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GUJARAT HIGH COURT
Smt. Abhilasha Kumari, J.
Aurovill Appliances Pvt. Ltd. —Petitioner
versus
District Magistrate and Ors. —Respondents
C/SCA/8852/2015
Decided on 5.10.2015
Counsel for the Parties:
For the Petitioner:Ms. Tejal A. Vashi, Advocate
For the Respondent Nos. 1 and 2: Ms. Shruti Pathak, Assistant Government Pleader.
For the Respondent No. 3:Mr. K.M. Parikh, Advocate.
For the Respondent No. 4: Rule served.
For the Respondent No. 5: Served by Affix
IMPORTANT POINT
Lessee of secured asset cannot challenge eviction order after having unsuccessfully participated in auction proceedings of secured asset.
Headnote:Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002—Section 14—Posession of secured asset—Eviction of lessee from property—Petitioner did not challenge order under Section 14 of SARFAESI Act at relevant point of time but participated in auction proceedings of secured asset conducted by authorised officer of respondent Bank, though unsuccessfully—Order under Section 14 of SARFAESI Act has been challenged after auction proceedings are over and possession of secured asset has been handed over to respondent—Failure on part of petitioner in disclosing fact that it had unsuccessfully participated in auction and that possession of property had been handed over to respondent is a material fact which would go to very roots of matter—Situation is no longer at the stage when there is threat of dispossession of petitioner—By suppressing material facts petitioner is seeking to obtain an order that would result in nullifying proceedings of auction in which third party rights and interest have already been created—Petition rejected. (Paras 7.1, 16, 21, 25, 26, 29 and 30)
Result: Petition rejected.
Smt. Abhilasha Kumar, J.— This petition under Articles 226 and 227 of the Constitution of India has been preferred, inter alia, with a prayer to quash and set aside the impugned order dated 09.05.2014, passed by respondent No.2 – Additional District Magistrate, Valsad, under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“the SARFAESI Act” for short), on the ground that the said order is without jurisdiction and the authorised officer of respondent No.3 – Central Bank of India, has no power to evict the petitioner, who is a lessee, from the disputed property, in view of the provisions of subsection the SARFAESI Act. It is further prayed that the seals and lock applied by respondent No.3 – Bank on the premises of which the petitioner is a lessee be opened and the possession thereof be restored to the petitioner.
2. Briefly stated, the facts of the case emerging from the memorandum of the petition are to the following effect:
2.1 The petitioner is a Company, duly registered under the provisions of the Companies Act, 1956 and is being represented through its Director. Respondent No.1 is the District Magistrate, Valsad, and respondent No.2 is the Additional District Magistrate, Valsad. Respondent No.3 is the Central Bank of India, a Banking Company constituted under the Banking Companies Act (Acquisition and Transfer of Undertakings) Act, 1970.
2.2 The subjectmatter of the petition is the property at Plot No.6A, Ranchhodji Nagar, having three floors, situated near Dharampur road, Abrama, Taluka and District Valsad (hereinafter referred to as the disputed property), owned by respondent No.4 (“the original owner” for short).
2.3 The petitioner asserts that it is the lessee of the disputed property and is carrying on its business in the nature of a Mall known as “Mother Mall”, which is being run by the petitionerCompany, of which he and his wife are Directors. The husband of respondent No.4 Kokilaben Babubhai Patel, the original owner, had taken a loan, from the respondent Bank on 07.01.2012 by mortgaging the disputed property as a collateral security. The said loan was in the nature of a cashcredit facility, to the tune of Rs.75 lakhs, approximately. In the said loan, respondent No.4, the original owner, was named as a guarantor.
2.4 It is the case of the petitioner that somewhere in the month of December 2011, the petitioner intended to occupy the disputed property for the purpose of its business in the nature and style of a Mall, by taking the disputed property on hire. According to the petitioner, sometime around December, 2011, a sum of Rs.2 lakhs was paid by the petitioner to the original owner towards the lease between the original owner and the petitioner.
2.5 On 07.02.2012, the petitioner and the original owner completed the formality of signing the lease deed of the disputed property, for a period of ten years. The petitioner had also undertaken the exercise of renovating the disputed property and incurred expenses towards the same.
2.6 Thereafter, due to the default in the repayment of the installments of the cashcredit facility availed of by the original owner, who was running the business in the name and style of M/s.B.G.Enterprises, the respondentBank issued a notice under the provisions of Section 13(2) of the SARFAESI ACT to M/s.B.G.Enterprises, on 28.10.2013.
2.7 On 13.02.2014, the respondent – Bank, through its authorised officer, issued a statutory notice under the provisions of Section 13(4) of the SARFAESI Act to M/s.B.G.Enterprises for taking over the possession of the said property. On 17.02.2014, the possession notice under section 13(4) of the SARFAESI Act was published in a daily newspaper.
2.8 According to the petitioner, though the respondentBank had knowledge that the petitioner is the lawful lessee of the disputed premises, its authorised officer did not join the petitioner as party to the proceedings under the SARFAE
