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2011 (1) Supreme 655
SUPREME COURT OF INDIA
D.K. Jain and H.L. Dattu, JJ.
Kanaiyalal Lalchand Sachdev & Ors. — Appellants
versus
State of Maharashtra & Ors. — Respondents
Criminal Appeal Nos. 338-340 of 2011
(Arising out of S.L.P. (Crl.) Nos.4436-4438 of 2009)
Decided on : 7-2-2011
(2008) 1 SCC 125; (2004) 4 SCC 311; (2010) 8 SCC 110 – Relied upon
(b) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – Sections 14 and 17 – An action under Section 14 of the Act constitutes an action taken after the stage of Section 13(4) – Therefore an appeal against such action will lie u/s 17 before DRT. (Para 20)
(2009) 8 SCC 366 – Relied upon
(c) Constitution of India – Article 226/227 – Alternative remedy – Ordinarily relief under Articles 226/227 is not available if an efficacious alternative remedy is available to any aggrieved person. (Para 21)
(2003) 3 SCC 524; (2003) 6 SCC 675; (2006) 9 SCC 252; (2009) 1 SCC 168 – Relied upon
Facts of the case:
1. Respondent No. 3, the State Bank of India, had advanced a loan of ‘4,50,00,000/- to appellant No. 6 on an equitable mortgage by deposit of the title deeds of certain properties, subject matter of these appeals, on 6th February, 2006. Appellant Nos.1 to 5 and one Mr. Lalchand Sachdeo stood as personal guarantors to the said loan.
2. On default of re-payment of loan amount, respondent No. 3 issued a notice under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Second) Ordinance, 2002 and its officers dispossessed the appellants of one of the secured properties.
3. The appellants filed a writ petition contending that the notice issued by respondent No. 3 was illegal, no action could be taken in pursuance thereof, and if at all, the respondent wanted to take any action, it was required to approach the Chief Metropolitan Magistrate under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Thereupon respondent No. 3 withdrew the notice dated 18th November, 2006 without prejudice to its rights and returned the possession of the said property to the appellants, on the appellants and all adult members furnishing an undertaking to the effect that they shall not alienate, encumber, transfer, dispose of and/or create any third party interest in the said premises for a period of six months. The writ petition was dismissed.
4. Thereafter respondent No. 3 filed application before the Chief Metropolitan Magistrate under Section 14 of the Act for taking possession of the secured assets. The Magistrate allowed the said application and directed the Assistant Registrar to take possession of the mortgaged properties after issuing notice to the appellants.
5. Appellants again approached the High Court. The High Court dismissed the said writ petition, on the ground of availability of alternative remedy under Section 17 of the Act. Nevertheless status quo was directed for a period of 10 weeks so as to enable the appellants to approach the Debts Recovery Tribunal under Section 17 of the Act.
6. Thereafter, the appellants filed Criminal Application before the High Court seeking an extension of the status quo period which was rejected.
Finding of the Court:
Impugned judgment cannot be flawed.
Key Points: - The Court held that ordinarily relief under Articles 226/227 is not available where an efficacious alternative remedy exists under Section 17 of the Act. (!) (!) - Actions taken under Section 14 constitute actions after Section 13(4) and are subject to appeal under Section 17 before the DRT; thus the remedy is efficacious and available. (!) - The Debts Recovery Tribunal has jurisdiction to consider whether measures under Section 13(4) are compliant with the Act and to restore possession or set aside actions if necessary. (!) (!) (!) - Rule 8 (and Rule 4) of the 2002 Rules govern possession of assets, with the noted relevance that Rule 4 may not apply to immovable assets in this case. (!)
JUDGMENT
D.K. Jain, J. —
Leave granted.
2. Challenge in these appeals, by special leave, is to the judgments and orders dated 28th April, 2009 and 1st July, 2009 delivered by the High Court of Bombay in W.P. No. 707 of 2009, and Criminal Application No. 178 of 2009 in W.P. No. 707 of 2009, respectively whereby it has dismissed the writ petition filed by the appellants herein, and also declined to extend the status-quo order granted by it to them.
3. Briefly stated, the facts, material for adjudication of the present appeals, may be stated thus:
Respondent No. 3, viz. the State Bank of India had advanced a loan of ‘4,50,00,000/- to appellant No. 6 on an equitable mortgage by deposit of the title deeds of certain properties, subject matter of these appeals, on 6th February, 2006. Appellant Nos.1 to 5 and one Mr. Lalchand Sachdeo stood as personal guarantors to the said loan.
4. On default of re-payment of loan amount, respondent No. 3 issued a notice under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Second) Ordinance, 2002 on 18th November, 2006. On 12th February, 2007, the officers of respondent No. 3 dispossessed the appellants of one of the secured properties viz. T-125, CTS, No. 1729. Being aggrieved, the appellants filed a writ petition being CRL. W.P. No.286 of 2007 before the Bombay High Court, inter-alia, contending that the notice issued by respondent No. 3 was illegal, no action could be taken in pursuance thereof, and if at all, the respondent wanted to take any action, it was required to approach the Chief Metropolitan Magistrate under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “the Act”).
5. Before the High Court, respondent No. 3 offered to withdraw the notice dated 18th November, 2006 without prejudice to the rights and contentions advanced by them, and to return the possession of the said property to the appellants, subject to the appellants and all adult members furnishing an undertaking to the effect that they shall not alienate, encumber, transfer, dispose of and/or create any third party interest in the said premises for a period of six months. Accepting the statement made on behalf of respondent No. 3, the High Court dismissed the writ petition vide order dated 7th March, 2007.
6. Thereafter, on 11th April, 2007 respondent No. 3 issued to the appellants a notice under Section 13(2) of the Act. The appellants replied to the said notice on 23rd May, 2007. Vide letter dated 29th May, 2007, respondent No. 3, communicated its reasons for not accepting the reply. Subsequently, respondent No. 3 issued a public notice in newspapers, informing the appellants of the issuance of notice under Section 13(2) of the Act.
7. In pursuance thereof, respondent No.3, filed C.C. No. 223/M/2008 before the Chief Metropolitan Magistrate under Section 14 of the Act for taking possession of the secured assets. Vide order dated 3rd February, 2009, the Magistrate allowed the said application and directed the Assistant Registrar, Kurla Centre of Courts, to take possession of the mortgaged properties after issuing notice to the appellants.
8. Vide notice dated 27th February, 2009, the Assistant Registrar, directed the appellants to hand over the possession of the mortgaged properties to respondent No. 3 within 15 days from the receipt of the said notice. At this juncture, it would be expedient to extract the relevant portions of the said notice:
“Whereas, the Chief Metropolitan Magistrate, Esplanade, Mumbai has passed the following order on 3.2.2009 on the application filed before him by State Bank of India, Mazda Complex, Parsi Agari Lane, Thana (W) 400601 through its Authorized Officer Fazlur Rehman Sheikh.
ORDER
The Application is allowed. Asst. Registrar, Mr. P.A. Tendolkar, Kurla Centre of Court after issuing notice of taking possession of the secured assets.................................... .
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