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PATNA HIGH COURT (DB)
Ajay Kumar Tripathi and Smt. Nilu Agrawal, JJ.
Syndicate Bank through its Regional Manager —Appellant
versus
Rajesh Kumar and Ors. —Respondents
Patent Appeal No.1475 of 2014 in Civil Writ Jurisdiction Case No.11378 of 2014
Decided on 11.5.2017
Counsel for the Parties:
For the Appellant:Mr. Siddharth Harsh, Advocate
For the Respondents: Mr. Y.P. Sinha, AAG-7 and Mr. Shankar Kumar, AC to AAG-7
IMPORTANT POINT
Duty of District Magistrate under SARFAESI Act is to provide assistance, take steps and provide force and not to act as an adjudicatory authority.
Headnote:(A) Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002—Section 13(2)—Re-initiation of SARFAESI proceedings from stage of notice under Section 13(2)—Since notices were to be sent to borrower and guarantor in terms of Section 13(2) of SARFAESI Act, at least two registered cover were required to be sent—Court is not satisfied with explanation of authorities of Bank that merely on account of non-return of registered cover, there would presumption of service of notice under Section 13(2) of SARFAESI Act—If notices were deemed to have been served, Bank was required to have at least gathered proof of such service—No evidence has been sought to be collected by Bank much less produced before Court to satisfy that such notices under Section 13(2) of SARFAESI Act was actually served on petitioner—Appeal dismissed. (Paras 6, 7 and 10)
(B) Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002—Section 14—Possession of secured asset—Role of District Magistrate is to assist, take or cause to be taken for such steps and use, or cause to be used, such force as may, in his opinion be necessary—District Magistrate was not an adjudicatory authority, rather it is only for assistance and if necessary provide police force—Duty of District Magistrate under SARFAESI Act is to provide assistance, take steps and provide force and not to act as an adjudicatory authority. (Para 10)
Result: Petition dismissed.
Nilu Agrawal, J.—The Bank, who was Respondent Nos.3 to 5 in the writ application, have preferred this intra-court appeal aggrieved by the order dated 25.07.2014, passed in C.W.J.C.No.11378 of 2014 directing for re-initiation of SARFAESI proceedings from the stage of notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the SARFAESI Act).
2. Heard the learned counsel for the parties.
3. The writ petitioner, who is respondent no. 1 in the present appeal, had preferred the writ petition seeking the following reliefs:
“...for quashing of notice dated 20.06.2014 for vacation of premises/property of the petitioner situated at Mohalla-Nandpuri (Bhagwanpur) District-Muzaffarpur without taking recourse to the provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the SARFAESI ACT), whereby and where under the respondent Bank has given notice to the petitioner to vacate the premises/ house/ building upto 25.06.2014 after which the bank may put its lock on the premises/seize the property on any day without any further notice observing therein is that we have initiated action under SARFAESI Act, 2002 read with SARFAESI RULES there under and taken possession of the secured assets under Section 13(4) of the SARFAESI ACT. Further, in terms of the provisions of the Act, the District Magistrate, Muzaffarpur has been directed for taking physical possession/ seizure of the secured assets and has directed for deputation of Magistrate and police force for the purpose vide his order dated 07.02.2014.”
4. The main contention of the private respondent in the writ petition was that before taking recourse to the provisions of Section 13(2) of the SARFAESI Act, the appellant Bank has initiated 13(4) proceedings and thereby taking possession of his premises and property situated at Mohalla Nandpuri (Bhagwanpur), District Muzaffarpur, thus, denying him opportunity to file objection under Section 13(3A) of the SARFAESI Act.
5. The learned Single Judge has dealt, rather extensively, regarding the SARFAESI proceedings initiated against the private respondent who had taken a credit facility of Rs. 7 lakhs from the Bank on 25.09.2007 and since the account became Non-Performing Asset (NPA), the loan was recalled and the writ petitioner was held liable to pay the entire loan amount with interest by the appellant Bank.
6. Private respondent contended that the notice sent under Section 13(2) of the SARFAESI Act was not received although the Bank in the counter affidavit in the writ had categorically stated that a notice under Section 13(2) was sent on 27.09.2011 through registered post on 22.10.2011, but the learned Single Judge observed that since the registered cover sent on 22.10.2011 did not return back to the Bank at any point of time, the presumption would be that notices were not served on the petitioner and had this to observe:
“In the considered opinion of this Court presumption of a notice to be served under Section 13(2) of the SARFAESI Act, having a penal provision and capable of even dispossessing a person from his mortgaged property, cannot be so lightly inferred. The presumption of non-return of the registered cover, as envisaged under Order 5, Rule 19A of the Code of Civil Procedure ipso facto can not be made applicable to the proceedings under SARFAESI Act in absence of such a provision made in the Act and the Rules framed thereunder. In any event, when two notices were prepared and signed by the authorised officer on 27.09.2011 and yet only of them was said to be sent only on 22.10.2011, there would be itself a big question as to which whom the notices were sent because the such notices were required to be sent separately to borrower and guarantor. There is however nothing on record to show that notices were sent to both, borrower and
