IMPORTANT POINT
CMM does not adjudicate any dispute, but renders assistance to ensure that power of secured creditor to take over possession as measures to recover debt under S. 13(4), no error in order.

1. With the consent of both the parties, the writ petition is taken up for final disposal.

2. The challenge in this writ petition is to the order dated 16th April 2014 passed by the learned Chief Metropolitan Magistrate Court, Egmore, Chennai-8 in Cri.M.P.No.1385 of 2014. The learned Chief Metropolitan Magistrate, while exercising his power under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “the Act 2002”), allowed the application filed by the respondent-Bank to take possession of the property mentioned in the Schedule hereunder:

“All that piece and parcel of land and building (Flat) bearing No.C (Now F1) in Plot No.W-811, 9th Street, Syndicate Bank Colony, Anna Nagar West Extn., Chennai-101, measuring an extent of 1325 Sq.ft. super plinth area inclusive of all common area along with UDS of 874 sq.ft. comprised in R.S.No.155 Part and 151/2 Part of Padi Village.

North by	30 feet Road;
South by	Plot No.860;
East by	Plot No.812
West by	30 feet Road.

Situated within the Sub-Registration District of Villilvakkam and Registration District of Chennai.”

3. The learned counsel appearing for the petitioners questions the legality of the impugned order on the ground that before making an application under Section 14 of the Act 2002 to take over the possession of the secured asset, the first respondent ought to have accepted the proposal of sale by auction with all reasonableness. It was also contended that the petitioners were not given sufficient opportunity to raise funds by way of sale or otherwise to settle the outstanding loan amount. Thus, the impugned order directing the respondent bank to take over physical possession of the secured asset is bad in law and deserves to be set aside.

4. We have heard Mr. R. Nagasundaram, learned counsel for the petitioners and Mr. M. Santhanaramam, learned counsel for the first respondent bank.

5. The scheme for enforcement of security interest is contemplated under provisions of Section 14 of Act 2002. Sub-section (2) of Section 13 of the Act 2002, provides for affording an opportunity to the borrower to make good the default, by making repayment of secured debt within 60 days from the date of notice, failing which the secured creditor is justified to take action under sub-section (4) of Section 13. Section 13(3A) of the Act 2002 further provides an opportunity to the borrower to make a representation raising any objection pursuant to the notice under sub-section (2) to put forward its case for settlement of dues to the secured creditor. If the borrower fails to take steps under provisions of Section 13(3A), the secured creditor is fully authorised to take action under sub-section (4) of Section 13 of the Act 2002. Under sub-section 4, several measures are followed to recover the secured debt:

“4. In case of the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:

(a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset;

(b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset;

Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt:

Provided further that where the management of whole of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security for the debt.

(c) appoint any pe