IMPORTANT POINT
Requirement of filing affidavit as stated in first proviso shall not apply to proceeding pending before DM or CMM, on date of commencement of Securitisation Act.

Manoj Misra, J.—By these proceedings, the petitioner seeks to question the legality of an order passed by the District Magistrate under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002.

2. In the application which was filed before the District Magistrate, the second respondent pleaded that it had extended financial assistance in the amount of Rs.10 lacs to the borrowers who had executed a security agreement on 15 September 2005 against immovable property. The petitioner is a co-borrower. On a default committed by the borrowers, the second respondent stated that it had issued a demand notice on 24 June 2011 under Section 13(2) calling upon the borrowers to repay the entire dues in the amount of Rs.10,69,589 within 60 days. According to the petitioner, on 1 September 2011, the second respondent affixed a possession notice on the property. The petitioner challenged the possession notice by filing a securitisation application under Section 17 of the Securitisation Act before the Debt Recovery T

ribunal. The application is pending. Admittedly, no interim order enures to the benefit of the petitioner.

3. The grievance of the petitioner is that in the reply which the second respondent filed to the securitisation application, it was stated that the second respondent had not adopted a measure under Section 13(4) until the institution of the securitisation application. The second respondent stated that its notice dated 1 September 2011 only demanded possession of the property. The second respondent filed an application under Section 14 of the Securitisation Act before the Collector and District Magistrate, Lucknow on 23 October 2011. The application has been allowed by the impugned order dated 10 March 2014 which is sought to be questioned in these proceedings under Article 226 of the Constitution.

4. The first submission which has been urged is that the second respondent in its reply which was filed before the Debt Recovery Tribunal had stated that no measure had been taken under Section 13(4) till the date of the institution of the securitisation application. Contrary to this, it has been alleged that in the application which the second respondent filed before the District Magistrate, it stated that on 1 September 2011, it had issued a notice for taking possession of the secured asset in realization of its dues. To meet this submission, it has been stated on behalf of the second respondent that there was in fact no measure taken by the second respondent at that stage. When it had filed its reply to the securitisation application, the second respondent had not taken a measure within the meaning of Section 13(4).

5. The reply before the Debt Recovery Tribunal appears to have been filed on 19 November 2011. When the second respondent moved the District Magistrate, it stated that it had issued a notice for taking possession of the secured asset on 1 September 2011.

6. The real issue before the Court is as to whether the second respondent can be faulted for having moved the District Magistrate under Section 14 and whether the District Magistrate was acting within jurisdiction in issuing an order for possession under that provision.

7. In this regard, it would be necessary to refer, at the present stage, to a decision of the Supreme Court in Standard Chartered Bank v. V. Noble Kumar and Ors. The Supreme Court in the following observations has laid down that there are three situations or methods by which the secured creditor can take possession of the secured assets:

“Thus, there will be three methods for the secured creditor to take possession of the secured assets:

(i) The first method would be where the secured creditor gives the requisite notice under rule 8(1) and where he does not meet with any resistance. In that case, the authorised officer will proceed to take steps as stipulated under rule 8(2) onwards to take possession and thereafter for sale of the secur