IMPORTANT POINT
District Magistrate has no power to adjudicate legal niceties of transaction between secured creditor and borrower.

Sanjay K. Agrawal, J.—Impugning legality, validity and correctness of the order passed by the District Magistrate, Raipur granting application under section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, ‘the SARFAESI Act’) and also questioning the consequential order passed by the Naib Tahsildar, Dharsiva dated 26-8-2015, the writ petitioners, who are borrower and guarantor, respectively, have filed this writ petition under Article 226 of the Constitution of India seeking quashment of those orders.

2. Essential facts necessary to judge the correctness of the aforesaid orders are as under:-

2.1) Respondent No.1 Bank granted loan facility of Rs. 58.62 crores on 29-3-2008 to petitioner No.1 to which petitioner No.2 stood as guarantor. The outstanding amount which was found against the petitioners as on 30-9-2015 was Rs. 64.58 crores. Thereafter, due to financial indiscipline, diversion of funds and for other reasons, the account was declared non-performing asset (NPA) on 30-11-2012. After declaring the account as NPA, on 7-12-2012 (Annexure P-3), a notice under Section 13 (2) of the SARFAESI Act was issued and on 19-2-2013, possession notice was issued and thereafter, the Bank filed recovery suit bearing O.A.No.33/2013. Measures under Section 13(4) of the SARFAESI were taken. Since physical possession of secured assets could not be taken, the respondent Bank filed application under Section 14 of the SARFAESI Act before the District Magistrate, Raipur for obtaining physical possession and affidavit was also filed supporting the contents of the application as required under the proviso to Section 14 (1). In that application, the petitioners appeared and filed their objection raising plea that the matter is pending consideration before the company court and therefore without due permission/leave of the company court, Section 14 application cannot be granted. Against the measures taken under Section 13 (2) of the SARFAESI Act, petitioner No.1 has filed Securitisation Application No.68/2013 under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal and that is pending consideration in which the application for interim relief was rejected by the Tribunal on 12-4-2013. Securitisation Application No.3/2015 was also filed by petitioner No.2 challenging the measures under Section 13 (4) of the SARFAESI Act which was dismissed by the DRT for want of prosecution on 20-3-2015. Ultimately, the learned District Magistrate by its impugned order, granted the application after having satisfied with the affidavit filed by the respondent Bank and further directed the Naib Tahsildar to verify and proceed for taking possession, if no other case is pending. Calling in question the order of the District Magistrate as well as that of the Naib Tahsildar, this writ petition has been filed.

2.2) The impugned challenge made in the writ petition is on the ground that the learned District Magistrate has no jurisdiction to delegate his power of satisfying himself under the first proviso to Section 14 (1) of the SARFAESI Act and delegation of that power by the District Magistrate makes the order of the District Magistrate as well as the Naib Tahsildar without jurisdiction and without authority of law. It is the further case of the petitioners that since company petition is pending before the company court, therefore, without leave of the company court, no order under Section 14 of the SARFAESI Act could have been passed. Statutory compliance of the proviso to Section 14 (1) of the SARFAESI Act has not been recorded by the learned District Magistrate while passing the impugned order in its letter and spirit, therefore, the writ petition be allowed and the order of the District Magistrate followed by the order of the Naib Tahsildar deserves to be set aside.

2.3) Detailed return has been filed by the State/respondents No.2 and 3 stating inter alia that the petitio