A party is entitled to challenge the making of an application under section 14 of the SARFAESI Act by the secured creditor and can file a quia timet action under section 17.

S.J. Vazifdar, J.

1. The petitioner has sought a declaration that the Additional Metropolitan Magistrate has no jurisdiction to pass an order under section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the “said Act”), and an order quashing the order of the Additional Chief Metropolitan Magistrate dated 16th April, 2013 under section 14 of the said Act. The petitioner has also sought an order quashing a notice dated 15th May, 2013, passed by the Assistant Registrar, Mumbai.

2. The question that falls for consideration is whether an application is sustainable under section 17 of the Act against any action taken by a secured creditor under section 14 of the Act prior to possession being taken pursuant to an order of the Chief Metropolitan Magistrate under section 14. In other words, can an application lie under section 17 only after possession is taken pursuant to an order under section 14.

3. The petitioner claims to be a tenant of respondent No.2 under an agreement of tenancy dated 20th March, 2002. The opening part of the agreement states that it is a leave and licence agreement. Clause 1 of the operative part of the agreement, however, states that the premises had been let out to the petitioner as a monthly tenant.

4. Considering the order that we intend passing, it is not necessary to adjudicate upon the petitioner's rights. We intend relegating the petitioner to the alternate remedy of an appeal provided by section 17 of the said Act.

5. Nor is it necessary, therefore, to refer to the facts in detail. Suffice it to state that according to the petitioner, the tenancy was created prior to the securities created by respondent Nos.2 to 4 in favour of the State Bank of India. The State Bank of India has not been impleaded. However, in the title under the State of Maharashtra the petitioner has referred to the authorised officer of the State Bank of India. The State Bank of India had granted certain facilities to the other respondents. In respect thereof, State Bank of India adopted proceedings under the said Act. It issued a notice under section 13(2) dated 29th September, 2012, inter-alia, calling upon the other respondents to discharge their liabilities within 60 days. In May 2012, State Bank of India took symbolic possession of the said premises. This petition, however, is concerned with the action taken by State Bank of India under section 14 of the Act in respect of the said premises. On 7th June, 2012, State Bank of India filed an application No.160 of 2012 seeking an order for taking possession of the said property and delivering the same to it for the purpose of enforcing the security interest and realising the secured debts by effecting the sale thereof. It is important to note that the petitioner was not impleaded in the said application.

6. By the impugned order dated 16th April, 2013, the Additional Chief Metropolitan Magistrate allowed the application. According to the petitioner, the order was not served upon him. The petitioner came to know of the same from respondent No.3 on 18th May, 2013. The petitioner, therefore, approached this Court prior to the order under section 14 being implemented.

7. According to us, the petitioner has an alternate remedy under section 17 of the said Act. The petitioner apprehends that the alternate remedy may not be available until after the order under section 14 is implemented. The apprehension is unfounded.

8. The question that falls for consideration, therefore, is whether a party is entitled to file an appeal under section 17 of the said Act before an order under section 14 is implemented. We have answered the question in the affirmative. Sections 13(4), 14 and 17 of the Act, insofar as they are relevant, read as under :

“13. Enforcement of security interest.—

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(4) In case the borrower fails to discharge his liability in full within the period specified in sub-