The main legal point established in the judgment is the valid service of notices under Section 13(2) and Section 13(4), the mandatory nature of communicating reasons for non-acceptance of representation within one week, and the impermissibility of a secured creditor forcibly evicting a borrower without seeking recourse to the Chief Metropolitan Magistrate under Section 14.

Dr. D.Y. Chandrachud, J.

Rule. Counsel for the Respondents waive service. On the request of Counsel and by consent, the rule is heard finally at this stage.

2. This Petition under Article 226 of the Constitution of India is directed against an order passed by the Debts Recovery Appellate Tribunal on 6 October 2010. The order of the Appellate Tribunal was delivered in an Appeal filed by the Bank against an order by which the Tribunal had held that the Bank had unlawfully taken possession of a secured asset on 28 July 2010 under Section 13 (4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The Tribunal had directed redelivery of possession to the mortgagor, of the secured asset. The Appellate Tribunal came to the conclusion that service of the notice under Section 13(2) had been validly effected and that the notice of possession under Section 13(4) was valid. However, the Appellate Tribunal came to the conclusion that the notice of sale was not validly issued. Hence, the Appellate Tribunal came to the conclusion that the action of the Bank upto the stage of the publication of the possession notice under Rule 8(2) was valid. The Bank has been permitted to proceed in the matter from the stage of Rule 8(5) of the Rules. The order passed by the Tribunal for the redelivery of possession of the secured asset to the mortgagor has been set aside.

3. In these proceedings the First Petitioner is a private limited company and is the borrower to whom credit facilities have been extended by the First Respondent. The Second Petitioner is a guarantor and mortgagor of a residential flat being Flat No.7A/8A, Suneeta Apartments, Ridge Road, Malabar Hill, Mumbai. On 17 May 2010 the Bank issued a notice under Section 13(2). The notice was issued in the name of a Director of the First Petitioner. The notice was acknowledged by the Second Petitioner. The acknowledgment also bore the rubber stamp of the First Petitioner. On 9 June 2010 the First Petitioner, as the borrower, replied to the notice. Following the reply, the Bank served a notice of possession dated 28 July 2010 under Section 13(4). The notice was served at the premises on Murugan Pillai, an employee of the First Petitioner, holding the designation of Manager-Accounts. Possession was taken by the Bank.

4. An application was filed by the Petitioners before the Debts Recovery Tribunal under Section 17. The Tribunal by its judgment dated 29 June 2010 allowed the application and, while setting aside the taking over of possession, directed that possession shall be redelivered to the Petitioners. The Tribunal held that the measure which has been adopted by the Bank under Section 13(4) was unlawful for want of service of a notice of possession on the Second Petitioner and for failure to separately publish a possession and sale notice. The Tribunal also entered into a finding of fact that possession was unlawfully taken by the Bank in a forcible manner without seeking recourse to the remedy provided under Section 14 of moving the Chief Metropolitan Magistrate. However, the Tribunal clarified that the final decision did not rest on that ground since independently the Tribunal was of the view that the measure under Section 13(4) was flawed for want of service of a notice of possession. The order of the Tribunal has been confirmed in part by the Debts Recovery Appellate Tribunal in so far as the invalidity of the sale notice is concerned. The Appellate Tribunal held that (i) There was delivery and service of the possession notice under Rule 8(1) on the Second Petitioner. The finding of the Tribunal on this point was reversed.; (ii) The publication of the possession notice in the newspaper on 3 August 2010 under Rule 8(2) was lawful and the finding on that issue of the Tribunal was reversed; (iii) The finding of the Tribunal that the sale notice published on 3 August 2010 was unlawful was upheld. It is in that view of the matter