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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
AHSANUDDIN AMANULLAH, B. S. BHANUMATHI, JJ.
M/s. Mangalagiri Textile Mills Private Limited, Rep. by its Chairman, Dr. Goli Nagasaina Rao - Appellant
Vs.
The State Bank of India & Anr. - Respondent
WRIT PETITION No. 30161 of 2021
Decided On : 18-02-2022
Constitution of India, 1950 - Article 226 and 227 - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 –Section 14, 14(1), 23(1) - Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Section 20 - Security Interest (Enforcement) Rules, 2002 – Powers of Advocate Commissioner - Non-Performing Asset - Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset - Petition is filed under Section 14(1) of SARFAESI Act to appoint an Advocate Commissioner to take possession of petition schedule property and to deliver possession to petitioner bank - Whether instant writ petition ought to be entertained - Whether time-limit under Section 14 of Act of 30 days to pass an order, extendable in aggregate to 60 days, is mandatory or directory - Whether, once time specified in warrant had elapsed, could possession of property in question still be taken over, under same warrant - Whether there is any requirement or justification to fix a time limit by CMM for taking possession of secured asset while exercising jurisdiction under Section 14 of SARFAESI Act.
Finding of the Court:
Court direct that status quo ante as be restored forthwith - Necessary consequences in law shall entail - SBI is at liberty to approach CMM concerned seeking an appropriate order to extend time for taking possession of secured asset within four weeks from today - CMM shall proceed further in accordance with law, after giving both parties an opportunity of hearing - All questions of fact and law in this regard, and rights and contentions thereto of both sides, remain open for consideration by learned CMM, and we have not expressed any opinion, either way, thereon - This order, however, shall not result in any recoveries being made from Advocate Commissioners of any fees paid in terms of CMM's order - Registry shall circulate a copy of this Judgement to all Chief Metropolitan Magistrates/Chief Judicial Magistrates and District Magistrates in State of Andhra Pradesh, for ensuring that while passing order under Section 14 of Act, a reasonable time is fixed for person authorised to execute/carry out/implement/give effect to such order by actual taking over and delivery of physical possession of properties covered under such order and further, to obviate any ambiguity or chance of transgression, such time shall also be incorporated in consequential warrant/authorisation issued to such authorised person - Court note that an objection was raised on behalf of SBI that Advocate Commissioner concerned ought to have been made a party in instant proceeding - Such stand was adopted in counter-affidavit - Court is not considering reasons and/or justification for Advocate Commissioner having executed/given effect to order authorising him to take over physical possession of property in question, much beyond time fixed/granted by CMM to do so - As has been held by us, order under Section 14 of Act loses its force/effect, in law, upon expiry of returnable date, as fixed by CMM, unless extended - Thus, for instant adjudication, Advocate Commissioner is not a party required to be heard - Moreover, Advocate Commissioner, being conferred only power, limited, of taking over physical possession by CMM under Section 14 of Act, has no vested right of being heard with regard to validity/life thereof.
Result: Writ petition is disposed of.
JUDGMENT :
Ahsanuddin Amanullah, J.
Heard Mr. T. Lakshmi Narayana, learned counsel for the petitioners and Mr. Satyanarayana Moorthy, learned counsel for the respondents – State Bank of India (hereinafter referred to as the 'SBI').
2. By the instant writ petition, the petitioners assail the action(s) taken by the SBI under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the 'Act') alleging violation of the procedure prescribed therein as well as nonconformity with The Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as the 'Rules').
3. The factual matrix may first be adverted to. The petitioners obtained loan from the SBI. The account having become a Non-Performing Asset (hereinafter referred to as 'NPA'), the petitioners applied for One-Time Settlement (hereinafter referred to as 'OTS'), whereunder the total amount to be paid was Rs.10,36,25,840.82. The application money of Rs.52,00,000/- was paid and SBI also issued sanction letter dated 23.11.2020. Though as per the terms of OTS, the first instalment to be paid was Rs.1.04 crores by 23.12.2020, the petitioners paid only Rs.32,00,000/- on 23.12.2020. As a consequence, SBI issued letter dated 29.12.2020 informing cancellation of OTS and asking the petitioners to deposit the entire Bank dues with interest at contracted rate. The request of the petitioners by letter dated 03.01.2021 for extension of time for payment of balance amount of first instalment of Rs.72,00,000/- was rejected by the SBI vide letter dated 21.01.2021. The same is pending challenge in W.P.No.2512 of 2021, before this Court. As the petitioners had defaulted, the SBI, prior to sanctioning OTS, on 27.02.2019 had already moved before the Chief Metropolitan Magistrate (hereinafter referred to as the 'CMM'), Guntur, in Crl.M.P. No.201 of 2019, under Section 14 of the Act for taking physical possession of the secured asset/property, in which the following order was made on 28.12.2020:
Heard and perused the record.
It seems that the petitioner bank followed the procedure contemplated under the Act to proceed against the mortgaged property for realization of loan amount due to the petitioner bank. Therefore, the petition has to be allowed.
In the result, the petition is allowed. Sri K. Veera Bhaskar, Sri P. Koteswara Rao, Sri/Smt. V. Sreelatha, Sri/Smt. J. Rama Lakshmi, Advocates are appointed as Commissioners to take possession of the petition schedule property and to deliver the possession to the petitioner bank. Their fee are fixed at Rs.10,000/- each payable by the petitioner bank. The Commissioner shall issue notice to both parties and advocates on record before execution of warrant. Commissioner is at liberty to break open the schedule for execution of warrant with aid of police when ever required. Warrant returnable with Report by 15.02.2021.
Warrant shall be issued on payment of commissioner fee and process on or before on 04.01.2021""
4. On 04.01.2021, the matter was adjourned, for payment of Commissioner fee and process, to 05.01.2021, on which date it was recorded as under:
5. Thereafter, on 17.12.2021, the Advocate Commissioners took possession of the property.
6. Learned counsel for the petitioners submitted that the order passed by the CMM was beyond 60 days of filing of the application under Section 14 of the Act, which is impermissible in view of Section 14 of the Act. It was further contended that even thereafter, as per order dated 28.12.2020 of the CMM, the warrant was to be executed latest by 15.02.2021, which was the retur
Advocate Commissioner, being conferred only the power, limited, of taking over physical possession by the CMM under Section 14 of the Act, has no vested right of being heard with regard to the validi....
(1) Physical possession of secured asset/property – Once time specified in warrant has elapsed, possession of property in question cannot be taken over under same warrant.(2) Physical possession of s....
Point of Law : SARFAESI Act - There is no provision under Section 14 that requires imposition of any time limit for aforesaid purpose - Only time limit provided in Section 14 is in proviso to Section....
The power of a designated magistrate under the recovery statute to facilitate possession of secured assets is purely ministerial, not adjudicatory. It requires no prior notice to debtors, no pre-regi....
The Chief Judicial Magistrate holds equivalent jurisdiction as the Chief Metropolitan Magistrate under the SARFAESI Act, permitting administrative orders for asset recovery.
Court dismissed contempt allegations, finding that execution of a property warrant was not unlawful, as it adhered to legal processes despite timing disputes.
Authorized officer is not expected to adjudicate the contentious issues raised by the concerned parties but only verify the compliance referred to in the first proviso of Section 14 and being satisfi....
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