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2024 Supreme(Kar) 369
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
N.V. ANJARIA, CJ., T.G. SHIVASHANKARE GOWDA, J.
M/s. International Asset Reconstruction Company Limited, Rept. By Its Senior Vice President, Mr. Sidhharth Shah – Appellant
Versus
Ms. Jhansirani Vinodkumar, W/o. Late Vinodkumar and Ors. – Respondents
Writ Appeal No. 231 Of 2024 (GM-RES) C/W Writ Appeal No. 230 Of 2024 (GM-RES)
Decided On : 05-06-2024
For the Appellant :Sri P.S. Rajagopal, Senior Advocate for Smt. Sreedevi K.B. & Sri Patil J.M., Advs.
For the Respondents:Sri Udaya Holla, Senior Advocate for Sri Rakesh B. Bhatt, Adv., Sri K.N. Phanindra, Senior Advocate for Sri Srikanth Patil K., Adv.
IMPORTANT POINT
The enforcement of security interest under the SARFAESI Act is limited to the specific area of land mortgaged as per the assignment deed.
Headnote:
SARFAESI - Writ Appeals - Karnataka High Court Act, 1961, SARFAESI Act, 2002 - The court interpreted the provisions of the SARFAESI Act, particularly Sections 2(ba), 2(zd)(iii), 2(ze), 2(zf), 5, and 13, concluding that the enforcement of security interest was limited to the mortgaged area of 2012 sq.mts. only.
Fact of the Case:
The appeals arose from a common judgment regarding the possession of land claimed by an asset reconstruction company under the SARFAESI Act. The petitioners contended they were the rightful owners of the land, while the appellant claimed rights based on an assignment deed.
Finding of the Court:
The court found that the Additional Chief Metropolitan Magistrate exceeded jurisdiction by ordering possession of more land than was mortgaged. The enforcement of security interest was limited to the area specified in the assignment deed.
Issues: Whether the Additional Chief Metropolitan Magistrate could order possession of land beyond the extent mortgaged as per the assignment deed.
Ratio Decidendi: The court held that the rights of the assignee were confined to the specific area of land mentioned in the assignment deed, and any enforcement beyond that was invalid.
Result: The appeals were dismissed, upholding the lower court's decision.
JUDGMENT :
(N.V. Anjaria, CJ.)
These two appeals arise out of common judgment and order dated 06.02.2024 passed by learned Single Judge in Writ Petition No.26720 of 2023 and Writ Petition No.26996 of 2023. The first mentioned petition is referable to Writ Appeal No.231 of 2024, whereas, the Writ Appeal No.230 of 2024 arises out of Writ Petition No.26996 of 2023.
1.1 Since in both the petitions facts are common and learned Single Judge also dealt with both the petitions together, these two appeals are considered simultaneously to be disposed of by this judgment and order.
1.2 Heard learned Senior Advocate Mr. P.S. Rajagopal with learned Advocate Smt. K. B. Sreedevi and learned Advocate Mr.J.M. Patil for the appellant in both the appeals, learned Senior Advocate Mr.Udaya Holla assisted by learned Advocate Mr.Rakesh B. Bhatt for respondent Nos.1 to 13 in Writ Appeal No.231 of 2024 and learned Senior Advocate Mr.K.N.Phanindra assisted by learned advocate Mr.Srikanth Patil K for respondent Nos.1 to 13 in Writ Appeal No.230 of 2024. Respondent No.14 in both the appeals came to be deleted from the array of respondents, as per the order of the Court.
2. The appeals are preferred by the appellant–M/s. International Asset Reconstruction Company Ltd.–original respondent No.1 under Section 4 of the Karnataka High Court Act, 1961, seeking to call in question the common judgment and order of learned Single Judge. The writ petitions which were filed by respondent Nos.1 to 13 herein, came to be allowed in terms of the directions issued by learned Single Judge.
2.1 The following operative directions were passed,
“(i) Writ Petitions are allowed in part.
(ii) The orders dated 26-03-2022, 06-07-2023 and 21.07.2023 passed by the XXXI Additional Chief Metropolitan Magistrate, Bengaluru in Criminal Miscellaneous No.5700 of 2021 are set aside, insofar as they concern granting of possession of one hectare and 2012 sq.mts. in Sy.No.34 of plot No.21-D, Peenya Industrial Area, Nallakadaranahalli, Yeshwantapur Hobli, Bangalore North Taluk and is restricted to 2012 sq.mts. in terms of the Assignment Deed 04-02-2008.
(iii) The 1st respondent/Company is at liberty to act in accordance with law, to take possession of one hectare as well, bearing in mind the observations made in the course of the order.
(iv) All other contentions of both parties remain open.”
2.2 The orders dated 26.03.2022, 06.07.2023 and 21.07.2023 under challenge in the writ petitions were the orders passed by learned 31st Additional Chief Metropolitan Magistrate, Bengaluru, in Criminal Misc. Application No.5700 of 2021, in exercise of powers under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘SARFAESI Act’).
2.3 The impugned orders were set aside in so far as they related to handing over possession of the land admeasuring 1 hectare and 2012 sq.mts., in Plot No.21-D, Survey No.34, Peenya Industrial Area, Nallakadaranahalli, Yeshwanthapur Hobli, Bengaluru North Taluk, and the taking over possession was restricted to 2012 sq.mts., out of the said total land, in terms of the Assignment Deed dated 04.02.2008. Liberty was reserved for the appellant– respondent No.1 to act in accordance with law to take possession of the rest of 1 hectare in light of the observations made in the order.
3. The petitioners were neither the borrowers nor the guarantors. While challenging the aforementioned orders passed by learned Additional Chief Metropolitan Magistrate under Section 14 of the SARFAESI Act, it was the case of the original petitioners inter alia that they were the absolute owners and in possession of immovable plots forming part of the Eastern plot bearing No.21-D in the Peenya II Phase Industrial Area in Survey No.34, Bengaluru North Taluk. The petitioners stated that different petitioners owned different plots carved out from the main plot which was purchased by them from respondent – M/s. Electrex (India)
