). Going by the language of un-amended section 14, it would appear that the CMM/DM had to do the desk work and the field work as well for taking possessi .....

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/administrative work thereby leading to likely inconvenience in faithfully carrying out the specified duty. Judicial interference in respect of pre-amended section 14 orders passed by the CMM/DM authorising the authorised officers of secured creditors to take possession of the secured assets with the assistance of the local police, instead of the CMM/DM himself taking possession in terms of the statutory mandate, is not uncommon. The last proviso to sub-section (1) is conceived to save applicati .....

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act done by him in pursuance thereof. These being the nature of amendments, I am inclined to the view that the entire sub-stratum of section 14 remains unchanged even after the amendments made therein. 54. It has been argued by Mr. Saha that the requirement to comply with natural justice has neither been expressly excluded nor excluded by implication and, therefore, natural justice has to be read into section 14. It has also been contended that since the order of the CMM/DM under section 14 for .....

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till such time possession of the secured asset is taken by the secured creditor after serving the requisite notices and responding to the objection/representation that may be lodged/preferred by the borrower under section 13(3A). That Mardia Chemicals (supra) and Transcore (supra) are pre-section 14 amendment decisions, make no difference. There is no fundamental change in the object and purposes of the SARFAESI Act even after the amendments. Since the need for a borrower to draw legal assistanc .....

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ance with natural justice at the stage when section 13(4) or 14 operates. Paragraph 36 of V. Noble Kumar (supra) explains that there are 3 (three) methods for taking possession of a secured asset. In view thereof, section 14 cannot stand independent of sub-section 13(4). If a borrower has no right of hearing when the secured creditor takes possession under section 13(4), a fortiori, no hearing can be demanded by a borrower when he succeeds in resisting possession being gained over by the authori .....

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e need to amend section 14, may be for reasons indicated by me in paragraph 53 supra. If it were the intention of the legislature to extend opportunity of hearing to a borrower before the CMM/DM, it was free to do so. Advisedly, the legislature did not do so, for, it would have militated against the scheme of the SARFAESI Act and more particularly section 13 thereof. It is implicit in the scheme of the SARFAESI Act that natural justice only to a limited extent is available and not beyond what is .....

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n for the purpose of proper construction of section 14. That the CMM/DM does not discharge a quasi-judicial duty can well be inferred because he is not supposed to decide any contentious point but is mandated to assist secured creditor in taking possession of secured asset (emphasis supplied). Referring to the decision reported in 1954 SCR 444 (CIT v. Bhogilal Laherchand), it has been argued by Mr. Saha that marginal notes in an Indian statute cannot be referred to for the purpose of construing .....

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reme Court noticed that the marginal note was changed so as not to confine applicability of the relevant section to non-residents but also to residents. The decisions in Ahmedbhai Umerbhai (supra) and Bhogilal Laherchand (supra) do not lay down the law that a marginal note can never be looked into, even in case of doubt or ambiguity. 58. That a marginal note can be considered as an aid for interpreting the section of an enactment has been repeatedly held by the Supreme Court at least from the se .....

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e Electricity Board) noted: "18. ***** It is true that the marginal note cannot afford any legitimate aid to a construction of a section, but it can certainly be relied upon as indicating the drift of the section, or, to use the words of Collins M. R. in Bushell v. Hammond, (1904) 2 KB 563 'to show what the section was dealing with'." 61. Yet again, Hon'ble E.S. Venkataramaih, J. (as His Lordship then was) in the decision reported in 1981 Supp SCC 87 (S.P. Gupta v. Union of .....

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o be attached to a marginal note in a statute. If the relevant provisions in the body of the statute firmly point towards a construction which would conflict with the marginal note, the marginal note has to yield. If there is any ambiguity in the meaning of the provisions in the body of the statute, the marginal note may be looked into as an aid to construction." 62. The same view has been reiterated in several subsequent decisions of the Supreme Court delivered in this century, viz. (2004) .....

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of possession of a secured asset and/or documents in relation thereto to ultimately enable the secured creditor to put up the secured asset for sale and to recover its dues. 64. I am inclined to the view that whichever way one sees section 14, either with or without the marginal note, there is no reason whatsoever for not giving to the plain words of the section the meaning that on the face of it they bear. 65. Before concluding my discussion on the point, the observation made in paragraph 20 o .....

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court", it must be held that they derive their powers from the State and are exercising the judicial powers of the State. 67. First, what constitutes the 'judicial power of the State needs to be understood. I can do no better but refer to two other Constitution Bench decisions of the Supreme Court. 68. In the decision reported in AIR 1965 SC 1595 (Associated Cement Companies Ltd. v. P.N. Sharma), the principal point of law which arose in the civil appeal by special leave was whether the .....

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reaching their administrative decisions, administrative bodies can and often do take into consideration questions of policy. It is not unlikely that even in this process of reaching administrative decisions, the administrative bodies of authorities are required to act fairly and objectively and would in many cases have to follow the principles of natural justice; but the authority to reach decisions conferred on such administrative bodies is clearly distinct and separate from the judicial power .....

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tate, and on considerations of policy, the State transfers its judicial functions and powers mainly to the Courts established by the Constitution; but that does not affect the competence of the State, by appropriate measures, to transfer a part of its judicial powers and functions to tribunals by entrusting to them the task of adjudicating upon special matters and disputes between parties. It is really not possible or even expedient to attempt to describe exhaustively the features which are comm .....

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the dispute necessarily involves a decision on the rights and obligations of the parties to it and the authority is called upon to decide it, there is an exercise of judicial power. ***" 70. Reference in this connection may also be made to the decision reported in AIR 2005 SC 3549 (Management Committee, Montfort Senior Secondary School v. Vijay Kumar) where meaning assigned to the words 'judicial', 'judicial power' and 'judicial authority' in certain foreign decisio .....

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r affecting the rights of others." 15. In Huddart Parker and Co. v. Moorehead (1909) 8 CLR 330 (E) judicial powers were defined as under :- "The words 'judicial power' as used in section 71 of the Constitution mean the power which every sovereign authority must of necessity have to decide controversies between its subjects or between itself and its subjects whether the rights relate to life, liberty or property. The exercise of this power does not begin until some tribunal whic .....

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ssary to be strictly a Court." In Royal Aquarium and Summer and Winter Garden Society Ltd. v. Parkinson (1892 (1) QB 431) dealing with the meaning of the word 'judicial' it was observed as under : "The word 'judicial' has two meanings. It may refer to the discharge of duties exercisable by a Judge or by Justices in Court or to administrative duties which need not be performed in court, but in respect of which it is necessary to bring to bear a judicial mind, that is, a .....

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pertaining to a judge; pertaining to the administration of justice, proper to a Court of law. The word 'judicial' is used in two senses. The first to designate such bodies or officers 'as have the power of adjudication upon the rights of persons and property. In the other class of cases it is used to express an act of the mind or judgment upon a proposed course of official action as to an object of corporate power, for the consequences of which the official will not be liable, althou .....

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the definition quoted, all the attributes of judicial power are plainly present.' 'Judicial power' as defined by Chief Justice Griffith in Huddart Parker and Co. v. Moorehead (1909) 8 CLR 330 at 357 approved by the Privy Council in Shell Company of Australia v. Federal Commr. of Taxation, (1931) AC 275 at p. 283 means the power which every sovereign authority must of necessity have to decide controversies between its subjects, or between itself and its subjects, whether the rights r .....

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r the propriety of doing an act is the subject-matter of adjudication. (Grider v. Tally 54, Am Rep 65). A judge exercises 'judicial powers' not only when he is deciding suits between parties, but also when he exercises disciplinary powers which are properly appurtenant to the office of a judge. (A.G. of Gambia v. N' Jie, 1961 AC 617)." 71. My understanding of the law is that the judicial power of the State for administration of justice to its subjects can exclusively be vested i .....

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ties to the dispute and often with the assistance of argument by or on behalf of the parties on the evidence; (3) if the dispute between them is a question of law, the submission of legal argument by the parties, and (4) a decision which disposes of the whole matter by a finding upon the facts in dispute and application of the law of the land to the facts so found, including where required a ruling upon any disputed question of law, seems to have been accepted by the Supreme Court itself in Bhar .....

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he ratio of the decision is evident from observations made in paragraph 25 thereof, where it has been clearly held that the legal niceties of the transaction between the secured creditor and the borrower are not to be examined by the CMM/DM. If indeed a lis were involved, it would not be open to the CMM/DM to say that it would examine factual aspects only and not the legal niceties. Since the CMM/DM does not decide any lis between parties upon receiving evidence from them, the judicial power of .....

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to be noted. They are: (i) whether the provisions of the SARFAESI Act have in any way affected the right of a lessee to remain in possession of the secured asset during the period of a lease ? (paragraph 15). (ii) whether the provisions of the SARFAESI Act have the effect of terminating these valid leases made by the borrower or the mortgagor made in accordance with the provisions of the Transfer of Property Act? (paragraph 18). (iii) what is the nature of the right of the lessee and as to when .....

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vi) whether a lessee has any remedy by way of an appeal under Section 17 of the SARFAESI Act when the secured creditor attempts to take over possession of the secured asset which is in possession of the lessee? (paragraph 30). (vii) whether the tenants have remedies under the tenancy law concerned? (paragraph 35). 76. Proceeding to answer the first four questions of law and the last one set out above, the Supreme Court held that where the lawful possession of the secured asset is not with the bo .....

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on 13 thereof, so long as a lease of an immovable property does not get determined, the possession of the lessee is lawful and such lawful possession of a lessee has to be protected by all courts and tribunals. The Court further held that possession of the secured asset from a lessee in lawful possession under a valid lease is not required to be taken under the provisions of the SARFAESI Act and the CMM/DM does not have any power under section 14 of the SARFAESI Act to take possession of the sec .....

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e under sub-section (2) of section 13 of the SARFAESI Act by the borrower. It was also held that in view of section 34 of the SARFAESI Act, recourse to civil courts would not be available. 77. Question (v) was answered by the Court by holding as follows: "28. A reading of sub-rules (1) and (2) of Rule 8 of the Security Interest (Enforcement) Rules, 2002 would show that the possession notice will have to be affixed on the outer door or at the conspicuous place of the property and also publis .....

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ct of the secured asset in respect of which he is the lessee, from the possession notice which is delivered, affixed or published in sub-rule (1) and sub-rule (2) of Rule 8 of the Security Interest (Enforcement) Rules, 2002, he may either surrender possession or resist the attempt of the secured creditor to take the possession of the secured asset by producing before the authorised officer proof that he was inducted as a lessee prior to the creation of the mortgage or that he was a lessee under .....

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to file an application before the Chief Metropolitan Magistrate or the District Magistrate under Section 14 of the SARFAESI Act and state in the affidavit accompanying the application, the name and address of the person claiming to be the lessee. When such an application is filed, the Chief Metropolitan Magistrate or the District Magistrate will have to give a notice and give an opportunity of hearing to the person claiming to be the lessee as well as to the secured creditor, consistent with the .....

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on of the secured asset to the secured creditor. But in case he comes to the conclusion that there is in fact no valid lease made either before creation of the mortgage or after creation of the mortgage satisfying the requirements of Section 65-A of the Transfer of Property Act or that even though there was a valid lease, the lease stands determined in accordance with Section 111 of the Transfer of Property Act, he can pass an order for delivering possession of the secured asset to the secured c .....

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d before any court or any authority. But this Court has repeatedly held that statutory provisions attaching finality to the decision of an authority excluding the power of any other authority or court to examine such a decision will not be a bar for the High Court or this Court to exercise jurisdiction vested by the Constitution because a statutory provision cannot take away a power vested by the Constitution. ...... In our view, therefore, the decision of the Chief Metropolitan Magistrate or th .....

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er the said sub-section 'any person (including borrower)', aggrieved by any of the measures referred to in sub- section (4) of Section 13 taken by the secured creditor or his authorised officer under the chapter, may apply to the Debts Recovery Tribunal having jurisdiction in the matter within 45 days from the date on which such measures had been taken. We agree with Mr Vikas Singh that the words 'any person' are wide enough to include a lessee also. It is also possible to take a .....

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restore possession of the secured asset to the borrower only and not to any person such as a lessee. Hence, even if the Debts Recovery Tribunal comes to the conclusion that any of the measures referred to in sub-section (4) of Section 13 taken by the secured creditor are not in accordance with the provisions of the Act, it cannot restore possession of the secured asset to the lessee. Where, therefore, the Debts Recovery Tribunal considers the application of the lessee and comes to the conclusion .....

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Section 17 of the SARFAESI Act to the lessee to protect his lawful possession under a valid lease." 79. Before proceeding further, section 34 of the SARFAESI Act may be considered. It ordains that : "34. Civil court not to have jurisdiction.-No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any .....

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can also be invoked, where for example, the action of the secured creditor is alleged to be fraudulent or his claim may be so absurd and untenable which may not require any probe whatsoever or to say precisely to the extent the scope is permissible to bring an action in the civil court in the cases of English mortgages.***" 81. One must remember that Harshad Govardhan Sondagar (supra) found that there is no remedy available under section 17 of the SARFAESI Act to the lessee to protect his .....

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eing determined by it, is the remedy by way of a suit barred insofar as the lessee is concerned? Considering the language of section 34 read with sub-section (3) of section 17 together with paragraph 51 of Mardia Chemicals (supra), I am inclined to the opinion that a suit instituted by such a lessee against a secured creditor seeking to dispossess the former may not be totally barred. 83. The decision in Harshad Govardhan Sondagar (supra) no doubt bears reflection of a new line of judicial thoug .....

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t may, it has been laid down in umpteen number of Supreme Court decisions that a decision is an authority for what it decides and not what can logically be deduced therefrom, and also that an additional or different fact may make a world of difference between conclusions in two cases even when the same principles are applied in each to similar facts. 85. I had the occasion to consider Harshad Govardhan Sondagar (supra) in M/s. Vision Comptech Integrators Ltd. (supra) and was of the opinion that: .....

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the borrowers. The question that arose for decision there was whether a section 17 application at the instance of a borrower would lie before he lost possession of the secured asset. Paragraph 15 is not the ratio of the decision but in the nature of a passing observation considering Harshad Govardhan Sondagar (supra) which, as observed above, read natural justice in section 14. However, there can be no doubt that the decision in Harshad Govardhan Sondagar (supra) turns on its facts and has no a .....

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a tenant/purchaser of a mortgaged property after creation of mortgage. Most importantly, I have not found any declaration of law in such decision that in every case while the CMM/DM is in seisin of a section 14 application, the borrower or the person in possession of a secured asset has to be put on notice. 87. Concurring with the relevant observations in Kamal Jajoo (supra) and K. Arockiyaraj (supra), the first question formulated above in paragraph 43 supra, accordingly, is answered in the neg .....

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CMM/DM under section (1-A), or (iii) the "steps" and/or "force" employed in sub-section (2), or (iv) any one/two or all of them? 89. The word "act" taking within its fold all the three situations, would flow from a literal reading of section 14. If indeed that is the correct approach, no order for taking possession passed by the CMM/DM could be challenged in an application under section 17 before the specified forum. However, holding an order for taking possession .....

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SCC 366 (Indian Overseas Bank v. Ashok Saw Mill), it was held by the Court as follows: "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 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 affected by an action under Section .....

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nt, measures other than taking the possession of the secured asset are possible under Section 13(4). Alienating the asset either by lease or sale, etc. and appointing a person to manage the secured asset are some of those possible measures. On the other hand, Section 14 authorises the Magistrate only to take possession of the property and forward the asset along with the connected documents to the borrower (sic the secured creditor). Therefore, the borrower is always entitled to prefer an 'a .....

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ithout resorting to such a process obtaining of the possession of a secured asset is always a measure against which a remedy under Section 17 is available." 92. Kanaiyalal Lalchand Sachdev (supra) and V. Noble Kumar (supra) are authorities for the proposition that an order under section 14 of the SARFAESI Act is open to challenge under section 17. There can be no warrant for an assumption that the Supreme Court in deciding the relevant civil appeals did not notice sub-section (3) of section .....

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approach to interpretation is necessary and ought to be adopted while reading section 14. After all, it is the context in which the words are used that is of significance and relevance for deciding an issue. One cannot lose sight of the law authorising the CMM/DM to make a choice of the subordinate officer to whom the power of taking possession may be delegated, as well as the choice of the CMM/DM or the officer authorised to take such "steps" or to employ such "force" as may .....

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d under section 14(1) would not be open to challenge except before the High Court under Article 226 or before the Supreme Court under Article 32. The CMM/DM has been given absolute discretion to choose his subordinate officer, who would execute the order and take possession of the secured asset. In terms of sub-section (2), the CMM/DM is also authorised to take or cause to be taken such steps and use or cause to be used such force as may, in his opinion, be considered necessary. Take an instance .....

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th to give effect to an order passed under sub-section (1) without their (reasonable) action being amenable to challenge before any court/tribunal, except the Supreme Court/High Court, and can never be read as foreclosing a challenge to such order, on merits, before the specified forum under section 17. 94. The decisions in IDBI Bank Limited (supra) and in Mansa Synthetics Pvt. Ltd., proceeding to lay down the law that an order under section 14(1) of the SARFAESI Act is not amenable to a challen .....

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law. 96. A side question that emerges is, what is the remedy available to a secured creditor if its application under section 14 stands rejected? The plain language of section 17 of the SARFAESI Act does not permit a secured creditor to approach the relevant tribunal thereunder. Such an order of rejection, necessarily, is open to judicial review under Article 226 of the Constitution not because of sub-section (3) of section 14 but because of the reason in the preceding sentence. 97. Moving on to .....

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ion. The observation that banks cannot employ goondas for taking possession by force was not made upon a finding that goondas had in fact been employed by the appellant. It is trite that a decision on any point that has not been argued does not constitute a binding precedent. I would have certainly kept Prakash Kaur (supra) out of my consideration but for the subsequent decisions of the Supreme Court and the guidelines issued by the RBI following the observations made therein, which have been pl .....

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nt of preparation of notice in Appendix IV, affixation thereof and publication in newspapers, the Rules provide no guidelines regarding the procedure for taking possession. Therefore, section 13 and section 14 are the only relevant sections. It is noteworthy that while sub-section (2) of section 14 permits the CMM/DM to take or cause to be taken such steps and use or cause to be used such force as may, in his opinion, be necessary, sub-section (4) of section 13 or any other sub- section thereof .....

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dira Nehru Gandhi v. Raj Narain). It is thus plain and clear that a secured creditor is not authorised to exert force while taking possession and that is left only to the CMM/DM, as the case may be, in the sound exercise of his discretion under sub-section (2) of section 14. Sundaram BNP Paribas Home Finance Ltd. (supra) expresses the same view. If on a request made by the authorised officer to vacate the secured asset the borrower or any person in occupation thereof does not voluntarily surrend .....

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taken by the authorised officer of the secured creditor (United Bank of India, Kolkata Branch). 103. In W.P. No. 11828(W) of 2015 dated June 9, 2015 (hereafter the former writ petition) filed by Jawahar Singh (hereafter Jawahar), an order dated January 22, 2015 issued by the District Magistrate, 24 Parganas (South) is under challenge basically on the ground that the application under section 14 of the SARFAESI Act having been filed sometime in 2014, the order of the district magistrate ought to .....

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arganas (South). 105. There is no indication in the former writ petition of the secured asset having been transferred in favour of any third party. The impression that one derives on reading thereof is that possession of the flat (secured asset) was with Jawahar and that on the basis of the order impugned dated January 22, 2015 passed by the District Magistrate, 24 Parganas (South), Jawahar was forcefully dispossessed and the flat put under lock and key. 106. This writ petition cannot be conside .....

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mar that after such purchase, his name has been mutated in the records of the Kolkata Municipal Corporation and that he has also been paying property tax in respect of such flat. It has also been claimed in paragraph 7 of the latter writ petition that while Amar was away from the flat on May 18, 2015, the secured creditor removed the padlock put by Amar on the main door and replaced the same by another padlock and since then Amar has been forced to stay away from his flat. 108. Having contacted .....

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a prayer has been made by Amar for restoration of possession. 109. It is clear from the demand notice dated January 15, 2014 issued by the bank under section 13(2) of the SARFAESI Act to Jawahar that the account had been classified as non-performing asset on June 30, 2011 whereas the deed of conveyance between the vendor (Jawahar) and the purchaser (Amar) was executed on December 15, 2011. If at all, Amar is a purchaser of mortgaged property. 110. Jawahar, it appears, had approached this Court .....

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fruitful. While granting liberty to the bank to proceed in accordance with law for selling the flat in question for recovering its dues by fresh auction, Jawahar was also granted the liberty to approach the appropriate forum if he felt aggrieved by such auction to be conducted by the bank. 111. Jawahar has now filed the former writ petition challenging the order dated January 22, 2015, which is definitely a new cause of action. However, having regard to the fact that the earlier challenge to the .....

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against the order dated January 22, 2015, in accordance with the order of the Hon'ble Division Bench as well as according to law. No case for interference has thus been set up by Jawahar. W.P. No. 11828(W) of 2015 stands dismissed, without order for costs. 112. Insofar as the latter writ petition is concerned, Amar is not entitled to any relief for restoration of possession as claimed by him. Admittedly, he is not a pre- mortgage lessee/tenant but is the purchaser of a property which was mo .....

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on'ble Division Bench issues fresh sale notice, Amar shall be at liberty to pursue his remedy in accordance with law. 113. W.P. No. 12210(W) of 2015 stands disposed of, without order for costs. W.P. 11993(W) of 2015 114. The order passed by the District Magistrate, 24 Parganas (North) dated March 20, 2015, on an application filed by the authorised officer of State Bank of India, Nimpith Branch under section 14 of the SARFAESI Act is under challenge in this writ petition dated June 2, 2015, p .....

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rectors. The three petitioners claim to be his son, widow and daughter. The secured asset appears to be an immovable property being land measuring 3 cottahs 5 chittacks 19 sq. ft. within P. S. Khardah in the District of 24 Parganas (North). 116. The order impugned has been challenged basically on the ground that the same is cryptic and without reasons. 117. The order impugned refers to the affidavit that was filed by the authorised officer, Nimpith Branch and the requisite satisfaction of the di .....

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at liberty to approach the tribunal under section 17 of the SARFAESI Act in accordance with law. If approached, the tribunal shall be at liberty to examine the matter in depth and to ascertain whether a case for exercise of power under sections 13 and 14 had indeed been set up or not and further as to whether taking of possession by the authorised officer of the secured creditor has resulted in any grave miscarriage of justice or not. 119. W.P. 11993(W) of 2015 stands dismissed without costs. I .....

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produced by Mr. Mantha appearing for the bank and has been taken on record. It is revealed therefrom that the bank was permitted to take physical possession of the secured asset i.e. a flat in the building "Shyam Kunj" at 12/C, Lord Sinha Road, P.S. Shakespeare Sarani, Kolkata with police help, if necessary. 122. The point that has been raised on behalf of the petitioner is that there was no affidavit before the Chief Metropolitan Magistrate, Calcutta filed in terms of the first provi .....

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in questioning such order before the tribunal under section 17 in terms of the observations made above. W.P. 11787 (W) of 2015 is not entertained and it stands disposed of, without order for costs. 124. Since possession has been taken over on May 20, 2015 and this writ petition was presented on June 8, 2015, the period during which it was pending before this Court shall be excluded for computing the period of limitation and the tribunal may, in its discretion, grant the benefit of section 14 of .....

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n Magistrate, Kolkata on an application under section 14 of the SARFAESI Act and an application for modification of the order dated February 7, 2015 respectively, filed the by State Bank of India, SME Branch, Howrah. The tribunal held that the question of tenancy can only be decided by the Chief Metropolitan Magistrate in view of the decision in Harshad Govardhan Sondagar (supra) and that the section 17 application was not maintainable before it. 126. In my view, for the reasons indicated above, .....

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ordingly stands set aside with the result that application being no. SA/37/15 would stand revived. The tribunal shall proceed to consider and dispose of such application in accordance with law as early as possible. 127. W.P. No. 5651(W) of 2015 stands allowed to the extent indicated above, without order for costs. W.P. No. 10048(W) of 2015 128. The petitioner being the secured creditor had applied before the District Magistrate, 24 Parganas (South), for taking possession of a secured asset being .....

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st on May 5, 2015. 130. Mr. Bhattacharya referred to page 28 of the writ petition, being a letter dated March 25, 2008 written by a learned advocate engaged by the respondent no. 6 and contended that such letter clearly indicates receipt of notice under section 13(2) of the SARFAESI Act by the respondent no. 6. Based thereon, he contended that the district magistrate erred in law in refusing to grant assistance under section 14 on the ground of non-service of notice under section 13(2) of the Ac .....

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to in the first proviso to amended section 14. However, an affidavit appears to be on record which, however, does not contain the letter dated March 25, 2008 referred to above. Despite the letter dated March 25, 2008 not being part of the affidavit, notices dated February 1, 2008 under section 13(2) of the Act addressed to the respondents 6 and 7 are part of such affidavit, which were sent by registered post with A.D. Although photocopies of some A.D. cards are part of the affidavit, it cannot .....

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